ISPO CERTIFICATION STILL BENEFITS SMALLHOLDERS DESPITE CHALLENGES

DECEMBER 9,2021

On Tuesday, 7/12/2021, the Secretariat of the NAP SPO Implementation Team with the support of UNDP SPOI conducted online socialization on the study of the potential benefits of ISPO certification for smallholders.

Since 2011, the government of Indonesia has established policy regarding Indonesian Sustainable Palm Oil (ISPO) Certification as part of its commitment on sustainable palm oil by taking social, economic, and environmental aspects into consideration.

The policy was established due to the expectation of environmentalists that the economic benefit provided by palm oil industry does not necessarily sacrifice social and environmental aspect. Producers could maintain social and environmental aspect if the industry remains profitable, so the balance between these three aspects is very important for the sustainability.

To accelerate the implementation of sustainable palm oil development in Indonesia, the Government published several regulations. One of them is the Minister of Agriculture Regulation No. 38/2020 to update the ISPO certification policy ratified in 2011, said the Head of the Secretariat for the Implementation Team of the National Action Plan for Sustainable Palm Oil (NAP SPO), Dedi Junaedi.

The secretariat of ISPO committee team will also evaluate the implementation of ISPO certification under the legal protection of Presidential Regulation No. 44/2020. Dedi also mentioned that currently, the certification has become mandatory for all palm oil producers, such as corporate plantations, whether large private or state-owned plantations as well as smallholders.

However, until the first quarter of 2020, only around 0.19% of smallholder oil palm plantations have obtained ISPO certification. In 2025, the certification target for 1 million oil palm smallholders will be a challenge, adding complexity of the problem, considering that the same program cannot be applied to all smallholders.

The certification cost is quite expensive, especially for smallholders with relatively low incomes and land area that is far below the minimum scale. Meanwhile, ISPO acceptance on the buyer side is being advocated by the government, especially if there is a need for a premium price for the additional costs and efforts of the certification. Therefore, it is necessary to have a systematic strategy based on empirical conditions to achieve the target plan.

The assessment study was conducted to explore the potential benefits (or incentives) that can be obtained by smallholders as a positive impact of ISPO certification. The results of this study are presented on a policy brief that is expected to be recommendations for the government, companies, development partners, and other multi-stakeholders in supporting palm oil smallholders to accelerate ISPO certification. Therefore, the results of this study need to be disseminated to related parties through meetings.

"The implementation of mandatory ISPO certification is an important step because from 1980 to 2020 there have been many changes. Now the number of smallholders has increased by almost 42% of the total 13 million hectares. This means that the significant change in the number of smallholder groups will also bring significant change for the entire palm oil industry in Indonesia," explained Dr. Diana Chalil from the Consortium Studies on Smallholder Palm Oil, University of North Sumatra.

The study was carried out with two approaches through desk study, also Focus Group Discussions (FGD) and interviews. The desk study was carried out based on series of pre-existing studies from the websites of the relevant institutions. FGDs and interviews were conducted with stakeholders related to the certification process.

Both the desk study and stakeholder consultation have produced information on the smallholders characteristics, the gap between the existing smallholders performance and the conditions that must be fulfilled in the ISPO criteria, the potential benefits if the growers can obtain certification, and the obstacles faced.

One of the findings on the smallholders characteristics and performance is that general plasma and ex-plasma smallholders have more compliance in terms of land status and utilization of certified seeds. However, the plants productivity is lower and the selling price is quite high.

The direct benefits of ISPO certification for smallholders in the findings include improving legality, increasing transparency through the provision of data, improving administration which includes land ownership documents, SOP on documentation and recording.

Furthermore, there are some indirect benefits such as productivity and price that are relatively higher. However, their income is relatively lower because they haven’t been certified for a long time while the targeted productivity and prices have not been reached.

The study also identified several constraints and alternative solutions. One of them is financing support which is an important aspect that determine the certification target for smallholders. In addition, there are other fundamental constraints such as the lack of understanding of growers and stakeholders who consider ISPO not mandatory, low smallholders capacity in preparing documents, low institutionalization, low partnerships, and low market acceptance.

Based on the study, the implementation of ISPO certification for smallholders needs to be carried out in a planned, gradual, and involves all stakeholders. Other important recommendations are better data collection and mapping for the formulation of of measurable action plan, phased planning, and involvement of all stakeholders. In terms of the smallholder’s self-sustain in the sustainability of ISPO certification, it is necessary to have a better supporting system from national and district level.

The dissemination of the study is expected to provide input for the related stakeholders to accelerate ISPO Certification for smallholders.

-----

You can access the policy brief on this link https://bit.ly/ISPOBenefits and watch the recording on https://youtu.be/TS76nmPkz34