For Ermanto Fahamsyah, holder of law doctorate from University of Indonesia, one of the complex problems he is currently dealing is how to make sure that oil palm smallholders become an inseparable part of the country’s efforts to turn its palm oil sector sustainable.
Even though he believes that smallholders should strive to certify their plantations, there were still a lot of problems that hindered this.
“In the future, even more so if traceability becomes a requirement, the plantation of smallholders will have to be ISPO certified,” said Fahamsyah who is also active in the team to assess and strengthen the Indonesian palm oil sustainability scheme, the Indonesia Sustainable Palm Oil (ISPO).
A regulation from the agriculture ministry issued in 2011 and updated in 2015, stipulates that plantation companies must be ISPO certified. The companies coming under these obligations are those who are managing the cultivation of palm oil, managing mills or managing palm oil plantations that have one or more mills.
Certification is not mandatory but voluntary for palm oil companies related to biofuels production.
For smallholders, whether under a plasma scheme or independent, ISPO certification is not obligatory and is still voluntary in nature.
“There is still a lot of problems there, but this is not a reason for us not to make it mandatory for smallholders, although this requires the state to be present,” said the man who was born in 1979.
He said that even under the current sustainability certification scheme, which is considered not too demanding, there are plenty of problems. One of the major obstacles to certification for many smallholders is legal documents for their land.
“One does not have to speak about independent smallholders, because even plasma scheme smallholders are still struggling with legality problems,” he said, adding that even though plasma scheme smallholders usually get legal documents for their land when joining the scheme, often the land ownership changing without going through the proper legal procedures.
The state, he said, could help by issuing legal documents for problem-free land, or by accelerating or simplifying the process.
The ISPO Principles and Criteria (P&C) requires land ownership titles or land usage certificate in order for smallholders to apply for certification.
“For me, if one looks at the conditions, it is the P&C that should be modified,” he said, adding that perhaps, under the current conditions, smallholders did not need to have a land ownership title but could instead possess a Land Information Letter (SKT) only. Five years later when the certification needs a renewal, a tighter land ownership criteria can be applied.
Fahamsyah, who also teaches law at his alma mater, the University of Jember, said that the state needed to be present in the process of sustainability certification of smallholders.
“So, the state needs to be present, firstly in the framework of providing guidance or preconditioning for smallholders so that they are eligible for ISPO certification. The second form of state presence is in financing to pay for the certification of the smallholders and the third is possibly in the form of providing an incentive,” he said.
“If necessary, the issuance of certificates should be free or using a subsidy model,” he said, adding that at the very least, the government should be “safeguarding the official cost,” because smallholders usually would have to pay a lot of additional costs.
He said that there was a discourse to make ISPO certification mandatory for smallholders too, but many, including himself, doubted whether the smallholders were ready for this and therefore a transition period would be needed.
The law graduate who is very familiar with the challenges and problems of palm oil admitted that there is no absolute justification for setting any length of time needed for preconditioning smallholders for ISPO.
“There is that presidential regulation on a moratorium for improving the management system which is assumed to take three years. That means, if the government is really consistent on its effort, especially on the smallholders, it would be clear after three years and the other two years would be spent for preparing the smallholders for ISPO,” Fahamsyah said.
Another difficulty in getting smallholders to go on the path of sustainability is the requirement that they form or join farmer’s groups or cooperative. All palm oil sustainability schemes only deal with farmers who are organized into groups or cooperatives, not individuals.
“Personally, I also agree that farmers should first establish organizations in the framework of strengthening their own bargaining position,” he said.
Secondly, he said, that being in groups would make it easier for the provision of technical assistance and other facilities to the farmers. This would also simplify the audit process later on.
However, reality shows that aside from the scattered nature of smallholders’ locations and the lack of information they have on the certification process, there are also farmers who were reluctant to join organizations because of past experiences.
Fahamsyah also said that if the ISPO certification becomes an obligation for smallholders, he will propose that the costs be borne by the government, or at the very least the government provides a subsidy.
“Later, when it becomes mandatory, we will make the government uses BPDP-KS funds to finance it,” he said, referring to the Oil Palm Plantation Fund Management Agency that collect dues from the export of palm oil and its derivatives.
“In reality, ISPO for smallholders is in the interest of the government and companies,” he said because if smallholders are not planting their oil palm sustainably, the government and companies would suffer the consequences.
Therefore, the government and the private sector must actively assist smallholders in getting their plantation certified.
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