Uneven participation of independent and contract smallholders in certified palm oil mill markets in Indonesia
Andini Desita Ekaputri, David Gaveau, Robert Heilmayr, Kimberly M. Carlson
Abstract
Abstract Sustainability requirements imposed on agricultural producers by downstream supply chain actors risk excluding smallholder farmers from upgraded markets. Here we investigated smallholder participation in sustainably certified palm oil mill markets in Indonesia. We developed and applied a conceptual model to estimate the importance of structural market access, smallholder capacity, and buyer/seller behavior in shaping mill smallholder sourcing. Smallholders who hold exclusive contracts with specific mills were overrepresented at certified mills. Independent smallholders unaffiliated with mills contributed one-third of regional oil palm production but 7% of certified mill supply. We found no evidence that independent smallholders exited markets after mill certification (“active” exclusion). Instead, only 36% of certified mills ever purchased from independent smallholders, and independent smallholder lands were less common around certified (29–38% of palm area) versus noncertified (41–42%) mills. To address such “passive” exclusion, supply chain governance programs should encourage participation of actors well-positioned to source from small-scale producers.