The Palm Scribe

Strong Government Role is Key in Bringing Sustainability to Oil Palm Smallholders

Attacks and criticism against Indonesia’s palm oil sector have so far zeroed in on large corporations while overlooking smallholders who manage a sizeable chunk of the country’s oil palm plantation. But getting them to join the path of sustainability is far from easy, and this required a strong government leading role, experts are saying.

“The government, or the state, must be present in encouraging and facilitating the establishment of farmer institutions,” said Ermanto Fahamsyah, Secretary General of the Forum for the Development of Sustainable Strategic Plantations (FP2SB).

“They (smallholders) have to be encouraged to gather into groups. Who should do this? The government, that is clear,” he said, adding that Sustainability certifications for farmers are only given to groups, not individuals.

Smallholders, especially the independent ones, not only live spread out, far from each other but also have weak organizational experience or skills. Fahamsyah also said that many of the farmers had bad past experiences with organizations, making them reticent to join one. 

Speaking to The Palm Scribe, Fahamsyah said that by the government, he meant a number of ministries, such as for agriculture and also for cooperatives, but more importantly the operational offices of both ministries at provincial and district/municipal level.

Fahamsyah, who is also a law lecturer at the Jember University and is actively involved in efforts to strengthen the Indonesian Sustainable Palm Oil scheme as well as in preparing a draft bill on a plantation, said that in some areas, plantation companies must also play a role but the initiator must remain the government.

“The government must act as the initiator and can be supported by plantation companies. The engine must be from the government,” he said, while for scheme palm oil farmers, their partner plantation companies must play the supporting role, for independent farmers it could be the companies operating the mills with which the farmers are in partnership.

Chairman of the Board of Experts of the Indonesian Farmers Association (HKTI), Agus Pakpahan, believed that developing farmers’ institutions was part of the duties of the state, in this respect, the government.

“This duty is just like having to build bridges or highways…this is where our biggest challenge is. Waiting for the awareness and political will of the government in building and investing in farmers’ institutions,” he said. The government should view support for the establishment of farmers’ institutions as a necessary investment just as for infrastructure, he added.

For oil palm farmers, a role of the government was indeed crucial in getting farmers certified, according to Narno who chairs the Indonesia Forum for Sustainable Palm Oil Farmers (FORTASBI). However, he also said that corporations and non-governmental organizations (NGOs) should also pitch in.

“The government must be present in promoting and providing training for certification,” Narno said in an e-mail to the Palm Scribe. His organization gathers farmer organizations or groups that have already obtained sustainability certifications —From the Indonesian Sustainable Palm Oil (ISPO), the Roundtable on Sustainable Palm Oil (RSPO), and the International Standard on Certification and Carbon (ISCC).

“All companies or mills that purchase farmer’s Fresh Fruit Bunches must assist (farmers). It should not be just bought and sell,” he said, adding that NGOs were mostly more familiar with the needs and capability of farmers as well as the challenges they faced, as they were usually on hands in the field.

Narno added that because of the importance of certification, all palm oil farmer organizations must prepare themselves in order to get certified. Individual palm oil farmers, especially independent ones needed to join or organize themselves into farmers’ groups, cooperatives or join an Association of Farmer Groups (Gapoktan) at their village as existing systems only dealt with the organization, not individuals, he said. FORTASBI, Narno said, is providing training for farmers to help them get certification.

Pakpahan said that in Indonesia, as was the case for most developing countries, there was a low awareness about the importance of associations of farmers. “The weak nature of these institutions/organizations are seldom realized as evident in the dismal amount of resources allotted for strengthening these farmers’ institutions/organizations,” Pakpahan told the Palm Scribe in an email..

In Indonesia, the world’s top producer, exporter and consumer of palm oil which supplies about half of global demand, smallholders manage about 40 percent of the country’s 14.7 million hectares of oil palm plantation. In the face of continuously rising demand for palm oil, the importance of smallholders is also expected to rise further and they are estimated to manage 60 percent of the country’s oil palm plantation by 2030 according to the Palm Oil Agribusiness Strategic Policy Initiative (PASPI).

But many of them, especially the independent ones, cultivate oil palm without support from the government or companies and have remained mostly left out of the country’s sustainability drive. Access to sustainability certificate that is limited to farmers’ organizations/groups, only compound the matter further

Citing October 2018 market data, The Roundtable on Sustainable Palm Oil said that the total number of smallholder groups holding its certification stood at these groups gathered a total of numbered in total 110,691 smallholders and out of that, only 5,901 were independent ones. These figures accounted for a total of 354,220 hectares, of which independent smallholders managed 26,659 hectares. The total surface of a certified plantation was equal to only about 7.5 percent of the estimated 4.7 million oil palm plantation managed by smallholders in Indonesia.

The Indonesian Sustainable Palm Oil (ISPO) scheme has no similar data and only reported that by end of 2017 it had issued sustainability certificate to one association of independent oil palm farmers, two cooperatives of independent farmers and four cooperatives of scheme palm oil farmers. Another 450 certificates were issued to oil palm companies. ISPO figures by mid-December showed that its certification covered 3.099 million hectares of oil palm plantation big and small, or about 21 percent of the country’s some 14.7 million hectares of oil palm plantation.

Fahamsyah said that by organizing themselves into groups or by joining groups or organization, farmers would most importantly have a stronger bargaining position.  

According to Pakpahan, the establishment of farmers’ organizations or institutions will create various incentives for farmers to go on the path of sustainability. Besides better access to markets and various facilities, training, and financing, they would also lead to higher revenues, a better future, more security, and developing business, that could not have otherwise been obtained without being in an organization.

Establishing farmer’s institutions or organizations was far from being easy, not only because of the scale of their plantations usually small but also because of their disparate locations. They also do not have proper access to information and the means to organize themselves. Organizations also needed capable and able leaders. 

“Of course, the government needs to encourage or facilitate the birth of leaders among farmers who will become leaders who push farmers to establish, develop and maintain their own institutions,” he said.

Companies, should also assist, bearing in mind that better, progressive farmers are intangible social assets for them and thus helping to develop and strengthen farmers’ organization should not, therefore, be seen as a burden, he added.

Fahamsyah said that getting farmers on the path of sustainability was in the interest of the government and plantation companies, especially when international markets demanded strict traceability requirements for the palm fruits that produce the palm oil. Therefore, they needed to invest, including in strengthening the organizational capacity of the oil palm farmers.

Share This