CORPORATE SUSTAINABILITY CERTIFICATION AND SMALLHOLDER INCLUSION IN INDONESIAN OIL PALM SUPPLY CHAINS

Keywords: Sustainability, certification, tropical region, Indonesia, Palm oil, smallholders, inequity
Abstract Type: Paper Abstract

Abstract

The Roundtable on Sustainable Palm Oil (RSPO) is the leading sustainability certification system in the palm oil industry but has been adopted mostly by large-scale growers, raising concerns that smallholders, who account for almost 50% of palm oil production, do not have equitable access to markets demanding sustainability. Yet, certified mills that run by these large companies may themselves help smallholders achieve certification or exclude smallholders that don’t meet sustainability standards. Through a timeseries analysis of RSPO audit reports for a sample of certified Indonesian oil palm mills (n = 88 mills), I addressed questions about the inclusion of smallholder farmers into supply chains flowing to actors opting into voluntary sustainability certification. My results suggest that smallholders contractually bound to the company (“tied” smallholders) comprised a substantial portion of oil palm fruit supply to RSPO certified mills (26% of total production). Certification rates for these tied smallholders increased significantly with time since initial mill certification. While corporate commitment to smallholder certification was important to overcome barriers to smallholder certification (e.g., lack of evidence for land tenure), factors such as the type of smallholder scheme and the era in which it was developed were important for defining these barriers. Independent smallholders contributed a small proportion of certified mill fresh fruit bunch (FFB) supply (3%), but I found no evidence that these producers were excluded from certified mill supply chains. While industrial producers are facilitating certification for tied smallholders, the additional benefits of such mill level certification for tied smallholders remain uncertain.