The Palm Scribe

Incentivizing Palm Oil Smallholders for Sustainability

With the increasing importance of smallholders in Indonesia’s palm oil sector, efforts to draw them into the fold of sustainability are pressing but unless there is a clear incentive in sight for them to do so, getting them to join will be difficult, according to an activist with a long experience in helping small independent palm oil farmers to get certified in sustainability.

“Building up an agreement with farmers is the most difficult part because usually, they will first ask about the benefits. One of the benefits that they usually ask is whether the prices of their fresh fruit bunches would change if they get certified,” said Setara Jambi Foundation Director Rukaiyah Rafiq, who is active in helping farmers, including palm oil smallholders, strengthen their organizational skills.


Smallholders, including independent ones, account for about 42 percent of the country’s palm oil-planted surface. However, the productivity of their plantations has remained quite low because of the limited access they have to finance sustainability knowledge and practices, technical assistance and the necessary infrastructure and facilities to enable sustainable cultivation.

Fitrian Ardiansyah, Director of Sustainable Trade Initiative (IDH) Indonesia, which is one of the organizations that assist independent smallholders grouped under UD Lestari in North Sumatra to get RSPO certified, said that the role of smallholders is really important in achieving sustainability in the palm oil sector.

“A sustainable palm oil industry starts from its smallholders,” he told The Palm Scribe.

He said that one of the clear benefits expected from the RSPO-certified farmers is that the productivity of their plantation, generally very low, will increase.

Setara Jambi has so far assisted six farmer groups in Jambi and neighboring South Sumatra. Two of the groups in Jambi were once beginner farmers not bound by any organizations and Setara Jambi has helped them form their own organization. One is in the form of a Farmer Group Union (Gapoktan) and another in the form of a Farmers’ Forum. Meanwhile, the four groups in South Sumatra are already organized into cooperatives.

Rafiq said that the six farmers’ groups covered some 1,478 farmers who managed a total of 2,631 hectares of palm oil plantation. Each farmer has an average plantation of between two and four hectares.

The six group of farmers are now among the few to have received certification from the Roundtable on Sustainable Palm Oil (RSPO.)

The importance of the incentives is also apparent in the interest of the farmers who were already RSPO certified in getting other sustainability certification such as the Indonesia Sustainable Palm Oil (ISPO) and the International Sustainability and Carbon Certification (ISCC) system.

“Up to now, the ISPO scheme has not yet been able to provide incentives such as provided under the RSPO scheme, so that farmers are not so interested in ISPO. Meanwhile, for ISCC, they are also not so interested because the farmers must sell their fresh fruit bunches to companies which are members of the ISCC,” said Rafiq.

 Under the RSPO scheme, buyers pay a premium price for certified palm oil.

Although they sometimes do not go directly into the hands of the farmers, some of the companies which buy from the farmers, process, and export crude palm oil, give back the premium to the farmers in the forms of capital for furthering their sustainability practices.

According to Rafiq, the farmers can also sell their RSPO certificate through the Palm Trace scheme, where the sale is done virtually.

“Of course, we must cooperate with the nearest company so that the efforts taken by the farmers to get certified can get incentives from that nearest company,” Rafiq said.

UD Lestari manager Jumadi, who could not be immediately contacted, had said at the ceremony for the award of the certification to 63 independent palm oil smallholders, that, besides the premium, other incentives to certification was better agricultural practices, including in fertilizing, pest control and harvesting methods.

The Setara Foundation itself initially did not try to help the smallholders get RSPO certified. Its focus was more on providing assistance to build up the institutionalization of the farmers after realizing that the main problems faced by the farmers included low prices, low fruit quality and the lack of a bargaining position.

“We have been assisting farmers since 2008, but only in 2011 did we try to assist farmers in implementing RSPO. For us, the RSPO certification was actually merely giving it a try but it turned out that the farmers were capable of implementing it. Of course, after having gone through a long process and on the field assistance,” Rafiq said.

She said that Setara works with the provincial and district authorities in Jambi and in South Sumatra to strengthen the organizational capabilities of the smallholders and also works with corporations to provide the technical and knowledge support for them to engage in sustainable cultivation.

Of course, it is also necessary to work with donor institutions to help support the cost of the certification process which involves a sum that is not negligible for farmers.

Rafiq said that the length of time needed to get the certification varied depends on the readiness of the smallholders’ groups and can go from between one to two years to three to five years.

The challenges do not stop after the farmers have been certified. “The hardest thing after the RPO certification is to maintain the certificate because the farmers have to implement all rules that they have built themselves. Every year there is a supervision from the audit institution,” she added.

Audits mean costs and according to Rafiq, some of the farmers use the money from their trading of their RSPO certificate to cover the audit costs.

Share This