Increasing global focus on sustainable palm oil (SPO) initiatives has led to discussions of smallholder integration at the bottom of the supply chain. In 2019, the Roundtable on Sustainable Palm Oil (RSPO) introduced a new standard for independent smallholders. Meanwhile, through Presidential Regulation no. 44 of 2020, the President of Indonesia recently made Indonesian Sustainable Palm Oil (ISPO) mandatory for smallholders by 2025. While both certifications aim to improve smallholder inclusion, millions of palm oil independent smallholders face difficulties in attaining certification. This study examines the barriers that these smallholders face in pursuing the regulatory process prior to certification process and how they affect smallholder inclusion in sustainable palm oil initiatives.
The study finds that limited access to information regarding SPO certifications, a lack of understanding of regulations concerning land, and limited financial support may hinder independent smallholders from pursuing regulatory compliance. Facilitation can help farmers in addressing these issues; however, at the local level, access to facilitation is unequal. The findings show that the inequality is influenced by three factors, namely local institutional arrangement, land status and legality, and practicalities, must thus be concerned when attempting to improve facilitation opportunity. Furthermore, the current centralised licensing system that has been adopted at the local level limits smallholders’ ability to engage with the legal process; this is mainly due to technical and practical issues that arise in navigating convoluted regulations and bureaucracies.
Furthermore, farmers are facing environmental challenges to differing degrees, which prevents independent smallholder groups from being able to fulfil pre-certification requirements. Thus, from a practical point of view, procedural justice required to incorporate independent smallholders into sustainable palm oil initiatives has not yet been achieved.