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Indonesia’s oil palm smallholders need more support for certification, study finds

Dependency on NGOs undermines long-term viability of non-state standards
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An oil palm plantation on the border of a intact forest in the province of Jambi on the island of Sumatra in Indonesia. CIFOR/Iddy Farmer

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The production of sustainably managed palm oil in Indonesia requires a broader strategy that encourages independent smallholder farmers to adopt non-state certification standards designed to gain them access to global markets and improve their sustained yields, scientists say.

While public policies are vital to preventing crop expansion in biodiversity hotspots and high conservation areas, private mechanisms are needed to share the costs and risks of certifying the smallholders who produce 40 percent of the country’s palm oil. This includes support from other stakeholders in the supply chain as well as members of the Roundtable on Sustainable Palm Oil (RSPO), one of the largest global certification groups for smallholders.

These are among the findings of a new study sponsored by the U.S. Agency for International Development and the Center for International Forestry Research (CIFOR).

By 2025, Indonesia will need an additional 6 million hectares of these plantations to meet global demand for the crop. Amid efforts to meet this target, the government has adopted policies that aim to sustainably intensify existing plantations, improve productivity through smallholder plantation replanting programs and permanently stop issuing palm oil business permits on primary forest and peatlands.

Stronger mandatory standards and the implementation of Indonesian Sustainable Palm Oil (ISPO) certification are also designed to ensure sustainable production of palm oil.

Participation in RSPO also strengthens standards, by incentivizing producers to consider the environmental and social aspects of their business.

More than half of the total area occupied by RSPO-certified oil palm plantations worldwide is located in Indonesia and is mostly farmed by large industrial firms, according to 2019 figures. Smallholder producers – who began to adopt oil palm in Indonesia in the late 1970s under the Suharto government’s rural development program – are a rapidly growing segment. Some of them manage their land independently and rely on non-governmental organizations (NGOs), companies or other actors to gain finance, training and market access. Through its Estate Crop Service, the government also provides support.

“The NGOs’ facilitation of farmer organizations is crucial not only in the earlier phase but also when the groups gain a direct benefit from certification,” says Ernawati Apriani, the lead author of the study, which was compiled in the School of Forestry at Northern Arizona University under the supervision of Yeon-Su Kim. “Sharing the benefits for the farmers’ organization with all registered members has proven to increase non-members’ interest in membership.”

In order to better understand how various stakeholders perceived RSPO certification, the authors surveyed 181 certified independent smallholders at two sites in Jambi province on the island of Sumatra. Most respondents had little understanding of the challenges involved in the certification process, but recognized the need for NGO support, according to the study.

Direct financial benefits were a motivating factor for farmers to continue with certification and for others to consider joining the group when such benefits were disbursed equitably in non-monetary and communal form, such as in shared food, it said. Increased social recognition for the certified farmers and access to the PalmTrace trading platform for RSPO credits also influenced smallholders’ decision to seek membership.

RSPO is a voluntary certification system that requires palm oil producers to comply with sustainability criteria in order to enter the international market, serving as both an opportunity and barrier for smallholders. Considering the many common elements of RSPO and ISPO in promoting the country’s sustainable palm oil, efforts have to be made to establish a more efficient for a certification system that satisfies the need of companies and smallholders.

The government has recently reinforced the ISPO system, which has now become mandatory for all growers including smallholders. This could not only help secure land tenure for smallholders – an important requirement for RSPO membership – but also incentivize them to adopt sustainable practices. Both systems could benefit from greater acceptance by global consumers, Ernawati said.

“The Indonesian government needs to facilitate the land tenure issue as well as the legal barriers that are often faced by smallholders interested in sustainability and entry to the global market,” she added. “A strong regulation needs to be followed by collaborative implementation. The ongoing palm oil jurisdictional approach is one way to ensure that collaborative actions are taken for all actors in the value chain.”

The long-term viability and scalability of RSPO certification depend on building the capacity of those at the bottom of the supply chain, while preparing an exit strategy for NGOs once smallholders have been certified, the authors say. However, the European Union’s planned phase-out of palm oil from renewable resources for biofuel by 2030 threatens international trade of the crop and raises questions about whether certification efforts will continue in the future.

A blanket ban on palm oil will only shift the environmental problems to other crops, according to the authors. Instead, state and non-state actors should work together to manage palm oil production sustainably, while civil society groups continue to boost public awareness about the benefits of voluntary as well as mandatory certifications, they wrote.

“These findings can be used to target early participants in the RSPO certification process, who can then motivate farmers’ groups to get involved,” says Himlal Baral, a CIFOR senior scientist who contributed to the study. “The information will also help in the design of appropriate strategies that facilitate membership entry for independent smallholders.”

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For more information on this topic, please contact Himlal Baral at h.baral@cgiar.org.
This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.
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Topic(s) :   Oil palm Wetlands