Sustainable Palm Oil for All

Jun 20, 2017

A palm oil plantation in Indonesia's Riau province.



By Christophe Bahuet, UNDP Indonesia Country Director

Heated debates have recently surrounded the palm oil sector in Indonesia and its access to export markets, including the European Union. The issue is crucial for Indonesia as the world’s largest palm oil producer, the largest exporter, and about 16 million jobs depending directly or indirectly on this sector. Palm oil has also become a public issue in many consumer countries. Governments, parliaments and citizens are paying increasing attention to environmental protection and the sustainability of production patterns, which they expect national and international standards to guarantee.

Following the palm oil debate, a statement from the World Trade Organization’s Trade and Environment Committee came to mind: ‘The answer is not to weaken environmental standards, but to set appropriate standards and enable exporters to meet them.’ Although it was released a few years ago about the global issue of sustainable production and consumption, the WTO Committee’s statement seems to bear an extraordinary relevance to the current debate in Indonesia. In its simple phrasing, it may also point at workable approaches to sustainable palm oil, around which consensus can be built.

To be trusted, standards and certification schemes need to be credible and include a transparent tracing/verification mechanism to ensure they are adhered to throughout the supply chain. An inclusive process also matters for various stakeholders to shape and own the principles they would eventually be held accountable for. Weakening standards cannot be the answer. It would weaken credibility on the global market, and translate into lost economic opportunities. However, appropriate standards alone are not the answer either. Perhaps the most important word in the WTO statement is the one underlined here: set appropriate standards and enable exporters to meet them. This combination may be the one on which the future of palm oil in Indonesia and its sustainability hinges.

As part of the efforts made to address the sustainability challenge, the Indonesia’s Sustainable Palm Oil System (ISPO) was introduced in 2011 as the mandatory certification scheme intended to cover all palm oil producers in the country. Recently, the Ministry of Agriculture with UNDP support has taken the lead in analyzing the major differences that exist between ISPO and the Roundtable on Sustainable Palm Oil (RSPO), the world’s largest voluntary certification scheme for sustainable palm oil, which consumers trust most. The Ministry is now working on better aligning the two schemes. The Coordinating Ministry of Economic Affairs has established a task force to revise the principles and criteria of ISPO and strengthen its legal standing through a higher-level decree. This could allow to address dimensions of sustainability that depend on public policies (such as registration, monitoring, training, governance of enforcement), which cannot be properly assessed at the level of mills and plantations that constituted RSPO certified value chains.

In parallel, it is imperative to support producers so that they can meet standards and access markets. This is crucial in Indonesia where approximately half of all palm landscapes are with smallholder farmers. Many of these farmers will have never received the training, or access to basic agricultural requirements including certification-standard fertilizer or seeds. They will be unable to pay for the costs of this new certification, for example land certificates from local Government bodies. Smallholder farmers, if denied certification and access to the formal market, will then be more likely to rely on the informal market, accelerating unlawful deforestation and labor practices – exactly what the Government of Indonesia and its development partners, are committed to prevent. To counter that risk, the Ministry of Agriculture, UNDP, Asian Agri and Tanoto Foundation supported the ISPO certification of a first group of over 300 small holders in Pelalawan, Riau, earlier this year. This first successful certification needs to be expanded further, which will advance both environment protection and poverty eradication.

All the initiatives undertaken will however not reach their full impact without a platform to discuss all complex inter-connected issues, enhance coordination and build consensus. Over the last 18 months, the Forum on Sustainable Palm Oil (FoKSBI)—previously called the Indonesia Palm Oil Platform—has been meeting to achieve precisely this. FoKSBI constitutes a neutral forum where key palm oil stakeholders can share their perspectives, and agree on actions such as support to smallholders or awareness raising on certification standards. FoKSBI is also the platform under which a National Action Plan is being formulated with contributions from experts, non-governmental organizations, government, associations and the private sector.

At a time when almost all the member States of the United Nations, including Indonesia, reaffirm their unshakable commitment to the Paris Agreement, national actions and international cooperation for sustainable palm oil in Indonesia is more needed than ever. Under a global programme for green commodities supported by the Swiss Economic Development Cooperation, UNDP is determined to continue to contribute to this objective together with all stakeholders. Working jointly towards sustainable palm oil must be part of our common response to address climate change. It will also greatly help to achieve the Sustainable Development Goals we are all committed to, protect the planet, and improve life of its inhabitants.

As published on The Jakarta Post, 16 June 2017