The challenges of adopting sustainable practices for smallholders by Jan

1. Sustainable practice for
smallholders: the challenges
Symposium Sustainable palm oil: challenges, a
common vision and the way forward
May 2011

2. Outline
● Introduction Solidaridad
● Facts on oil palm smallholders
● Is it really so difficult for smallholders? Case
Indonesia
● Smallholder issues commonly heard
● Conclusion: what do smallholders need?
● RSPO and smallholders
● Palm Oil Producer Support Initiative - POPSI

3. Supply chain initiatives Solidaridad
Supply chain initiatives Solidaridad
1988:
1988: Max Havelaar; fair trade (coffee, fruits)
Max Havelaar; fair trade (coffee, fruits)
1995:
1995: Fairtrade Labeling Organization (global)
Fairtrade Labeling Organization (global)
1996:
1996: Oké banana (fair trade-organic)
Oké banana (fair trade-organic)
1999:
1999: Kuyichi (sustainable fashion)
Kuyichi (sustainable fashion)
2002:
2002: UTZ Certified; CSR label (coffee, tea, cocoa)
UTZ Certified; CSR label (coffee, tea, cocoa)
2006:
2006: RTRS; Responsible Soy
RTRS; Responsible Soy
2008:
2008: membership RSPO; Sustainable Palm Oil
membership RSPO; Sustainable Palm Oil
2009:
2009: Bonsucro; Better Sugarcane Initiative
Bonsucro; Better Sugarcane Initiative
2010:
2010: BCI; Better Cotton Initiative
BCI; Better Cotton Initiative

4. Solidaridad approach

5. Solidaridad approach

6. Pyramid of Change
Solidaridad is active on all levels of the pyramid as systems are
Solidaridad is active on all levels of the pyramid as systems are
complementary. Total approach and dynamics within the pyramid will
complementary. Total approach and dynamics within the pyramid will
only lead to the necessary change for more sustainable supply chains.
only lead to the necessary change for more sustainable supply chains.

7. Solidaridad network organization:
Solidaridad network organization:
● Regional Expertise Centers
● Regional Expertise Centers
☉ Country offices in palm oil regions
☉ Country offices in palm oil regions
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9. Global distribution oil palm
smallholders

10. Facts on oil palm smallholders
● Six million directly employed, of which half in
Indonesia
● ‘Tied’ vs ‘Independent’ smallholders
● Produce 20-30% of global output on 40-50% of
planted area
● Median planted area 2-4 hectares, average yields
2-3 t/ha
● Oil palm is not a traditional smallholder crop
outside West Africa…
● …and in West Africa there is hardly any access to
modern technology and planting material

11. Is it really so difficult for
smallholders?
smallholders?
● Well, it depends
● Situations differ from country to country
● Witin countries, sub-national comparisons show
differentiation
● Equivalent institutions across a country respond in
different ways via causal mechanisms
● Linking state policy, local regimes, corporate
strategies and how change is interpreted locally all
create different outcomes

12. Malaysia
Riau
West Kalimantan
(KalBar)
Jambi
Indonesia

13. Key outcomes
● Smallholder outcomes in Indonesia are largely
influenced by the evolution of state-society-
agribusiness configurations
● State-Regime interests & capacities
● Decentralisation and Reformasi
● Agribusiness attempts to minimize risk
● The challenges for smallholders – tied and
independent – are in general considerable but
scope and agency provide opportunities for
improved livelihood outcomes

14. Variation a key to outcomes
World Bank Poverty & Economic Indicators:
District Poverty Fiscal GRDP per
Headcount Revenue capita
Riau Low High High
Jambi High High High
Kalbar Low Low Low

15. Variation a key to outcomes
Variation over time in:
● State capacity & interest
● Available resources
● Regional taxation and fiscal strength
● donor policy & aid flows
● Decentralization heightened variation
● Many key factors local
● Type of plantation company at the district level
● Private company vs state-owned company

16. Variety key outcomes in KalBar
● Best practice plantation
● Solid plantation profit
● Smallholders credit free within three-four years
● Critical factors:
● Smallholders: leadership, agency & unity
● Reject the 7.5:2 hectare ratio division
● Government desire for this plantation to work
● High quality seedlings; access to fertiliser
● High CPO prices
● Smallholder training executed

17. Key issues commonly heard
● Land tenure issues
● Certifikasi Hak Milik (Land certificates)
Agro-
● Agro-economic issues
● Harga Pupuk (Fertiliser prices)
● Lack of guidance/help on farming
● Infrastructure issues
● Kondisi Jalan (Road conditions)

18. Key issues commonly heard
● Supply chain governance issues
● Janji yang tidak terpenuhi oleh perusahaan (Company
promises not met /misunderstanding)
● Sistem pola yang tidak adil (unfair scheme
arrangements)
● Petani berdasi (literally ‘farmers wearing ties’)
● Bapak angkat to mitra benaran (Role of Cooperatives)

19. Conclusion
● Provision of advice and training to smallholders a
key – technical and organizational
● Oversight and follow-up critical
● Conflict management systems at the local level
● Outreach and implementation monitored more
closely by government

20. Roundtable on Sustainable
Palm Oil
● In 2004, a round table dialogue of
industry, producers and NGOs has
started to address this
● WWF and Unilever were among the
founders, Solidaridad joined in
2008 as a member
● RSPO provides a code for
Sustainable Palm Oil production
● POPSI provides producer support
towards RSPO certification

22. POPSI program
● Set up by Solidaridad for RSPO members
● WWF in advisory role
● Support small farmers and farm workers to apply
good practices according to RSPO
● With technical support, farmers can improve their
skills on soil, crop and pest management
● With organizational support, farmers are able to get
better prices and improve marketing
● In 2009-10, POPSI was active in Indonesia, Malaysia,
Papua New Guinea, Ghana, Brazil and Colombia

23. Tribal communities and
workers,
workers, Sarawak
● 100 tribal community
smallholders
● 1,500 plantation
workers
● Linkage to Keresa:
RSPO-certified palm
oil mill with intl.
clients

24. Palm oil smallholders, Ghana
smallholders,
● With POPSI support, 5,500
farmers are trained
● First 500 certified in 2011,
rest in 2012/13
● Linked to RSPO member
GOPDC
● Three more mills with
outgrowers potentially
interested

25. Cooperatives and
smallholders,
smallholders, Latin America
● Brazil, Colombia,
Honduras
● Cooperative with 120
members and 750
family farms supported
to meet RSPO by 2013
● Another 4,000 ha and
cooperative under
development
● Unilever indicated to
buy CPO from 2012

26. POPSI open for applications
● For RSPO members
● Preferably in supply chain consortium
● Benefits to smallholders and/or workers
● 1-3 year projects
● 40% cofunding by POPSI of overall budget
● In-kind applicant / supply chain contributions
acceptable under some conditions

27. attention!
Thank you for your attention!
For more information contact:
dros@solidaridad.nl
popsi@solidaridadnetwork.org
www.solidaridadnetwork.org/popsi

28. Photo credits
Disclaimer
Efforts have been undertaken to contact the authors of all photo’s in this presentation. However, this has
not been realised for the smallholder pictures obtained from the internet on slides 23-25. Please do not
duplicate these for external use. Photographers that claim copyrights for photo’s on slides 23-25 can get
in touch with solidaridad to have their photo’s properly credited.
Slide 1,8 © WildAsia/POPSI
Slides 4-7, 9, 27 © Solidaridad
Slide 21 © Pieter Sijbrandij/Solidaridad