Working with smallholders
To achieve true balance in nature, we work in partnership with its guardians—the farmers and smallholders who grow, nurture, and harvest our crops—to improve livelihoods and share the benefits of sustainable agriculture.
Smallholder farmers contribute approximately 40% of global oil palm production and play an important role in the world’s food systems, producing around one third of the global food supply. Collaborating with smallholders is therefore essential for advancing sustainability goals within the palm oil sector.
SIPEF’s smallholder programmes and services emphasise inclusivity, best management practices, certification, and the reduction of cost barriers, enabling smallholders to engage in sustainable practices and benefit from SIPEF's technical expertise. In doing so, they enjoy improved livelihoods through higher yields, better production quality, increased incomes, and enhanced access to international markets.
Oil palm smallholders
More than 9,000 smallholders participate in our oil palm programmes in Indonesia and Papua New Guinea. Together, they manage over 20,000 hectares of production area.
SIPEF engages with five main types of smallholders: ‘associated’, ‘company managed’, ‘village’, ‘associated buy/sell’, and ‘associated seedling’ smallholders.
Through our smallholder programmes, we provide smallholder farmers with extension services, including agronomic advice and quality seedlings to support improved yields. We also conduct training sessions to communicate our policies and provide guidance on responsible practices and certification requirements. Where appropriate, we offer additional support in the form of zero- or low-interest loans for seedlings and tools.
Our approach and activities are tailored to the the country of operation and the smallholder type, allowing us to accomodate for different legal requirements, local contexts, and specific challenges. In Papua New Guinea, for example, we collaborate closely with research partners to identify and address risks faced by oil palm smallholders supplying our mills in West New Britain. This includes research and development on integrated pest management, disease control, outreach and awareness initiatives, as well as projects aimed at improving livelihoods and supporting community development.
Supporting smallholders to certification
SIPEF supports smallholders in their journey towards improved, sustainable, and certified production. By taking advantage of our training and support, smallholders can achieve RSPO certification. This allows them to earn higher incomes and have better access to international markets.
Around 80% of SIPEF’s total smallholder production area is certified according to the Roundtable on Sustainable Palm Oil (RSPO) standard.
Indonesian regulations, which require 20% of any new or renewed concession rights agreement areas (Hak Guna Usaha – HGU) to be allocated to smallholders, slows our ability to achieve full certification, as we must engage additional smallholders whose integration into the certified supply base takes time. To ensure that our own mills maintain full certification, crops from smallholders still undergoing certification are processed separately by third-party mills.
Our Responsible Purchasing Policy supports the integration of new smallholders. This policy provides a framework for assessing risks related to legal compliance, no deforestation, Free, Prior and Informed Consent (FPIC), and traceability. It also sets out procedures to monitor, support, evaluate progress, and review the participation of smallholders who are not yet compliant.
For more information on the procedures for assessing and managing supplier-related risks, visit SIPEF's deforestation-free supply chain.