Identifying Small Wins towards ISPO Certification of 1 Million Palm Oil Smallholders in Indonesia in 2025

Last week, Strengthening Palm Oil Sustainability Indonesia (SPOS), IPB University, and ANGIN-Wageningen University hosted an online dialogue session on the possibility of ISPO-certifying one million Indonesian smallholders by 2025. Overall, experts speaking at the dialogue appear cautiously optimistic about the ambitious goal, with several pertinent points:

1. Marieka Leegwater from Solidaridad Palm Oil Program reiterated that transparency is imperative for ISPO standards to be effectively enforced and receive recognition by value chain and government. In response to a question about fostering a fair relationship between mills and smallholders, Marieke opines that it cannot be forced, as the former are typically in a better position contractually than the latter. 

2. Rukaiya Rafik from Forum Petani Kelapa Sawit Berkelanjutan Indonesia (FORTASBI) was optimistic about the possibility of certifying one million smallholders by 2025. Data is already available, as are incentives, although the latter is not yet well integrated throughout the supply chain. Rukaiyah agreed with Marieke’s answer on the question on mill-smallholder relationships, adding that it presents a good opportunity to encourage smallholders to get certified. 

3. Frans Claassen of Margarine, Fats and Oils (MVO) explained that several initiatives and measures introduced, including the ISPO and relevant presidential moratoria, have contributed towards international recognition of sustainable palm oil from Indonesia. Success stories help, such as the declining deforestation rates linked to palm oil plantations for four years in a row in Indonesia. With specific reference to ISPO, increased transparency, continuous improvements, and clear benefits for the smallholders are key to strengthening its credibility.

Source: Heriawan, National Action Plan of Sustainable Palm Oil (2021). There was a discussion on whether intercropping or agroforestry would be more acceptable to big plantation companies, especially considering that these companies would likely be deterred from agroforestry practices as it may lower their oil palm production rate.

Smallholders in the Palm Oil Sector

The importance of smallholders in the palm oil sector is often misunderstood or overlooked, especially when it comes to their role in improving the sustainability of the industry. Sustainability criteria, including the ESG standards, are used by palm oil companies for complying to international requirements and increasing economic benefits, but the reported scores are rarely a reflection of the local reality (Moohan-Sidhu, 2018; Thoumi, 2018).

Smallholders, as defined by the RSPO, are farmers growing palm in small plantations with an area below 50 ha where the family provides most of the labor. These family farms manage 40% of the global palm oil production area, a percentage which will continue to expand due to companies facing increasing barriers for opening new large tracts of land (Jeezer et al., 2019). Independent smallholders, as opposed to those under a scheme, are the most neglected in the sector. They have more difficulty accessing financial resources and produce around 20% lower yields than company plantations (Jelsma et al., 2019). Independent farmers represent a large portion of all smallholder area—for example, in Indonesia more than half of these area, 2.54 million ha, corresponds to independent smallholders. 

A Lubuk Beringin villager, Rahimah, 70, harvests palm nuts for palm oil on her agroforestry farm at Lubuk Beringin village in Jambi province, Indonesia. Caption from: Hans Nicholas Jong/Mongabay. Photo by: Tri Saputro/CIFOR/Flickr.

Including smallholders in the palm oil supply chain and addressing their state of exclusion is crucial for attaining environmental and social results. Despite some attempts to promote the adoption of standards among small producers only a low number of independent smallholders have been certified (Sagar et al. 2019). In Indonesia, only 1% hold a RSPO or ISPO certification (WRI, 2018). Other efforts led by palm oil companies which claim sustainability objectives, such as the Indonesia Palm Oil Development for Smallholders program implemented by Musim Mas, are focused on improving the productivity and traceability of smallholders along the supply chain. However, these ultimately end up benefitting companies but having little environmental impact. These initiatives do not show clear results in terms of avoided deforestation nor accountability for the distribution of premia returns to local communities.

Including smallholders and reducing the barriers they face are crucial for attaining credible and measurable sustainability results at a significant scale. While increasing the equity of the palm oil supply chain will create its own set of challenges, such addressing the complex traceability, accessibility, and layered sourcing system, ultimately it is worth the effort.

By Sandra CHIRI, 16 Nov 2020

On the Rural Political Economy of Malaysia

This is looking back a bit,  but thought it might be useful to draw together here various media interviews and think tank articles I have had on this subject. Primarily on the Felda-FGV political economy.

Recent and upcoming:

• A radio show interview. GE14 - BECAUSE FELDA MATTERS by KHOR Yu Leng, Independent Political Economist, Segi Enam Advisors 08-May-18 11:13 on BFM 89.9 The Business Station.

• Two topics in commentary: 'FELDA in GE14 - New Access to the BN Fortress and a Takeover Rumour' in The Edge Malaysia http://www.theedgemarkets.com/article/felda-ge14-%E2%80%94-access-bn-fortress-and-takeover-rumour.

• Research article comparing the voting preference and socio-economic indicators for Felda settlements and kampung biasa in GE14.

Playing palm oil politics ahead of Malaysia’s elections By KHOR Yu Leng - East Asia Forum, Australia National University, Crawford School, 26 April 2018.

The FELDA Quarrel and its National Ramifications By KHOR Yu Leng - ISEAS-Yusof Ishak Institute, 12 Jul 2017.

Malaysia Paddy Fields Are Najib’s Battlefield to Woo Voters By Shamim Adam, Bloomberg, June 20, 2016.

The Political Tussle Over Felda Land Schemes by KHOR Yu Leng - Kajian Malaysia, Universiti Sains Malaysia, 2014.

Others include interviews on Al Jazeera news.

Also, do read:

Voting Behaviour in FELDA Parliamentary Constituencies since 2004 by Geoffrey Pakiam, 26 Apr 2018.

Coalitions in Collision: Malaysia's 13th General Elections, Ed. J Saravanamuttu et al., 2015. Chapters by Maznah Mohamad and KHOR Yu Leng.

#Felda #FGV #Malaysia #PRU14 #GE14 #PRU13 #GE13 #PoliticalEconomy #GeneralElection