Palm oil, coffee and songbirds: Toward sustainable trade in Indonesia

Coffee fruit, Indonesia. CIFOR/Yayan Indriatmoko

Economic interconnectivity – including through international trade — is a mainstay of modern life, delivering life-changing and -saving goods and services across the globe.

But when it comes to the natural world, our trading systems have a lot to answer for. Roughly 29 to 39 percent of global anthropogenic emissions derive from international trade, mainly in beef and oilseeds.

In world tropical countries, deforestation for agriculture and tree plantations releases a total of 2.6 gigatons of carbon dioxide a year. Those countries then bear the brunt of biodiversity and ecosystem service loss, while resources produced are mostly sold elsewhere. More vulnerable local communities are disproportionately affected by the loss of ecosystem services.

“Largely, western and developed countries are importing these products for their consumption from developing countries, which is partly associated with deforestation, emissions and biodiversity loss – and producing countries are gaining some economic benefits, but are suffering some of the consequences of these economic trades as well,” said Neil Burgess, chief scientist of the U.N. Environment Programme World Conservation Monitoring Centre (UNEP–WCMC).

Burgess spoke at a webinar last month for stakeholders of the Indonesian division of the Trade, Development and the Environment Hub (TRADE Hub) – a five-year research project, which runs to 2024. It is supported by the UK Research and Innovation Global Challenges Research Fund (UKRI GCRF), which aims to address the challenge of sustainable global trade implementation. The Hub is conducting research with around 42 organizations in 15 countries, led by the UNEP–WCMC.

Indonesia is one of the focus locations where research on trade in palm oil, coffee and wildlife species – particularly songbirds — is undertaken by the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF), Wildlife Conservation Society, Research Center for Climate Change, University of Indonesia, Bogor Agricultural University and Lampung University. Webinar discussions focused on findings, progress and emerging issues in the quest for more sustainable trade in these key commodities.

After an opening by Nada Rifda Putri of Indonesia’s agricultural university in Bogor, IPB University, and welcoming remarks by CIFOR-ICRAF representatives Herry Purnomo, Sonya Dewi and Michael Brady, Burgess gave an overview of the need for sustainable commodity trading and challenges. He explained that existing free trade agreements tend to be quite weak in terms of environmental safeguards and incentives, and that the Hub is working with the World Trade Organization and other key bodies on improved enforcement, monitoring and general prioritization of these aspects within agreements – as well as greater transparency, inclusion and power-balancing practices.

In the Indonesian context, Musdhalifah Machmud, Indonesia’s deputy minister for Food and Agribusiness Coordination at the Coordinating Ministry of Economic Affairs, discussed the important role of palm oil dominated by Indonesia and Malaysia, which together produced  84 percent  of total global production in 2018  – Indonesia’s share 57 percent and Malaysia’s 27 percent — in the national economy, and the steps that are being taken towards boosting the sustainability of their impact, such as improving agricultural practices and supporting smallholders. Discussions also included Indonesian coffee, which makes up 4.6 percent of total global production.

These steps are likely to be welcomed at the local level. Jeni Pareira, from Wildlife Conservation Society Indonesia Programme (WCS), shared insights from WCS’s work with coffee producers in the Bukit Barisan Selatan National Park in Lampung. WCS has applied several successful interventions across the value chain, such as encouraging companies to source from deforestation-free areas, developing financial mechanisms and trainings to encourage farmers to boost their productivity in sustainable ways, improving smallholders’ access to markets and buyers and creating a traceability system.

Bustanul Arifin from Lampung University shared another example of work with small-scale coffee producers in the Pugung Tampak area of the West Coast district and the Lombok area of West Lampung district at the buffer zone of Bukit Barisan Selatan National Park, where he said there were “very serious challenges to achieve sustainability,” and encroachment into the national park is also frequently occurring. These smallholders receive only a very small share of the profits from their crops – and with low income to invest in inputs and little education, they do not tend to farm productively: most have only 20 to 50 trees per hectare, where 400 is the recommended density, he said.

Suria Tarigan of IPB University offered a presentation on capacity building for oil palm smallholders. A video of a plantation in Jambi province demonstrated the “three island” technique, where oil palm is grown as a monoculture, with small “islands” of interspersed trees and other crops, which provide other food and cash crops, timber, pollinator habitats and other ecosystem services.

Sonny Mumbunan, a scientist at the Research Centre for Climate Change at the University of Indonesia(RCCC UI), shared research on oil palm smallholder definitions and realities. Currently, defined as someone who cultivates less than 25 hectares, 75 percent of the 882,782 smallholders surveyed in the study in Riau and Sumatra, owned 2 to 3 hectares, and the median was 1 to 2 hectares. “If the definition is not sufficient, perhaps the policy is not well targeted,” said Mumbunan, recommending an amendment to category recognize those with less than 6 hectares.

CIFOR-ICRAF researchers Agus Andrianto and Heru Komarudin demonstrated how to create a business case for smallholder oil palm farmers, which highlighted how market failures, lack of incentive and weak law enforcement currently impedes the adoption of sustainable practices.

Purnomo and his CIFOR-ICRAF colleague Sonya Dyah Kusumadewi presented a bigger-picture perspective on the political economy of oil palm, which highlighted the importance in producer nations of adaptability to a potential global green deal for the commodity and ensuring that such a deal proves an incentive rather than a barrier.

Dewa Ekayana of the Fiscal Policy Agency and RCCC UI shared research on options for publicly financed sustainable palm oil, and required innovations. He listed barriers for smallholders in accessing finance, such as land tenure and certification issues. “Finding the right balance between socio-economic productivity and environmental sustainability is a long-standing challenge for the industry, especially for smallholders in Indonesia,” Ekayana said. “Public finance can be leveraged by the Indonesian government to address these challenges, especially to ensure better financial inclusiveness for small holders. When public finance management is well implemented, it will translate to higher sector productivity and to improving stakeholders’ welfare.”

CIFOR-ICRAF research officer Beni Okarda discussed the songbird trade. Collecting songbirds, and entering them into singing contests, is a popular pastime in the country, but trade is a threat to endangered species and can spread diseases and invasive species. The researchers used big data analysis and machine learning modelling to track and characterize the online songbird market – including the incidences of poaching and trade in endangered species – and suggested that these processes could be used to monitor developments and create policy to support a more sustainable songbird sector.

Dyah Puspitaloka from CIFOR-ICRAF delivered a detailed analysis of stakeholders involved across the sectors, and the relative power and influence of each – with a view to empowering weaker actors in sustainable trade pathways.

“While we still have a long way to go in our journey, I think we are in a good position to secure more sustainable trade in palm oil, coffee and songbirds in Indonesia,” Arifin said.

As a result of a request by the Indonesian Ministry of Environment and Forestry’s Agency for Standardization of Environment and Forestry Instrument, editorial changes were made to this story.