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How sustainable certification helps support independent smallholder farmers through the global pandemic.
Jakarta, 23 June 2020: While the spread of COVID-19 has threatened the income of independent oil palm smallholder farmers in Indonesia due to low fresh fruit bunch (FFB) prices, Roundtable on Sustainable Palm Oil (RSPO) certified farmers have found that the sale of RSPO Credits has provided the additional funds and support needed to see them through this difficult time.
In a virtual event that took place last Thursday, titled, “COVID-19’s impact on RSPO certified farmers,” Senior Advisor of the Sustainable Palm Oil Farmers Forum Indonesia (Fortasbi), Rukaiyah Rafik, noted that in addition to low FFB prices, farmers felt the pinch as both palm oil mill and manufacturing activities remain sluggish due to large scale social restrictions, yet fertiliser prices remain high.
“As many independent smallholder farmers do not have the means to transport their FFBs to a mill, they rely on a “middle man” or intermediary business to provide this service, but the restriction in activities and movement due to COVID-19 has impacted their primary source of livelihood as they’re unable to sell or transport their FFBs to a buyer. The pandemic also affects fertiliser stock and input for the farmers’ plantation as well as food prices,” he said.
Fortasbi’s Rukaiyah added that RSPO certified farmers have a strong institution and network to support them, as well as accountability built into the standard. He added that these farmers also have a diverse range of businesses or crops during the pandemic, which further supported their livelihoods.
Secretary General of Palm Oil Farmers Union (SPKS), Mansuetus Darto, shared that at one point during the pandemic, the FFB price dropped below Rp 1.000 per kilogram (or roughly USD $0.07 per kilogram) at the independent smallholder farmers’ level. Meanwhile, the FFB price for plasma farmers (farmers who partner with palm oil-producing companies) was recorded at between Rp 1.200 per kg and Rp 1.300 (USD $0.08-$0.09) per kg.
“The price below Rp 1.100 is difficult for farmers who have more than two children, with their child pursuing higher education, or those who have another family member who is dependent on them, such as their parents. Because of their low productivity, between 1 to 1.2 tonnes per hectare per month, they sold [their produce] to middlemen. They also have a debt burden to the middlemen because the farmers have loans, which have to be repaid during harvest,” he said.
He added that many oil palm farmers have no other sources of income and solely rely on palm oil. A 2018 SPKS study revealed that only 30 percent of farmers have alternative means of livelihood from cultivation, rubber planting, and becoming small traders. Land that was set aside during the New Order era for PIR farmers during the transmigration period, which spans 0.75 hectares, has been converted to oil palm plantation.
Darto also said that farmers were being dragged down due to the increase in fertiliser prices, which are sometimes scarce. “There are no health protocols for farmers/harvesters. Farmers need cash while the transaction process for FFBs for farmers who sell to the corporations is usually processed between one or two weeks after the produce was delivered to the factory or mill,” he said.
RSPO Indonesia’s Smallholder Programme Manager, Guntur Cahyo Prabowo said, “During the pandemic, certification helped support around 6.000 members that make up 30 farmer groups, through the sale of RSPO certified palm oil via RSPO Credits. A total of USD $1.5 million was disbursed to 30 groups of RSPO certified independent smallholder farmers from the transaction of certified palm oil sales between May 2019 and May 2020.” Guntur added that at the time of this unforeseen pandemic, certification proved to be a great asset for farmers when dealing with the uncertainties of the situation. This included requirements for certification such as a strong farmer’s organisation and financial planning, helping to improve their bargaining power during the pandemic.
A farmer representative from the Independent Palm Oil Farmers Association, YB. Zainanto Hari Widodo said that there are no cash transfers (BLT) from the government that are focused on palm oil farmers. “As RSPO certified farmers, we get staple food aid and fertilisers for our members. Assistance for non-members includes health equipment, support for community health centres [Puskesmas] within the association’s area, help to establish a COVID-19 command center and aid for the economically-vulnerable people,” he said.
However, other types of businesses, such as the Small-Medium Enterprise (SME) have also found it hard to market products such as vegetables, fish and other foodstuffs, during the pandemic.
A similar sentiment was shared by Jumadi, a farmer representative from UD Lestari, a farmer business unit. Jumadi said the impact of COVID-19 to the livelihood of farmers and its families is significant as many are afraid and do want to leave their homes due to risk of infection.
Jumadi said that after almost four years being certified by RSPO, there were many benefits that he enjoyed, such as receiving more knowledge on sustainable oil palm cultivation as well as benefiting from additional increase in price from the sales of certified FFBs.
“For the benefit received during the pandemic, the farmers received aid from PT Unilever, including shampoo, soaps and detergent,” Jumadi said. A farmer representative from South Sumatra, Pairan, added that they too enjoyed the benefit of RSPO certification during the pandemic, where the proceeds from RSPO incentives were being used to aid the social activities of COVID-19 prevention efforts for local communities.
The online event was hosted by RSPO and CNN Indonesia and presented several speakers, including RSPO Indonesia’s Smallholder Programme Manager, Guntur Cahyo Prabowo, Senior Advisor of Sustainable Palm Oil Farmers Forum Indonesia (Fortasbi), Rukaiyah Rafik, and Secretary General of Palm Oil Farmers Union (SPKS), Mansuetus Darto.. Farmer representatives from North Sumatera, Jambi, Riau, South Sumatera and Central Kalimantan were also in attendance.
The Roundtable on Sustainable Palm Oil (RSPO) was formed in 2004 with the objective of promoting the growth and use of sustainable oil palm products through credible global standards and engagement of stakeholders. RSPO is a not-for-profit, international, membership organisation that unites stakeholders from the different sectors of the palm oil industry including oil palm producers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation NGOs, and social or developmental NGOs.
Name: Dan Strechay
Position: Global Outreach & Engagement Director
Name: Margareth Naulie Panggabean
Position: Outreach and Engagement Manager Indonesia