Blog: Blogs Innovation and technology improving palm oil smallholders lives

We’ve often pointed out in our blogs that the palm oil industry in Indonesia is actually made up of a large number of smallholder farmers. Any conversation about improving the industry must include making smallholders’ lives better. Helping smallholders become more efficient and productive is especially crucial if we want to grow more from land already being cultivated rather than opening new forested land for palm oil.

Enter SAWIT (Smallholders Advancing through Innovation and Technology) Challenge. The programme is run by the Oil Palm Smallholders Union, the Indonesia Business Council for Sustainable Development, and the U.S. Agency for International Development (USAID), to get the best ideas from around the world to help solve everyday problems faced by smallholders.

“Smallholders need a platform for exchanges that enable them to address their challenges and these innovations are needed to help them improve sustainability practices,” said the Chairperson of the Oil Palm Smallholders Union, Mansuestus Darto.

More than 70 international applications were received for Sawit Challenge 2016. Nine applicants were chosen and invited to pitch their ideas to leaders in business, forest conservation, international development and government in Jakarta recently. As one of the Sawit Challenge Council Members, our company was involved in the discussions with the innovators about their ideas.

Here’s a look at some of the solutions offered:

Providing smallholders financial incentives to produce sustainably

Like other small farmers across the world, palm oil smallholders often face obstacles in obtaining loans. This prevents them upgrading their agricultural practices.

Stanford University (USA) and a consortium consisting of Bentang Alam (Indonesia), Forest Carbon (Indonesia), SNV (Netherlands), Financial Access (Netherlands), and Akvo (Netherlands) have an idea to help smallholders obtain affordable, more timely financing. Stanford University proposed a 10 percent price premium for smallholder farmers who comply with sustainability standards, only passing on a small portion of the cost to buyers. The price premium comes from allowing smallholders to be paid for palm oil fresh fruit bunch (FFB) delivered to the mill, as opposed to waiting for delayed payment or selling to middlemen at highly discounted prices. Bentang Alam proposed combining cash and farm input loans that can decrease risks for financial institutions. The scheme is already being piloted in East Kalimantan.

Reducing the use of harmful herbicides

While using pesticides and herbicides is often seen as unavoidable in today’s agricultural sectors, overuse of these chemicals can have a detrimental effect on the environment and may pose potential health risks to the people who use them regularly.

PT Pandawa Agri Indonesia has come up with an organic locally-produced herbicide that could cut the use of more hazardous chemicals by half. Meanwhile, The Indonesian Oil Palm Research Institute will provide access to high quality oil palm seeds and technical assistance to smallholder farmers to boost yields without overreliance on harmful herbicides.

Improving supply chain transparency

More and more consumers want to know where their goods come from so they can be assured that these goods are ethically produced with minimal environmental damage. The more information smallholders can give about themselves and their practices, the more likely they will be able to gain access to global markets.

In this area, Sourcemap (USA) provides a field monitoring and traceability application that combines data collected in the field with enterprise purchasing records and third-party risk data to present a complete supply chain picture. And PT Koltiva Indonesia is adapting models developed in the cocoa industry for the palm oil sector.

Meanwhile, Landmapp (The Netherlands) and the Cadasta Foundation in partnership with Humanitarian OpenStreetMap (USA) is working on more affordable mapping. They work directly with smallholders and use mobile technology to map the land, collect data, and complete legal paperwork, which is then submitted to the Land Agency. Confirmation of legality for smallholders helps them better access financing amongst other things.

Leveraging mobile technology

Small farmers in remote areas often lack access to timely market information. But most of them have a handphone. Now, EcoHub Global from Singapore has designed a free mobile app that gives farmers access to real-time pricing information from mills and helps connect smallholders directly to buyers, processors, and cooperatives. The app also has information on good agricultural practices.

Advancing through partnerships

All these innovations show promise, but they will need to be tested in the field and scaled up. More importantly, partnership and collaboration with the government, growers and other stakeholders will be needed to get these ideas off the drawing board and turned into real solutions for farmers on the ground.