Minister of Agriculture Regulation No. 39/PERMENTAN/OT.140/6/2010 was recently released after initially meeting resistance from smaller-scale farmers; it regulates licensing in the crop cultivation business.
When the regulation was being drafted, crop producers with less than 25 hectares of cultivation area and / or have less than 10 permanent employees must register with the relevant Regent or Mayor, thereby securing a ‘Tanda Daftar Usaha Proses Produksi’ or ‘TDU-PP’; a proof of registration. Local farmer associations objected, calling registration burdensome, and arguing it would be at their expenditure rather than their profit to do so.
Although the provision survived in Article 6 (1), the concern of small-holders was accommodated in Article 6 (5), which makes the process free of charge. Governmental officials levying fees on the process will be subject to administrative sanctions (Article 39), although none are specified.
The regulation goes on to oblige larger-scale cultivation businesses to obtain formal licenses. These business licenses can be separated into three types:
1.
Crop Cultivation Production Business License (Izin Usaha Tanaman Pangan Proses Produksi / IUTP-P) will be granted to crop cultivation business actors that have more than 25 hectares of cultivation areas and / or more than 10 permanent employees. Crop cultivation production in this context includes preparing the cultivation areas, scattering seeds, cultivating, and harvesting – among others;
2.
Crop Cultivation Post Harvest Business License (Izin Usaha Tanaman Pangan Pasca Panen / IUTP-PP) will be granted to crop cultivation business actors that make more than IDR 2.5 billion in annual post-harvest profit. Post Harvest activity includes processing, conservation, packaging, stockpiling, and distribution, and;
3.
Crop Cultivation Business License (Izin Usaha Budidaya Tanaman Pangan / IUTP) will be granted to business actors engaging businesses both in the production and post harvest processes.
All the abovementioned licenses will, upon application, be granted by the relevant regent, mayor, or governor depending on the locale. Supporting documents for that request are set out in Articles 11 – 13 of the regulation. Response (license, or rejection) will be issued within 15 days of application reception.
In the event the business actors, which have secured a license, wish to expand their businesses (e.g. expanding crop cultivation area), the Regulation requires them to do so in the form of a partnership scheme. Obligating a partnership scheme when business actors are planning for an expansion is mainly designed to keep small-scale farmers from losing their job if their land is acquired. Provisions on the subject are set out in Chapters IV and V of the regulation.
Subsequent, post-license obligations include: implementation of licensed operations, protection of the environment, and reporting the implementation of business to the government (Chapter VI).
Any violations to the provisions of this regulation, except those relating to the registration of TDUP-P, will be sanctioned in the form of written warnings, revocation of the business licenses, and ultimately, revocation of the business actor’s Right to Develop (Hak Guna Usaha) over their crop cultivation areas.
The regulation has been in force since 14 June 2010.
Minister of Agriculture Regulation No. 39/PERMENTAN/OT.140/6/2010 was recently released after initially meeting resistance from smaller-scale farmers; it regulates licensing in the crop cultivation business.
When the regulation was being drafted, crop producers with less than 25 hectares of cultivation area and / or have less than 10 permanent employees must register with the relevant Regent or Mayor, thereby securing a ‘Tanda Daftar Usaha Proses Produksi’ or ‘TDU-PP’; a proof of registration. Local farmer associations objected, calling registration burdensome, and arguing it would be at their expenditure rather than their profit to do so.
Although the provision survived in Article 6 (1), the concern of small-holders was accommodated in Article 6 (5), which makes the process free of charge. Governmental officials levying fees on the process will be subject to administrative sanctions (Article 39), although none are specified.
The regulation goes on to oblige larger-scale cultivation businesses to obtain formal licenses. These business licenses can be separated into three types:
1.
Crop Cultivation Production Business License (Izin Usaha Tanaman Pangan Proses Produksi / IUTP-P) will be granted to crop cultivation business actors that have more than 25 hectares of cultivation areas and / or more than 10 permanent employees. Crop cultivation production in this context includes preparing the cultivation areas, scattering seeds, cultivating, and harvesting – among others;
2.
Crop Cultivation Post Harvest Business License (Izin Usaha Tanaman Pangan Pasca Panen / IUTP-PP) will be granted to crop cultivation business actors that make more than IDR 2.5 billion in annual post-harvest profit. Post Harvest activity includes processing, conservation, packaging, stockpiling, and distribution, and;
3.
Crop Cultivation Business License (Izin Usaha Budidaya Tanaman Pangan / IUTP) will be granted to business actors engaging businesses both in the production and post harvest processes.
All the abovementioned licenses will, upon application, be granted by the relevant regent, mayor, or governor depending on the locale. Supporting documents for that request are set out in Articles 11 – 13 of the regulation. Response (license, or rejection) will be issued within 15 days of application reception.
In the event the business actors, which have secured a license, wish to expand their businesses (e.g. expanding crop cultivation area), the Regulation requires them to do so in the form of a partnership scheme. Obligating a partnership scheme when business actors are planning for an expansion is mainly designed to keep small-scale farmers from losing their job if their land is acquired. Provisions on the subject are set out in Chapters IV and V of the regulation.
Subsequent, post-license obligations include: implementation of licensed operations, protection of the environment, and reporting the implementation of business to the government (Chapter VI).
Any violations to the provisions of this regulation, except those relating to the registration of TDUP-P, will be sanctioned in the form of written warnings, revocation of the business licenses, and ultimately, revocation of the business actor’s Right to Develop (Hak Guna Usaha) over their crop cultivation areas.
The regulation has been in force since 14 June 2010.
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