Smallholders on the forest frontier — Insights from research on oil palm farmers in Indonesia - In conversation with Diana Chalil

How would you define a smallholder?

The official national definition of an oil palm smallholder in Indonesia is a farmer with less than 25 hectares. According to the definition of the RSPO [Roundtable on Sustainable Palm Oil], a smallholder has less than 50 hectares. Both definitions are based on the size of the land.

What different types of smallholders are there?

In our research we distinguish between several types. First, there are smallholders who are part of a company’s plantation scheme, and those who are independent. Second, there are smallholders who are organized and those who are not. Third, there are smallholders who partner with other actors, and those that do not. And, fourth, there are certified and non-certified smallholders. This results in eight categories of smallholders.

What do you mean with smallholders who partner with other actors?

Today, most oil palm farmers are independent, but they often lack resources and skills to improve their agricultural practices. In many areas we now see that companies and NGOs are supporting independent smallholders. We have called these the partner smallholders. We compared three types of partner smallholders: those that receive support from companies; those that receive support from NGOs; and those that receive support from both. We found that the latter group performed best. This is because companies are usually good in providing support in agronomic aspects, while NGOs are usually good in actively engaging smallholders and helping smallholders to organize. The latter is important, as it helps to achieve economies of scale.

What is the objective of these partnerships?

Most of them focus on certification, such as the RSPO certificate. This is especially so when oil palm is produced for the international market. For the domestic market there is a certification programme as well, which will become mandatory for smallholders by 2025. So this is also becoming more important. Certified smallholders cannot produce within areas that are classified as state forest lands.

Part of your research focusses on the South Tapanuli landscape in the province of North Sumatra. Can you describe the landscape?

The area is famous because it is the place where a new species of orangutans was recently discovered. The landscape has a high conservation value. There are four large scale oil palm plantations in the region, and an increasing number of smallholders are cultivating oil palm.

How would you describe a typical smallholder in the landscape?

Smallholders in the area used to cultivate rubber, but since the late 1990s most have converted to monoculture oil palm plantations, because it offered a better and more stable market than rubber. The average size of the landholdings is between two and four hectares.

Are smallholders expanding into the forested areas?

There is a national moratorium on oil palm expansion into state forest land. Although it is not perfect, I would say that it is successful in slowing down expansion. We found that smallholders who receive support to increase their productivity are less likely to expand. This is partly because many of these farmers are located in hilly parts where expansion is quite difficult and expensive, so they prefer to focus on improving productivity within their existing plots.

If current trends continue, what will the landscape look like in 30 years?

If you look at the data since 1996, you see that deforestation rates have been particularly high in the secondary swamp forest zone, and that some of the hills have been cleared, leading to problems such as landslides. Currently, we see that there is a lot of support from the government and donors to help smallholders by increasing their productivity and awareness-raising on sustainable management as part of the national action plan for sustainable oil palm. Annual deforestation rates between 2011 and 2020 were half of those in the between 2006 and 2011. Because of this, I am optimistic that we are in a transition phase, and that areas within the state forest zone will remain forested.

What are the prospects for young boys and girls in the landscape?

You see that many smallholders have started earning higher incomes, enabling them to send their children to school in other areas of Indonesia or even abroad. Some parents prioritize boys to study in higher education. Many of these young people do not return to the landscape to become farmers. Of the young people who stay in the landscape, some are taking up oil palm farming, while others have started experimenting with environmentally friendly agriculture and agroforestry.

Do you think those environmentally friendly farming practices have potential?

Some products that can be grown in agroforestry systems, like citronella oil, may fetch high prices, and can be processed locally. This is especially interesting for farmers who are currently located on the forest border, with limited access to capital. Environmental NGOs have been supporting farmers in this area for several years now. But much more work is needed to make it successful. At the moment, environmentally friendly farming initiatives remain heavily dependent on support from donors, and markets are not yet well developed. It is difficult to set up a new system for production, processing and trade. Clearly, the oil palm system is very well developed, but other commodities don’t have that luxury.

Could smallholders integrate other crops alongside oil palm in diverse agroforestry systems?

There has been quite a lot of research on this, but I don’t think that it is realistic. It neither benefits oil palm nor other crops. You cannot properly harvest oil palm when there are other plants in the way. You need space for a harvesting path, and harvesting fresh fruit bunches could damage other plants growing under oil palm trees.

What needs to be done to ensure a sustainable future for smallholders in this landscape?

We need to improve the productivity of smallholders so they can make a good living, while preventing further expansion into natural forest areas. We also need to support agribusiness systems of other commodities so that they can be as profitable as oil palm. This should offer alternatives to smallholders with land that is less suitable for oil palm. And we need more coherent planning and coordination. Currently, district governments have spatial plans, but decisions about land-use permits in some areas are controlled by national government agencies. Also, alternative funding needs to be found, as some international donors that are active in the area will end their programmes soon.

How can the dependency on such international programmes be decreased?

We need to build capacity among smallholder organizations so they can more effectively support smallholders with good agricultural practices and certification. Next to that, we need to invest in the human resources within district governments. Only then can they decrease their dependency on donor funded projects.  

Diana Chalil is a researcher and lecturer at the Universitas Sumatera Utara, Indonesia, and the founder and coordinator of the Consortium Studies on Smallholder Palm Oil (CSSPO), with members from five universities in Indonesia, Malaysia and Thailand. Her research interests focus on oil palm smallholders within the palm oil industry and value chain, including palm oil certification, bilateral trade, inclusivity, landscape management and smallholder welfare.