Towards a sustainable business model for rubber agroforestry in Indonesia


Authors: Elok Mulyoutami, Dia Mawesti, Triana, Edi Purwanto and Atiek Widayati

Indonesia - 2024

ISSUE No.: 62


Language: English


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Agroforestry systems, particularly rubber agroforests, are crucial for Dayak communities in Indonesia, providing economic benefits and vital assets for their livelihoods. Two common types in Simpang Dua sub-district are tembawang (traditional fruit gardens) and rubber agroforests. Both have flourished for generations but they now face threats of conversion due to declining rubber prices and the oil palm boom. Tembawang is considered more resilient due to better protection of tenure rights under local customary law and its greater provision of socioeconomic benefits. In some instances, rubber agroforests are only maintained because of their deep rooted social and cultural importance, but they have potential to still be economically valuable. Rubber agroforests can provide a diversified income, offering resilience against volatile rubber markets, and although oil palm provides higher income in the short term, rubber agroforests can provide higher income over the entire system cycle.

Long-term financing is essential to improve yields and product quality, to support smallholder rubber agroforests, but obtaining this type of financing is difficult. Obstacles include low rubber prices, poor-quality latex, a lack of productivity of agroforestry crops and low attention from investors, financiers, and markets. Non-commercial financial support, including technical support, could help strengthen farming practices and market-based instruments, including carbon payments, could help stabilise farmers' income. The expansion, however, of large-scale oil palm plantations has shifted the rural labour force from rubber smallholders to plantation workers. Efforts to address these challenges include the establishment of a rubber processing and collective marketing unit, UPPB, to improve market access and prices for smallholder farmers. Founded in 2022, the unit aims to arrange collective marketing and provide technical capacity for farmers to meet the specifications of Standard Indonesia Rubber. By aggregating rubber slabs, farmers can earn up to 25% higher prices than individual farmers, but irregular supplies from farmers and low prices are affecting their success. Despite facing challenges, local farmers' groups remain resilient in organising themselves to improve their systems with the support of NGOs. Commitment from government and private sector stakeholders is additionally needed to further promote sustainable and inclusive rubber agroforestry businesses. 

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