"If smallholders prosper, the region prospers."

TFT spoke with Tania Li, professor of anthropology at the University of Toronto, about the importance of supporting independent palm oil smallholders in Indonesia

“In the last 15 years Indonesia has seen a massive expansion in palm oil plantations, both in large plantations and in smallholder forms,” explains Tania Li. This expansion, she says, has undoubtedly affected smallholders in many different ways.

Li’s work has taken her across Indonesia, where she has spoken with smallholders, plantation workers and community members whose lives have been affected by palm oil, in one way or another, for better or worse.

Some of these farmers, known as plasma smallholders, are tied to plantations or mills and are given a certain area to grow their crop. In return, they receive seedlings and technical assistance. They may find it difficult to plant other crops, particularly if they are based on or near a plantation.

Independent smallholders, however, receive little to no outside assistance. But “they’re feisty and they look after their own interests,” according to Li. Currently smallholders grow around 3.1 million hectares of palm plantation in Indonesia. By some estimates, the production of Indonesian smallholders will double by 2050.

This situation is such that many smallholders, both tied and independent, are almost completely dependent on palm oil for their living.

“Why do independent smallholders convert their rice, rubber and other plantations to oil palm?” Li asks. “It has to do with money and labour. Oil palm needs very little labour and produces a good income.”

Why do independent smallholders convert their rice, rubber and other plantations to oil palm? Oil palm needs very little labour and produces a good income.

But while switching to palm oil can bring added cash to smallholders, it comes with a range of consequences. “The danger is that if oil palm is the only option then you’re going to have a vastly simplified landscape with farmers locked in, no longer having the kind of flexibility and autonomy that has been the mainstay of smallholder agriculture for decades.”

To take one example, despite their feistiness, palm oil smallholders are often said to have crops that suffer from low productivity.”

Palm oil smallholders are often said to have low productivity, but there are underlying causes behind this.

But you have to look at the conditions that underlie this, Li stresses. “These people are often planting very inferior seed, because they have not had access to capital, credit or good planting material.” In addition, a lack of proper technical training, on crop management or fertiliser use, can all play into low smallholder productivity.

“It’s not in the nature of smallholding to be low producing, it’s partly in the nature of the material they are planting,” Li concludes. In TFT’s own work, through our Rurality programme, it has frequently been found that palm oil smallholders from around the world, from Brazil, to Ghana and Indonesia, lack formal training, access to tools or high-quality seedlings.

It’s not the nature of smallholdings to be low producing.

“So, some input to these smallholdings, like a big effort to widely distribute and make the kind of hybrid seeds the plantations are using available, might hugely increase the productivity of smallholdings.”

Equity is important too, Li stresses: some so called “smallholders” have 25 hectares or more and run their farms with wage workers, like small plantations. She believes they can manage fine on their own. It is smallholdings of six hectares or less, where farmers depend on their farms as their main source of income, that really need help, she says.

Adding to the menu

What is essential, according to Li, is the expansion of the “menu of options” available to independent smallholders in Indonesia and elsewhere. “Right now, the only game in town is palm oil. Why should it be so? Why is it not possible to have, for instance, productive market gardening?”

Right now, the only game in town is palm oil. Whys is it not possible to have, for instance, productive market gardening?

A flexible menu, and not one that’s already decided for farmers, is of vital importance. “You have to ask them what they want or need,” Li continues. Farmers know the local ecology and market, they know their own land and labour constraints. “There’s a problem with promoting what look to outsiders like sustainable paths which the locals regard as unprofitable ones.”

Rurality has found that by conducting a thorough Rural Dynamic Diagnostic, which drills deeply into the livelihoods, aspirations, challenges and opportunities that smallholders face, the menu can be plumped up. Smallholders have been supported by increasing the value of their existing products via better marketing skills, training on intercropping, and assistance setting up quail egg farms, among other things. Backing this up with solid market studies of the surrounding area ensures that once farmers’ alternatives are productive, they have a ready outlet for their goods.

Investigating local markets can open up new revenue streams for smallholders, lessening dependency on single crops like palm oil.

The benefits of supporting smallholders in growing their opportunities and incomes is clear to Li. “You see that as smallholders prosper, an entire secondary economy emerges, there are small businesses, people are fixing up their houses…” she continues, painting a vivid picture of a vibrant rural community. “Basically, as smallholders prosper, the entire region prospers.”

Several different actors have a role to play in bringing about this prosperity, Li adds, such as governments, through which support schemes, and companies and mills, by recognising the importance and independence of smallholders in supply chains.

“Ideally, smallholders would retain a great deal of independence in supply chains. Like in Sumatra where some smallholders have a choice of five mills to sen their product. That’s a great situation for them.”