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Who are Smallholders?

Smallholders are small-scale farmers who own less than 20 hectares of planted oil palm. Traditionally, the farmers’ families provide most of the labor and grows other crops for subsistence. Smallholders account for 41% of Indonesia’s oil palm plantations, yet they lack the resources and expertise to improve yield and produce more sustainably.

As a major palm oil producer in Indonesia, we see our investment in people as an essential contribution to sustainable development. This applies not just to our workers and surrounding local communities, but also to smallholders.

In Indonesia, oil palm smallholders are classified into two groups:

Scheme Smallholders and Independent Smallholders

Scheme Smallholders

Scheme smallholders are those operating under a program initiated by the Indonesian Government to encourage the development of smallholder plantations, where plantation companies (nucleus estates) assist and support surrounding community plantations.

Independent Smallholders

Independent smallholders on the other hand are those who are self-financed, self-managed, and self-equipped, but are not bound to any one mill.

Comparison SCHEME
Bounded to a particular mill by contract or credit agreement
Autonomy to work with mill operator or an agent of their choice
Receive supervision and training on planting, crop management techniques by mill managers
Access to schemes or assistance from government agencies, businesses or cooperatives HIGH LOW

Why Smallholders are Key Stakeholders?

There is an estimated number of over 2.6 million smallholders in Indonesia as of 20221. They are critical in making sustainable palm oil the norm. They hold approximately 41% of Indonesia’s oil palm plantations and are a significant group in the palm oil supply chain. This represents 6.4 million hectares in Indonesia, that’s more than twice the size of Belgium.

According to the Palm Oil Agribusiness Strategic Policy Initiative (PASPI), smallholders are projected to manage 60% of Indonesia’s oil palm plantations by 2030. This means that smallholders are a substantial group that must be included in the journey to make sustainable palm oil the norm. Independent smallholders have the potential for increased productivity and better sustainability practices.


1 Tree Crop Estate Statistics of Indonesia

Challenges Faced by Independent Smallholders

Frame 3101

Lack of GAP
(Good Agricultural Practices) knowledge

Frame 3102

Lack of access
to finance

Frame 3103

Poor quality planting materials (historical)

Frame 3104

Lack of access to markets

Frame 3105

Lack of financial literacy and business planning skills

Why is It in Our Interest to Engage Smallholders?

Smallholders represent:

  1. The biggest risk to our NDPE (No Deforestation, No Peat, No Exploitation) Policy
  2. The biggest opportunity for yield enhancement and not land expansion