Creating an independent smallholder hub in Jambi, Sumatra

Jambi is the 5th largest palm oil producing province in Indonesia, with a total palm oil producing area of more than 500,000 hectares – more than all of Colombia. Besides over 30 mills and estates, there are about 75,000 independent smallholders, who manage over 120, 000 hectares of land. Independent smallholders are palm oil producers that are no longer tied to an estate or Crude Palm Oil mill by supply contracts.

In general, these independent smallholders have oil palm plantations with low quality, low yield varieties (70-90% has ‘Dura’) and they have limited access to knowledge and quality input. On top of this, their low level of internal organization puts them in a weak bargaining position vis-à-vis the middlemen, mills, and input providers. In the past, input providers have deceived the farmers by selling fake fertilizers and hybrid seeds, creating distrust towards service and input providers. As a result, these smallholders are now stuck with low yields and limited means and incentives to invest in their productivity.

Setara Jambi is a local organization that supports farmers to get organized and facilitates them to implement Better Agricultural Practices that can increase their yields and economic returns dramatically. In parallel, the demand for palm oil from sustainable and secured sources is increasing. There is a risk that independent smallholders are further marginalized if they cannot comply with the RSPO and ISPO standards in the near future.

Solidaridad supports the set-up of a ’smallholder hub’ by Setara in the province of Jambi to reach out to the independent smallholders in this province and to improve their internal organization structures, so they can start to benefit from economies of scale. The project starts with a small pilot, in which 407 independent oil palm smallholders will be facilitated in the set-up of a cooperative structure. It is anticipated that the number of participating farmers will increase as the effects of the training program become visible to neighboring communities.

During the project trainings in Better Agricultural Management Practices will be provided by RSPO member PT Inti Indosawit Subur, the closest oil palm company with the smallholder site project and one of the first companies who has certified all their contracted smallholders. The Jambi district government will also be involved in the trainings, via the local District Training Facilitator (Fasda).

This project is co-funded by the Roundtable Sustainable Palm Oil (RSPO) and PT Inti Indosawit Subur (Asian Agri).