Presented by Herry Purnomo (Director of Indonesia Country Programme, CIFOR-ICRAF; IPB University) at "A nature-positive trade for sustainable agriculture supply chains and inclusive development", Jakarta, Indonesia, on 26 - 27 Sep 2023

1. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
26-27 SEPTEMBER 2023
Presented at the Regional Stakeholders Consultation in Asia: A nature positive
trade for sustainable agriculture supply chains and inclusive development
Borobudur Hotel Jakarta, 27 September 2023
Roadmap for Sustainable Palm Oil Trade
to Address Green Trade Initiatives and
the Climate Crisis in Indonesia
Results of GCRF TRADE Hub Roundtable Discussion, Policy Dialogue and Workshop in Indonesia by
TRADE Hub Indonesia research team at CIFOR-ICRAF, IPB University and CCSF UI
HERRY PURNOMO AND SONYA DYAH KUSUMADEWI

2. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Background: Sustainable trade of palm oil
• In Indonesia, TRADE Hub focuses on palm oil
– beside of coffee and wildlife trade.
• Our findings suggest that:
• Sustainable oil palm in Indonesia is mostly
defined as no-deforestation and
employment.
• Trade and governance matter to achieve
sustainability of oil palm sector in Indonesia.
(Purnomo et al., 2022 and 2023)

3. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Background: Needs join efforts producers and consumers
Our findings also suggest that:
• Reconciling environment-economy outcomes in oil palm development is possible by join
efforts of producing and consuming countries.
• Green trade initiatives can improve product sustainability, however there is a need for
intervention to avoid economic loss as impact.
(Purnomo et al., 2020, Purnomo et al., 2022)

4. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Background – reconciling economy and ecological outcomes of oil palm development
Increasing biodiversity and carbon storage in monoculture system
Tree Island on
oil palm – IPB
University &
EFforTS/CRC990

5. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Background – addressing social impacts: framing and financing for smallholders
▪ Oil palm smallholders are
connected to various aspects
and areas of sustainable
development – and so its
mapping and frame.
▪ Financing needs to be tailored
to the needs of smallholder
farmers. Such as the Farmers
for Forest Fund (4F) proposed
by Indonesia’s smallholder
farmer’s union.

6. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Roadmap for Sustainable Palm Oil Trade to
Address Global Green Trade Initiatives and the
Climate Crisis in Indonesia
This roadmap is part of synthesis study of TRADE Hub project and involve key and relevant
stakeholders in the study.
Stakeholder
consultation
Policy Dialogue
and workshop
for the roadmap
in April 2023
Case study EU
Deforestation-
free regulation:
Roundtable in
December 2023
TRADE Hub
Indonesia studies
since 2020

7. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Our first process with key stakeholders:
Roundtable discussion in December 2022

8. Topic on concern about EUDR in
Indonesia
Challenges or concerns Opportunities Potential pathways
Technicality
Country deforestation risk
benchmark
The due diligence processes will be
differentiate based on benchmark set
according to deforestation risk
assessment of producer countries by
EU. It is necessary to apply
transparent, fair, and robust method
that recognize national context.
Indonesia has established national
forest monitoring system and other
relevant monitoring system e.g.
deforestation, carbon project registry
etc.
Align methods for deforestation risk
assessment benchmarking with
existing national system and
considering national achievement.
Due diligence procedure
There is need more clarity on the
technical procedure for due diligence
processes. The establishment of new
procedure or certification can be
disadvantaging the producer’s side in
terms of cost.
Indonesia has applied mandatory
certification system for sustainable
palm oil (e.g. ISPO), as well as
participated in the voluntary
certification e.g. RSPO, ISCC.
Integrate existing sustainable palm oil
certification with the due diligence
procedure, including recognizing the
national mandatory system.
Compliance
Compliance for vulnerable group
Deforestation-free criteria can create
barrier for vulnerable group to
comply (e.g. small company, dan
smallholders) due to legality and
traceability issue.
Government of Indonesia with
support of stakeholders has pushing
various efforts under the National
Plan for Sustainable Oil Palm as the
main framework that also strengthen
by jurisdictional approaches at sub-
national level. The legality and
traceability have been prioritized
issue in Indonesia.
If Indonesia can improve
achievement in sustainable palm oil
production, it is possible to increase
Indonesia’s palm oil competitiveness
to adapt and comply with EUDR and
enlarge its sustainable palm oil
marketing to EU.
Key take away from the roundtable discussion: Align, integrate, improve

9. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Our second process with key stakeholders: High-level policy dialogue and roadmap workshop in April 2023

10. Key takeaway from
the policy dialogue:
The pathway
→ reconciliation
among priorities
→ more
communication
and more
collaboration.

15. Key takeaway:
Common vision
and action tracks

16. Action tracks Status/gaps Ways forward Roadblocks Road ahead (s)
#0 Common understanding
on sustainability (Additional
action track)
No common sustainability
concept so far e.g., among
regimes/sector, among
actors.
Build and harmonize sustainability concept,
especially among consumers and producers that
reflect each other priorities.
How to harmonize sustainability concept
among different priorities?
How the common concept can be
disseminated and translated to be understood
by all stakeholders with different capacity?
Collective action through multi-
stakeholder communication and
collaboration should be strengthen, and
empowering weak stakeholders to
improve their understanding.
#1 Sustainable consumption Indonesia is largest exporter
and consumer of palm oil in
the world.
In 2022, 41% production
goes to domestic market
(biodiesel and goods
manufacturer industry
(cooking oil industry,
oleochemical)), and the rest
(59%) is for export market.
While market preference is beyond producer’s
control, as palm oil is consumer-driven commodity,
the sustainable consumption can be promoted by
providing sustainability information in the product,
mainstreaming sustainability in the derivatives
industry and public procurement to create more
demand for sustainable palm oil.
Promoting sustainable consumption should
starts with providing sustainable products
with accountability framework.
Various initiatives for sustainable
production in Indonesia have already in
place and can be an advantage to address
challenges to improve sustainable
consumption.
#2 Production system To push sustainable
production, the Government
of Indonesia has issued a
national action plan for
Sustainable Palm Oil (RAN
KSB) and mandatory
sustainability standard
(Indonesia Sustainable Palm
Oil, ISPO).
Smallholder certification
rate is still low both for
mandatory or voluntary
standards.
Ensuring sustainable practices is implemented by
small- and large-scale producers, as well as advancing
implementation of existing strategies and policies
including realization of certification (mandatory &
voluntary)
Main issue is lack of capacity of smallholders
to implement sustainability practices. Apart of
technical challenges, there are institutional,
and governance challenges those constraining
various efforts in implementation of
sustainable production. Most important
challenge is smallholder land legality. More
than 1 million ha of oil palm area owned by
smallholder is inside state forest area that is
considered as illegal.
There are efforts from stakeholders to
achieve sustainable practices in palm oil
production despite many challenges.
Harmonization and integrating various
efforts seem to be a key to optimize the
results and impacts. On the other hand,
smallholders need to be supported and
empowered.
#3 Markets The supply chain of the palm
oil trade is long and
complex, lot of trade
barriers along the supply
chain in Indonesia.
Lack of direct access to
market for smallholders.
To address and avoid trade barriers along the supply
chain and carrying the sustainability transformation
costs together.
Main challenge for smallholder is lack of
financial and technical capacity to increase
productivity, value-added, and promote
collective actions (e.g., forming groups)
especially for independent smallholders.
Integration and harmonization for
common accountability measures,
development/operationalization of
incentive mechanism, and supporting
weak stakeholders to address trade
barriers.
The pathway: action track #0 – action track #3

21. The pathway: action track #4 – action track #7
Action tracks Status/gaps Ways forward Roadblocks Road ahead (s)
#4 Benefits The benefit sharing along
the value chain actors is
still uneven. Smallholders
receive lower benefit,
while large corporation
still receive higher share
due to the complex value
chains.
To distribute fair benefit sharing for actors
among palm oil supply chain.
Distribution of benefits may
reflect distribution of costs
among the actors, each actors
has different capacity e.g., lack
of government
funding/allocation, lack of
financial capital and access to
finance smallholders.
To provide funding availability to support improving
sustainable business capacity of smallholders and
encourage farmer-private sector collaboration.
#5 Fair system As market-driven
commodities, sustainable
transformation costs are
solely burden to the
producers.
To ensure fair distribution of costs and risks
burden for sustainable transformation.
Different capacity of actors
may influence fair distribution
of costs and risks, as well as
free rider practices on the
ground (land allocation,
business implementation, and
marketing) can be constraining
the efforts.
Fair incentive and disincentives system.
#6 Access to Finance
(Additional action track)
In Indonesia, there are
several credit schemes for
smallholder farmers,
however there is still
challenges for the
smallholders to access the
funding especially related
to paperwork
requirement.
To provide better access to existing financing
scheme and/or create alternative financing
scheme for smallholder farmers.
Land legality is the main
roadblock for smallholder’s
farmer to access the existing
financing scheme.
Lack of smallholders’ capacity
in business and institution.
• To optimize implementation of existing credit
scheme by integrating with capacity building
programs for smallholder farmers.
• To create alternative scheme e.g., PES for
forest protection, blended finance.
#7 Communication
(Additional action track)
There are already
government-led national
multi-stakeholder
platform for sustainable
oil palm in Indonesia e.g.,
FOKSBI
• To balancing bottom-up and top-down
communication.
• To optimize existing multistakeholder
platforms at national level.
• To create global multi-stakeholder dialogue
that different priorities of market and
producer countries.
Different interests among
actors and information often
use as power.
Strengthening existing multi-stakeholder platforms
and improving fair dialogue at international level.

26. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Key ways forward:
1. To increase or create demand for sustainable palm oil. While market preference is beyond producer’s
control, as palm oil is consumer-driven commodity, the sustainable consumption can be promoted by
providing sustainability information in the product, mainstreaming sustainability in the domestic
derivatives industry and public procurement to create more demand for sustainable palm oil.
2. To ensure sustainable practices is implemented by small- and large-scale producers, as well as
advancing implementation of existing strategies and policies including realization of certification
(mandatory & voluntary).
3. To address and avoid trade barriers along the supply chain and carrying the sustainability
transformation costs together.
4. To distribute fair benefit sharing for actors among palm oil supply chain, especially improving benefit
share for smallholders.
5. To empower smallholder farmers by capacity building and provide better access to existing financing
scheme and/or create alternative financing scheme for smallholder farmers.
6. To build and harmonize sustainability concept, especially among consumers and producers that
reflect each other priorities and among actors with different capacity.

27. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
What actors can do?
• Consumers: provide incentive for sustainable producer’s efforts.
• Smallholders: implement sustainable practices & improve business model
with support.
• Public sector: establish accountability framework, policy integration and
harmonization, enabling incentive mechanism, support smallholders.
• Private sector: implement sustainable practices & improve achievement,
transparency and traceability, connect sustainable palm oil supply chain with
end consumers (manufacturers), connect with sustainable smallholders.
• Civil society, media and academia: promote collective actions and
connecting the dot of small but impactful initiatives, provide and distribute
credible information.

28. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
26-27 SEPTEMBER 2023
THANK YOU
cifor.org/tradehub
Project contact person: s.dyah@cifor-icraf.org

29. A NATURE-POSITIVE TRADE FOR SUSTAINABLE AGRICULTURE,
SUPPLY CHAINS AND SOCIO-ECONOMIC DEVELOPMENT
Please kindly share your thoughts
Presentation can be accessed here:
Bit.ly/roadmap-presentation-27Sep
Feedback form please visit here:
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