The replanting of palm oil plants aimed at producing better trees through good agricultural practices. The UNDP’s Good Growth Partnership (GGP) in Indonesia included several projects under one umbrella. Credit: ILO/Fauzan Azhima

By Cecilia Russell
JOHANNESBURG, Apr 27 2023 (IPS)

Smallholder farmers are critical to the success of Indonesia’s efforts to address deforestation and climate change. Creating an understanding and supporting this group, internally and abroad, is a crucial objective for those working towards reducing deforestation and promoting good farming practices, especially as smallholders often work hand-to-mouth and are vulnerable to perpetuating unsustainable farming practices.

Musim Mas, a large palm oil corporation involved in sustainable production, says smallholders “hold approximately 40 percent of Indonesia’s oil palm plantations and are a significant group in the palm oil supply chain. This represents 4.2 million hectares in Indonesia, roughly the size of Denmark. According to the Palm Oil Agribusiness Strategic Policy Initiative (PASPI), smallholders are set to manage 60 percent of Indonesia’s oil palm plantations by 2030.” 

Since last year a new World Bank-led programme, the Food Systems, Land Use and Restoration (FOLUR), incorporates the United Nations Development Programme Good Growth Partnership (GGP). It will continue to be involved in the success of palm oil production and smallholders’ support—crucial, especially as a study showed that the “sector lifted around 2.6 million rural Indonesians from poverty this century,” with knock-on development successes including improved rural infrastructure.

Over the past five years, GGP conducted focused training with about 3,000 smallholder farmers, says UNDP’s GGP Global Project Manager, Pascale Bonzom:

“The idea was to pilot some public-private partnerships for training, new ways of getting the producers to adopt these agricultural practices so that we could learn from these pilots and scale them up through farmer support system strategies,” Bonzom says.

Farmer organizations speaking to IPS explained how they, too, support smallholder farmers.

Amanah, an independent smallholder association of about 500 independent smallholders in Ukui, Riau province, was the first group to receive Indonesian Sustainable Palm Oil (ISPO) certification as part of a joint programme, right before the start of GGP, between the Indonesian Ministry of Agriculture, UNDP, and Asian Agri. This followed training in good agricultural practices, land mapping, high carbon stock (HCS), and high conservation value (HCV) methodologies to identify forest areas for protection.

“The majority of independent smallholders in Indonesia do not have the capacity to implement best practices in the palm oil field. Consequently, it is important to provide assistance and training on good agricultural practices in the field on a regular and ongoing basis,” Amanah commented, adding that the training included preparing land for planting sustainably and using certified seeds, fertilizer, and good harvesting practices.

A producer organization, SPKS, said it was working with farmers to implement sustainable practices. It established a smallholders’ database and assisted them with ISPO and Roundtable on Sustainable Palm Oil (RSPO) certifications.

Jointly with High Conservation Value Resource Network (HCVRN), it created a toolkit for independent smallholders on zero deforestation. This has already been implemented in four villages in two districts.

“At this stage, SPKS and HCVRN are designing benefits and incentives for independent smallholders who already protect their forest area (along) with the indigenous people,” SPKS said, adding that it expected that these initiatives could be used and adopted by those facing EU regulations.

SPKS sees the new EU deforestation legislation as a concern and an opportunity, especially as the union has shown a commitment to supporting independent small farmers—including financial support to prepare for readiness to comply with the regulations, including geolocation, capacity building, and fair price mechanisms.

Amanah also pointed to the EU regulations, which incentivize independent smallholders to adhere to the certification process.

“As required by EU law, the EU is also tasked with implementing programs and assistance at the upstream level as well as serving as an incentive for independent smallholders who already adhere to the certification process. The independent smallholder will be encouraged by this incentive to use sustainable best practices. Financing may be used as an incentive. The independent smallholders will be encouraged by this incentive to use sustainable best practices,” the organization told IPS.

SPKS would like to see final EU regulations include a requirement for companies importing palm oil into the EU to guarantee a direct supply chain from at least 30 percent of independent smallholders based on a fair partnership.

“In the draft EU regulations, it is not yet clear whether the due diligence is based on deforestation-related risk-based analysis. Indonesia is often considered a country with a high deforestation rate, and palm oil is perceived to be a factor in deforestation. Considering this, we hope the EU will consider smallholder farmers by ensuring that EU regulations do not further burden them by issuing Technical Guidelines specifically designed for smallholder farmers.”

In April 2023, the European Parliament passed the law introducing rigorous, wide-ranging requirements on commodities such as palm oil. The UNDP is now researching how it should step up its assistance to producers to meet the criteria.

Setara Jambi, an organization dedicated to education and capacity building for oil palm smallholders for sustainable agricultural management, says that while they are concerned about the EU regulations, small farmers have “many limitations, which are different from companies that already have adequate institutions.

“This concern will not arise if there is a strong commitment from both government and companies (buyers of smallholder fresh fruit bunches) to assist smallholders in preparing and implementing sustainable palm oil management.”

The next five years with FOLUR will face significant challenges. There is a need to ensure that the National Action Plan moves to the next level because it is going to expire at the end of 2024. It will require updating and expanding.

In Indonesia, there are 26 provinces and 225 districts that produce palm oil. And at the time of writing, eight provinces and nine districts have developed their own versions of the pilot Sustainable Palm Oil Action Plan and developed their own provincial or district-level Sustainable Palm Oil Action Plans.

There is a lot to do, including supporting the Indonesian government’s multi-stakeholder process, capacity building for the private sector, supporting an enabling environment for all, and working with financial institutions to make investment decisions aligned with deforestation commitments.

The biggest issue is to get the smallholder farmers on board. Because they live a life of survival, often they are vulnerable to “short-termism.”

On the positive side, the FOLUR initiative has the government’s backing. At the launch in Jakarta last year, Musdhalifah Machmud, Deputy Minister for Food and Agriculture at the Coordinating Ministry for Economic Affairs, said that the implementation of the FOLUR Project was expected to be able to create a value chain sustainability model for rice, oil palm, coffee, and cocoa through sustainable land use and “comprehensively by paying attention to biodiversity conservation, climate change, restoration, and land degradation.”

At that launch workshop in Jakarta, the World Bank’s Christopher Brett, FOLUR co-leader, noted: “Healthy and sustainable value chains offer social benefits and generate profits without putting undue stress on the environment.”

Bonzom agrees: “At the end of the day, they (smallholders) will need to see the benefits—better market terms, better prices, better, more secure contracts—that’s what is attractive for them.”

IPS UN Bureau Report