The Cost of Sustainable Palm Oil:
Should an Indonesian smallholder farmer get RSPO certified?
Mr. Hanif must seek certification for sustainable practices to continue selling palm oil to his current mill but he wonders if the benefits of RSPO certification outweigh the costs.
, , and
Indonesia is the world’s largest producer of palm oil, a popular commodity found in a wide range of food and cosmetic products all around the world. Palm oil production has skyrocketed in recent years due to increasing demand and, as a result, deforestation in Indonesia has accelerated to make way for new and expanding plantations. Though palm oil agriculture has proved detrimental to Indonesia’s forests, it has improved the quality of life in rural villages throughout the country, making the road to sustainability unclear.
The Roundtable for Sustainable Palm Oil (RSPO) is a non-governmental association of stakeholders in the palm oil industry that aims to promote sustainable palm oil through a market-driven certification scheme. Though well established in the palm oil community, there is ongoing debate about the fundamental effectiveness of the RSPO in preventing deforestation and protecting biodiversity, as well as criticism of its social track record. For the time being, the RSPO remains a flagship certification scheme in the industry and is thus an organization that stakeholders throughout the supply chain—including smallholders—find themselves dealing with.
The RSPO claims its certification provides access to new markets, but the certification process is time-consuming and costly. Mr. Hanif is a smallholder in Kalimantan whose mill has recently committed to purchasing only RSPO-certified palm oil. Now, he must decide whether to pursue RSPO certification or find a new mill to sell to. The decision may impact his ability to fund his son’s schooling in the capital, Jakarta.