The Palm Pod
Planting the seeds of change, one pod at a time. Join us at The Palm Pod for engaging discussions, expert insights, and industry updates on sustainable palm oil, guiding consumers and businesses to make better choices for the people, planet and prosperity. This podcast is brought to you by the Roundtable on Sustainable Palm Oil (RSPO) - a global partnership to make palm oil sustainable.
The Palm Pod
Episode 3 - The Mighty 40% (Smallholders)
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
The palm oil sector is often perceived as a "Big Boys' Game," dominated by large corporations controlling the global market. However, this narrative overlooks the significant contribution of independent farmers—smallholders—who account for approximately 40% of the global palm oil sector.
Hosted by Fara Rom, this episode of The Palm Pod shines a light on the critical role smallholders play in shaping the industry. Joining us is Francisco Naranjo, Director of Technical & Smallholders at the Roundtable on Sustainable Palm Oil (RSPO), to explore why including smallholders in the palm oil conversation is essential for building a more inclusive and sustainable future.
Learn more about sustainable palm oil at www.rspo.org.
*The views and opinions expressed on The Palm Pod are solely those of the speaker and do not necessarily reflect those of The Palm Pod or the Roundtable on Sustainable Palm Oil (RSPO).
You are now listening to the Palm Politics brought to you by RSPO, a global partnership for the POMO Sustainable. Hi, I'm Fora Rom, and you're listening to the third episode of the Palm Politics, where we host engaging discussions, expert insights, and industry updates on sustainable palm oil, guiding consumers and businesses to make better choices for the planet. In this episode, we'll dive into the world of smallholders and their role in sustainable palm oil production, being responsible for 40% of production of the world's palm oil, smallholders face unique challenges and opportunities in their journey towards sustainability. We will explore the landscape of certifications, market demands, and partnerships with governments and businesses all striving to adopt environmentally responsible practices to join us as we uncover the essential contributions that smallholders make to the palm oil industry and the crucial support they need for a more sustainable future. Speaking to us today is Francisco Narajo, Director of Technical and Smallholder in RSPO. Welcome, Francisco.
SPEAKER_00Thank you, Fada. Thank you for having me on the palm poll.
SPEAKER_01Great. I'm so excited for us to discuss on smallholders. And to start, can you in short share with the audience about yourself and your involvement in the sustainable palm oil sector, particularly your work on smallholders?
SPEAKER_00Yes, thank you, Fada. I'm from Ecuador and I've been working in the palm oil industry for all for about 15 to 20 years. I'm a civil engineer. I graduated many, many years ago. Just to give you an idea, when I finished the university, that was the first uh the same year that the first Earth summit in Rio. So that gives you an idea of uh my age. And at that time, the term uh sustainability was uh not even a word. I mean it was just uh being born. But later I uh I started my master's in environmental management, I did a master's in environmental management. And since then I've been working in sustainability, especially in the palm oil industry. I joined the RSBO in 2014, but before that, I was executive director of the National Association of Oil Palm Browers in Ecuador and Cuba. And uh I got involved in the palm oil world uh maybe around 2008-2009, when um with a good friend of mine, we started a project, uh a project with uh two objectives. Uh first, a forest conservation project, and second, uh developing an oil palm plantation. So it's an interesting mixed uh mix. This private initiative is still going on and um has been, uh I would say, very successful because we um today we have still 200 hectares of well-preserved secondary forests under private conservation, and also 50 hectares of palm plantation. Uh, and this plantation provides the resources needed to protect the forest. So I think it's uh it's an interesting exercise and uh that uh has allowed me to see firsthand the the challenges uh that smallholders face day to day and um and also how difficult it is to protect uh a forest, how challenging it is to protect the forest. So it's been an uh an interesting uh uh an interesting initiative over these uh these years. I hope that this is enough.
SPEAKER_01That's a really great start, and I feel like you're such a great person to talk to because you are wearing two hats at the same time. Um, you are overlooking a lot of the strategies for smallholders in RSPO, but you are also considered as a smallholder. So um I think we can go through what is RSPO smallholder strategy. Um and I think part of the smallholder strategy includes livelihoods. Livelihoods is one of the biggest that I can say on smallholder support work that RSPO is doing. So improving smallholder livelihoods is is one of the main objectives of the RSPO smallholder strategy and alongside market access and certification. So I think you um we want you to share how can collaboration between businesses, governments, and NGOs support to uplift smallholders.
SPEAKER_00Yes, uh, you are right, improving the smallholder livelihood is the first and foremost uh objective of the what we call the RSPO smallholder strategy. Maybe for um a little bit of a background for those who are not aware, uh, RSPO developed uh the smallholder strategy in 2017, and it is um, I would say, a roadmap for smallholder inclusion and for improving farmers' uh livelihoods. So uh throughout these years of working with smallholders and implementing the smallholder strategy, I'm convinced that uh improving smallholders' livelihood can be achieved uh through two main approaches, maybe more, but at least two main uh work streams. The first is supporting smallholders to adopt the best agricultural practices in their farms, um, by training them, by giving them technical support to implement the best sustainability practices, the best management practices, which in turn will result in better yields and um, of course, higher income for smallholders. So that's one approach. And the second approach is by providing smallholders with the, I would say, the economic resources that they need to implement those best management practices, those best agricultural practices. But uh coming back to your question, uh yes, uh the only way to enhance smallholder inclusion and help smallholders to improve their livelihoods is uh through collaboration of multiple uh stakeholders, key stakeholders. Definitely collaboration is the cornerstone of smallholder support. And this is because um uh everyone has a role to play in supporting the smallholders. And when I say uh everyone, I say I mean uh every key actor in the palm oil supply chain, uh ranging from large multinationals, uh, corporate uh companies, uh, uh those who use palm oil in their products, they have an important role to play in ensuring uh that their sustainability. For example, sustainability practices don't leave uh smallholders behind. But um NGOs, social and environmental NGOs also have uh an important role to play in raising awareness. For instance, um local governments and national governments uh play an important role in shaping policies. Uh they need to ensure that their policies don't leave the smallholders behind, banks, investors with uh green financing. So, what I'm trying to say is that everybody everybody has an important role to play in um you know to support the smallholder inclusion. And um, so that that's the key word collaboration, definitely.
SPEAKER_01Great. And this is enabled by the creation of the RSPO as well, especially in the palm oil sector. So, can you briefly share what is the role of RSPO in promoting smallholder inclusions and improving their livelihoods?
SPEAKER_00Um, yes, RSPO plays um um a crucial role as RSPO is uh by far the main convener of the sustainable palm oil industry. I'm I'm not overextending when I say over stating it that when I say that uh RSPO is the main convener. RSPO has uh more than 6,000 members worldwide, and um and the key players who have the power to drive the those uh the structural changes needed to make the palm oil industry more sustainable. All of them are already part of the RSPO's membership. So uh the RSPO initiative has been extremely successful in bringing together the key actors, key players needed um to drive sustainability in this industry. So that is uh I would say the uh one of the important roles that RSPO plays. There are many others, but uh for instance, uh RSPO has uh is a is a certification scheme, and we have um we have developed a standard for the independent smallholders together with the tools and incentives for uh suitable for smallholders. But uh this role of bringing together the key actors, I think is one of the roles, the important roles that RSPO plays. But I want to say that uh collaboration alone is not enough. We need all of these actors, that is for sure. Business, governments, NGOs, uh, but we need them to fully commit to transforming the this industry towards something more sustainable. And these commitments need to be transparent, and also they have to remain accountable. So um collaboration is not enough. What I'm trying to say is that I believe collaboration is important, but uh that must come together with transparency, accountability, uh, and long-term commitment. And uh that is the uh that is the the small challenge that uh we have at RSPO.
SPEAKER_01And um I think it's quite interesting if you look at sustainability um and also including small farmers, um, smallholders. Um and I'm just wondering, to your knowledge, is there many um organizations or any certification bodies that has a similar scheme with RSPO in terms of uh palm oil in the sustainability sector in general? Just to your knowledge, is there any such thing? Or RSPO is like one of the few that actually does have uh strategy for smallholders to uplift them um uh as a whole, profit-based, um, livelihood, and other aspects.
SPEAKER_00I mean, being part of RSPO, I tend to think that um RSPO is by far the most important initiative, but um definitely we need to find the right partners, the right um uh stakeholders to work with. I'm sure there are plenty of good initiatives uh out there to support the smallholders, aiming to support the smallholders. Um I truly believe that if we want to scale up our um our impact, the RSPO impact in terms of uh smallholding inclusion and smallholder certification, definitely we need to strengthen our collaboration with the governments, for example, with NGOs, with um with supply chain members, with the buyers, with the with the market in general. So I think it's uh it's our main uh mission to find those uh partnerships. Actually, that's why our mission is uh is to a partnership to make uh palm oil sustainable. I'm sure there are plenty of uh initiatives and um RSPO is one of them, but of course, being uh in this industry and being part of RSPO, I feel that RSPO has uh has an immense power in its uh membership to drive those uh the changes that uh to make uh this industry more sustainable.
SPEAKER_01Through the smallholder strategy, um there are several initiatives under RSPO, or what the ones that RSPO has implemented so far um in terms of improving smallholder livelihoods. Can you share some of the initiatives um with the audience?
SPEAKER_00Uh sure. Yeah, there are there are many initiatives that RSPO is currently undertaking to improve smallholder livelihoods. All of them to some content is to some extent stem from the implementation of the RSPO smallholder strategy. Each of them contributes from a different angle and from a different perspective. For instance, one of the flagship initiatives is the smallholder trainer academy, or the STA in short. This trainer academy aims to improve smallholder livelihoods by building their internal capacities, building the smallholder capacities. And we do this um through high-quality training programs, focused on how implementing best agricultural practices results in higher yields and in higher incomes for smallholders. So that's one of the initiatives that the SDA was launched in 2019. And um it's uh it has a multi-level approach where um RSPO works in partnership with Academy Partners to deliver training and um training to smallholders, training to group managers, and uh and what we call master trainers. So the academy has uh more than 20 uh sorry, more than 90 academy partners uh across the globe, and more than uh 250 master trainers uh currently. So and through this uh pool of uh partners and master trainers, um the academy has trained tens of thousands of smallholders in Indonesia, Malaysia, Thailand, Africa, Latin America, and um and also in India. So that's one of the initiatives, the programs that um RSPO is um carrying out right now. Um another another interesting um initiative and a very helpful tool to enhance smallholder inclusion has been the RCSF, or RCSF stands for the RSPO Smallholder Support Fund that was established in 2013, and um it aims to provide financial support to smallholder groups. And these groups can use the resources from the from the fund for many things like um capacity building programs, the fund can be used to cover the audit costs, and the fund um could be um could also be applied, for example, to strengthen internal capacities. So the the RCSF has been uh very instrumental in supporting smallholder inclusion, in supporting smallholder certification. And um just to give you an idea, since uh its inception, the RCSF um has benefited more than 30,000 smallholders. But um the main mechanism that RSPO has developed to provide smallholders with uh higher income has uh has been without any doubt the RSPO credits. So let me explain uh how the RSPO credits uh work, uh what the RSP RSPO credits are. Um when a group of smallholders achieves RSPO certification, basically they have two options. One is to sell the their certified FFP, the certified fresh fruit punches to a certified meal, and um and they sell uh the FAPs, the certified FAP at an additional premium most of the time. Or they can convert those cred those volumes, those certified volumes into what we call RSPO credits, especially when they don't have in the vicinity a certified meal to sell, uh to buy their FF the certified FAPs, they can convert the volumes into credits. And this conversion is uh is very simple: one ton of sustainable palm oil produced in a sustainable way equals one RSPO credit. So credits can be purchased by palm oil end users, um, those who want to support smallholder groups. And um and uh you know this is uh um handing smallholder groups directly with financial resources from the end users. So last year alone, um certified smallholder groups uh received over$7 million from the sales um of RSBO credits, and this year we we expect this figure to go up to maybe 10 million uh in 2024. So it's been a very successful mechanism to so to financially support the smallholders.
SPEAKER_01So the sale of RSBO credits is actually benefits directly towards the smallholder itself, and um, I believe from some of um my experience also visiting some plantations in Indonesia, and they actually mentioned how RSBO credits have changed the lives of many, and not just um the people who work in the plantations, it's even the community themselves. Um, so with that, when you mentioned about certification and credits, so from your point of view, what is currently missing from the system that can help boost smallholder inclusion even more in the sustainable palm oil production?
SPEAKER_00Yeah, well, uh as I mentioned at the uh at the start of our conversation, um I believe that what uh what is really needed is greater uh involvement from uh key stakeholders. Um is smallholders need uh much more support, especially to overcome the initial barriers uh to certification. Um and we have seen that um with strong backing from say from buyers, from governments, from NGOs, uh progress can be made uh very quickly. But uh without the support, without that support, um it's difficult for them to break those uh you know, overcome those barriers, especially those initial barriers for certification. And um so RSPO has done um, I would say its part by creating the necessary conditions through the smallholder standard, um, through the most whole smallholder training academy, the RCSF fund, and the other programs that um uh RSPO is currently undertaking. But um I think uh more involvement is needed, especially from those downstream players. Um, because I I think smallholders cannot bear the full weight of sustainability on their shoulders. I mean, is uh is not uh I would say is not fair. So everyone should do their part to ensure that uh palm oil is more sustainable, and this is uh what uh the so-called sustainability justice is all about, right? So I would say is the missing part is uh it's enhancing uh more involvement uh from uh down-the-screen players.
SPEAKER_01Okay, you mentioned about sustainability justice. Can you elaborate further what does that mean? And how does the concept of sustainability justice apply to POM or smallholders and why is it important for their long-term success?
SPEAKER_00Yes, it's interesting because it's now becoming more and more um uh popular to talk about uh sustainability justice, and it's a combination of the uh, you know, the main the three pillars of uh sustainability, environment, uh society and economy, or people, planet, and prosperity, combining these three pillars with a justice-based intersectional approach. And basically, it is about ensuring that a fair distribution of both benefits and responsibilities. Again, this means everyone, all the stakeholders, from smallholders to large multinationals, from NGOs to supply chain members, from governments to processors, traders, everyone needs to step up and do their part, do their fair share. So that that is um in a nutshell what um this concept of uh sustainability justice is. But let me let me put me uh put my my hat of uh of my smallholder hat for a moment. Um I've been um I would say um in um in a privileged uh situation to um of having the financial resources and most importantly the access uh to knowledge to establish my oil pump plantation in Ecuador. But I have seen firsthand that the immense effort and commitment that smallholders put into getting certified, uh implementing the best agricultural practices, understanding what sustainability means. And we could uh move much, much faster with more support and more commitment from other stakeholders, especially those uh down-the-screen players, um, and I would say together with governments and NGOs. So again, collaboration is uh is important here, even to underpin this uh concept of um sustainability justice.
SPEAKER_01Great. Um going back to certification, um, it was mentioned that smallholder certification is growing rapidly over the years. Can you give us an overview of the progress and share any relevant numbers?
SPEAKER_00Sure. Yeah, that's um one of the most uh interesting parts. The number of um for smallholder certification are really encouraging. Last year alone, the area of uh certified under the independent smallholder standard grew by around 36%, so it's a huge jump. We passed from 100,000 hectares to 100 and almost 140 hectares certified against the independent smallholder standard, which is a huge, huge um growth. Right now we are nearing 180,000 uh certified smallholders, but the most important or the most exciting part is the trend of uh certification. We expect that this uh trend of uh this growing trend of uh certification is um will continue in uh in the upcoming years. So um in the next uh five to at least five years in the horizon of five years, we we will we are confident that this trend will continue. And um and if we continue, for example, this year we are uh we are expecting to grow at least at uh 30% again or above uh 30 uh 30 30 percent again. And uh with this um uh so with this uh growth, the goal of certifying one million uh smallholders in the medium term feels very much uh within reach. I mean, it's not easy, but uh we are in the right uh in the right uh pathway. So, yes, um those are the the figures, very strong growth, and um we have a lot of um groups in the pipeline, smallholder groups in the pipeline in countries like uh Indonesia, Thailand, Malaysia. We have um we have seen uh some groups um um you know some progress starting in uh Africa, in Latin America. So uh yes, this is uh perhaps the most um daunting uh challenge that RSPO has, but we are going in the in the right direction.
SPEAKER_01I think um we are reaching the end of our discussion, and I feel like there's a lot more to discuss because smallholders are a very interesting topic to talk about, especially because um many are not aware on how important is the palm oil sector for smallholders. And as you mentioned, there are almost 7 million smallholders that is involved in the sector and to to empower them and to make sure that their stories are heard are really important and they should be supported. So you can summarize in a few words uh on what needs to be done uh for smallholder inclusion to prosper, for smallholders to get more attention, and for smallholders to win the game in sustainable palm oil production and the palm oil sector in general, and not just be the unfor the forgotten 40%.
SPEAKER_00Yes, it stressed uh two figures that I think it's important to keep in mind. One is that 40% of the planted area with oil palm globally is managed by smallholders, by family farmers. And you correctly mentioned that there are more than 7 million smallholders across the globe. So if we left them behind, there's no way to make a palm oil industry more sustainable. So it's uh it's mandatory, it's uh is of uh the utmost uh importance to ensure that they are included and they are part uh and the smallholder inclusion is perhaps um the most important step in transforming the palm oil industry in something more sustainable. So and as we have um uh discussed today, it's all about collaboration, it's all about involvement. So definitely I would like to finish by making a call to action for other actors in the supply chain, especially downstream players, but also big buyers and market players, uh governments, NGOs, to step up, to do their fair share, to ensure that palm oil coming from 7 million smallholders worldwide becomes more sustainable. That is what um what is needed right now, and um I I see the um that this is something achievable only with uh the uh full commitment and full collaboration with all kinds of stakeholders.
SPEAKER_01That's great. And I believe that wraps up this episode on the mighty 40% smallholder. With strengthened partnerships between governments, businesses, and sustainability organizations, the future holds promising shifts. Programs like RSP or certification can open doors for smallholders, helping them gain recognition, access new markets, and improve livelihoods. Thanks for tuning in and let's keep the conversation going. I was speaking to our guest, Francisco Naranjo, director, technical and smallholder from RSPO. I am Farar Rong, and this is the palm pod.