Smallholders—defined by the RSPO as working on a plantation of less than 50 hectares (ha)—account for 30% of the world’s palm oil production and 40% of land coverage used for palm oil cultivation. Large producers and mill operators are increasingly engaging with smallholders for a number of reasons:
- Expansion into African and Latin American markets, where oil palm smallholders dominate the industry
- Demand for segregated certified sustainable palm oil (CSPO) requires smallholder certification to enable suppliers to meet time-bound commitments
- Government incentives and regulations for smallholder engagement
- Corporate Social Responsibility (CSR) initiatives to improve sustainability and reputation
- Legal requirements and schemes such as Indonesia’s plasma scheme
Independent smallholders are self-financed, managed, and equipped and are not bound to any one mill. They may deal directly with local mill operators of their choice or process their own palm oil using personal or community manual palm oil presses (more common in Africa).
Schemed or associated smallholders
Schemed or associated smallholders are structurally bound by contract, a credit agreement or planning to a particular mill. They do not choose which crop they grow, are supervised in their planting and crop management techniques, and are often organised, supervised or directly managed by the managers of the mill, estate or scheme to which they are structurally linked.
Government agencies, businesses, or cooperatives can help oil palm smallholders in a number of different ways, including providing seed stock, fertilisers, pesticides, training, and loans as needed. Under the Indonesian plasma scheme, businesses may develop the land first and then distribute it to local communities to manage and harvest their own oil palm trees as smallholders. In return for this assistance, smallholders commit to selling their crops to the company at a set price to be processed at the company’s nearby mill, with a proportion of any loans received deducted from the revenue.
Certification and RSPO engagement
Under the RSPO certification scheme, palm oil mills and smallholders must provide a plan to be fully certified within three years.
The RSPO Smallholders working group advocates greater support for smallholders within the RSPO by working with smallholders to inform them of sustainability issues, developing certification procedures and protocols customised for smallholder needs, including for group certification, and finding ways to provide financial assistance for independent smallholders to cover the cost of certification.
Through certification, smallholders can increase their yields and reduce the negative impact of their activities on ecosystems through improved management practices, while improving their wellbeing. Smallholders who are certified by RSPO can access the growing market for certified sustainable palm oil and help global consumer goods companies meet their commitments to sustainable palm oil.
The costs involved in RSPO membership, auditing, and implementing best practices may make it difficult for palm oil producers and mill operators to motivate smallholders to become certified. The RSPO Smallholder Support Fund (RSSF) helps make certification possible through supporting the costs for training, project management, HCV and SEIA Assessments, audit costs, tools and technique development for smallholders. The fund has so far helped 10,987 smallholders controlling 55,031 hectares of land, including the recent certification of 2,700 smallholders under the group name ‘Sapta Tunggal Mandiri’ (STM). These independent smallholders account for the production of around 92,000 metric tonnes of certified fresh fruit bunches (FFB) from over 5,500 hectares of land in South Sumatra, Indonesia. Four of the seven village cooperatives that make up this group were formerly associated with Wilmar’s PT Tania Selatan mill, who also supported these farmers through sustainability training and resource support to achieve certification.
SAWIT is a new initiative working to identify and foster breakthrough ideas that help independent smallholder farmers produce palm oil sustainably. The initiative, run by The Oil Palm Smallholders Union (SPKS), the Indonesia Business Council for Sustainable Development (IBCSD), and the U.S. Agency for International Development (USAID), seeks innovative solutions to help equip independent smallholder farmers in Indonesia to adopt more effective farming practices that increase productivity, meet sustainable palm oil standards and reduce deforestation.
Henkel and BASF are collaborating with the development organization Solidaridad to support a project in Indonesia working with smallholders to improve their standards of living whilst making them eligible for RSPO certification. The 5-year project covers an area around 16,000 hectares and will reach around 5,500 farmers through direct training on sustainable farming methods and ways to improve crop yields.
The Wild Asia Group Scheme (WAGS): Implementing Capacity Building for Independent Smallholders case study provides examples of some of the challenges experienced by smallholders as well as the approaches and resources that can be used to try to address those issues.
The Reforming of extension services to improve palm oil milling and waste management case study developed by the Anjong Young Farmers Group in Cameroon provides examples of the challenges that smallholders may face in getting access to palm oil mills and how farmers’ cooperatives can help them overcome these barriers. In another case study, Overcoming Challenges in Certifying Smallholders, Simon Lord of New Britain Palm Oil describes the company’s efforts to certify all of its smallholders.
The key issues are addressed in the reports: Towards sustainable palm oil: a framework for action, Towards better practice in smallholder palm oil production, and Investing in Oil Palm- An Analysis of Independent Smallholder Oil Palm Adoption in Sumatra, Indonesia.
- Case Studies
- Further Information
- Fires in Indonesia: Causes, Costs and Policy Implications
- Food, Fuel, or Forests? Charting a responsible U.S role in global palm oil expansion
- How does GreenPalm work for independent growers and smallholders?
- Investing in Oil Palm: An Analysis of Independent Smallholder Oil Palm Adoption in Sumatra, Indonesia
- Mongabay news articles on palm oil
- Oil Palm Expansion in South East Asia: Trends and implications for local communities and indigenous peoples
- Palm Oil Action News Articles
- Palm Oil and Indigenous People’s in South East Asia
- Participation and power in Indonesian oil palm plantations
- Priorities of Smallholder Oil Palm Producers in Ika Local Government Area of Delta State: Implication for Agricultural Extension Service in Nigeria
- Profitability and Sustainability in Palm Oil Production
- Rights and Resources Initiative
- RSPO Members List
- RSPO Principles and Criteria for the Production of Sustainable Palm Oil 2013
- RSPO Smallholders Task Force
- SAWIT Challenge
- The Sustainable Agriculture Network
- Toward Sustainability: The Roles and Limitations of Certification
- Towards better practice in smallholder palm oil production
- United Nations Declaration on the Rights of Indigenous Peoples
- WORLD BANK GROUP FRAMEWORK AND IFC STRATEGY IN THE PALM OIL SECTOR
- WWF Statement on the required characteristics of sustainable palm oil initiative
- WWF Video – Sustainable Palm Oil and Smallholders
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