Study on Smallholders Incentive for ISPO Acceleration

JULY 4,2021

To explore the potential benefits or incentives available to smallholders because of ISPO certification, the UNDP SPOI facilitated a study to identify any recommendations to various parties in galvanizing support for oil palm smallholders.

ISPO certification is included in the Presidential Instruction 6/2019 regarding the National Action Plan for Sustainable Oil Palm (NAP SPO) and stipulated under Component E, Support for Accelerating the Implementation of ISPO Certification and Increase Market Access for Palm Oil Products. This component also includes programs related to the Implementation of ISPO Socialization for National Stakeholders.

ISPO itself has been started since the enactment of Ministry of Agriculture (MoA) Regulation No 19/2011 and was readjusted in MoA Regulation 11/2015. With the dynamics of sustainable palm oil and to improve its governance and broader acceptance, ISPO was further strengthened through Presidential Regulation No 44/2020 and MoA Regulation No 38/2020 for its technical implementation regulations.

In the Presidential Regulation, it is stipulated that ISPO is mandatory for oil palm smallholders within five years from its enactment. Despite many challenges that will arise from its implementation, the Ministry of Agriculture emphasized that the government is committed to providing priority support for smallholders to carry out the mandate.

The study is an attempt to identify the government's strategic steps to support smallholders in ISPO. This study was carried out in collaboration with the NAP SPO Implementation Team Secretariat and the Consortium Studies on Smallholder Palm Oil (CSSPO), the University of North Sumatra, which performs data mining, analysis, and policy paper writing.

Series of consultations were conducted in June 2021, followed by a multi-stakeholder consultation on 18 June 2021 which brought together interested stakeholders who contribute to the Indonesian sustainable palm oil. To explore ideas, the CSSPO Team raised several guiding questions.

The initial questions in the discussion revolved around mapping and coordinating the mentoring program, which was used as an annual target in achieving ISPO certification until 2025, and who should be the coordinator.

In response to this question, several responses suggested that the Coordinating Ministry for Economic Affairs could hold the general coordination for a broader scope of work. Then the technical coordinator can be carried out by the DG of Plantations, Ministry of Agriculture.

Regarding ISPO certification, this study aims to explore how the enabling conditions could be synergized with the ongoing programmes, such as the Smallholders' Oil Palm Replanting program, the annual program for land certification from the Ministry of Agrarian Affairs and Spatial Planning, as well as the sustainability improvement program for smallholders from donor agencies.

Regarding the national supply chain, questions revolved around whether biodiesel producers could receive feedstocks from ISPO certified palm oil mills furthermore, whether palm oil mills are also required to receive FFB from ISPO certified smallholders at a price set by the Plantation Office.

Apart from ISPO, this study examines how other certification schemes can support each other by conducting a joint assessment on the acceptance of global supply chain certification, such as the RSPO mechanism. In the end, this study also examines the possibility of collecting data on smallholders' readiness clusters.

In the closing session, the discussion concluded that there are at least some challenges in implementing ISPO, namely the necessary concrete steps to accelerate ISPO certification, market acceptance, and incentives.

The results of this study are expected to be completed by August 2021 and be widely published to palm oil stakeholders as a recommendation for support to smallholders towards ISPO certification acceleration.