Musim Mas
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By Devane Sharma

Behind the commercial aspects of the agribusiness industry that determine the supply and prices of food around the world are the lesser talked about academics that study ways to make agriculture more sustainable, productive, and inclusive for smallholder farmers. Musim Mas had the opportunity to interview Dr Diana Chalil, Head of the Master’s Program in Agribusiness in the Faculty of Agriculture, Universitas Sumatera Utara, and Indonesia Founder & Coordinator, Consortium Studies on Smallholder Palm Oil (CSSPO).

Dr Diana Chalil

In 2003, Dr Chalil began a long and illustrious career in studying sustainable palm oil supply chains, with a focus on smallholder farmer inclusion. In 2015, she founded CSSPO together with other academic partners. Since 2016, CSSPO has been partnering with the Agricultural Research Centre for International Development (CIRAD), the French think tank and international cooperation organization for sustainable development of agriculture in the tropics and the Mediterranean, conducting joint research projects. CSSPO also manages a training program for oil palm smallholders, engages in replanting programs for Indonesian smallholders whose plantations are no longer commercially viable, and actively participates in the Indonesian Palm Oil Platform. Since 2018, Dr Chalil has been involved in the North Sumatra Sustainable Palm Oil Platform as a scientific member, and in 2023, she became a consultant for the Roadmap Team of Aceh Sustainable Palm Oil.

Q: Could you tell us about your background and what motivated you to enter the agribusiness industry?

I took both my undergraduate and postgraduate courses in agribusiness. I started studying palm oil in my bachelor’s thesis and continued to do so for my doctoral dissertation. During my studies, I found negative perceptions of the palm oil industry that were not based on objective information/data. This motivated me to be involved in providing accurate information to clarify misconceptions. I became more motivated when my colleague and I, together with two other universities from Indonesia (UNJA and Unimal), one from Thailand (PSU), and one from Malaysia (UPM), founded the Consortium Studies on Smallholder Palm Oil (CSSPO) and started working together with CIRAD.

Q: You have many years of experience researching sustainable agriculture, especially in the palm oil industry. What motivated you to specialize in this area?

The palm oil industry presents a multifaceted landscape for a researcher—comprehensive, sophisticated, yet intertwined with persistent challenges. It embodies both constructive and detrimental aspects, offering a fertile ground for exploring research inquiries and potential resolutions. Within the industry, sustainability emerges as a pivotal focal point, encompassing various subjects and analytical levels, from environmental to social issues such as smallholder livelihoods. As my research advanced, I often had more interesting topics and questions to explore. My engagement with the Indonesian Sustainable Palm Oil platform further enriched my understanding and involvement in this critical domain as it promotes the commercial adoption of a sustainability standard. This is very important to ensure that sustainability becomes a “must” rather than an option in the industry.

Q: We read that you teach a summer course called “Inclusive and Sustainable Palm Oil Industry,” among others. Could you tell us about this and what this course aims to achieve?

The palm oil industry serves as a compelling illustration of the intricacies within an agribusiness supply chain. We designed this summer course to include academics, representatives from various universities, NGOs, and industry stakeholders.

This course aims to stimulate discussion on the future trajectory of palm oil sustainability rooted in factual insights, real-world scenarios, and empirical data. It also endeavors to equip participants with the practical application of academic methodologies to evaluate sustainability claims objectively.

Structured around three key components, the course involves online classes that cover the concepts of inclusivity and sustainability, the presentation of empirical cases by experts, field visits to smallholder plantations and mills, and ends with a field trip to an orangutan conservation area to foster appreciation for nature and first-hand observation of orangutans in their natural habitat.

Q: How does the university maintain neutrality and promote a robust debate in this course?

In this course, we encourage free and open discussion. When presenting their arguments, we encourage the participants to use measurable indicators where possible and to draw upon the concepts they’ve learned in their various academic backgrounds.

Q: Sustainable production is predicated on balancing market needs and environmental protection. What are some of the first-hand challenges you’ve witnessed on the ground between stakeholders in the landscape?

The environment is a vital resource as it provides essential ecosystem services and is the foundation for human well-being and economic activities. The latter includes the production of commodities like palm oil which meet the world’s demand for fats and oils.

Indonesia has not developed the palm oil industry effectively, requiring more resources and having lower production. To operate efficiently in the palm oil industry, the producers should have sufficient business scale and technical, managerial, and financial abilities. However, the area of oil palm smallholdings is significantly increasing, and many smallholders lack these abilities and thus need support from other stakeholders. There are at least two challenges in providing said support. First, there is a big gap between the smallholders and larger plantations and downstream companies, which often increases their dependency and risks the sustainability of the smallholdings. Second, some general policies and programs are often difficult to accommodate, considering the heterogeneous nature of smallholders, and exclude groups that are the weakest and most needing support.

Indonesia faces challenges in effectively developing its palm oil industry in terms of improving resource efficiency and yields. Palm oil producers must have substantial business scale and possess technical, managerial, and financial capabilities to optimize production. However, smallholders make up over 40 per cent of production now and are expected to increase both in numbers and in their share of production.

Many smallholders lack the skills to optimize production and require support from various stakeholders, and that is where the challenges lie. Firstly, a significant disparity exists between smallholders and larger plantations and downstream companies, making smallholders wary of working with them. Secondly, it makes it harder for the government to implement policies that benefit all producers, with the vast numbers of smallholders geographically dispersed across the Indonesian archipelago.

Q: You’ve worked a lot with smallholders, including promoting sustainable practices among them. What are some interesting experiences you’ve had working with smallholders?

Education and awareness are essential for driving positive changes in the palm oil industry and influencing future decision-makers, governments, policies, and companies. A well-informed and conscious industry, including smallholders, can contribute to a more sustainable and ethical future of sustainable palm oil production.

Resources and incentives are also essential. Not all bad agricultural practices among smallholders stem from a lack of knowledge. Sustainable practices require enough financial support and incentives to be viable. Without these resources, smallholders become short-sighted and risk-averse, prioritizing short-term gains. The impact of sustainable practices, both in productivity and selling prices, often takes time to be realized and cannot be guaranteed, making it hard for smallholders to get the necessary financing. Therefore, the industry needs the combined support of buyers, traders, processors, and off-takers of palm oil to improve productivity—producing more without expanding land use and while implementing sustainable agricultural practices.