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By Carolyn Lim

Smallholders in Indonesia make up over 40% of oil palm planted areas and are an integral part of the Musim Mas Group’s supply base, directly and indirectly. Musim Mas leads Indonesia’s most extensive and innovative independent smallholders’ program. Over 40,700 smallholder farmers have been trained under this program, and they represent planted areas of over 78,300 hectares. Over 3,500 have achieved the Roundtable on Sustainable Palm Oil (RSPO) certification, and 1,600 have received the Indonesian Sustainable Palm Oil (ISPO) certification.

Here are three reasons why we will continue to source from smallholders to meet the triple bottom line of Planet, People, and Profit.

Planet: Smallholders Hold the Key to Stopping Deforestation

There is an estimated number of over 2.6 million oil palm smallholders in Indonesia as of 2022. This number is set to rise to 60% more smallholders by 2030. To make sustainable palm oil the norm, independent smallholders are a critical group that needs to be engaged. Independent smallholders have the potential for increased productivity and better sustainability impacts.

However, these smallholders face many barriers and challenges toward better productivity. Smallholders often lack access to quality planting material and technical advice and find it difficult to secure loans.

Smallholders facing lower yields might resort to clearing forests to increase their livelihoods. They may rely on slash-and-burn techniques, often the lowest-cost practice.

Musim Mas has developed and implemented programs to support independent oil palm smallholders since 2015. We assist them in adopting efficient farming techniques by bringing training to them, with modules covering good agricultural practices (GAP) and No Deforestation, No Peat, No Exploitation (NDPE).

People: Smallholders form the Backbone of Indonesia’s Development Agenda

According to the World Bank, around 43% of Indonesia’s population resides in rural areas, and nearly 29% of the Indonesian workforce works in the agricultural sector. Primary agricultural production accounted for 13.7% of GDP in 2020.

Around half of Indonesian farmers in the agricultural sector are smallholders – earning an average of US$3.2 per day and are vulnerable to climate and price shocks.

The Indonesian government estimates that the palm oil sector has lifted millions out of poverty thanks to industry growth over the last three decades.

Today, palm oil represents roughly 14% of Indonesian exports, mostly made of refined and processed palm products, making it the second largest export from the archipelago nation.

Growing oil palms and harvesting their fruits provides a significant source of income for around 3 million smallholder farmers who depend partly or solely on palm oil for their livelihoods. Oil palms can be harvested year-round, so their cultivation provides families with a steady source of income.

Profit: Smallholders are the key to the future growth of the palm oil industry

Smallholder farms provide a large proportion of the food supply in developing economies, and they have to be part of any solution for achieving the higher food production required to feed the world’s projected 2050 population of nearly 10 billion people.

With limited land expansion for new oil palm plantings, increasing smallholder yields is essential for increasing the total production of palm oil.

Additionally, two or three decades after their establishment, many smallholder oil palm farms will require replanting soon. Replanting offers a unique opportunity to redesign farms, close yield gaps, and secure livelihoods without sacrificing more forest.

Providing opportunities for improved incomes, industrial development, and, ultimately, resilience, palm oil is integral to the economic development of Indonesia.

Conclusion

Smallholders are an integral part of any responsible sourcing strategy, given the long-term opportunities that smallholders present to the triple bottom line.

Regulations should aim at supporting and integrating them as a priority. Regulatory changes such as the European Union Deforestation Regulation (EUDR) should be designed with a long-term view. While the EUDR might exclude deforestation from the EU market in the short term, it will not stop deforestation or create the conditions for a durable development pathway for small farmers. Smallholders face the burden of proof as they cannot meet the rigorous traceability and legality requirements. They will most likely be excluded from the EU market.

Certification schemes such as RSPO and ISPO have prepared a better future for oil palm farmers. The EUDR needs to recognize and build upon the work of the RSPO and ISPO. Musim Mas believes that recognizing the existing standards of the RSPO will be more impactful in encouraging the uptake of sustainable palm oil production. Incentivizing the uptake of RSPO certification among smallholders will contribute to halting deforestation. Since the smallholder program started, the Group has been onboarding independent smallholders for the certifications.

Over the years, Musim Mas has gone beyond training smallholders directly to include landscape-based collaborations. Musim Mas’ six Smallholder Hubs unite smallholders, palm oil dealers and refiners, off-takers, governments, and civil society to consider sustainable land use across broad landscapes. Musim Mas will continue to invest in farmers, as it is the right thing to do for long-term sustainability and profitability.

 

 

By Devane Sharma

How We Train Independent Smallholder Farmers

The adage “Give a man a fish, and you feed him for a day. Teach a man to fish and you feed him for a lifetime” is a principle so well-understood that its origin is contested the world over. Yet, the importance of facilitating self-sufficiency in food security is far from reality. The World Economic Forum reports that smallholder farmers produce about a third of the world’s food supply but lack the “financial, technical and technological support they need to thrive[1].” We believe that our smallholder curriculum will equip our smallholders with the skills they need for a lifetime.

Oil palm smallholders make up about 40% of planted area. Independent ones particularly, lack the resources to produce sustainably. Our comprehensive training program covers both the hard and soft skills that enable independent smallholders to improve their livelihoods.

The program typically spans close to a year with its modules spread out to meet the availability of the farmers across a number of regencies in Sumatra and Kalimantan in Indonesia. Over the years, Musim Mas’ program has also grown to become Indonesia’s largest independent smallholder training program.

Curriculum Overview

Formulated with support from the International Finance Corporation (IFC), a member of the World Bank Group, Musim Mas’ Smallholder Program was first developed to equip smallholders with skills that would align them with the Roundtable on Sustainable Palm Oil (RSPO) Principles and Criteria. It is structured into topics on Environmental issues, Business Management, and Social issues.

Over the years, Musim Mas has evolved its program to reflect prevalent issues raised by the smallholders, including encouraging alternative livelihoods such as the planting of other crops. This is especially important in the palm industry as oil palm crops take approximately 3 years to start bearing fruit. During this time, smallholders need alternative sources of income.

The duration and delivery may differ for different groups as the program is always tailored to suit the knowledge of the participating farmers, and the conditions in each regency. This is necessary as conditions in Sumatra can be vastly different from that of Kalimantan, among other factors.  The program is administered on a village-wide level, in a mixture of classroom and field sessions. Classroom lessons are delivered in a village meeting hall, known locally as a Balai Desa, or sometimes in the farms of the smallholders.

Also, depending on the facilities available, the classroom sessions are delivered as presentations with projection facilities are available. Otherwise, the group’s trainers use posters.

After the lessons are completed, Musim Mas trainers would arrange field visits to the smallholder plantations to assist with implementation.

Musim Mas’ Smallholder Training Program in Action

Perspectives from a Smallholder Farmer

An interview with Mr. Kateni, a smallholder farmer

During a recent training session, Musim Mas’ sustainability team obtained the feedback of a smallholder farmer who participated in the program, Mr. Kateni from the Rokan Hilir Regency in Riau, Indonesia. Mr. Kateni manages an oil palm plantation that is 3.5 hectares in size and on the sidelines, he and his wife sell fritters.

Said Mr. Kateni “I have been an oil palm smallholder farmer for 20 years. As Musim Mas’ program came from a private company, I was initially wary about it. However, I saw that the group is genuine in the training. I heard from other farmers that Musim Mas was also helpful for implementation issues we face post-program.”

A big portion of the training curriculum is on the hard skills the smallholders need to improve their production sustainably. An example of this is appropriate weeding. “I used to treat all weeds as bad and used herbicides but Musim Mas’ program taught me that some weeds are actually good and beneficial for the crops so it’s better to mechanically remove the bad weeds such as Dicranopteris linearis. I also learnt how to conduct leaf and soil sampling to apply the right fertilizer types and quantities,” said Mr. Kateni.

Soft skills like financial literacy are just as important. Many smallholders are unbanked and without formal land deeds necessary to secure loans for fertilizers which are typically the biggest cost component they face. Without fertilizers, their yields tend to be significantly lower. Musim Mas’ program teaches them the principles of financial planning, log book keeping, and provides information on the Government subsidy program by Palm Oil Plantation Fund Management Agency (BPDPKS).

Indonesia’s largest Independent Smallholder Training Program

From its launch in 2015, Musim Mas’ Smallholder Program has since become Indonesia’s largest for independent smallholders.

In 2020, the group expanded its program to a train-the-trainer basis for local agricultural officers, known as Village Extension Officer (VEO) in Indonesia. This serves to provide capacity building for the VEOs who can then go on to train even more smallholders

As of January 2023, the group has trained over 40,000 independent smallholders and over 370 VEO trainers, representing a combined total of over 84,500 hectares of land.

Said Rob Nicholls, General Manager of Programs and Projects, Musim Mas, “There are an estimated 3 – 4  million smallholder farmers in Indonesia. The nation is the largest producer of the commodity which is used globally in just about everything around us- as much as half of packaged goods in the supermarkets.[6] While Smallholders do not supply directly to Musim Mas, the group will continue growing its training program for Smallholders and Village Extension Officers, as it considers small farmers key to achieving sustainability across the palm oil industry.”

 

[1] https://www.weforum.org/agenda/2022/09/smallholder-farmers-key-achieving-food-security/#:~:text=The%20600%20million%20smallholder%20farmers,24%25%20of%20gross%20agricultural%20area

[2] RSPO: Roundtable on Sustainable Palm Oil

[3] ISPO: Indonesian Sustainable Palm Oil

[4] HCV: High Conservation Value

[5] HCS: High Carbon Stock

[6] https://www.wwf.org.uk/updates/8-things-know-about-palm-oil

Speech by Senior Manager of Corporate Communications, Carolyn Lim, at NUS Global Asia Institute’s Wee Cho Yaw Business Forum 2023.

In the thick of the haze that engulfed Southeast Asia in 2015, I received a random call on my landline who said, “Why are you working for an evil palm oil company?

The stigma for the palm oil industry is bad enough that it’s seen as “a sin industry” alongside gambling and tobacco.

However, people who work in evil industries are often in a position to do valuable things. Swapping from cigarettes to less risky products is a net gain for health. Changing from chopping down trees to developing zero deforestation strategy is a net gain for climate action.

Today I want to clarify three misconceptions about palm oil.

1. We need to feed the world with a productive crop for global food security

Oil palm is a uniquely productive crop. On a per hectare basis, oil palms are 6-10 times more efficient at producing oil than temperate oilseeds such as rapeseed and sunflower.

If oilseeds were to replace palm, it would require at least 50 million additional hectares of prime farmland to produce the same amount of edible oil.

Ensuring everyone has access to an affordable diet sustainably is one of the most significant challenges that humankind faces today.

The question is not to ban palm but to ask ourselves: How do you grow oil palm sustainably?

2. We’re committed to zero deforestation in our operations and beyond

Over the years, we’ve worked with our suppliers, peers, civil society groups, and local governments to reduce deforestation and tighten the standards.

Indonesia supplies about half of the world’s palm oil. These days, 80% of the country’s refining capacity is run by companies that have pledged “No deforestation, no peat, and no exploitation”, or NDPE for short.

Although Indonesia’s forests are shrinking, the pace has slowed sharply in recent years compared to other tropical countries. In 2021 it fell for a fifth straight year, down by a quarter compared with 2020, according to the NGO World Resources Institute (WRI).

Strikingly, and for the first time, rises in the price of palm oil since 2020 do not appear to have caused more deforestation in Indonesia.

3.  We’re not “a big business” crop

Another misconception is that palm oil is overwhelmingly a “big business” crop. There are about 4 million smallholder growers, nearly all of whom farm individual plots.

In Indonesia, the largest palm oil-producing country, smallholders account for 40% of the total planted area.

We have the most extensive independent smallholders program in Indonesia, working in areas outside our operations to train smallholders.

The fruits of our labor were made possible today because we’ve worked very hard in the past. We had only 10 on the team when I joined the group in 2012. Over the last decade, we’ve grown more than 10 times to about 150 full-time staff working on the Musim Mas sustainability team.

To all the critics of palm oil, if you want to change the world, join an evil palm oil company first.