Improving Climate Performance and

Creating Sustainable Livelihoods for Oil Palm

Smallholders in Indonesia
Introduction
Solidaridad Network is proposing a new programme in Indonesia to support the Government’s stated
climate and land use policy goals - which contribute to the global Paris targets - while making
smallholder oil palm cultivation more sustainable and profitable. Solidaridad has been active in
Indonesia for a decade supporting policy dialogues, convening stakeholders as well as implementing
sustainable practices in the field. Solidaridad believes that top-down private sector driven
international sustainability standards had its share of success but it didn’t lead to significant difference
in addressing challenges of deforestation and sustainable livelihood. The changes were restricted to
only palm oil and kept out majority of the smallholders who were not supplying to the private
companies promoting the certification scheme. We believe that there exist already significant policies
and tools within Governments of Indonesia. Solidaridad is in a position to leverage its existing
partnerships with central and provincial departments of Government to support implementation of
these schemes and enhance its efficiency. At the same time Solidaridad would engage with the policy
makers at the national level for a coordinated strategy on achieving the national targets.

Context and Background

Agricultural sector contributed around 13.4% to Indonesian GDP in 2014; 16.7% of which came from
oil palm sector, the highest contributor to agricultural sector – outweighed the second contributor:
rubber and its derivatives which was 4.8% (Ministry of Agriculture, 2015)1. Oil palm sector has become
very essential to Indonesian economy. The business is characterised by labor intensive. In 2017, the
export value of this sector reached USD 23 billion, increased 26% from 2016 value. It becomes source
of income and employment for more than 4.72 million people2 all around Indonesia. Not only serves
as cooking oil and its other derivatives, this commodity’s role has been escalated to achieve energy
security and government’s target to reduce GHG emission by replacing solar import of the country by
3 million KL in 2016. In detail, please see figure 1.

Palm oil is a highly controversial commodity, yet a tremendous land-based commodity that supports
the subnational and national economies of Indonesia. Its development has been relatively marked
with deforestation, peatland conversion, land degradation, GHG emission, fire calamity as well as
declined biodiversity. Indonesian fire and haze in 2015 contributed to an economic loss of US 16.1
billion (Glauber and Gunawan, 2016)3, 24 people death and 100,300 people preliminary death (Koplitz
et al., 2016)4.

1
http://epublikasi.setjen.pertanian.go.id/perstatistikan/173-analisis/analisis-pdb/365-analisis-pdb-sektor-
pertanian-2015
2
Ibid.
3
http://pubdocs.worldbank.org/en/643781465442350600/Indonesia-forest-fire-notes.pdf
4
http://iopscience.iop.org/article/10.1088/1748-9326/11/9/094023/pdf
Figure 1. Palm Oil Role to Indonesian Economy
Source: National Team for Acceleration of Povery Eradication (2018)

Between 1990 to 2005, more than a half of oil palm plantation development in Indonesia was
preceded by conversions of primary and secondary forests into timber industries (Koh and Wilcove,
2008)5. This finding is supported as well by IUCN (2018)6 analysing spatial maps of Kalimantan between
1973 and 2015 that reveal industrial oil palm plantations developed without additional forest loss due
to preceded by forest loss and degradation by timber extraction. However, between 2005 and 2015,
industrial oil palm plantations became the primary driver of deforestation in Borneo (Indonesia and
Malaysia), accounting for 50% (2.1 Mha) of Borneo’s old-growth forest area loss (4.2 Mha)7.

Indonesian oil palm cultivation is conducted by three sectors: private companies, state-owned
companies and smallholders. The palm oil smallholders started their participation in oil palm business
in the beginning of 1980. Since then, the portion of land cultivated by this actor has been growing
significantly. Palm Oil Statistics (2017) recorded that smallholders shared around 40.3% of the total
cultivated area in Indonesia in 2016. Even, the Indonesian Palm Oil Association (GAPKI) reported that
smallholders in 2017 have shared the biggest proportion, reaching 53% of total area8.

Figure 2. Indonesia’s oil palm

production, by actor type
(1978-2016)
** 2016 data is based on
projections
Source: Palm Oil Statistics
(2015-2017)

5
https://doi.org/10.1111/j.1755-263X.2008.00011.x
6
https://doi.org/10.2305/IUCN.CH.2018.11.en
7
https://doi.org/10.1038/srep32017
8
https://gapki.id/news/3875/peran-strategis-sawit-rakyat-indonesia
Kalimantan, as a whole together with Sabah & Serawak of Malaysia known as Borneo Island – the
earth’s third largest island with a 73.7 million hectares (Mha) landmass, is well known for having vast
pristine forest supporting global oxygen supply and other global as well as local ecosystem services.
Indonesian Ministry of Forestry (2014)9 through National Forest Inventory Study between 1996-2013
reveals the carbon content (ton C/ha) in seven big islands in Indonesia (table 1). By aggregate of the 7
land cover classes, Kalimantan is the fourth having high carbon content after Maluku, Sulawesi and
Jawa. This condition has positioned Kalimantan as quite important island in maintaining carbon level.

Table 1. Carbon Content by Land Cover Classes in Seven Big Islands in Indonesia
Carbon Content (ton C/ ha)
Land Cover
No Sumatera Kalimantan Sulawesi Jawa Bali-Nusa Maluku Papua
Classes
Tenggara*
1 Primary 134.29 134.71 137.62 72.14 137.19 150.72 119.83
Dryland Forest
2 Secondary 91.12 101.63 103.26 85.25 81.37 111.08 90.22
Dryland Forest
3 Primary 227.30 162.00 188.30 393.62 188.30 116.79 116.79
Mangrove
Forest
4 Secondary 52.98 116.00 92.80 179.00 94.07 37.03 37.03
Mangrove
Forest
5 Primary 110.42 137.77 107.19 0.00 0.00 198.06 89.39
Swamp Forest
6 Secondary 75.70 85.27 85.27 0.00 0.00 117.20 72.84
Swamp Forest
7 Plantation 76.70 54.70 92.65 75.19 110.79 172.50 172.50
Forest
Total 768.51 792.08 807.09 805.20 611.72 903.38 698.60
Note: *) Comprises of three islands: Bali island, West Nusa Tenggara and East Nusa Tenggara

Our analysis from interpretation of satellite data of 7 targeted project areas (Sintang, Sanggau,
Sekadau, Melawi, Kapuas Hulu, Bengkayang and Landak – other three targeted project areas in East
Kalimantan are not included due to limited resources) reveals that around 198,216 hectares of forest
area in 7 districts was converted into industrial oil palm plantations between 2000 and 2017. However,
quite vast areas of oil palm plantations also come from agricultural dryland and abandoned/open land
which can increase carbon stock as these two land uses have lower carbon content compared to oil
palm10. Our estimation shows that between 2000 and 2017, land use conversions have caused around
4.6 million tons C to be emitted from these 7 districts11. Nevertheless, this is just a rough estimation
only taking into account land uses in 2000 converted into industrial oil palm plantation in 2017. Further
research and more detailed data as well as thorough system investigation will be needed to confirm
the estimation. For better overview about these land use conversions between 2000, 2010 and 2017,
see figure 3.

http://appgis.dephut.go.id/appgis/download.aspx?status=view&filename=Buku%20Pemantauan%20Emisi%20
dan%20Serapan%20Karbon_2015_Tosiani.pdf&fileFullName=E:%5Cwebgisapp%5CDownload%5CPemantauan
%20Hutan%20Nasional%5CBuku%20Pemantauan%20Emisi%20dan%20Serapan%20Karbon_2015_Tosiani.pdf
10
Ibid.
11
Estimation is based on IPCC methodology, which is activity data multiplies emission factor. Activity data was
derived from land use changes (all land uses that converted into oil palm plantation) between 2000 and 2017;
while emission factor was derived from study of Ministry of Forestry (2014).
 2000

Water body
District border
Subdistrict border

Land Uses
Primary dry forest
Secondary dry forest
Secondary swamp forest
2010 Plantation forest
Open land
Plantation
Human settlement
Mining
Dryland agriculture
Mixed dryland agriculture
Swamp
Paddy field
Shrub/ bush
Swamp shrub/bush
Airport

2017

Figure 3. Land Use Changes in Landak, Bengkayang, Sanggau, Sekadau, Melawi, Sintang and Kapuas Hulu
from 2000, 2010 and 2017.
Due to this concern, Solidaridad Indonesia has focused its resources and attention to help achieve
sustainable development in Kalimantan. Since 2012, Solidaridad has embarked some phases of
continuous projects to support oil palm smallholders to achieve sustainable livelihood and ecological
performance.

The first project started in 2012 as Improved Livelihoods for Smallholder Farmers in West Kalimantan
supported by the Dutch Ministry of Foreign Affairs (FSP, PFC), BASF and Henkel. It covers five districts
of Sintang, Sekadau, Sanggau, Melawi and Kapuas Hulu and will run till June 2019. The project is
formulated in response to the issues of income fluctuation, the need for environmentally sustainable
farming practices, and to address lagging yield improvement.

A central theme of all phases, particularly phase 3, has been the capacity building of key staff at KKG
and its business units (CUKK, K77, and K52). The main achievements of the project are as follows:

1. Capacity building for farmers through Farmer Field School (1,045 farmers graduated during 2016-
2017, 31% female) and Financial Literacy programs (2,541 people completing the program during
2017, 55% female).
2. Based on a survey conducted by one of KKG’s division, farmers have 4% increase of their harvest
yield after finishing the FFS program. Now with the availability or fertilizer due to MoU with PT.
Pupuk Kalimantan Timur, we expect this number will further increase. Farmers’ income increased
by 10%, which is also influenced by the rise of FFB prices.
3. K77 plays significant role in linking farmers to the market through partnerships with nearby mills
for rubber and palm oil FFB. Farmers received a better price for their FFB through this partnership.
4. CUKK has started the preparation to get “Client Protection Certification” by the end of the project.
This certification is an independent, third party evaluation to publicly recognize financial
institutions that meet adequate standards of care in how they treat clients. It encourages practices
that aim to ensure prudent, transparent, and respectful treatment of clients that expected to
contributes to a more stable financial inclusion industry.

Farmer Field School Financial Literacy

K77, the producer cooperative K52, the consumer copperative

Figure 4. Pictures of Improved Livelihood program’s interventions

The second project is Two Goals with One Kernel supported by The David and Lucile Packard
Foundation, covering 4 districts of Sintang, Sanggau, Sekadau and Melawi, to support the growth of
the oil palm sector while reducing greenhouse gasses emission through avoiding expansion onto forest
and peat areas in the four targeted districts of West Kalimantan.

Some key achievements include:

• Training for more than 1,400 farmers, of which 24% are female through farmer field school and
smallholders training programs on how to efficiently use/ apply chemical fertilizers to reduce
leaching and GHG emission and also to restore soil fertility
• RSPO introduction to more than 300 farmers
• Mapping more than 2,700 farmers’ plantations and farmers’ data record
• Mapping 740 ha of forest area through participatory mapping for forest conservation action.
• Financial capability training for 90 farmers and formation of 4 self-help business groups.
• Training for village government in village management and development of village business unit
(BUM-Des) for sustainable business
• Strengthening local government capacity, in sustainable palm oil in particular and in sustainable
district development in general.

Demoplot of Good Agricultural Practices GPS & Drone Mapping

Nursery for Replanting Program RSPO sensitizing training

Figure 5. Pictures of TGOK program’s interventions

Problem Analysis
Palm oil has been held responsible for deforestation, degraded peatland and fire as well as smog
calamity. These impacts of palm oil production have been well documented and highly publicised.
Around 50% of all deforestation on Borneo island between 2005 and 2015 was driven by oil palm
development12. Aligned with aforementioned issues, oil palm sector has been negatively related to
large amount of GHG emission due to forest clearing and drained peat. Additionally, oil palm
plantations have been observed to release nitrous oxide (NO2), a potent GHG with a global warming
potential estimated at 265-298 times greater than CO2, to the atmosphere due to massive use of
chemical fertilizer. Oil palm plantations and the production of palm oil have been as well indicted as
significant source of methane, the GHG that is more efficient at trapping radiation than CO2 and has a
global warming potential estimated at 25 times greater than CO2.

The essential point is that palm oil needs to be produced more sustainably. Oil palm sector contributed
16.7% to agricultural sector of Indonesian GDP in 2014, the highest contributor to the agricultural
sector. This commodity has become source of income and employment for more than 4.72 million
people all around Indonesia. Though palm oil has a controversial position, a simple shift from palm oil
to other oil crops is not a solution as it may lead to further biodiversity loss due to the need for more
land as other major oil crops produce only less than one ninth of oil palm production per unit area
(IUCN, 2018)13. Oil palm can help meet global demand for vegetable oils that is estimated to grow
from an annual 165 million tonnes now to 310 million tonnes in 205014.

Palm oil smallholders can play significant role in realizing sustainable palm oil in Indonesia as they
contribute around 40.3% to the total oil palm area in Indonesia (Palm Oil Statistics 2015-2017)15.
However, independent smallholders are currently poorly equipped with all necessary skills and
knowledges (Rietberg and Slingerland, 2016)16. Due to low yield and economic welfare, they are
presumed to be in need of more land for cultivation to earn higher income. This condition on the
ground could threaten forest, peatland and HCVAs (high conservation value areas) to be encroached
and converted. In the light of these issues, we see that capacity empowerment, economic
development as well as organizational skills are some of the key components to help palm oil
smallholders become sustainable.

The growth of the independent oil palm smallholders occurred without any far-reaching government
planning or support (McCarthy and Zen, 2016)17. Current policy to action gap has even worsen the
condition. Various government agencies are lacking of cohesive as well as coherent actions. For
instance, different definition of palm oil smallholders between Ministry of Agriculture and Central
Statistic Bureau has caused confusion and different government data about palm oil smallholders
which can pose serious challenges for regulating and providing supports to independent smallholders.
The governments are also lacking the efficiency in policy implementation. This case is reflected by the

12
https://doi.org/10.2305/IUCN.CH.2018.11.en
13
Ibid.
14
Ibid.
15
http://ditjenbun.pertanian.go.id/tinymcpuk/gambar/file/statistik/2017/Kelapa-Sawit-2015-2017.pdf
16
http://www.sensorproject.net/wp-content/uploads/2017/04/Barriers-to-smallholder-RSPO-certification-
Sep16_FINAL.pdf
17
McCarthy, J.F., Zen, Z., 2016. Agribusiness, agrarian change, and the fate of oil palm smallholders in Jambi. In:
McCarthy, J.F., Cramb, R. (Eds.), The Oil Palm Complex: Smallholders and the State in Indonesia and Malaysia,
1st ed. National University of Singapore, Singapore, pp. 109–154.
monitoring of forest area. Although national government already declared location and width of forest
areas, but on the ground regional governments do not have adequate monitoring capacity and
resources which can then lead to encroachment or forest conversion. Governments’ effort to enforce
sustainability also faces challenges relating to limited adoption of national standard known as
Indonesian Sustainable Palm Oil (ISPO). Since issued in 2009, ISPO has only certified around 2 million
hectares out of 11.9 million hectares of Indonesian oil palm plantation. These conditions have
implicated that there are still a lot of policy harmonization, implementation efficiency, highest
penetration of national standard adoption to do, either by governments, private sectors, NGOs and
other stakeholders in order to achieve sustainable palm oil development in Indonesia.

Rationale
Governments (both central and local) have significant roles to help realize climate performance
improvement and sustainable livelihood creation for palm oil smallholders. At one hand, central
government plays the role of national GHG aggregation and reporting to UNFCCC. While on the other
hand, local governments play the role of regional GHG inventory and improving smallholders’
administration and documentation which can help better regulate and provide targeted supports to
them and thus enhance their access to domestic and global palm oil markets.

The proposed programme would help Indonesian Government to meet its climate and land use policy
goals which would contribute to the global Paris targets while making smallholder oil palm cultivation
more sustainable and profitable. The project interventions would be supplemented with government
engagement, policy support and the development of a mutually agreed framework to measure climate
performance. The programme will focus on achieving impact and outcomes on the ground through
the measurement of a number of performance indicators linked to the impact areas mitigation (GHG
emission reductions), adaptation (to climate change) and improved livelihoods of smallholders
(capacity, productivity & income).

Solidaridad will collaborate with IDH at national and provincial level to communicate and set-up the
work plan (2020-2022), KPIs and targets together with the targeted government agencies. At district
level, as currently Solidaridad and IDH do not share same target geographies, these two institutions
will work separately to involve the district governments. In West Kalimantan, Solidaridad is working in
5 districts of Sintang, Sekadau, Sanggau, Melawi and Kapuas Hulu, and adding Landak and Bengkayang;
while IDH currently is covering 3 districts of Kubu Raya, Ketapang and North Kayong. Three districts of
Solidaridad’s target geographies in East Kalimantan, currently are not covered by IDH as well.

Oil palm is an important cash crop in Indonesia, cultivated by more than two million smallholders
(Statistic of Indonesian Oil Palm 2015-2017), and is an important economic driver in rural economic
development in Indonesia. At national level, oil palm is the largest export commodity in crop estate
sector. Indonesia is the largest palm oil producer and exporter in the world. Albeit having controversial
position ecologically and socio-culturally, this sector is yet estimated to reach the production of 40
million tons by 2020 (Indonesian Palm Oil Association, 2017). Palm oil production in the world is
dominated by Indonesia and Malaysia. In total both countries produce approximately 85%-90% of
global palm oil production18 (please see the figure 6 below for further detail).

18
https://www.indonesia-investments.com/id/bisnis/komoditas/minyak-sawit/item166?
 Production in metric ton

36,000,000

21,000,000

2,200,000 1,320,000 970,000

Indonesia Malaysia Thailand Kolombia Nigeria

Country Figure 6. Global Oil Palm Production in 2016
Source: Mundi Index, 2016

Indonesian oil palm has been growing significantly in the last 20 years. This growth is reflected in the
number of production and export as well as increasing area of oil palm in Indonesia. Spurred by
increasing global demand and relatively more profitable commodity compared to others, oil palm has
developed quite rapidly both by smallholders and public/ private companies.

Table 2. Production and export of Indonesian Palm Oil (2008-2016)

Production Export Area

Year
(Million Tons) (Million Tons) (Million Ha)
2008 19.2 15.1 NA
2009 19.4 17.1 NA
2010 21.8 17.1 NA
2011 23.5 17.6 NA
2012 26.5 18.2 9.6
2013 30.0 22.4 10.5
2014 31.5 21.7 10.7
2015 32.5 26.4 11.4
2016 32.0 27.0 11.8
Source: Indonesian Palm Oil Producers Association Indonesia (GAPKI) and Indonesia Ministry of Agriculture

In addition to its tremendous economic performance, oil palm sector is negatively overwhelmed with
deforestation and peatland degradation issues. GHG data from Ministry of Environment (2013)
revealed that land use change and forestry (LUCF) was the biggest source of emission in Indonesia
that can alter the outlook of Indonesian GHG performance. During 2000 to 2005, Indonesian GHG
performance showed increasing trend. In 2002, there was a significant spike due to forest and peat
fire calamity (in detail, please see figure 7).

LUCF changed the

GHG outlook

Figure 7. Indonesian GHG outlook,

including and excluding LUCF
(2000-2005)
Source: Indonesian Ministry of
Environment (2015)
At the 10th COP of UNFCCC (in 2014), Indonesia gave its commitment to climate change control by
setting its target to reduce GHG emission unconditionally by 26% by 2020, and with another additional
12% of reduction if international support is provided to make 41% reduction. Since then, Indonesia
has strengthened its commitment towards this issue. In 2015, at the 21st COP of UNFCCC Indonesia
even increased its unconditionally target by 29% by 2030; while still same on 41% if international
supports are acquired. At the moment, Government of Indonesia, through governments’ funding
(excluding initiatives by private sectors, NGOs/CSOs and other societies due to limited resources and
capacities to capture those GHG emission reduction initiatives), has achieved GHG emission around
13% (National GHG Reduction Secretariat, 2014)19. This POSH funding will be essential and
fundamental as international funding support to help Indonesian Government achieve 41% GHG
emission reduction target.

As a follow-up to its commitment on ratifying the 21st COP agreement, Indonesia submitted its INDC
on November 2016 setting up the GHG reduction target for five focused sectors as follows: land-use,
land-use change and forestry (17.2%); energy – including transport (11%), agriculture (0.32%),
industrial processes and product use (0.10%) and waste management (0.38%).

To complement the mitigation actions, in 2013 the National Planning and Development Agency
formulated the National Action Plan for Climate Change Adaptation (RAN-API). The adaptation plan
intended to gather the necessary adaptation measures and improve the required adaptive capacity,
especially among farmers, fishermen, and coastal communities vulnerable to climate change. Based
on vulnerability assessment results, there were 15 regions20 indicated vulnerable to climate change
impacts, which includes: western and southern parts of Sumatera; western and eastern parts of Java,
Papua; almost all regions of Bali and Nusa Tenggara; northern parts of Kalimantan as well as northern
parts of Sulawesi (see figure 8). As the assessment was nearly 10 years ago, updated and more detailed
assessment in target geographies of POSH Indonesia is necessary.

Figure 8. Regions Indicated Vulnerable to Climate Change in Indonesia (SIDA, 2009 in RAN-API)

19
http://ranradgrk.bappenas.go.id/rangrk/index.php/home/publication_detail/20
20
http://perpustakaan.bappenas.go.id/lontar/file?file=digital/153661-[_Konten_]-Konten%20D492.pdf
To legally guide climate change mitigation and adaptation actions in Indonesia, the governments, both
national and provincial have issued some regulations. The most essential regulations are listed below:
● Presidential Regulation No. 61 Year 2011 on National Action Plan for GHG Emission Reduction;
● Presidential Regulation No. 71 Year 2011 on Inventory of National GHG;
● Presidential Regulation No. 16 Year 2015 on Ministry of Environment and Forestry;
● Intended Nationally Determine Contribution of Republic of Indonesia submitted by the Ministry
of Environment and Forestry to the UNFCCC;
● West Kalimantan Governor Regulation No. 27 Year 2012 on Regional Action Plan of GHG Emission
Reduction in West Kalimantan;
● West Kalimantan Governor’s Decree No. 5 Year 2013 on the Formation of Coordinating Team of
Regional Action Plan Implementation of GHG Emission Reduction, appointing Development
Planning Agency at Sub-National Level as the leading sector;
● East Kalimantan Governor Regulation No. 39 Year 2014 on Regional Action Plan of GHG Emission
Reduction in East Kalimantan.
● Indonesian Sustainable Palm Oil (ISPO) standard

Project Strategy
Overall Objective

The overall objective of the proposal for the inception phase (Jan-Dec 2019, 12 months) is to
collaborate with governments (both central and local) and all relevant stakeholders (private sectors,
academic institutions, development partner agencies as well as smallholders themselves) to establish
common understanding, goals, work plan, key performance indicators and monitoring system to
improve climate performance and create sustainable livelihood for palm oil smallholders in Indonesia.

To achieve the general objective described above, step-by-step strategic approaches have to be
properly formulated. As such, the iterative strategic approaches starting from outcomes till project
activities are formulated as follows as presented in table below.

Intervention Strategies

✓ Measurement mechanisms: Solidaridad will work with Ministry of Environment & Forestry and
National Planning & Development Agency to register and estimate climate change mitigation and
adaptation activities. Additionally, Solidaridad will collaborate with Coordinating Ministry of
Economic Affairs for ISPO strengthening and wider penetration.
✓ Round tables: Solidaridad will collaborate with all relevant stakeholders starting from government
agencies, private sectors, NGOs and farmer associations to set-up and pursue shared targets, as
well as enable knowledge sharing.
✓ Cohesions – common framework for policy engagement: Solidaridad will utilize ICT tools to
integrate policies as well as improve the role of regional planning and development agency in
coordination with local office of estate crops as the leading sector of sustainable palm oil.
✓ Stakeholder platform for discussion and deliberation: activation of stakeholder platform to serve
shared basis of pursueing common goals of various stakeholders.
✓ Resarch: to set up reliable data basis and references, effective solutions based on local conditions
✓ Capacity building of all level of governments
✓ Capacity building for farmers – groups and individuals
 2018 2019
Objective Outcomes Outputs Key Deliverables Activities
Q4 Q1 Q2 Q3 Q4
1. Climate Vulnerability Assessment to
Collaborating √ √
improve smallholders' resilience.
with
1. Climate 2. Desk-study of key government
governments √ √
Vulnerability agencies’ development targets.
(both central 1. Climate Vulnerability
Assessment in 10 3. Need assessment and gap analysis
and local) and Assessment in 10 target
target geographies. between current development
all relevant geographies is available. √ √
stakeholders Key government achievements and future targets of key
2. Key government agencies are
(private agencies commit to 2. LoI or MoU from 10 government agencies.
well informed about the
sectors, participate in the targeted local 4. Courtesy visits, presentation about the
programme.
academic, programme governments as a programme and how the programme can
3. Key government agencies’
development form of expressing add value as well as help key government √
development targets are
partner their commitments agencies to achieve their development
explored and identified.
agencies as to participate in the targets.
well as programme. 5. Consultation of letter of intent or
smallholders Memorandum of Understanding (LoI/MoU) √ √
themselves) to with key government agencies
establish 1. Key government agencies and
common Key government 1. Joint definition of
project proponents are
understanding, agencies and Climate Smart 1. Consultations and dialogues about
trained and sharing same
goals, work project proponents Agriculture & Milling Climate Smart Agriculture and Sustainable √
knowledge about Climate
plan, key establish joint and Sustainable Forest Forest Management.
Smart Agriculture and
performance definition of Climate Management.
Sustainable Forest
indicators and Smart Agriculture &
Management.
monitoring Milling and
2. Key government agencies and
Sustainable Forest 2. Formulation of
system to project proponents establish
Management KPIs shared KPIs and 2. Workshop/ meeting to discuss/ share/
improve shared KPIs and targets. √
and formulation of targets relating to formulate shared KPIs and targets.
climate 3. Key government agencies and
targets those two themes.
performance project proponents develop a
 2018 2019
Objective Outcomes Outputs Key Deliverables Activities
Q4 Q1 Q2 Q3 Q4
and create multi-year strategic
sustainable implementation plan (2020-
livelihood for 2023). 3. Multi-year
palm oil 3. Workshop/ meeting to formulate
strategic
smallholders in multi-year strategic implementation √ √
implementation
Indonesia workplan
workplan

1. Private sectors, civil societies

and other key stakeholders in
the target geographies and
markets are mapped.
2. Private sector, civil society and
Solidaridad consults
other key stakeholders have
the KPIs and targets
adequate information about
with private sector,
the KPIs and targets as well as
civil society and
provide their feedbacks (if
other key
available/ applicable).
stakeholders in the
3. Private sector, civil society and
target geographies
other key stakeholders are
and markets
informed about foreseen
(planned) national/ sub-
national policies resulted from
the 2nd outcome (if available/
applicable).
1. Responsible section to
monitor and measure the
implementation of KPIs is
All parties agree on available.
measurement tools 2. Capacity building and
and monitoring communication tools,
responsibilities modules and manuals are
available to support
measurement and monitoring
process.
1. Mapping private sectors, civil societies
and other key stakeholders in the target √
geographies and markets.
2. Consultation and dialogues with
Informed KPIs and
related private sector, civil society and
targets to private √ √
other key stakeholders about the KPIs and
sector, civil society
targets.
and other key
stakeholders through 3. Facilitate dialogues with Chinese and
consultation and Indian palm oil buying companies on √ √
dialogue. addressing Climate change issue.
4. Dissemination of foreseen (planned)
national/ sub-national policies resulted √ √
from the 2nd outcome.
1. Formation of
1. Set up coordination committee to
coordination
monitor and measure the implementation √
committee in each
of KPIs.
target geographies.
2. Shared 2. Develop capacity building and
measurement tools communication, measurement tools,
√ √ √
and monitoring modules and manuals as well as
responsibilities. responsibility sharing
Proposed Project Locations
Solidaridad targets two provinces for the project implementation; the first is West Kalimantan
addressing 7 districts of Sintang, Sekadau, Sanggau, Kapuas Hulu, Melawi, Landak and Bengkayang;
and the second is East Kalimantan targeting 3 districts of Paser, Penajam Paser Utara and Berau.

Two reasons back the justification of this choice. The first is that though being the 4th among the 7th
Indonesian biggest islands in terms of carbon content, Kalimantan has been targeted very much for
oil palm cultivation. The 3 preceding islands are not having all favourable conditions for growing oil
palm as Maluku is lack of water resources and dominantly infertile; Sulawesi is more favourable to
cocoa and the commodity has outweighed oil palm in terms of economic performance; while Jawa is
unfavourable due to expensive land prices and governments’ programs to steer food crops growing in
this island. The second reason is that though being the 5th and 6th in terms of palm cultivation (see
figure 9), West and East Kalimantan are lacking attention from development partner agencies. Most
development partner agencies have focused their programs and activities on palm oil in Sumatera,
especially Riau, South Sumatera, Aceh and Jambi.

1600000

1400000

1200000

1000000

800000

600000

400000

200000

0
East Kalimantan

Bengkulu

Lampung
South Kalimantan

Papua

Banten

Central Jawa
Maluku

Bali
Riau

DKI Jakarta
Jambi
North Sumatera

West Sumatera

Central Kalimantan

West Jawa
West Kalimantan

West Sulawesi

West Papua
South Sumatera

South-east Sulawesi

North Sulawesi
North Kalimantan

East Nusa Tenggara

Gorontalo
Aceh

North Maluku
Central Sulawesi

South Sulawesi

Riau Islands

D.I Yogyakarta

East Jawa
Bangka Belitung Islands

West Nusa Tenggara

Figure 9. Oil Palm Plantation (in Ha) Owned by Smallholders by Provinces in Indonesia in 2016
Source: Statistic of Indonesian Oil Palm 2014-2016

The POSH Indonesia project will cover palm oil smallholders’ plantation in those ten districts exceeding
610,500 ha, bringing benefits to around 214,300 palm oil smallholders. In addition to its economic and
socio-organizational benefits, the project will as well help save more than 3.3 million hectares forest
area from being encroached and converted into other lower carbon content land uses due to
mismanaged oil palm sector.
 Future expansion: Malinau
Kapuas Hulu
Bengkayang

Landak Penajam Paser Utara

Sanggau
Paser

Sekadau Sintang Berau

Melawi

Figure 10. Spatial Orientation of 10 Proposed Project Locations

Solidaridad Indonesia has been building strong foundation in West Kalimantan with these seven
districts and is paving the same relationship with the governments in East Kalimantan. Even, in favour
of expressing their commitments to work together with Solidaridad to achieve the Sustainable
Development Goals in general and climate mitigation-adaptation in specific, five district governments
of Sintang, Sekadau, Landak, Sanggau and Bengkayang have issued support letters for Solidaridad
Indonesia; while the rest of other districts are in progress due to some locally political arrangement
taking place on the ground. The support letters from the district governments are enclosed along with
this proposal.

The Relevant Government Departments

At national level, currently there are two government institutions closely related to climate change action
and implementation: Directorate General of Climate Change Control of Ministry of Environment &
Forestry (KLHK) and National Secretariat of GHG Emission Reduction of National Development Planning
Agency (Bappenas). The responsibility of KLHK on climate change is in Jokowi’s era (current president),
while the one of Bappenas was in SBY’s era (previous president before Jokowi). Though, both institutions
still exist. However, the level of activeness of both institutions, both at national and local level, still need
to be verified. The differences between these two institutions in terms of function and responsibility are
described in the table below:

Variable Ministry of Environment & Forestry National Development Planning Agency

(KLHK) (Bappenas)
Position - National Focal Point to UNFCCC. National Secretariat of GHG Emission
- Verification Agency of GHG Reduction
accounting conducted by Bappenas
GHG accounting National Registry System; voluntary- National Action Plan for GHG Emission
system based. (RAN), followed by Regional Action Plan
(RAD); mandatory-based.
Legal basis Presidential Regulation No. 16 Year Presidential Regulation No. 61 Year 2011
2015
Drawback Do not have regional extension Have regional extension through the
Regional Action Plan, which is mandatory
for provincial government.
With this overview as above, some government institutions that are essential for our work can be
summarized as below:

Stakeholder Analysis
Scope Institutions Remark(s)
(relevant to the POSH)

KLHK High Power, High • National Focal Point to UNFCCC

Interest • Verification agency of GHG accounting conducted by
Bappenas
• Responsible for national forest policies and programs
Bappenas High Power, High • National Secretariat of GHG Emission Reduction
Interest • Validating agency of GHG accounting conducted by
sub-national government institutions
National
Coordinating High Power, High Leading sector of ISPO implementation.
Ministry of Interest
Economic
Affairs
Ministry of Medium Power, medium • Leading sector of national oil palm policies and
Agriculture Interest programs.
• Palm oil smallholders are not very much in the radar
of national government.
Governor Medium Power, medium • Leadership for SDGs achievement at provincial level
Interest • Leadership to steer government agencies’s policies
and programs at provincial level.
Provincial Medium Power, medium Coordinating agency of GHG accounting at provincial
Development Interest level.
& Planning
Agency
Provincial Office of Low Power, medium Leading sector of provincial oil palm policies and
Agriculture Interest programs.
and Estate
Crops
Office of Low Power, medium • Leading sector of provincial environment and
Environment Interest conservation policies and programs.
& • Monitoring of forest management at provincial level.
Conservation
Regent High Power, high Interest • Leadership for SDGs achievement at district level
(Bupati) • Leadership to steer government agencies’s policies
and programs at district level.
• Authority (delegating the authority to relevant
district government agencies) for the issuance of
Registration Certificate of Plantation Activity for
smallholders.
Office of Medium Power, medium Leading sector of development and planning policies
Development Interest and programs at district level.
District & Planning
Agency
Office of Medium Power, high • Leading sector of oil palm policies and programs at
Agriculture Interest district level
and Estate • Frequently being the delegated authority for the
Crops issuance of Registration Certificate of Plantation
Activity for smallholders.
Office of Low Power, medium Leading sector of environment policies and programs at
Environment Interest district level.
Ambition 2022
The growth of the independent oil palm smallholders in Indonesia occurred without any far-reaching
government planning or support. In part due to lack of state oversight, most independent smallholders
receive little to no extension support and are often required to depend on informal land, input and
offtake markets. In addition to that, markets pressures in the form of certification and other
commitments are currently leaving out palm oil smallholders from the process. Palm oil smallholders
can play significant role in realizing sustainable palm oil in Indonesia as they contribute around 40,3%
to the total oil palm area in Indonesia. We believe that capacity building for governments and
smallholders as well as proper administration/ documentation system are key components to serve
as solid foundation in improving climate performance and helping create sustainable livelihood for
smallholders in Indonesia. Significant policies and tools within Governments of Indonesia are in place.
Solidaridad is in a position to leverage its existing partnerships with central and provincial
governments to support implementation and effectiveness of these policies and schemes.

Possible Key Performance Indicators and Targets (KPIs for 2022)

● 25,000 oil palm smallholders with target of 40% women are trained on good environmental,
economic and socio-organizational practices;
● Total area coverage 265,000 ha inclusive of revitalizing 1,900 ha abandoned oil palm plantation;
● Increased production and yield by 35% relative to the baseline;
● Increased smallholders’ income at 1.5 to 2.0 times relative to the baseline;
● Improved mechanisms, policies and regulations to support sustainable land use, deforestation and
peat land conservation;
● Capacity building for cooperative to actively provide smallholders with effective and efficient
financial products;
● Establishment of agreed mutual platform and mechanism to monitor and evaluate GHG reduction
performance.
The expected outcomes of project would be as follows:
● 25,000 smallholders with target of 40% women are performing good environmental, economic
and socio-organizational practices;
● Measurable and effective national and local climate mitigation policies;
● Reduction of GHG emission from oil palm sector relative to the whole interventions conducted in
this project;
● Enhanced adaptive capacities of smallholders to climate risks;
● Improved productivity and increased livelihood opportunities;
● Enhanced individual capacities of landscape stakeholders and partner organizations;
● Enhanced governance towards realizing sustainable and climate smart oil palm development.
ANNEXURE