ABSTRACT
Indonesia implements policy strategies by providing certification and implementing replanting programs to ensure the achievement of sustainability standards of the palm oil industry. The country follows the certification standard system issued by the Roundtable Sustainable Palm Oil (RSPO) and the Indonesian Sustainable Palm Oil (ISPO). It would require political will and mutual recognition from both RSPO and ISPO sides to generate a valuable guide in building palm oil competitiveness. Meanwhile, the replanting program is purposed to develop human resources and assistance with facilities and infrastructures based-right on target, right technical, right cost, and timely manner, as well as having a professional smallholder institution that can do partnerships. Implementing the replanting program needs to synergize among stakeholders such as central and regional governments, oil palm plantation companies, and oil palm associations in a concrete and consistent way to accelerate its achievement. The specific jurisdictional approach for oil palm certification may vary across different regions in Indonesia, as it depends on local regulations, initiatives, and collaboration among stakeholders. Moreover, the goal of the jurisdictional approach is to promote sustainable practices and responsible replanting to mitigate environmental impacts and support the long-term viability of the palm oil industry. These approaches recognize the importance of inclusive development, social equity, and the active participation of local communities in shaping the future of the palm oil industry. Above all, developing sustainable palm oil is not easy; however, sustainable palm oil is expected to be more inclusive and comprehensive in Indonesia.
Keywords: palm oil, certification, replanting, jurisdictional approach, Indonesia
INTRODUCTION
Indonesia ranked first in the global oil palm fruit (Rob Cook, 2023). The country contributes 60.14% of the total world’s oil palm fruit (450.21 million tons), followed by Malaysia (24.26%), Thailand (4.11%), Nigeria (2.45%), and Colombia (2.05%). Indonesia has great potential for domestic and global markets, namely Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) for fractionation/refining industries (especially cooking oil), special fats (cocoa butter substitution), margarine/shortening, ole chemical, body soaps, and others.
According to BPS (2021), there are 14.59 million hectares of oil palm plantation area in Indonesia comprising 7.98 million hectares of private plantation (54.69%), 6.04 million hectares of smallholder plantation (41.44%), and 0.57 million hectares of state plantation (3.88%). Oil palm plantation is one of the income sources of Indonesian farmers. It has become a locomotive of rural economic development and means of income distribution (Saragih, 2017). However, due to the lack of information on access to quality seeds, proper management methods, and funding sources, the productivity of smallholder plantations was quite low (Databox, 2020). The average productivity of smallholder plantations was about 2.50 tons CPO per hectare, or lower than those of state and private plantations, i.e., 3.32 tons CPO per hectare and 3.49 tons CPO per hectare, respectively (DGEC, 2021).
Palm oil has a positive prospect for Indonesia, particularly regarding added value and competitiveness. Therefore, the government of Indonesia keeps developing national palm oil such as certification and replanting programs-based regulations. Hence, this paper discusses the perspective and challenges of the jurisdictional approach on certification and replanting programs towards the country's sustainable palm oil industry.
CERTIFICATION AND REPLANTING PROGRAMS
Certification program
Indonesia implements a policy strategy by providing certification to ensure the achievement of sustainability standards of the palm oil industry. The country follows the certification standard system issued by the Roundtable Sustainable Palm Oil (RSPO) and the Indonesian Sustainable Palm Oil (ISPO). The main difference between these two systems is anchored in their legality. The RSPO is a voluntary organization with global representation, while the ISPO is regulated by the government of Indonesia. The comparison of RSPO and ISPO can be seen in Table 1.
Based on its principles, RSPO has several criteria (RSPO, 2018), namely: (1) Behaves ethically and transparently (3 criteria); (2) Operates legally and respect rights (3 criteria); (3) Optimizes productivity, efficiency, positive impacts, and resilience (7 criteria); (4) Respects community, human rights, and delivers benefits (6 criteria); (5) Supports smallholder inclusion (2 criteria); (6) Respects worker’s rights and conditions (7 criteria); and (7) Protects, conserves, and enhances environmental ecosystem (11 criteria). Moreover, there are some principles and criteria of ISPO for smallholders and companies of oil palm plantations (Table 2).
There is a fundamental difference between the systems, in which RSPO categorizes minor and major indicators when being audited for certification, while all the ISPO principles and criteria are major and compulsory because they are linked to existing regulations. There are different elements contained in the requirements of the two systems. Key differences include the protected area and high conservation value concepts, in which the concept of free, prior informed consent process in RSPO, oil palm plantation land ownership procedures in ISPO based on Indonesian law, and procedures for the new development of plantation (UNDP, 2015).
There are certain challenges in implementing RSPO and ISPO certifications. They are (1) Low understanding of smallholders; (2) Lack of financial ability of smallholders and limited capacity of extensionists; (3) Limited land ownership; (4) Low access to information, technology, capital, and market; and (5) Inadequate incentives/benefits for farmers who already have certificates (ICASEPS, 2022).
The biggest challenges experienced by independent smallholders entirely managing oil palm plantations from land preparation, planting, maintenance, and harvesting, to marketing. In addition, they have difficulties in obtaining Integrated System for Plantation Cultivation Business Registration/STDB[1] (Mongabay.co.id. 2020). The independent smallholders had some reasons in line with certification. First, the main or dominant family income source was not from the oil palm plantations. Second, most independent smallholders faced land legality issues (lack of legal basis in the form of land certificates) affecting the agrarian conflicts between plantations and protected areas. Third, independent smallholders were not ready to implement ISPO since most of them used unidentified oil palm seeds (using identified seeds are required in this program). Fourth, most independent smallholders did not know the ideal environmental management principles under ISPO standards (ICASEPS, 2023). It is important to note that developing sustainable palm oil is not easy. However, sustainable palm oil is expected to be more inclusive and comprehensive (Arifin, 2023).
Independent smallholders recognize the problems faced in achieving oil palm sustainability but are powerless to overcome the problems without assisting external parties. Therefore, it is necessary to assist them with various efforts to narrow the gap in various certification indicators First, it must be concerned with risk factors, i.e., economic risks in the form of plantation demolition and reinvestment of oil palm plantations. Second, it requires land legalization and administrative processes related to land issues which are quite complex and convoluted at the village level to the supra-village level. Third, it needs a very intensive mentoring process to provide awareness of the principles of sustainability and certification and a mentoring process for farmers to help with certification and convince relevant stakeholders (ICASEPS, 2023)..
Replanting program
Indonesia has a total area of oil palm plantation of about 16.38 million hectares, of which 6.90 million hectares (42.12%) belong to smallholders. However, smallholder oil palm plantations still face considerable challenges, particularly related to the low extent of agro-input uses. The national productivity has only reached 3-4 tons CPO per hectare. This could threaten the future of Indonesian smallholder palm oil if no comprehensive steps are taken. It is consequently required to carry out improvements from the upstream sector by replacing old or unproductive plants. Increasing oil palm production and productivity continues to be facilitated by utilizing the BPDPKS funds through the Replanting Program of Smallholder Oil Palm Plantation (PSR) since 2017 (MoA, 2023).
The replanting program was initially launched by the President of Indonesia on 13 October 2017 at Musi Banyuasin Regency, South Sumatra province. It was purposed to help smallholders renew their oil palm plantations with more sustainable and quality palm oil and reduce the risk of illegal land clearing toward improving productivity by opening new land. It is implemented for old and/or damaged crops by supporting human resources development and facilitating infrastructures and facilities. This is essential to manage oil palm plantations that technically are over 25 years old and others less than 25 years of age with average production below 10 tons per hectare annually (DGEC, 2017). This program is carried out by the following requirements: (1) Legal (it must follow the aspect of land legality); (2) Productivity (it is targeted up to 10 tons of fresh fruit bunch per hectare per year with a plant density of below 80 trees per hectare ); (3) Certification (it includes land, conservation, environment, and institutions It is intended to facilitate the program participants to obtain ISPO certification in the first harvest); and (4) Sustainability (it includes land, conservation, environment, and institutions).
This program aims to develop human resources and assistance with facilities and infrastructures based on target, right technical, right cost, and timely manner, as well as have a professional smallholder institution that can do partnerships (BPDPKS, 2020).
To determine and develop the replanting oil palm plantations in a planned and targeted manner, the government of Indonesia has issued a policy on raising funds for oil palm plantations as mandated in Law Number 39/2014 concerning Plantations (GoI, 2014). This was stipulated by Presidential Regulation Number 61/2015 in conjunction with Number 24/2016 concerning the Collection and Use of Oil Palm Plantation Funds (GoI, 2015 and GoI, 2016). This policy provides a basis for setting the priority scale for developing oil palm plantations owned by smallholders according to requirements by integrating all aspects to increase productivity.
Replanting is a national strategic program covering all central areas of smallholder oil palm plantations in Indonesia. At least 2.1 million hectares of smallholder plantations were identified and suspected of using low-quality seeds, while 0.3 million hectares were no longer productive (over 25 years). Thus, there are a total of 2.4 million hectares of unproductive oil palm plantations, which are the main cause of the low productivity of smallholder oil palm plantations as well as the main target of the replanting program (Sawit Plus 2018; Subagyono 2020; and ICASEPS, 2023).
Technically, BPDPKS distributes financial assistance of Rp 30 million (US$ 1,971) per hectare per farmer. However, this financial assistance can only cover planting seed provision. The rest will be fulfilled by three financing schemes. First, BPDPKS and smallholders' savings funds scheme. Second, BPDPKS supported by smallholders' submission of the People’s Business Credit (KUR) scheme. Third, combination schemes of BPDPKS, smallholders' savings funds, and KUR.
The criteria for the replanting program are oil palm plantations that: (1) Pass the economic age of 25 years; (2) Produce fresh fruit bunch of fewer than 10 tons per hectare per year at a minimum age of seven years; and (3) Using not certified seeds for at least two years. It is carried out by farmer’s groups, farmer’s group associations, and cooperatives through online applications and verified by regional offices or surveyors appointed by the Directorate General of Estate Crops, Ministry of Agriculture.
The replanting program is provided to a maximum of four hectares per household which has land legality in the form of Property Rights Certificates (SHM), Land Certificates (SKT), Land Compensation Certificates (SKGR) Land, Sporadic, Girik (Letter C), Deed of Sale and Purchase of Land (AJB), Customary Rights (communal) or other recognized land rights that are as existing. Program participants who receive and take advantage of the replanting program are expected to be able to buy all the needs of production facilities and infrastructure so that they can implement a technology package that can increase productivity, cost efficiency, increase income which has an impact on national production performance, added value, competitiveness, and exports toward sustainable downstream oil palm targets. Several financing schemes facilitate them.
The government is targeting replanting of 540,000 hectares of oil palm plantations owned by smallholders by 2024. However, according to data from BPDPKS, the realization of the program from 2016 to 30 June 2022 has only reached 256,744 hectares (47.55%). It was noted that from 2016 to 30 June 2022, the realization of the distribution of replanting program reached 256,744 hectares for 112,414 smallholders and Rp 7.01 trillion (US$ 0.45 billion) in funds. In 2020 the realization reached 94,033 hectares, but in 2021 it was decrease to 42,212 hectares (BPDPKS, 2022).
The replanting program includes (1) Preparation cost (administration of making farm maps and establishing institutions); (2) Replanting cost (land preparation, procurement of certified seeds, fertilizers, pesticides, agricultural equipment, and infrastructure); and (3) Human resource development cost (assistance and facilitation aimed at increasing the capacity of program participants in terms of productive and environmentally friendly plantation management). It will be completed in 2033, covering 2.8 million hectares of oil palm plantations.
From 2017 to 2022, the program was technically recommended in 21 provinces and implemented in 20 provinces. Cumulatively, there were 258,654 hectares of recommended smallholder oil palm plantations but only 189,369 hectares (73.21%) had been planted under this program, dominantly in the central producing areas of oil palm in Sumatra and Kalimantan.
Indonesia’s Ministry of Agriculture (MoA) has implemented the replanting program of smallholder oil palm plantations targeted to cover 180,000 hectares per year in 123 regencies/cities of 21 provincial central producing areas. From 2017 to 2022, the achievement of this program was 278,200 hectares or almost 10% of the total areas of 2.80 million hectares that have been replanted. In 2023, the Indonesia MoA, through the Directorate General of Estate Crops, distributed the replanting program in 112 regencies/cities of 20 provinces based-submitted proposals from the respective district and provincial offices. Meanwhile, the target distribution for proposing partnerships with plantation companies is in 24 regencies/cities of 11 provinces.
The implementation of this program only achieved 258,652 hectares (27.94%). It involved 112,803 households of smallholders and 1,422 units of farmer’s groups/cooperatives supported by transferred finance from BPDPKS of about Rp 6,892 million (US$ 459,458). Hence, there is a need to accelerate the annual and cumulative target achievements from 2017 to 2022 while identifying the occurring problems in each stage to improve the implementation of this replanting program (ICASEPS, 2023).
The low rate of the implementation of the replanting program was due to the following reasons: (1) Deliberated data administration and verification of smallholders; (2) High issues on land legality (e.g., located in forest areas and without land ownership certificates); and (3) Other constraints such as readiness of seeds, disbursement of funds, and existence institutional smallholders. In addition, simplifying the requirements and procedures for submitting funds was hampered by the need for legality and the authority of which rests with many agencies (both at the central and regional levels).
JURISDICTIONAL APPROACH
Concept of jurisdictional approach
The concept of a jurisdictional approach is relatively new in Indonesia. As initially introduced in 2014, this concept was known in the context of Reducing Emissions from Deforestation and Forest Degradation (REDD+) and developed as part of an effort to increase commitment to a deforestation-free supply chain. The jurisdictional approach was quite an unfamiliar term among organizations working to reduce deforestation and promote sustainable land use in the country. In 2018, the jurisdictional approach started as an initiative to track sustainable palm oil and define jurisdictional sustainability on a scale. In other words, it produces credible information and analysis to increase mutual understanding and trust in the sustainability of Indonesian palm oil. By early 2020, concept elements had been incorporated into official plans and regulations in several provinces and districts and were recognized in the government’s national medium-term development plan (Seymour et.al, 2020; EFI, 2023).
The jurisdictional approach has the following aspects: (1) Accommodated various stakeholders; (2) Oriented to the outcome; (3) Driven by local government through improved policies and governance; (4) Multi-level approach; (5) Issued across law, plantation, forestry, spatial planning, environmental governance, land, and regional development; and (6) Collaborated program and transparent monitoring framework (Rudiyanto, 2021). Moreover, this jurisdictional approach comprises four aspects (environmental, social, economic, and governance), including 22 indicators (Table 3).
Five indicators among 22 indicators are set to develop and assess the area’s sustainability level through a multi-stakeholder process. It becomes the basis for determining incentives and disincentives for regional governments, including the distribution of transfer allocations to the regions. The five indicators are as follows (EFI, 2023):
- Indicator 18: proportion of district budget allocated for sustainability (assess district government commitment in actualizing various policies related to environmental management and protection)
- Indicator 19: access to public information (measuring district government performance in ensuring good governance, one of which is public access to information).
- Indicator 20: multi-stakeholder participation in district planning (assessing the extent of local government commitment in actualizing the obligation to involve the community in the planning process in their jurisdiction).
- Indicator 21: grievance mechanism ensuring local government readiness in implementing regulations and policies regarding sustainable plantation commodity production in their jurisdictions).
- Indicator 22: sustainable land use planning (seeing the extent to which local governments in a jurisdiction have made efforts to plan the development of their area inclusively and sustainably.
The jurisdiction approach aims to promote the transition to sustainable commodity production by demonstrating the progress of Indonesian districts toward sustainability and providing incentives to encourage further progress by strengthening trade in sustainable palm oil. This initiative aims to strengthen efforts to address governance, regulatory, and technical challenges to achieve sustainability by measuring district performance and communicating with policymakers and market players. This initiative aims to protect forests and deliver inclusive benefits to smallholders, companies, and consumers by aligning national and international supply chain actors in their efforts.
The entry point of the jurisdictional approach is the local government (particularly the district administration) which has legislative, regulatory, political, and general administrative authorities. It is one of the regional-based development approaches considering the synergies across sectors, actors, and geographical units expected to encourage the stakeholders’ participation. Every sector, actor, and geographical unit could benefit from planned and implemented development programs (IPB, 2019). It follows political boundaries; its success depends on the commitment and leadership of local governments.
Despite the jurisdictional approach generating potential benefits, it has some challenges. First, implementation can be complex and costly, and it can take time to deliver results. The multi-stakeholder approach requires ample negotiation, compromise, and tradeoffs in establishing and working towards multiple goals that may not be mutually reinforcing. To add to the complexity, these goals can also be impacted or influenced by external factors beyond the control of the jurisdictional actors. Second, the important ingredient of government engagement can be challenging due to political turnover, poor alignment across divisions, capacity, resource constraints, transparency, and limited access to information. In addition, the boundaries for implementation can be physically misaligned with the ecosystem landscape boundaries, which would have the greatest environmental impact. Third, it needs significant funding and support, which can be hard to engage companies in supporting a particular jurisdiction, particularly for those that source from many places and do not have strong links with specific supply regions due to the nature of the commodities and their position in the supply chain. Fourth, the benefits will largely flow to producers, making it unclear whether governments will get sufficient resources and incentives to engage. Also, at this stage, there are few success stories to point to as examples for garnering more support and assuaging the concerns of potential partners and investors. Fifth, there is a risk that larger-scale sustainability will not be achieved, for example, because of companies shifting sourcing away from underperforming jurisdictions and only incentivizing higher-performing jurisdictions (Buchanan et al., 2019).
The big challenge is the implementation of jurisdictional approach-based regional development approaches. It notes that every local government has a specific performance in line with local autonomy administration. Moreover, the contribution of palm oil to regional development is relatively low (Rudiyanto, 2021). It is indicated by the absence of a correlation between the value of palm oil exports and the Gross Regional Domestic Product (PDRB). Several issues are identified such as: (1) There are no regulations regarding profit sharing funds (DBH) from oil palm, but only derived from forestry, oil and gas, mineral and coal, geothermal, and fisheries; (2) Local Government Budget (APBD) source from oil palm only comes from Land and Building Tax (PBB) of plantation, income tax (PPh), Value Added Tax (PPN), and Export Duty; and (3) The largest revenue from palm oil comes from export levies managed by BPDPKS and used for developing human resources, research and development, replanting, facilities and infrastructure, and promotion of oil palm plantations. Consequently, the development of the palm oil industry could be categorized as not the main priority of the local government. However, the implementation of certification, replanting, and farm development programs from the perspective of a jurisdictional approach is strategically based on some key elements.
The perspective of jurisdictional approach on certification program
The jurisdictional approach on oil palm certification refers to the certification of entire regions or jurisdictions based on sustainable practices in the oil palm sector. This approach aims to address environmental and social concerns at a larger scale, promote sustainable production, and support the reputation and marketability of Indonesian palm oil. Some key elements of the jurisdictional approach for oil palm certification are as follows:
- Collaboration and stakeholder engagement: The jurisdictional approach involves collaboration among various stakeholders, including government agencies, palm oil companies, local communities, non-government organizations (NGOs), and certification bodies. This collaboration ensures that the certification process considers the perspectives and interests of all parties involved.
- Development of standards and criteria: Developing standards and criteria is crucial to oil palm certification. These standards define the requirements for sustainable practices, environmental conservation, social responsibility, and good agricultural practices. The standards are typically aligned with RSPO and ISPO principles and criteria.
- Landscape-level assessment: The jurisdictional approach includes conducting a comprehensive landscape assessment to evaluate its sustainability and readiness for certification. This assessment considers land use, biodiversity, conservation areas, social aspects, and existing practices. It helps identify areas for improvement and guides the development of action plans.
- Action plans and implementation: Based on the landscape assessment, action plans are developed to address the identified gaps and challenges. These plans outline specific measures, timelines, responsibilities, and targets for improving sustainable practices in the oil palm sector. Implementing these plans involves various activities, such as capacity building, training programs, land use planning, and adopting best management practices.
- Monitoring and verification: Effective monitoring and verification systems are implemented to ensure compliance with the certification standards. This involves regular monitoring of plantations, on-site inspections, document reviews, and technology and remote sensing. Independent certification bodies or auditors often verify compliance with the standards.
- Certification and market access: Once the jurisdiction meets the certification criteria, it can be certified as a sustainable oil palm jurisdiction. Certification provides recognition and market access for the products originating from that jurisdiction. Certified jurisdictions can access premium markets that prioritize sustainable sourcing and demonstrate compliance with internationally recognized sustainability standards.
- Continuous improvement and review: The jurisdictional approach emphasizes continuous improvement and periodic review of certification criteria and practices. This ensures the certification remains relevant, up-to-date, and aligned with evolving sustainability expectations. Regular monitoring, evaluation, and stakeholder feedback contribute to ongoing improvement efforts.
The perspective of jurisdictional approach on replanting program
Replanting oil palm involves various jurisdictional approaches that address environmental concerns, promote sustainable practices, and support the palm oil industry. The following some key aspects of the jurisdictional approach on replanting oil palm:
- Government regulations: The Indonesian government plays a crucial role in setting policies and regulations related to palm oil replanting. These regulations often focus on sustainability, land use, environmental conservation, and social aspects. They aim to ensure responsible replanting practices while balancing the needs of the palm oil industry and protecting the environment.
- Sustainability certification: RSPO and ISPO certifications are widely recognized as benchmarks for sustainable palm oil production. It sets criteria for environmental protection, social responsibility, and good agricultural practices. Plantation companies can adopt RSPO and ISPO standards and seek certification for palm oil production, including replanting activities.
- Jurisdictional certification: Jurisdictional certification refers to the certification of a specific area or region based on sustainable palm oil production practices. Some initiatives can be generated to certify entire districts or provinces for sustainable palm oil production. These approaches encourage collaboration between various stakeholders, including government, the private sector, and local communities, to implement sustainable practices at a larger scale.
- Land use planning: Proper land use planning is essential for sustainably replanting oil palm. It involves identifying suitable land for oil palm cultivation, considering environmental factors, social considerations, and existing land use practices. Land use planning aims to minimize the conversion of high conservation value areas, protect critical ecosystems, and prevent land conflicts.
- Smallholder support: Smallholders play a significant role in Indonesia’s palm oil industry. Jurisdictional approaches for replanting often include programs to support smallholders in adopting sustainable practices. These programs may provide technical assistance, training, access to finance, and market linkages to ensure smallholders can replant palm oil sustainably and improve their livelihoods.
- Monitoring and enforcement: Monitoring systems and enforcement mechanisms are put in place to ensure compliance with sustainable replanting practices. This involves regular monitoring of plantations, use of satellite imagery, on-ground inspections, and penalties for non-compliance. Proper enforcement helps maintain the integrity of sustainable replanting efforts and discourages illegal or unsustainable practices.
The jurisdictional approach in the context of sustainable palm oil in Indonesia refers to an integrated effort to transform entire landscapes or jurisdictions (like provinces, districts, or municipalities) to produce sustainable commodities, rather than targeting individual farms or plantations. While this approach offers potential solutions to the environmental and social issues posed by the palm oil industry, there are several challenges and problems associated. Among other things are (1) Scale and complexity with multiple jurisdictions and layers of governance; (2) Existing problem related to inter-jurisdictional coordination in terms of process given differing objectives and priorities; (3) Policy and regulatory gaps i.e., inconsistencies between national policies and local interpretations can create challenges (some jurisdictions might have regulations that promote sustainable practices, while others may not, leading to uneven results); (4) Heterogeneity, in which every jurisdiction has unique socio-economic, environmental, and political characteristics (a strategy that works in one district might not be effective in another – this makes it hard to implement a standardized approach across regions); and (5) Policy and regulatory gaps such as inconsistencies between national policies and local interpretations can create challenges. Some jurisdictions might have regulations that promote sustainable practices, while others may not, leading to uneven results.
Addressing the above-mentioned challenges and problems requires a holistic and multi-stakeholder approach that takes into account the complexities of the palm oil industry, local contexts, and the interests of various stakeholders. It also emphasizes the importance of strong governance, transparency, and active engagement from both the private and public sectors. While the jurisdictional approach offers an inclusive way to promote sustainable palm oil production in Indonesia, its effective implementation is fraught with challenges. Solutions will likely require coordinated efforts, innovative financing, and robust monitoring and verification systems.
CONCLUSION AND RECOMMENDATION
The jurisdictional approach is a new strategy to achieve sustainability in the palm oil sector, including achieving a deforestation-free supply chain and optimizing regional revenues. It needs to be continued by conducting periodic evaluations. Moreover, further studies on the mechanism for sharing national and regional revenues from the palm oil sector must be carried out. Increasing regional revenues from palm oil need to be strengthened in the downstream of the palm oil industry by building palm oil factories and refineries. Product diversification is also necessary to strengthen income stability in palm-producing regions.
It is important to note that the specific jurisdictional approach on oil palm certification may vary across different regions in Indonesia, as it depends on local regulations, initiatives, and collaboration among stakeholders. The aim is to promote sustainable practices, improve the palm oil sector's environmental and social performance, and enhance Indonesian palm oil's market acceptance. Moreover, the goal of the jurisdictional approach is to promote sustainable practices and responsible replanting to mitigate environmental impacts and support the long-term viability of the palm oil industry. These approaches recognize the importance of inclusive development, social equity, and the active participation of local communities in shaping the future of the palm oil industry.
REFERENCES
Arifin, B. 2023. Aspek Kemitraan UMKM dan Usaha Besar Bidang Pertanian, Perkebunan, Kelautan dan Perikanan dalam UU 6/2023 Cipta Kerja (Partnership Aspects of Micro, Small and Medium Enterprises and Large Enterprises in Agriculture, Plantation, Maritime Affairs and Fisheries in Law Number 6/2023 on Job Creation). FGD Aspek Kemitraan Bidang Pertanian dalam UU 6/2023 Cipta Kerja dan Turunannya (Focus Group Discussion on Partnership Aspects in the Agricultural Sector in Law Number 6/2023 on Job Creation and Its Derivatives). 16 June 2023. Jakarta.
BPDPKS. 2020. Program Peremajaan Perkebunan Kelapa Sawit (Replanting Program of Smallholder Oil Palm Plantation). Retrieved from: bpdp.or.id (19 August 2023).Badan Pengelola Dana Perkebunan Kelapa Sawit (Oil Palm Plantation Fund Management Agency). Jakarta
BPDPKS. 2022. Prinsip dan Kriteria ISPO (Principles and Criteria of ISPO). Retrieved from: https://www.bpdp.or.id/prinsip-kriteria-ispo-2 (17 June 2023). Badan Pengelola Dana Perkebunan Kelapa Sawit (Oil Palm Plantation Fund Management Agency). Jakarta.
Buchanan, J., J. Durbin, D. McLaughlin, L. McLaughlin, K. Thomason, and M. Thomas. 2019. Jurisdictional Approach to Sustainability Commitments in Palm Oil and Soy Supply Chains. Conservation International, March 2019.
Databox. 2020. 2,7 Juta Petani Bergantung pada Perkebunan Sawit Rakyat (2.7 Million Farmers depend on Smallholder Oil Palm Plantations). Retrieved from: https://databoks.katadata.co.id/datapublish/2020/ 04/06/27-juta-petani-bergantung-pada-perkebunan-sawit-rakyat (5 January 2023).
DECC. 2017. Keputusan Direktur Jenderal Perkebunan Nomor: 29 Tahun 2017 tentang Pedoman Peremajaan Tanaman Kelapa Sawit Pekebun, Pengembangan Sumber Daya Manusia dan Bantuan Sarana dan Prasarana dalam Kerangka Pendanaan Badan Pengelola Dana Perkebunan Kelapa Sawit (Decree of the Director General of Plantations Number: 29 of 2017 concerning Guidelines for Planters Rejuvenating Palm Oil Plants, Human Resource Development and Assistance Facilities and Infrastructure in the Funding Framework of the Oil Palm Plantation Fund Management Agency). Directorate of Estate Crops. Indonesian Ministry of Agriculture. Jakarta.
DGEC. 2021. Statistik Perkebunan Unggulan Nasional 2020-2022 (Statistics of National Leading Estate Crops Commodity 2020-2022). Directorate General of Estate Crops. Indonesian Ministry of Agriculture. Jakarta.
DGEC. 2023. Sistem Terpadu Pendaftaran Usaha Budidaya Perkebunan untuk Pekebun Swadaya (Integrated System for Plantation Cultivation Business Registration for Independent Smallholders). Retrieved from: https://stdb.ditjenbun.pertanian.go.id/beranda (18 August 2023). Directorate General of Estate Crops. Indonesian Ministry of Agriculture. Jakarta.
EFI. 2023. Sejarah Pendekatan Yurisdiksi Berkelanjutan (The History of the Sustainable Jurisdiction Approach). European Forest Institute and Kementerian Perencanaan Pembangunan Nasional//Bappenas (Nasional (Ministry of National Development Planning/National Development Planning Agency). Jakarta.
GoI. 2020. Peraturan Presiden Republik Indonesia Nomor 44 Tahun 2020 tentang Sistem Sertifikasi Perkebunan Kelapa Sawit Berkelanjutan Indonesia (Presidential Regulation of the Republic of Indonesia Number 44/2020 concerning Indonesia’s Sustainable Palm Oil Plantation Certification System). Government of Indonesia]. Jakarta.
ICASEPS. 2023. Akselerasi Program Peremajaan Sawit Rayat terhadap Peningkatan Eisiensi Biaya dan Daya Saing Kelapa Sawit Rakyat (Acceleration of the Palm Oil Replanting Program to Improve Cost Efficiency and Competitiveness of Smallholder’s Oil Palm). Collaboration of Indonesian Center for Agricultural Social Economic and Policy Studies and Badan Pengelola Dana Perkebunan Kelapa Sawit (Oil Palm Plantation Fund Management Agency). Bogor.
IPB. 2019. The Guidelines for Planning of Regional Sustainable Plantation based on a Jurisdictional Approach (Case Study: Oil Palm Plantation). Retrieved from: https://p4w.ipb.ac.id/en/the-guidelines-for-planning-of-regional-sustainable-plantation-based-on-a-jurisdictional-approach-case-study-oil-palm-plantation/ (13 June 2023)
MoA. 2020. Peraturan Menteri Pertanian Republik Indonesia Nomor 38 Tahun 2020 tentang Penyelenggaraan Sertifikasi Perkebunan Kelapa Sawit Berkelanjutan Indonesia (Regulation of the Minister of Agriculture of the Republic of Indonesia Number 38/2020 concerning Implementation of Indonesian Sustainable Palm Oil Plantation Certification). Indonesian Ministry of Agriculture Jakarta.
MoA. 2022. Peraturan Menteri Pertanian Republik Indonesia Nomor 3 Tahun 2022 tentang Pengembangan Sumber Daya Manusia, Penelitian dan Pengembangan, Peremajaan, serta Sarana dan Prasarana Perkebunan Kelapa Sawit (Minister of Agriculture Regulation Number 3/2022 on Development of Human Resources, Research and Development, Replanting, Facilities, and Infrastructure of Oil Palm Plantations). Indonesian Ministry of Agriculture. Jakarta.
Mongabay.co.id. 2020. Petani Sawit Swadaya Masih Hadapi Berbagai Masalah (Independent Palm Oil Smallholders Still Face Various Problems). Retrieved from: https://www.mongabay.co.id/2020/11/27/ petani-sawit-swadaya-masih-hadapi-berbagai-masalah/ (19 August 2023)
Rob Cook. 2023. Indonesia was the largest producer of oil palm fruit in the world in 2019 followed by Malaysia and Thailand. Retrieved from: https://beef2live.com/story-ranking-countries-produce-oil-palm-fruit-fao... (17 January 2023). Ranking of Countries that Produce the Most Oil Palm Fruit (FAO). Rob Cook, Published on 15 January 2023.
RSPO. 2018. RSPO Principles and Criteria: National Interpretation. Round Table on Sustainable Palm Oil. Kuala Lumpur.
Rudiyanto, A. 2021. Pembangunan Berkelanjutan melalui Pendekatan Yurisdiksi dan Transfer Fiskal (Sustainable Development through Jurisdiction and Transfer Approaches). Kementerian Perencanaan Pembangunan Nasional/Bappenas (Ministry of National Development Planning/National Development Planning Agency). Jakarta.
Saragih, B. 2017. Oil Palm Smallholders in Indonesia: Origin, Development Strategy, and Contribution to the National Economy. Discussion at the World Plantation Conference and Exhibition. Jakarta. 18-20 October 2017.
Sawit Plus. 2018. Replanting tak semudah membalik tangan (Replanting is not as easy as turning the hand). Retrieved from: https://www.Sawitplus.Com/2018/02/24/Dirjenbun-Replanting-taksemudahMembalik-Tangan/ (6 June 2023).
Seymour, F. J., L. Aurora, and J. Arif. 2020. The Jurisdictional Approach in Indonesia: Incentives, Actions, and Facilitating Connections. Policy and Practice Reviews. Published on 9 November 2020. Frontiers in Forests and Global Change November 2020, Volume 3, Article 503326.
Subagyono K. 2021. Akselerasi Program Peremajaan Sawit Rakyat (Acceleration of Smallholder Oil Palm Replanting Program). Focus Group of Discussion, Jakarta, 10 March 2021.
UNDP. 2015. Joint Study on the Similarities and Differences of the ISPO and the RSPO Certification Systems. United Nations Development Programme in collaboration with and Indonesian Ministry of Agriculture, Indonesian Sustainable Palm Oil, and Roundtable on Sustainable Palm Oil. Jakarta.
[1] STDB is a collection of data and registration of planters with an area of less than 25 hectares by the government for 137 plantation commodities, including oil palm. The issuance process is preceded by data collection, field verification, and validation of the land owned by the smallholders who submitted the application (DGEC, 2023)
Perspective and Challenges of Jurisdictional Approach on Certification and Replanting Programs towards Sustainable Palm Oil Industry in Indonesia
ABSTRACT
Indonesia implements policy strategies by providing certification and implementing replanting programs to ensure the achievement of sustainability standards of the palm oil industry. The country follows the certification standard system issued by the Roundtable Sustainable Palm Oil (RSPO) and the Indonesian Sustainable Palm Oil (ISPO). It would require political will and mutual recognition from both RSPO and ISPO sides to generate a valuable guide in building palm oil competitiveness. Meanwhile, the replanting program is purposed to develop human resources and assistance with facilities and infrastructures based-right on target, right technical, right cost, and timely manner, as well as having a professional smallholder institution that can do partnerships. Implementing the replanting program needs to synergize among stakeholders such as central and regional governments, oil palm plantation companies, and oil palm associations in a concrete and consistent way to accelerate its achievement. The specific jurisdictional approach for oil palm certification may vary across different regions in Indonesia, as it depends on local regulations, initiatives, and collaboration among stakeholders. Moreover, the goal of the jurisdictional approach is to promote sustainable practices and responsible replanting to mitigate environmental impacts and support the long-term viability of the palm oil industry. These approaches recognize the importance of inclusive development, social equity, and the active participation of local communities in shaping the future of the palm oil industry. Above all, developing sustainable palm oil is not easy; however, sustainable palm oil is expected to be more inclusive and comprehensive in Indonesia.
Keywords: palm oil, certification, replanting, jurisdictional approach, Indonesia
INTRODUCTION
Indonesia ranked first in the global oil palm fruit (Rob Cook, 2023). The country contributes 60.14% of the total world’s oil palm fruit (450.21 million tons), followed by Malaysia (24.26%), Thailand (4.11%), Nigeria (2.45%), and Colombia (2.05%). Indonesia has great potential for domestic and global markets, namely Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) for fractionation/refining industries (especially cooking oil), special fats (cocoa butter substitution), margarine/shortening, ole chemical, body soaps, and others.
According to BPS (2021), there are 14.59 million hectares of oil palm plantation area in Indonesia comprising 7.98 million hectares of private plantation (54.69%), 6.04 million hectares of smallholder plantation (41.44%), and 0.57 million hectares of state plantation (3.88%). Oil palm plantation is one of the income sources of Indonesian farmers. It has become a locomotive of rural economic development and means of income distribution (Saragih, 2017). However, due to the lack of information on access to quality seeds, proper management methods, and funding sources, the productivity of smallholder plantations was quite low (Databox, 2020). The average productivity of smallholder plantations was about 2.50 tons CPO per hectare, or lower than those of state and private plantations, i.e., 3.32 tons CPO per hectare and 3.49 tons CPO per hectare, respectively (DGEC, 2021).
Palm oil has a positive prospect for Indonesia, particularly regarding added value and competitiveness. Therefore, the government of Indonesia keeps developing national palm oil such as certification and replanting programs-based regulations. Hence, this paper discusses the perspective and challenges of the jurisdictional approach on certification and replanting programs towards the country's sustainable palm oil industry.
CERTIFICATION AND REPLANTING PROGRAMS
Certification program
Indonesia implements a policy strategy by providing certification to ensure the achievement of sustainability standards of the palm oil industry. The country follows the certification standard system issued by the Roundtable Sustainable Palm Oil (RSPO) and the Indonesian Sustainable Palm Oil (ISPO). The main difference between these two systems is anchored in their legality. The RSPO is a voluntary organization with global representation, while the ISPO is regulated by the government of Indonesia. The comparison of RSPO and ISPO can be seen in Table 1.
Based on its principles, RSPO has several criteria (RSPO, 2018), namely: (1) Behaves ethically and transparently (3 criteria); (2) Operates legally and respect rights (3 criteria); (3) Optimizes productivity, efficiency, positive impacts, and resilience (7 criteria); (4) Respects community, human rights, and delivers benefits (6 criteria); (5) Supports smallholder inclusion (2 criteria); (6) Respects worker’s rights and conditions (7 criteria); and (7) Protects, conserves, and enhances environmental ecosystem (11 criteria). Moreover, there are some principles and criteria of ISPO for smallholders and companies of oil palm plantations (Table 2).
There is a fundamental difference between the systems, in which RSPO categorizes minor and major indicators when being audited for certification, while all the ISPO principles and criteria are major and compulsory because they are linked to existing regulations. There are different elements contained in the requirements of the two systems. Key differences include the protected area and high conservation value concepts, in which the concept of free, prior informed consent process in RSPO, oil palm plantation land ownership procedures in ISPO based on Indonesian law, and procedures for the new development of plantation (UNDP, 2015).
There are certain challenges in implementing RSPO and ISPO certifications. They are (1) Low understanding of smallholders; (2) Lack of financial ability of smallholders and limited capacity of extensionists; (3) Limited land ownership; (4) Low access to information, technology, capital, and market; and (5) Inadequate incentives/benefits for farmers who already have certificates (ICASEPS, 2022).
The biggest challenges experienced by independent smallholders entirely managing oil palm plantations from land preparation, planting, maintenance, and harvesting, to marketing. In addition, they have difficulties in obtaining Integrated System for Plantation Cultivation Business Registration/STDB[1] (Mongabay.co.id. 2020). The independent smallholders had some reasons in line with certification. First, the main or dominant family income source was not from the oil palm plantations. Second, most independent smallholders faced land legality issues (lack of legal basis in the form of land certificates) affecting the agrarian conflicts between plantations and protected areas. Third, independent smallholders were not ready to implement ISPO since most of them used unidentified oil palm seeds (using identified seeds are required in this program). Fourth, most independent smallholders did not know the ideal environmental management principles under ISPO standards (ICASEPS, 2023). It is important to note that developing sustainable palm oil is not easy. However, sustainable palm oil is expected to be more inclusive and comprehensive (Arifin, 2023).
Independent smallholders recognize the problems faced in achieving oil palm sustainability but are powerless to overcome the problems without assisting external parties. Therefore, it is necessary to assist them with various efforts to narrow the gap in various certification indicators First, it must be concerned with risk factors, i.e., economic risks in the form of plantation demolition and reinvestment of oil palm plantations. Second, it requires land legalization and administrative processes related to land issues which are quite complex and convoluted at the village level to the supra-village level. Third, it needs a very intensive mentoring process to provide awareness of the principles of sustainability and certification and a mentoring process for farmers to help with certification and convince relevant stakeholders (ICASEPS, 2023)..
Replanting program
Indonesia has a total area of oil palm plantation of about 16.38 million hectares, of which 6.90 million hectares (42.12%) belong to smallholders. However, smallholder oil palm plantations still face considerable challenges, particularly related to the low extent of agro-input uses. The national productivity has only reached 3-4 tons CPO per hectare. This could threaten the future of Indonesian smallholder palm oil if no comprehensive steps are taken. It is consequently required to carry out improvements from the upstream sector by replacing old or unproductive plants. Increasing oil palm production and productivity continues to be facilitated by utilizing the BPDPKS funds through the Replanting Program of Smallholder Oil Palm Plantation (PSR) since 2017 (MoA, 2023).
The replanting program was initially launched by the President of Indonesia on 13 October 2017 at Musi Banyuasin Regency, South Sumatra province. It was purposed to help smallholders renew their oil palm plantations with more sustainable and quality palm oil and reduce the risk of illegal land clearing toward improving productivity by opening new land. It is implemented for old and/or damaged crops by supporting human resources development and facilitating infrastructures and facilities. This is essential to manage oil palm plantations that technically are over 25 years old and others less than 25 years of age with average production below 10 tons per hectare annually (DGEC, 2017). This program is carried out by the following requirements: (1) Legal (it must follow the aspect of land legality); (2) Productivity (it is targeted up to 10 tons of fresh fruit bunch per hectare per year with a plant density of below 80 trees per hectare ); (3) Certification (it includes land, conservation, environment, and institutions It is intended to facilitate the program participants to obtain ISPO certification in the first harvest); and (4) Sustainability (it includes land, conservation, environment, and institutions).
This program aims to develop human resources and assistance with facilities and infrastructures based on target, right technical, right cost, and timely manner, as well as have a professional smallholder institution that can do partnerships (BPDPKS, 2020).
To determine and develop the replanting oil palm plantations in a planned and targeted manner, the government of Indonesia has issued a policy on raising funds for oil palm plantations as mandated in Law Number 39/2014 concerning Plantations (GoI, 2014). This was stipulated by Presidential Regulation Number 61/2015 in conjunction with Number 24/2016 concerning the Collection and Use of Oil Palm Plantation Funds (GoI, 2015 and GoI, 2016). This policy provides a basis for setting the priority scale for developing oil palm plantations owned by smallholders according to requirements by integrating all aspects to increase productivity.
Replanting is a national strategic program covering all central areas of smallholder oil palm plantations in Indonesia. At least 2.1 million hectares of smallholder plantations were identified and suspected of using low-quality seeds, while 0.3 million hectares were no longer productive (over 25 years). Thus, there are a total of 2.4 million hectares of unproductive oil palm plantations, which are the main cause of the low productivity of smallholder oil palm plantations as well as the main target of the replanting program (Sawit Plus 2018; Subagyono 2020; and ICASEPS, 2023).
Technically, BPDPKS distributes financial assistance of Rp 30 million (US$ 1,971) per hectare per farmer. However, this financial assistance can only cover planting seed provision. The rest will be fulfilled by three financing schemes. First, BPDPKS and smallholders' savings funds scheme. Second, BPDPKS supported by smallholders' submission of the People’s Business Credit (KUR) scheme. Third, combination schemes of BPDPKS, smallholders' savings funds, and KUR.
The criteria for the replanting program are oil palm plantations that: (1) Pass the economic age of 25 years; (2) Produce fresh fruit bunch of fewer than 10 tons per hectare per year at a minimum age of seven years; and (3) Using not certified seeds for at least two years. It is carried out by farmer’s groups, farmer’s group associations, and cooperatives through online applications and verified by regional offices or surveyors appointed by the Directorate General of Estate Crops, Ministry of Agriculture.
The replanting program is provided to a maximum of four hectares per household which has land legality in the form of Property Rights Certificates (SHM), Land Certificates (SKT), Land Compensation Certificates (SKGR) Land, Sporadic, Girik (Letter C), Deed of Sale and Purchase of Land (AJB), Customary Rights (communal) or other recognized land rights that are as existing. Program participants who receive and take advantage of the replanting program are expected to be able to buy all the needs of production facilities and infrastructure so that they can implement a technology package that can increase productivity, cost efficiency, increase income which has an impact on national production performance, added value, competitiveness, and exports toward sustainable downstream oil palm targets. Several financing schemes facilitate them.
The government is targeting replanting of 540,000 hectares of oil palm plantations owned by smallholders by 2024. However, according to data from BPDPKS, the realization of the program from 2016 to 30 June 2022 has only reached 256,744 hectares (47.55%). It was noted that from 2016 to 30 June 2022, the realization of the distribution of replanting program reached 256,744 hectares for 112,414 smallholders and Rp 7.01 trillion (US$ 0.45 billion) in funds. In 2020 the realization reached 94,033 hectares, but in 2021 it was decrease to 42,212 hectares (BPDPKS, 2022).
The replanting program includes (1) Preparation cost (administration of making farm maps and establishing institutions); (2) Replanting cost (land preparation, procurement of certified seeds, fertilizers, pesticides, agricultural equipment, and infrastructure); and (3) Human resource development cost (assistance and facilitation aimed at increasing the capacity of program participants in terms of productive and environmentally friendly plantation management). It will be completed in 2033, covering 2.8 million hectares of oil palm plantations.
From 2017 to 2022, the program was technically recommended in 21 provinces and implemented in 20 provinces. Cumulatively, there were 258,654 hectares of recommended smallholder oil palm plantations but only 189,369 hectares (73.21%) had been planted under this program, dominantly in the central producing areas of oil palm in Sumatra and Kalimantan.
Indonesia’s Ministry of Agriculture (MoA) has implemented the replanting program of smallholder oil palm plantations targeted to cover 180,000 hectares per year in 123 regencies/cities of 21 provincial central producing areas. From 2017 to 2022, the achievement of this program was 278,200 hectares or almost 10% of the total areas of 2.80 million hectares that have been replanted. In 2023, the Indonesia MoA, through the Directorate General of Estate Crops, distributed the replanting program in 112 regencies/cities of 20 provinces based-submitted proposals from the respective district and provincial offices. Meanwhile, the target distribution for proposing partnerships with plantation companies is in 24 regencies/cities of 11 provinces.
The implementation of this program only achieved 258,652 hectares (27.94%). It involved 112,803 households of smallholders and 1,422 units of farmer’s groups/cooperatives supported by transferred finance from BPDPKS of about Rp 6,892 million (US$ 459,458). Hence, there is a need to accelerate the annual and cumulative target achievements from 2017 to 2022 while identifying the occurring problems in each stage to improve the implementation of this replanting program (ICASEPS, 2023).
The low rate of the implementation of the replanting program was due to the following reasons: (1) Deliberated data administration and verification of smallholders; (2) High issues on land legality (e.g., located in forest areas and without land ownership certificates); and (3) Other constraints such as readiness of seeds, disbursement of funds, and existence institutional smallholders. In addition, simplifying the requirements and procedures for submitting funds was hampered by the need for legality and the authority of which rests with many agencies (both at the central and regional levels).
JURISDICTIONAL APPROACH
Concept of jurisdictional approach
The concept of a jurisdictional approach is relatively new in Indonesia. As initially introduced in 2014, this concept was known in the context of Reducing Emissions from Deforestation and Forest Degradation (REDD+) and developed as part of an effort to increase commitment to a deforestation-free supply chain. The jurisdictional approach was quite an unfamiliar term among organizations working to reduce deforestation and promote sustainable land use in the country. In 2018, the jurisdictional approach started as an initiative to track sustainable palm oil and define jurisdictional sustainability on a scale. In other words, it produces credible information and analysis to increase mutual understanding and trust in the sustainability of Indonesian palm oil. By early 2020, concept elements had been incorporated into official plans and regulations in several provinces and districts and were recognized in the government’s national medium-term development plan (Seymour et.al, 2020; EFI, 2023).
The jurisdictional approach has the following aspects: (1) Accommodated various stakeholders; (2) Oriented to the outcome; (3) Driven by local government through improved policies and governance; (4) Multi-level approach; (5) Issued across law, plantation, forestry, spatial planning, environmental governance, land, and regional development; and (6) Collaborated program and transparent monitoring framework (Rudiyanto, 2021). Moreover, this jurisdictional approach comprises four aspects (environmental, social, economic, and governance), including 22 indicators (Table 3).
Five indicators among 22 indicators are set to develop and assess the area’s sustainability level through a multi-stakeholder process. It becomes the basis for determining incentives and disincentives for regional governments, including the distribution of transfer allocations to the regions. The five indicators are as follows (EFI, 2023):
The jurisdiction approach aims to promote the transition to sustainable commodity production by demonstrating the progress of Indonesian districts toward sustainability and providing incentives to encourage further progress by strengthening trade in sustainable palm oil. This initiative aims to strengthen efforts to address governance, regulatory, and technical challenges to achieve sustainability by measuring district performance and communicating with policymakers and market players. This initiative aims to protect forests and deliver inclusive benefits to smallholders, companies, and consumers by aligning national and international supply chain actors in their efforts.
The entry point of the jurisdictional approach is the local government (particularly the district administration) which has legislative, regulatory, political, and general administrative authorities. It is one of the regional-based development approaches considering the synergies across sectors, actors, and geographical units expected to encourage the stakeholders’ participation. Every sector, actor, and geographical unit could benefit from planned and implemented development programs (IPB, 2019). It follows political boundaries; its success depends on the commitment and leadership of local governments.
Despite the jurisdictional approach generating potential benefits, it has some challenges. First, implementation can be complex and costly, and it can take time to deliver results. The multi-stakeholder approach requires ample negotiation, compromise, and tradeoffs in establishing and working towards multiple goals that may not be mutually reinforcing. To add to the complexity, these goals can also be impacted or influenced by external factors beyond the control of the jurisdictional actors. Second, the important ingredient of government engagement can be challenging due to political turnover, poor alignment across divisions, capacity, resource constraints, transparency, and limited access to information. In addition, the boundaries for implementation can be physically misaligned with the ecosystem landscape boundaries, which would have the greatest environmental impact. Third, it needs significant funding and support, which can be hard to engage companies in supporting a particular jurisdiction, particularly for those that source from many places and do not have strong links with specific supply regions due to the nature of the commodities and their position in the supply chain. Fourth, the benefits will largely flow to producers, making it unclear whether governments will get sufficient resources and incentives to engage. Also, at this stage, there are few success stories to point to as examples for garnering more support and assuaging the concerns of potential partners and investors. Fifth, there is a risk that larger-scale sustainability will not be achieved, for example, because of companies shifting sourcing away from underperforming jurisdictions and only incentivizing higher-performing jurisdictions (Buchanan et al., 2019).
The big challenge is the implementation of jurisdictional approach-based regional development approaches. It notes that every local government has a specific performance in line with local autonomy administration. Moreover, the contribution of palm oil to regional development is relatively low (Rudiyanto, 2021). It is indicated by the absence of a correlation between the value of palm oil exports and the Gross Regional Domestic Product (PDRB). Several issues are identified such as: (1) There are no regulations regarding profit sharing funds (DBH) from oil palm, but only derived from forestry, oil and gas, mineral and coal, geothermal, and fisheries; (2) Local Government Budget (APBD) source from oil palm only comes from Land and Building Tax (PBB) of plantation, income tax (PPh), Value Added Tax (PPN), and Export Duty; and (3) The largest revenue from palm oil comes from export levies managed by BPDPKS and used for developing human resources, research and development, replanting, facilities and infrastructure, and promotion of oil palm plantations. Consequently, the development of the palm oil industry could be categorized as not the main priority of the local government. However, the implementation of certification, replanting, and farm development programs from the perspective of a jurisdictional approach is strategically based on some key elements.
The perspective of jurisdictional approach on certification program
The jurisdictional approach on oil palm certification refers to the certification of entire regions or jurisdictions based on sustainable practices in the oil palm sector. This approach aims to address environmental and social concerns at a larger scale, promote sustainable production, and support the reputation and marketability of Indonesian palm oil. Some key elements of the jurisdictional approach for oil palm certification are as follows:
The perspective of jurisdictional approach on replanting program
Replanting oil palm involves various jurisdictional approaches that address environmental concerns, promote sustainable practices, and support the palm oil industry. The following some key aspects of the jurisdictional approach on replanting oil palm:
The jurisdictional approach in the context of sustainable palm oil in Indonesia refers to an integrated effort to transform entire landscapes or jurisdictions (like provinces, districts, or municipalities) to produce sustainable commodities, rather than targeting individual farms or plantations. While this approach offers potential solutions to the environmental and social issues posed by the palm oil industry, there are several challenges and problems associated. Among other things are (1) Scale and complexity with multiple jurisdictions and layers of governance; (2) Existing problem related to inter-jurisdictional coordination in terms of process given differing objectives and priorities; (3) Policy and regulatory gaps i.e., inconsistencies between national policies and local interpretations can create challenges (some jurisdictions might have regulations that promote sustainable practices, while others may not, leading to uneven results); (4) Heterogeneity, in which every jurisdiction has unique socio-economic, environmental, and political characteristics (a strategy that works in one district might not be effective in another – this makes it hard to implement a standardized approach across regions); and (5) Policy and regulatory gaps such as inconsistencies between national policies and local interpretations can create challenges. Some jurisdictions might have regulations that promote sustainable practices, while others may not, leading to uneven results.
Addressing the above-mentioned challenges and problems requires a holistic and multi-stakeholder approach that takes into account the complexities of the palm oil industry, local contexts, and the interests of various stakeholders. It also emphasizes the importance of strong governance, transparency, and active engagement from both the private and public sectors. While the jurisdictional approach offers an inclusive way to promote sustainable palm oil production in Indonesia, its effective implementation is fraught with challenges. Solutions will likely require coordinated efforts, innovative financing, and robust monitoring and verification systems.
CONCLUSION AND RECOMMENDATION
The jurisdictional approach is a new strategy to achieve sustainability in the palm oil sector, including achieving a deforestation-free supply chain and optimizing regional revenues. It needs to be continued by conducting periodic evaluations. Moreover, further studies on the mechanism for sharing national and regional revenues from the palm oil sector must be carried out. Increasing regional revenues from palm oil need to be strengthened in the downstream of the palm oil industry by building palm oil factories and refineries. Product diversification is also necessary to strengthen income stability in palm-producing regions.
It is important to note that the specific jurisdictional approach on oil palm certification may vary across different regions in Indonesia, as it depends on local regulations, initiatives, and collaboration among stakeholders. The aim is to promote sustainable practices, improve the palm oil sector's environmental and social performance, and enhance Indonesian palm oil's market acceptance. Moreover, the goal of the jurisdictional approach is to promote sustainable practices and responsible replanting to mitigate environmental impacts and support the long-term viability of the palm oil industry. These approaches recognize the importance of inclusive development, social equity, and the active participation of local communities in shaping the future of the palm oil industry.
REFERENCES
Arifin, B. 2023. Aspek Kemitraan UMKM dan Usaha Besar Bidang Pertanian, Perkebunan, Kelautan dan Perikanan dalam UU 6/2023 Cipta Kerja (Partnership Aspects of Micro, Small and Medium Enterprises and Large Enterprises in Agriculture, Plantation, Maritime Affairs and Fisheries in Law Number 6/2023 on Job Creation). FGD Aspek Kemitraan Bidang Pertanian dalam UU 6/2023 Cipta Kerja dan Turunannya (Focus Group Discussion on Partnership Aspects in the Agricultural Sector in Law Number 6/2023 on Job Creation and Its Derivatives). 16 June 2023. Jakarta.
BPDPKS. 2020. Program Peremajaan Perkebunan Kelapa Sawit (Replanting Program of Smallholder Oil Palm Plantation). Retrieved from: bpdp.or.id (19 August 2023).Badan Pengelola Dana Perkebunan Kelapa Sawit (Oil Palm Plantation Fund Management Agency). Jakarta
BPDPKS. 2022. Prinsip dan Kriteria ISPO (Principles and Criteria of ISPO). Retrieved from: https://www.bpdp.or.id/prinsip-kriteria-ispo-2 (17 June 2023). Badan Pengelola Dana Perkebunan Kelapa Sawit (Oil Palm Plantation Fund Management Agency). Jakarta.
Buchanan, J., J. Durbin, D. McLaughlin, L. McLaughlin, K. Thomason, and M. Thomas. 2019. Jurisdictional Approach to Sustainability Commitments in Palm Oil and Soy Supply Chains. Conservation International, March 2019.
Databox. 2020. 2,7 Juta Petani Bergantung pada Perkebunan Sawit Rakyat (2.7 Million Farmers depend on Smallholder Oil Palm Plantations). Retrieved from: https://databoks.katadata.co.id/datapublish/2020/ 04/06/27-juta-petani-bergantung-pada-perkebunan-sawit-rakyat (5 January 2023).
DECC. 2017. Keputusan Direktur Jenderal Perkebunan Nomor: 29 Tahun 2017 tentang Pedoman Peremajaan Tanaman Kelapa Sawit Pekebun, Pengembangan Sumber Daya Manusia dan Bantuan Sarana dan Prasarana dalam Kerangka Pendanaan Badan Pengelola Dana Perkebunan Kelapa Sawit (Decree of the Director General of Plantations Number: 29 of 2017 concerning Guidelines for Planters Rejuvenating Palm Oil Plants, Human Resource Development and Assistance Facilities and Infrastructure in the Funding Framework of the Oil Palm Plantation Fund Management Agency). Directorate of Estate Crops. Indonesian Ministry of Agriculture. Jakarta.
DGEC. 2021. Statistik Perkebunan Unggulan Nasional 2020-2022 (Statistics of National Leading Estate Crops Commodity 2020-2022). Directorate General of Estate Crops. Indonesian Ministry of Agriculture. Jakarta.
DGEC. 2023. Sistem Terpadu Pendaftaran Usaha Budidaya Perkebunan untuk Pekebun Swadaya (Integrated System for Plantation Cultivation Business Registration for Independent Smallholders). Retrieved from: https://stdb.ditjenbun.pertanian.go.id/beranda (18 August 2023). Directorate General of Estate Crops. Indonesian Ministry of Agriculture. Jakarta.
EFI. 2023. Sejarah Pendekatan Yurisdiksi Berkelanjutan (The History of the Sustainable Jurisdiction Approach). European Forest Institute and Kementerian Perencanaan Pembangunan Nasional//Bappenas (Nasional (Ministry of National Development Planning/National Development Planning Agency). Jakarta.
GoI. 2020. Peraturan Presiden Republik Indonesia Nomor 44 Tahun 2020 tentang Sistem Sertifikasi Perkebunan Kelapa Sawit Berkelanjutan Indonesia (Presidential Regulation of the Republic of Indonesia Number 44/2020 concerning Indonesia’s Sustainable Palm Oil Plantation Certification System). Government of Indonesia]. Jakarta.
ICASEPS. 2023. Akselerasi Program Peremajaan Sawit Rayat terhadap Peningkatan Eisiensi Biaya dan Daya Saing Kelapa Sawit Rakyat (Acceleration of the Palm Oil Replanting Program to Improve Cost Efficiency and Competitiveness of Smallholder’s Oil Palm). Collaboration of Indonesian Center for Agricultural Social Economic and Policy Studies and Badan Pengelola Dana Perkebunan Kelapa Sawit (Oil Palm Plantation Fund Management Agency). Bogor.
IPB. 2019. The Guidelines for Planning of Regional Sustainable Plantation based on a Jurisdictional Approach (Case Study: Oil Palm Plantation). Retrieved from: https://p4w.ipb.ac.id/en/the-guidelines-for-planning-of-regional-sustainable-plantation-based-on-a-jurisdictional-approach-case-study-oil-palm-plantation/ (13 June 2023)
MoA. 2020. Peraturan Menteri Pertanian Republik Indonesia Nomor 38 Tahun 2020 tentang Penyelenggaraan Sertifikasi Perkebunan Kelapa Sawit Berkelanjutan Indonesia (Regulation of the Minister of Agriculture of the Republic of Indonesia Number 38/2020 concerning Implementation of Indonesian Sustainable Palm Oil Plantation Certification). Indonesian Ministry of Agriculture Jakarta.
MoA. 2022. Peraturan Menteri Pertanian Republik Indonesia Nomor 3 Tahun 2022 tentang Pengembangan Sumber Daya Manusia, Penelitian dan Pengembangan, Peremajaan, serta Sarana dan Prasarana Perkebunan Kelapa Sawit (Minister of Agriculture Regulation Number 3/2022 on Development of Human Resources, Research and Development, Replanting, Facilities, and Infrastructure of Oil Palm Plantations). Indonesian Ministry of Agriculture. Jakarta.
Mongabay.co.id. 2020. Petani Sawit Swadaya Masih Hadapi Berbagai Masalah (Independent Palm Oil Smallholders Still Face Various Problems). Retrieved from: https://www.mongabay.co.id/2020/11/27/ petani-sawit-swadaya-masih-hadapi-berbagai-masalah/ (19 August 2023)
Rob Cook. 2023. Indonesia was the largest producer of oil palm fruit in the world in 2019 followed by Malaysia and Thailand. Retrieved from: https://beef2live.com/story-ranking-countries-produce-oil-palm-fruit-fao... (17 January 2023). Ranking of Countries that Produce the Most Oil Palm Fruit (FAO). Rob Cook, Published on 15 January 2023.
RSPO. 2018. RSPO Principles and Criteria: National Interpretation. Round Table on Sustainable Palm Oil. Kuala Lumpur.
Rudiyanto, A. 2021. Pembangunan Berkelanjutan melalui Pendekatan Yurisdiksi dan Transfer Fiskal (Sustainable Development through Jurisdiction and Transfer Approaches). Kementerian Perencanaan Pembangunan Nasional/Bappenas (Ministry of National Development Planning/National Development Planning Agency). Jakarta.
Saragih, B. 2017. Oil Palm Smallholders in Indonesia: Origin, Development Strategy, and Contribution to the National Economy. Discussion at the World Plantation Conference and Exhibition. Jakarta. 18-20 October 2017.
Sawit Plus. 2018. Replanting tak semudah membalik tangan (Replanting is not as easy as turning the hand). Retrieved from: https://www.Sawitplus.Com/2018/02/24/Dirjenbun-Replanting-taksemudahMembalik-Tangan/ (6 June 2023).
Seymour, F. J., L. Aurora, and J. Arif. 2020. The Jurisdictional Approach in Indonesia: Incentives, Actions, and Facilitating Connections. Policy and Practice Reviews. Published on 9 November 2020. Frontiers in Forests and Global Change November 2020, Volume 3, Article 503326.
Subagyono K. 2021. Akselerasi Program Peremajaan Sawit Rakyat (Acceleration of Smallholder Oil Palm Replanting Program). Focus Group of Discussion, Jakarta, 10 March 2021.
UNDP. 2015. Joint Study on the Similarities and Differences of the ISPO and the RSPO Certification Systems. United Nations Development Programme in collaboration with and Indonesian Ministry of Agriculture, Indonesian Sustainable Palm Oil, and Roundtable on Sustainable Palm Oil. Jakarta.
[1] STDB is a collection of data and registration of planters with an area of less than 25 hectares by the government for 137 plantation commodities, including oil palm. The issuance process is preceded by data collection, field verification, and validation of the land owned by the smallholders who submitted the application (DGEC, 2023)