Indonesian smallholder oil palm farmers own and/or manage at least 3.1 million ha of oil palm, accounting for more than 40% of the total oil palm area and generating an estimated 35% of total crude palm oil production nation wide. Smallholder farmers are present in all of Indonesia’s palm oil growing provinces, with significant areas of smallholder-managed farms in at least 18 provinces.

 

Based on planted area and number of households involved, the 10 highest priority provinces for considering improvements to policies and programs related to smallholder farmers are: Aceh, Bengkulu, Jambi, Riau, West Sumatra, South Sumatra, North Sumatra, West Kalimantan, East Kalimantan and Central Kalimantan. These provinces all have large smallholder managed oil palm area (>150,000 ha each) and significant numbers of smallholder farmer households (>20,000 households each).

 

This working paper highlighted that smallholder farmer needs vary tremendously with local conditions, but in general most farmers experience five main challenges to some degree, including: organizational, productivity, financial, legal and sustainability challenges.

 

While farmers in some organizational models may be better placed to manage challenges, all models would benefit from more systematic support for smallholder farmers to:
• Reduce transaction costs;
• Increase productivity and livelihood benefits;
• Formalize land tenure;
• Improve access to formal, long-term and affordable credit; and
• Ensure sustainable practice

 

Overcoming challenges noted above could deliver marked improvements to farmer livelihoods. Yet, this does not necessarily translate to more sustainable outcomes, since improving farmer productivity improving farmer productivity does not necessarily mean farmers will reduce their impacts on the environment; it could instead encourage farm expansion into forested areas. Smallholder farmer interventions must therefore be carefully designed, and must be coupled with effective landscape planning to avoid undesired outcomes.