The Palm Scribe

The Role of the Private Sector In Helping Smallholders Get Certified

A sustainable production of palm oil is important for smallholders to widen access to markets, especially after the commodity has come under the spotlight and being blamed for promoting deforestation.

Indonesia palm oil industry supports more than 20 million people, yet, almost half of them have land legality issue

The Indonesian government is also currently encouraging its own palm oil sustainability scheme, the Indonesia Sustainable Palm Oil (ISPO) to assure the sustainability of the palm oil industry. However, most smallholders still face many obstacles, administrative and or financial, in obtaining certification.

The matter of land tenure is also a major concern for palm oil smallholders as land titles are required when seeking certification under the ISPO scheme as well as under the Roundtable on Sustainable Palm Oil (RSPO) standards.

Ofra Shinta Fitri, innovation manager with INOBU, a non-governmental organization dealing in environmental issues and which has a long experience in assisting palm oil smallholders in Central Kalimantan, confirmed the matter.

“The percentage of independent smallholders in the Seruyan and West Kotawaringin districts who possess Freehold Titles (SHM) is only around 50 percent while the rest only have land ownership document or even have no document at all,” Fitri told The Palm Scribe.

Another difficulty is in trying to organized smallholders into cooperative or farmer groups, a prerequisite under both ISPO or RSPO schemes. Independent smallholders are much more used to work and live alone and independently and this poses troubles in organizing them.

“There is a need for active assistance to make cooperative management in line with the organizational requirements of RSPO certification standards,” Fitri said.

Many palm oil smallholders are also still unable to meet the existing certification standards, especially those set down under the RSPO scheme. The required material and or production quality levels are usually far above the daily level of the smallholders.

Fitri believes that basically, people were very enthusiastic in getting certification, but it is also a public secret that many smallholders are using below standard seedlings for their plantation because they did not have the necessary assistance or guidance when they purchased them.

“The certification process needs to develop an approach that would allow smallholders to gradually transition into sustainability standards,” added Fitri.

Certification costs also presented the main constraint for palm oil smallholders as the nominal required is quite substantial because of the complexity of the registration and auditing process.

“INOBU’s experience in assisting the Tani Subur village cooperative is that Rp 2.8 million is per hectare is needed to obtain certification. This nominal excludes STDB and SPPL registration costs,” Fitri said referring to the registration for Smallholder Plantation Registration Letter (STDB) and for a Statement of Ability to Manage and Monitor the Environment (SPPL).

Fitri further explained that a government role is needed to overcome this, for example by providing speedier services and facilities for smallholders to get the certification.

Private investment is also deemed important in helping smallholders boost their productivity and sustainable production, The presence of companies in a region can also balance the need for environmental conservation as well as economic and or social needs.

“We see that companies have important roles in providing capacity building for the smallholders, especially those who are part of their supply chain,” she added,

Musim Mas Communication Manager Carolyn Lim is aware of the importance of palm oil smallholder participation in the company’s palm oil production process. “We actively involve smallholders in our supply chain, to help boost their harvest and to apply our sustainable planting policy,” Lim told The Palm Scribe.

Musim Mas is working with the Internasional Finance Corporation (IFC) in assisting smallholders to get certified through the Indonesia Palm Oil Development Scheme (IPODS) by providing financial assistance or training.

The program, however, also faces constraints. “We are facing complex s that are actually beyond the capability of our company, such as land tenure that needs government intervention, inviting smallholders to join our program also needs our commitment and time,” Lim said, adding that smallholders tended to not be easily willing to be put in the same group with others who they did not know.

In order to overcome this, Musim Mas is employing a more personal approach to try to understand the difficulties faced by palm oil smallholders, even though this process takes a long time, “Grouping farmers can take between one week to 10 months, Mutual trust is an important factor in running our program,” Lim said.

Lim also added that cooperation with the government was just as important in assuring the success of the program and she said that the company is committed to safeguarding the program no matter how long it would take.

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