Importance of Smallholder Inclusivity in Indonesia Introduction to Smallholder Inclusivity The focus of the discussion is on smallholder inclusivity in Indonesia’s palm oil industry. Distinction between two main types of smallholders: Schemed Smallholders: Have formal agreements with companies. Receive assistance in managing their oil palm plantations. Relationship with the company is regulated by legal contracts, providing a structured support system. Independent Smallholders: Defined as those without legal agreements with companies. Autonomy to manage their own plantations, typically ranging from a half-hectare to a maximum of 20 hectares. Freedom to sell their crop to any buyer, granting them more flexibility in the marketplace. Characteristics of Independent Smallholders Size and Distribution Approximately 2.6 million independent smallholders in Indonesia. Control about 42% of the total planted palm oil area, a significant figure illustrating their role in the industry. Growth Projections Proportion of land controlled by independent smallholders is expected to increase to around 60% by 2030, indicating their expanding influence. Current Challenges Productivity Gaps: Independent smallholders currently achieve yields that are 30-50% lower than those of larger companies. Lack of Access to Resources: Often lack access to training and resources necessary for sustainable farming practices. Historical Context Many smallholders transitioned from rubber or other crops to palm oil based on neighborly examples. Often used inferior planting material, leading to lower yields. Key Issues Facing Independent Smallholders Agricultural Knowledge Deficiencies Many smallholders imitate practices seen in their surroundings without understanding their purpose or benefits. There is a critical need for educational programs focusing on sustainable agricultural practices. Financial Barriers Access to finance is a significant hurdle, as smallholders require funds for essential inputs like fertilizers. Fertilizer constitutes about 60% of palm maintenance costs, making financial access crucial for productivity. Regulatory Challenges Regulations like the EU Deforestation Regulation (EUDR) pose barriers, often excluding independent smallholders from supply chains due to compliance difficulties. Efforts to Support Independent Smallholders Inclusion and Training Initiatives Programs are designed to include independent smallholders as partners in sustainability efforts. On-the-ground training is conducted by dedicated teams led by experienced managers, such as Rudman. Focus Areas Increasing Productivity: Efforts aim to enhance yield per hectare to improve incomes and livelihoods. Market Access: Supporting certification processes (e.g., RSPO, ISPO) to provide better market opportunities for smallholders. Environmental Protection: Initiatives educate smallholders on the safe use of herbicides and sustainable farming methods. Challenges and Solutions in Engagement Communication and Education Educating smallholders about sustainable practices and the rationale behind them is essential for fostering change. Training programs emphasize good agricultural practices and financial literacy. Building Trust and Relationships Establishing trust with smallholders can take considerable time due to historical neglect and exclusion from industry benefits. Continuous engagement and collaboration with stakeholders, including other companies and government entities, is crucial. Benefits of Supporting Smallholders Economic Responsibility Musim Mas recognizes the importance of independent smallholders, accounting for about 40% of its supply chain. Ignoring this segment would be detrimental to both the company and the smallholders. Sustainability and Long-Term Success A commitment to sustainability is underscored by the company’s policies against deforestation and exploitation. Supporting smallholders is seen as a pathway to enhance productivity and environmental responsibility simultaneously. Collaborative Approaches The organization acknowledges the necessity of collaborative efforts with other industry players to achieve large-scale impact. Initiatives like the Train the Trainer Smallholder Hub are designed to empower local extension officers to educate smallholders effectively. Future Directions Capacity Building The goal is to empower smallholders to become self-sustaining and manage their own businesses effectively. Emphasis on building economic capacity ensures smallholders can thrive without ongoing dependency on external support. Collective Responsibility A call for a collective effort from all stakeholders to address the challenges faced by independent smallholders. The focus is on developing sustainable business models that benefit both smallholders and the broader palm oil supply chain. People, Planet, Profit: A Circular Need Core Principle: The interconnectedness of people, profit, and the planet underscores the necessity of maintaining balance among these elements. People: Their well-being and economic needs are paramount. Profit: Essential for sustaining livelihoods, yet contingent on responsible practices. Planet: Environmental stewardship is crucial; neglecting it jeopardizes both people and profit. Building Mutually Beneficial Relationships Smallholders Focus Emphasizing the importance of developing relationships that benefit independent smallholders, ensuring their active participation in the industry. Encouragement: Advocating for others to engage in this effort, recognizing existing companies’ initiatives while calling for broader involvement. Key Terminology The notion of “mutual trust, mutual respect, and mutual benefit” is vital for fostering successful partnerships. Win-Win Scenario: A relationship must benefit all parties; otherwise, collaboration will falter. Time and Trust in Relationships Investment in Time Establishing trust is a time-intensive process that cannot be rushed or artificially accelerated. On-the-Ground Presence: Deploying people to live within communities fosters trust through consistent engagement and commitment. Consistency is Key Aid and support must be delivered reliably to reinforce trust with smallholders. Mutual Benefit Requirement: If benefits are skewed toward one party, the relationship lacks sustainability. Collaborative Efforts and Shared Responsibility Collective Action The challenges faced require cooperation among diverse stakeholders—government, NGOs, and businesses. Shared Burden: Working together lightens the load, highlighting the importance of collective responsibility. Commitment to Smallholders Success is defined by empowering independent smallholders to become effective business operators. Training Initiatives Capacity Building Implementing programs like “train the trainer” for village extension workers to enhance the skills of smallholders. Iterative Learning: Education should build on foundational knowledge, akin to university-level progression. Respect for Intelligence Recognizing that a lack of formal education does not equate to a lack of intelligence; there is untapped potential within the non-literate population. Empowering Women and Youth Women’s Empowerment Program Launched to harness the potential of women in smallholder farming. Central Role: Women’s involvement is vital for family stability and community health. Youth Engagement Addressing the decline in youth interest in the agricultural sector, identifying ways to make it appealing. Technological Integration: Training youth in technology (e.g., drones for mapping and data analysis) to stimulate interest. Data Collection and Measurement of Success Importance of Data Data collection is essential for assessing the effectiveness of initiatives and tracking improvements in farming practices. Trust in Data Sharing: Smallholders must trust organizations before sharing data; relationships play a crucial role in this process. Collaboration with End Users Engaging Buyers Involving companies like Mars and Nestle in collaborative efforts strengthens the industry. Constructive Dialogue: Moving beyond criticism to foster cooperative solutions for sustainable practices. Women Empowerment Program Project Overview Linda leads the Women Empowerment Program, focusing on providing training and capacity building for women in the agricultural sector. Community Collaboration: Partnering with local universities and health professionals to offer health and nutrition training. Training Focus Areas Health and Nutrition Providing essential knowledge for women, recognizing their role in family well-being. Financial Literacy Emphasizing the importance of financial management skills for women to enhance family income and life quality. Home-Based Business Training Educating women on entrepreneurship, expense tracking, and product marketing. Commitment to Women’s Empowerment Scalable Impact The vision is to create a supportive platform for women and expand the program through collaboration with stakeholders. Training Reach Successfully trained approximately 500 women in Riau within the current year. Reinforcing Women’s Roles in Agriculture Hiring Practices Increasing the employment of young women within the organization to foster better communication and representation. Men’s Attitudes Encouraging men to support women’s empowerment initiatives and change cultural perceptions. Documentation and Training Environments Visual Record Keeping Taking photos to document training sessions and community engagement. Learning Atmosphere: Conducting training in informal settings (e.g., under trees) to create a comfortable learning environment for smallholders. Smallholders Program Significance of Smallholders Highlighting the challenges faced by smallholders in Indonesia: Smallholders play a critical role in local economies but often face significant obstacles that impact their livelihoods. Providing Food for Families: Many smallholders rely on their crops to feed their families, making agricultural success paramount. Education for Children: Financial limitations restrict the ability to fund education, impacting the future of their children. Caring for Loved Ones: Health care and support for elderly family members are additional burdens that smallholders must manage. Common Concerns These fundamental issues are central to the lives of many smallholders, driving their agricultural practices. Struggles with food security, educational access, and healthcare intertwine, influencing decisions on crop management and market engagement. HRSA Cross Mission The organization invites stakeholders to join them on a journey towards sustainability through their smallholders program. Focus on Smallholders: Smallholders own less than 20 hectares of oil palm and comprise approximately 40% of Indonesia’s oil palm plantations. This demographic is vital to the palm oil supply chain, with their contributions directly impacting national and global markets. Characteristics of Independent Smallholders Independence from Corporations Independent smallholders are not affiliated with any specific company, allowing them to be flexible in their agricultural practices. Access to Knowledge: Many independent smallholders lack access to essential agricultural knowledge. Without proper training, they struggle to manage and replant their crops effectively, leading to decreased productivity. Financial Limitations: Financial challenges are pervasive among smallholders. Limited access to credit and resources hinders their ability to invest in improving crop yields and adopting sustainable practices. Commitment to Support Smallholders Filling the Gaps HRSA Cross is dedicated to addressing the challenges faced by smallholders through comprehensive support. Program Components: The smallholders program consists of various modules: Good Agricultural Practices: Training that covers sustainable farming methods and crop management techniques. Financial Literacy: Education on budgeting, saving, and accessing financial resources to improve financial management. Personal Nutrition: Programs aimed at enhancing dietary knowledge and food security among smallholder families. Skill Development By acquiring these skills, smallholders can enhance crop yields, explore alternative income sources, and improve their overall quality of life. Skill development not only aids in immediate agricultural success but also contributes to long-term economic stability. Integration into Sustainable Supply Chains The program aims to connect smallholders with sustainable palm oil supply chains. Increased market access and selling opportunities are critical to ensuring smallholders receive fair prices for their crops. By fostering sustainability, smallholders can participate in a growing global market that prioritizes ethical sourcing. Collaboration and Impact Past Successes HRSA Cross has a proven track record of developing and implementing smallholder programs. Partnerships: Collaborations with organizations like the International Finance Corporation have engaged over 35,000 smallholders throughout Indonesia. These partnerships amplify the program’s reach and effectiveness, providing diverse resources and expertise. Geographical Reach The program impacts smallholders across several regions, including: Aceh: A region with significant potential for sustainable palm oil cultivation. Riau: Home to many smallholders engaged in palm oil production. North and South Sumatra: Key areas where smallholders contribute to local economies. West and Central Kalimantan: Regions that emphasize biodiversity and sustainable land use. Biodiversity Focus Given the rich biodiversity in these areas, the program emphasizes minimizing negative impacts on wildlife. Efforts are made to align agricultural practices with conservation goals, protecting local ecosystems while supporting smallholder livelihoods. Capacity Building and Training Extending Training Plans to extend training initiatives to local government agricultural officers. Knowledge Transfer: Agricultural officers will share their expertise with independent smallholders. This collaborative approach ensures that smallholders receive guidance tailored to local conditions and needs. Smallholders Hub Approach Collaborative Framework HRSA Cross partners with district governments and invites other organizations to work together on practical, hands-on projects. Commitment to Sustainability: This collaboration demonstrates a shared commitment to sustainable palm oil production. Aligning with sourcing strategies reinforces the importance of sustainable practices in supply chains. Collective Goals The initiative aims to: Reduce deforestation through responsible agricultural practices. Advance sustainable practices among smallholders, enhancing their ability to thrive economically. Improve their livelihoods by integrating them into broader economic frameworks. Smallholder Prosperity and Market Access Improving Yields and Profitability The program focuses on enhancing the yields and profitability of smallholders. Facilitating Access to International Markets: By improving productivity, smallholders are better positioned to meet international demand. Regulatory compliance is crucial, addressing both local and global standards. Regulatory Compliance Meeting both regulatory and voluntary requirements in Indonesia and those set by international buyers is essential for market access. Training programs aim to familiarize smallholders with necessary compliance measures to enhance their competitiveness. Support for Sustainable Practices Landscape and Jurisdictional Approaches Advocating for collaborative efforts that promote sustainable palm oil production. Deforestation-Free Supply Chain: Emphasizing the need for sustainable sourcing strategies that do not contribute to deforestation. Partnerships with local governments, civil society, smallholder farmers, and businesses are crucial to achieving shared objectives. Community Collaboration Local engagement is pivotal in promoting sustainability and economic development. Working alongside communities ensures that initiatives are culturally relevant and widely supported. Program Success and Collaboration Collaborative Success The program has thrived due to the cooperation of multiple stakeholders. Alignment with Policy Pillars: The initiative aligns with four policy pillars: Improving Livelihoods: Directly enhancing the economic conditions of smallholders. Enhancing Environmental Impacts: Promoting sustainable land use and conservation. Fostering Stakeholder Relationships: Building trust and collaboration among various actors in the industry. Encouraging Innovation: Supporting new ideas and practices that contribute to sustainability. Smallholders as Key Players Landscape Transformation Smallholders are pivotal in driving landscape transformation and shaping the future of the palm oil industry. Their active participation in sustainable practices influences broader environmental and economic outcomes. Government Engagement The involvement of local government officials, such as elected bupati (district heads), underscores the importance of leadership in collaborative efforts. Supportive Policies: The program supports the establishment of policies that benefit independent smallholders. These policies help smallholders obtain land titles and access training, fostering security and growth. Addressing Opposition and Inclusivity Navigating Challenges Acknowledging the historical opposition from campaigning NGOs towards oil palm, the program demonstrates that collaboration can yield positive outcomes. Efforts focus on transparency and building trust with stakeholders to foster productive relationships. Inclusivity Model The project involves engaging NGOs to find mutually beneficial solutions rather than fostering adversarial relationships. By including diverse perspectives, the program enhances its impact and supports broader community goals.