IDEAS home Printed from https://ideas.repec.org/a/gam/jlands/v11y2022i4p576-d793990.html
   My bibliography  Save this article

Incentives for Palm Oil Smallholders in Mandatory Certification in Indonesia

Author

Listed:
  • Eusebius Pantja Pramudya

    (Institute of Social and Economic Research, Raffles Hills Blok A3 No. 14-15, Depok 16954, Indonesia
    School of Business and Economics, Universitas Prasetiya Mulya, BSD Campus, BSD City Kavling Edutown I.1, Jalan BSD Raya Utama, BSD City, Tangerang 15339, Indonesia)

  • Lukas Rumboko Wibowo

    (Research Center for Population, National Research and Innovation Agency (BRIN), Gedung B.J. Habibie, Jl. M.H. Thamrin No. 8, Jakarta Pusat 10340, Indonesia)

  • Fitri Nurfatriani

    (Environment, Maritime, Natural Resources, and Nuclear Policy, Deputy of Development Policy, National Research and Innovation Agency (BRIN), Gedung B.J. Habibie, Jl. M.H. Thamrin No. 8, Jakarta Pusat 10340, Indonesia)

  • Iman Kasiman Nawireja

    (Department of Communication and Community Development Sciences, Faculty of Human Ecology, IPB University, Gedung FEMA Level 5 Wing 1, Kampus IPB Dramaga, Kota Bogor 16680, Indonesia)

  • Dewi Ratna Kurniasari

    (Research Center for Population, National Research and Innovation Agency (BRIN), Gedung B.J. Habibie, Jl. M.H. Thamrin No. 8, Jakarta Pusat 10340, Indonesia)

  • Sakti Hutabarat

    (Department of Agribusiness, Faculty of Agriculture, University of Riau, Jl. HR Soebrantas Km 12.5, Pekanbaru 28293, Indonesia)

  • Yohanes Berenika Kadarusman

    (School of Business and Economics, Universitas Prasetiya Mulya, BSD Campus, BSD City Kavling Edutown I.1, Jalan BSD Raya Utama, BSD City, Tangerang 15339, Indonesia)

  • Ananda Oemi Iswardhani

    (Institute of Social and Economic Research, Raffles Hills Blok A3 No. 14-15, Depok 16954, Indonesia)

  • Rukaiyah Rafik

    (Forum Petani Kelapa Sawit Berkelanjutan Indonesia (FORTASBI), Jl. Danau Kerinci, RT.05/RW.07, Kecamatan Bogor Tengah, Kota Bogor 16129, Indonesia)

Abstract

The Indonesian Sustainable Palm Oil (ISPO) is a mandatory certification for palm oil plantations based on compliance with Indonesia’s regulations. Its implementation has been slow, particularly for independent smallholders that face problems of complicated requirements, limited capacity, and limited funding. Meanwhile, limited incentives are in place, either in the form of premium prices, ease of regulation, or funding. This article aims to elaborate on the role of incentives and their options in supporting the acceleration of ISPO implementation to ensure and improve the market access of smallholders. It identifies ways to develop incentives to facilitate the acceleration of ISPO certification and alternative financing sources available to support this. The method of this research is based on qualitative methodology using a literature review, policy document analysis, and in-depth interviews with informants from the government and smallholders. The analysis of this article shows that incentives are needed in the form of funding, regulatory measures, technical assistance, promotion, and rewards for good practices to provide better facilitation and financial support for the regulatory compliance in the legal, managerial and financial aspects of the ISPO. These incentives target government and smallholders. Implications for enabling these incentives include the improvement of government coordination, improved understanding of challenges faced by smallholders, and adoption of innovative approaches to manage financial resources, which are crucial to facilitate smallholders’ capacity and organizational improvement.

Suggested Citation

  • Eusebius Pantja Pramudya & Lukas Rumboko Wibowo & Fitri Nurfatriani & Iman Kasiman Nawireja & Dewi Ratna Kurniasari & Sakti Hutabarat & Yohanes Berenika Kadarusman & Ananda Oemi Iswardhani & Rukaiyah , 2022. "Incentives for Palm Oil Smallholders in Mandatory Certification in Indonesia," Land, MDPI, vol. 11(4), pages 1-28, April.
    • Handle: RePEc:gam:jlands:v:11:y:2022:i:4:p:576-:d:793990
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-445X/11/4/576/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-445X/11/4/576/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Glasbergen, Pieter, 2018. "Smallholders do not Eat Certificates," Ecological Economics, Elsevier, vol. 147(C), pages 243-252.
    2. Eric F. Lambin & Holly K. Gibbs & Robert Heilmayr & Kimberly M. Carlson & Leonardo C. Fleck & Rachael D. Garrett & Yann le Polain de Waroux & Constance L. McDermott & David McLaughlin & Peter Newton &, 2018. "The role of supply-chain initiatives in reducing deforestation," Nature Climate Change, Nature, vol. 8(2), pages 109-116, February.
    3. Norhana Abdul Majid & Zaimah Ramli & Sarmila Md Sum & Abd Hair Awang, 2021. "Sustainable Palm Oil Certification Scheme Frameworks and Impacts: A Systematic Literature Review," Sustainability, MDPI, vol. 13(6), pages 1-10, March.
    4. Snyder, Hannah, 2019. "Literature review as a research methodology: An overview and guidelines," Journal of Business Research, Elsevier, vol. 104(C), pages 333-339.
    5. Christian Bux & Erica Varese & Vera Amicarelli & Mariarosaria Lombardi, 2022. "Halal Food Sustainability between Certification and Blockchain: A Review," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    6. Shofwan Al Banna Choiruzzad & Adam Tyson & Helena Varkkey, 2021. "The ambiguities of Indonesian Sustainable Palm Oil certification: internal incoherence, governance rescaling and state transformation," Asia Europe Journal, Springer, vol. 19(2), pages 189-208, June.
    7. Astari, Annisa Joviani & Lovett, Jon C., 2019. "Does the rise of transnational governance ‘hollow-out’ the state? Discourse analysis of the mandatory Indonesian sustainable palm oil policy," World Development, Elsevier, vol. 117(C), pages 1-12.
    8. Otto Hospes, 2014. "Marking the success or end of global multi-stakeholder governance? The rise of national sustainability standards in Indonesia and Brazil for palm oil and soy," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 31(3), pages 425-437, September.
    9. Hutabarat, Sakti & Slingerland, Maja & Rietberg, Petra & Dries, Liesbeth, 2018. "Costs and benefits of certification of independent oil palm smallholders in Indonesia," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(6), July.
    10. Arya Hadi Dharmawan & Dyah Ita Mardiyaningsih & Faris Rahmadian & Bayu Eka Yulian & Heru Komarudin & Pablo Pacheco & Jaboury Ghazoul & Rizka Amalia, 2021. "The Agrarian, Structural and Cultural Constraints of Smallholders’ Readiness for Sustainability Standards Implementation: The Case of Indonesian Sustainable Palm Oil in East Kalimantan," Sustainability, MDPI, vol. 13(5), pages 1-20, March.
    11. Eusebius Pantja Pramudya & Otto Hospes & C. J. A. M. Termeer, 2018. "Friend or foe? The various responses of the Indonesian state to sustainable non-state palm oil initiatives," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 3(1), pages 1-22, December.
    12. Nia Kurniawati Hidayat & Astrid Offermans & Pieter Glasbergen, 2018. "Sustainable palm oil as a public responsibility? On the governance capacity of Indonesian Standard for Sustainable Palm Oil (ISPO)," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 35(1), pages 223-242, March.
    13. Amila Omazic & Bernd Markus Zunk, 2021. "Semi-Systematic Literature Review on Sustainability and Sustainable Development in Higher Education Institutions," Sustainability, MDPI, vol. 13(14), pages 1-45, July.
    14. Schouten, Greetje & Glasbergen, Pieter, 2011. "Creating legitimacy in global private governance: The case of the Roundtable on Sustainable Palm Oil," Ecological Economics, Elsevier, vol. 70(11), pages 1891-1899, September.
    15. Tim Bartley, 2014. "Transnational governance and the re‐centered state: Sustainability or legality?," Regulation & Governance, John Wiley & Sons, vol. 8(1), pages 93-109, March.
    16. Jelsma, Idsert & Woittiez, Lotte S. & Ollivier, Jean & Dharmawan, Arya Hadi, 2019. "Do wealthy farmers implement better agricultural practices? An assessment of implementation of Good Agricultural Practices among different types of independent oil palm smallholders in Riau, Indonesia," Agricultural Systems, Elsevier, vol. 170(C), pages 63-76.
    17. Paul Ferraro & Toshihiro Uchida & Jon Conrad, 2005. "Price Premiums for Eco-friendly Commodities: Are ‘Green’ Markets the Best Way to Protect Endangered Ecosystems?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(3), pages 419-438, November.
    18. Fitri Nurfatriani & Ramawati & Galih Kartika Sari & Heru Komarudin, 2019. "Optimization of Crude Palm Oil Fund to Support Smallholder Oil Palm Replanting in Reducing Deforestation in Indonesia," Sustainability, MDPI, vol. 11(18), pages 1-16, September.
    19. Greetje Schouten & Otto Hospes, 2018. "Public and Private Governance in Interaction: Changing Interpretations of Sovereignty in the Field of Sustainable Palm Oil," Sustainability, MDPI, vol. 10(12), pages 1-15, December.
    20. Yohanes Berenika Kadarusman & Eusebius Pantja Pramudya, 2019. "The effects of India and China on the sustainability of palm oil production in Indonesia: Towards a better understanding of the dynamics of regional sustainability governance," Sustainable Development, John Wiley & Sons, Ltd., vol. 27(5), pages 898-909, September.
    21. van der Ven, Hamish & Sun, Yixian & Cashore, Benjamin, 2021. "Sustainable commodity governance and the global south," Ecological Economics, Elsevier, vol. 186(C).
    22. Ahmad Dermawan & Otto Hospes, 2018. "When the State Brings Itself Back into GVC: The Case of the Indonesian Palm Oil Pledge," Global Policy, London School of Economics and Political Science, vol. 9(S2), pages 21-28, October.
    23. Yohanes B. Kadarusman & Astrid G. Herabadi, 2018. "Improving Sustainable Development within Indonesian Palm Oil: The Importance of the Reward System," Sustainable Development, John Wiley & Sons, Ltd., vol. 26(4), pages 422-434, July.
    24. Euler, Michael & Hoffmann, Munir P. & Fathoni, Zakky & Schwarze, Stefan, 2016. "Exploring yield gaps in smallholder oil palm production systems in eastern Sumatra, Indonesia," Agricultural Systems, Elsevier, vol. 146(C), pages 111-119.
    25. Watts, John D. & Pasaribu, Katryn & Irawan, Silvia & Tacconi, Luca & Martanila, Heni & Wiratama, Cokorda Gde Wisnu & Musthofa, Fauzan Kemal & Sugiarto, Bernadinus Steni & Manvi, Utami Putri, 2021. "Challenges faced by smallholders in achieving sustainable palm oil certification in Indonesia," World Development, Elsevier, vol. 146(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eka Intan Kumala Putri & Arya Hadi Dharmawan & Otto Hospes & Bayu Eka Yulian & Rizka Amalia & Dyah Ita Mardiyaningsih & Rilus A. Kinseng & Fredian Tonny & Eusebius Pantja Pramudya & Faris Rahmadian & , 2022. "The Oil Palm Governance: Challenges of Sustainability Policy in Indonesia," Sustainability, MDPI, vol. 14(3), pages 1-20, February.
    2. Ahmed Zainul Abideen & Veera Pandiyan Kaliani Sundram & Shahryar Sorooshian, 2023. "Scope for Sustainable Development of Small Holder Farmers in the Palm Oil Supply Chain—A Systematic Literature Review and Thematic Scientific Mapping," Logistics, MDPI, vol. 7(1), pages 1-24, January.
    3. Johnson, Adrienne, 2022. "The Roundtable on Sustainable Palm Oil (RSPO) and transnational hybrid governance in Ecuador’s palm oil industry," World Development, Elsevier, vol. 149(C).
    4. de Vos, Rosanne E. & Suwarno, Aritta & Slingerland, Maja & van der Meer, Peter J. & Lucey, Jennifer M., 2023. "Pre-certification conditions of independent oil palm smallholders in Indonesia. Assessing prospects for RSPO certification," Land Use Policy, Elsevier, vol. 130(C).
    5. Ogahara, Zoë & Jespersen, Kristjan & Theilade, Ida & Nielsen, Martin Reinhard, 2022. "Review of smallholder palm oil sustainability reveals limited positive impacts and identifies key implementation and knowledge gaps," Land Use Policy, Elsevier, vol. 120(C).
    6. Watts, John D. & Pasaribu, Katryn & Irawan, Silvia & Tacconi, Luca & Martanila, Heni & Wiratama, Cokorda Gde Wisnu & Musthofa, Fauzan Kemal & Sugiarto, Bernadinus Steni & Manvi, Utami Putri, 2021. "Challenges faced by smallholders in achieving sustainable palm oil certification in Indonesia," World Development, Elsevier, vol. 146(C).
    7. Norhana Abdul Majid & Zaimah Ramli & Sarmila Md Sum & Abd Hair Awang, 2021. "Sustainable Palm Oil Certification Scheme Frameworks and Impacts: A Systematic Literature Review," Sustainability, MDPI, vol. 13(6), pages 1-10, March.
    8. Cordula Hinkes, 2020. "Adding (bio)fuel to the fire: discourses on palm oil sustainability in the context of European policy development," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(8), pages 7661-7682, December.
    9. Dermawan, Ahmad & Hospes, Otto & Termeer, C.J.A.M., 2022. "Between zero-deforestation and zero-tolerance from the state: Navigating strategies of palm oil companies of Indonesia," Forest Policy and Economics, Elsevier, vol. 136(C).
    10. Shofwan Al Banna Choiruzzad & Adam Tyson & Helena Varkkey, 2021. "The ambiguities of Indonesian Sustainable Palm Oil certification: internal incoherence, governance rescaling and state transformation," Asia Europe Journal, Springer, vol. 19(2), pages 189-208, June.
    11. Brandão, Frederico & Schoneveld, George & Pacheco, Pablo & Vieira, Ima & Piraux, Marc & Mota, Dalva, 2021. "The challenge of reconciling conservation and development in the tropics: Lessons from Brazil’s oil palm governance model," World Development, Elsevier, vol. 139(C).
    12. Apriani, Ernawati & Kim, Yeon-Su & Fisher, Larry A. & Baral, Himlal, 2020. "Non-state certification of smallholders for sustainable palm oil in Sumatra, Indonesia," Land Use Policy, Elsevier, vol. 99(C).
    13. Clara Brandi, 2021. "The Interaction of Private and Public Governance: The Case of Sustainability Standards for Palm Oil," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(6), pages 1574-1595, December.
    14. Hamish van der Ven & David Barmes, 2023. "The uneasy marriage of private standards and public policies for sustainable commodity governance," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5161-5173, December.
    15. José Carlos Marques & Burkard Eberlein, 2021. "Grounding transnational business governance: A political‐strategic perspective on government responses in the Global South," Regulation & Governance, John Wiley & Sons, vol. 15(4), pages 1209-1229, October.
    16. Greetje Schouten & Otto Hospes, 2018. "Public and Private Governance in Interaction: Changing Interpretations of Sovereignty in the Field of Sustainable Palm Oil," Sustainability, MDPI, vol. 10(12), pages 1-15, December.
    17. van der Ven, Hamish & Sun, Yixian & Cashore, Benjamin, 2021. "Sustainable commodity governance and the global south," Ecological Economics, Elsevier, vol. 186(C).
    18. Edi Purwanto & Hery Santoso & Idsert Jelsma & Atiek Widayati & Hunggul Y. S. H. Nugroho & Meine van Noordwijk, 2020. "Agroforestry as Policy Option for Forest-Zone Oil Palm Production in Indonesia," Land, MDPI, vol. 9(12), pages 1-34, December.
    19. Verena Bitzer & Alessia Marazzi, 2021. "Southern sustainability initiatives in agricultural value chains: a question of enhanced inclusiveness? The case of Trustea in India," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 38(2), pages 381-395, June.
    20. Somjai Nupueng & Peter Oosterveer & Arthur P. J. Mol, 2023. "Global and local sustainable certification systems: Factors influencing RSPO and Thai-GAP adoption by oil palm smallholder farmers in Thailand," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6337-6362, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jlands:v:11:y:2022:i:4:p:576-:d:793990. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.