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n spite of its infamous environmental track record, palm oil has brought considerable prosperity to rural Indonesia.

However, as market demands for sustainable palm oil rise, the future remains uncertain for many small-scale oil palm farmers who are dependent on the cash crop. Often unable to afford the capital required to invest in better agronomic practices, which limit the need for further plantation expansion, some small-scale farmers are at risk of being cut out of the market with little alternatives to turn to.

The majority of small-scale oil palm farmers who use unsustainable farming practices tend to be exposed to shocks, such as price fluctuations, and lack opportunities to diversify their incomes. They tend not to have access to financial resources such as credit, loans, technology, formal land titles or skills to engage in agriculture in more sustainable ways.

As a result, oil palm smallholder yields can be up to 50 percent lower than industry averages, sometimes prompting the communities to boost their income by expanding into new areas, in some cases officially protected zones.

Critically, these farmers are not the only ones responsible for expansion into forests. Ongoing court cases involving large plantation companies, regarding deforestation and the recent forest fires, highlight that the private sector also has work to do.

However, considering small-scale farmers are responsible for around 40 percent of the nation’s palm oil plantations, they do present an important opportunity to improve the industry’s sustainability targets whilst improving livelihoods in rural areas.

A major economic driver for Indonesia, accounting for around nine percent of total export revenue, palm oil is often celebrated for generating millions of jobs across the archipelago.

However, innovation and diversification is drastically required if Indonesia wants to remain competitive in the palm oil market, maintain economic development and drastically reduce the industry’s impact on the environment.

Poverty alleviation and environmental conservation can work hand-in-hand but it requires investment into supporting better practices, efficient technology, complimentary industries and new opportunities.

The government plays an essential role in implementing climate change mitigation policies so that they protect and even benefit the poor. In the case of palm oil, such examples include supporting the replanting of aging crops with more productive seedlings as well as better defining concession and protected areas, which will map and legally recognize the small-scale farmers in the process.

Possible interventions include strengthening social protection or cash transfers to cover interim periods when income streams are affected or creating smallholder farmers insurance. Boosting rural farmer knowledge about good agriculture practice is also drastically needed.

Other efforts include encouraging the practice of growing food crops such as banana, chili, cassava and sugar cane in-between young oil palms to generate extra income.

Meanwhile, encouraging innovative traditional practices such as reusing empty oil palm fruit bunches as organic fertilizer will limit the need to rely on costly, artificial inputs.

From the farmer’s perspective the best way to reduce exposure to risk is through diversification of income sources. The members of a small-scale palm oil farming household will work together to farm the palm oil.

Typically, men cut the palm oil fruits from the tops of the trees and operate heavy machinery while women collect the fruits from the ground and manage the finances.

Different household members, including the mother and father or grandparents, can engage in supplementary ways to stabilize their income and reduce exposure to risk of fluctuating palm oil prices.

Other economic activities include beekeeping and honey production, growing fruits and vegetables, rearing livestock, eco-tourism and trade activities. These types of activities can help development of rural economies and increase women’s empowerment.

These ideas to improve the situation for oil palm smallholders are far from new, in fact many of them are outlined in the UN’s Sustainable Development Goals (SDGs). Those who work in the fields of development and agriculture already know the answers; it now becomes a question of collaboration and genuine commitment.

Successfully extending services and support to an estimated 1 to 1.5 million small-scale oil palm farmers to achieve sustainable standards, and intensify productivity, is not an easy task by any measure.

However, it can be achieved through a wide-scale reform plan that is led by the Indonesian government and supported by multi-stakeholder partnerships and participation.

Both the private sector and civil society are already engaged in work to enhance small-scale farmer capacity. However many of these initiatives are not reaching the government and there is a general lack of coordination between stakeholders. To truly transform the Indonesian palm oil sector, one that is beneficial for the most vulnerable, the need to scale-up these efforts is paramount.

The UNDP, through the global Green Commodities Program, is currently supporting the government-led Indonesia Palm Oil Platform (InPOP), which sets out to convene lessons learned from all stakeholders and develop a National Action Plan (NAP) for sustainable palm oil.

The NAP, which will incorporate the need to strengthen the government’s Indonesia Sustainable Palm Oil (ISPO) standard, aims to devise a strategy that increases sustainability and improves livelihoods at the production end of the supply chain. Such a plan can only be achieved via multi-stakeholder consultation that includes representation of small-scale farmers, recognizing their right to financial security.

Without considering the economic and development needs of small-scale, independent farmers and their communities, we will not achieve sustainability in the sector. The time has come for Indonesia to consider broadening its focus as a primary exporter of palm oil.

This will require rural diversification in palm oil producing regions, including moves toward non-agricultural and other non-primary production activities, while simultaneously investing in the technology and the knowledge needed to truly enable the production of sustainable palm oil.

It is essential the world supports Indonesia in this endeavor by recognizing that small-scale farmers and rural communities are part of the solution, instead of the problem.
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The writer is the deputy country director for UNDP in Indonesia.