Poverty alleviation part of the solution toward achieving sustainable palm oil - UNDP Indonesia Blog
By : Francine Pickup, UNDP Indonesia Deputy Country Director In spite of its infamous environmental track record, palm oil has brought considerable prosperity to rural Indonesia. However, as market demands for sustainable palm oil rise, the future remains uncertain for many small-scale oil palm farmers who are dependent on the cash crop. Often unable to afford the capital required to invest in better agronomic practices, which limit the need for further plantation expansion, some small-scale farmers are at risk of being cut out of the market with little alternatives to turn to. The majority of small-scale oil palm farmers who use unsustainable farming practices tend to be exposed to shocks, such as price fluctuations, and lack opportunities to diversify their incomes. They tend not to have access to financial resources such as credit, loans, technology, formal land titles or skills to engage in agriculture in more sustainable ways. As a result, oil palm smallholder yields can be up to 50 percent lower than industry averages, sometimes prompting the communities to boost their income by expanding into new areas, in some cases officially protected zones. Critically, these farmers are not the only ones responsible for expansion into forests. Ongoing court cases involving large plantation companies, regarding deforestation and the recent forest fires, highlight that the private sector also has work to do. However, considering small-scale farmers are responsible for around 40 percent of the nation’s palm oil plantations, they do present an important opportunity to improve the industry’s sustainability targets whilst improving livelihoods in rural areas. A major economic driver for Indonesia, accounting for around nine percent of total export revenue, palm oil is often celebrated for generating millions of jobs across the archipelago. However, innovation and diversification is drastically required if Indonesia wants to remain competitive in the palm oil market, maintain economic development and drastically reduce the industry’s impact on the environment. Poverty alleviation and environmental conservation can work hand-in-hand but it requires investment into supporting better practices, efficient technology, complimentary industries and new opportunities. The government plays an essential role in implementing climate change mitigation policies so that they protect and even benefit the poor. In the case of palm oil, such examples include supporting the replanting of aging crops with more productive seedlings as well as better defining concession and protected areas, which will map and legally recognize the small-scale farmers in the process. Possible interventions include strengthening social protection or cash transfers to cover interim periods when income streams are affected or creating smallholder farmers insurance. Boosting rural farmer knowledge about good agriculture practice is also drastically needed. Other efforts include encouraging the practice of growing food crops such as banana, chili, cassava and sugar cane in-between young oil palms to generate extra income.