• Home
  • Getting to the bottom of illegal plantations on Indonesia’s state-owned forests

Getting to the bottom of illegal plantations on Indonesia’s state-owned forests

A man examines oil palm fruit at a research site in Indonesia. Photo by D. Ramsay/CIFOR
Posted by

FTA COMMUNICATIONS TEAM

Palm oil is used locally in cooking, and internationally in commercial food and personal care products. Photo by M. Pinheiro/CIFOR

In an ideal world, palm oil production would cause no deforestation, and have a transparent and fair supply chain. In reality, the impacts of the sector have been the cause of ethical concerns worldwide.

Palm oil is Indonesia’s most important commodity. In 2017 the country produced 37.8 million tonnes of crude palm oil (CPO) and exported over 80 percent of it, with a value of $31.8 billion. Indonesia is the world’s biggest palm oil producer, and its biggest exporter too.

The strong market demand of palm oil has led to a vast expansion of plantations. Currently smallholders make up around 40 percent of the production market, and around one-third of these do not have the correct land tenure permits. In some cases, the smallholders have moved into state-owned forest areas and in many cases, this occupancy creates conflict.

In 2017, the Ministry of Agriculture’s Directorate General of Plantations found that of the 2.5 million hectares of oil palm plantations on state-owned forests, 70 percent of these were controlled by smallholders.

To get to the bottom of why oil palm plantations continue to encroach into state forest areas, Center for International Forestry Research (CIFOR) organized a workshop in collaboration with Center for Research and Development on Social, Economics, Policy and Climate Change (P3SEPKI): ‘Linking science to policy: the role of research in the effort to accelerate solution of tenurial problems in oil palm plantation in forest areas.’

Read also: Comparative study of local nutrition and diet examines expansion of oil palm plantations into forest areas

Solving conflicts by understanding the underlying cause

In his presentation, Ismatul Hakim,  senior researcher at P3SEPKI, says that complex tenure conflicts can’t be resolved without understanding why oil palm plantations are encroaching into state forest areas. He believes assessing how different types of farmers take control of lands, what strategies they use, and most importantly, the motivations of the farmers, is needed before long-lasting resolution is achieved.

According to Hakim’s research, this can be segregated into four categories:

The first is maladministration, where a lack of coordination leads to disputes as it is unclear who legally manages the forest areas – is it the Ministry of Environment and Forestry or the local government?

Second, incomplete forest area gazettements- a legal declaration that announces state ownership- coupled with a lack of clarity and communication on where the gazetted boundaries lay, have caused local people, in need for income, to expand their plantations into unmarked forest areas.

Third, inequality of power and land ownership has caused people to encroach. Local people have watched big investors and corporations take control of and transform their ancestral land, and store land for the future (known as ‘landbanking’).

And finally, the ineffective implementation of policies for forest area release and land swap- where the government gives areas of new land to plantations in exchange for restoring degraded land. To add, he says, this is further hampered by the slow pace of conflict resolution.

Drawing from his research, Bayu Eka Yulian from Bogor Agricultural University (IPB) added “Oil palm plantations have expanded rapidly in East Kalimantan, particularly those smallholders in a silence mode.” He argued while corporations might generally adhere to tighter regulations, small holder farmers, including those with access to more capital and information, appear to expand their plantations at a scale from 0.5 to 3 hectares of land or even more, without restraint.

The attendees agreed that the situation  will keep perpetuating itself without intervention. Rapid expansion is causing damaging changes to the landscape, but farmers are also becoming trapped- as they become highly dependent on a monoculture crop, and get trapped on a single source of income.

Read also: The long and winding road to sustainable palm oil

A man examines oil palm fruit at a research site in Indonesia. Photo by D. Ramsay/CIFOR

Solving tenure issues through better governance

In September 2018, the Indonesian government issued a three-year moratorium on new oil palm plantation permits and devised attempts to increase productivity, expressed in Presidential Instruction (Inpres) No. 8/2018. Along with other prevailing policies, this moratorium offers an excellent opportunity to resolve tenure issues.

However, it was feared that the temporary halt might simply not be enough.

“It was generally agreed by the workshop participants that regulations should be clear and not create legal uncertainties,” said CIFOR scientist Heru Komarudin, adding that plantations that are currently operating on state forests should be given enough time to either relocate or have their land status legally changed to non-forest areas.

He similarly believes that smallholder plantations already illegally on state forests should be given the chance to confirm their land status through agrarian reform or social forestry schemes that are already in place.

“Priority should be given to those committed to practising ethical agriculture – by preventing further deforestation and promoting fair trade working rights,” said Komarudin. To create policies that work, the “heterogeneous typology” of smallholders, and the impact of plantations on local people need to be taken into account, he adds.

Furthermore, there is opportunity to raise state funds by getting tenure issues right. Legislating and governing the use and rental of state forest can then be further propped up by compensation payments by companies who have illegally encroached. While strict law enforcement could be used to police the tenure issues, granting land amnesty to those that depend heavily on these lands may be a breakthrough.

Internationally, the European Union Renewable Energy Directive which plans to phase out the use of palm oil for biofuel by 2030, has put pressure on the Indonesian palm producers. In responding to this development, workshop attendees agreed that foreign diplomacy should be strengthened by consolidating the national position, which in turn would make the Indonesian Sustainable Palm Oil (ISPO) certification credible.

“Building solidarity with other producing countries to promote best practices and a sustainable and legal palm oil industry is essential,” says Maharani Hapsari, PhD and lecturer of international relations at Gadjah Mada University. “Indonesia should focus its diplomacy on palm oil global trade not only to strengthen authority, but also to enhance legitimacy of forest and oil palm governance by the broadest possible range of stakeholders.”

By Nabiha Shahab and Dominique Lyons, originally published at CIFOR’s Forests News.

For more information on this topic, please contact Heru Komarudin at [email protected].


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), which is supported by the CGIAR Trust Fund.

This research is part of the Governing Oil Palm Landscapes for Sustainability (GOLS) project, which is supported by the United States Agency for International Development (USAID). The GOLS project supports effective and equitable implementation of the New York Declaration on Forests commitments by helping to align public and private policies and actions, and by delivering targeted, research-based evidence to key stakeholders and practitioners.

  • Home
  • Carving a niche in the global market: The woodworkers of Jepara

Carving a niche in the global market: The woodworkers of Jepara

Posted by

FTA COMMUNICATIONS TEAM

Based on a long tradition of skilled family trade, the woodworking industry in Jepara, Indonesia, is branching out into global markets by investing in sustainable timber. With the national timber legality license now compatible with export licenses to the European Union, trade opportunities are expanding beyond borders. Scientists at the Center for International Forestry Research (CIFOR) are finding the connections between sustainable supply chains and better business for local people.

Originally published by CIFOR.

This work forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), which is supported by CGIAR Fund Donors.

  • Home
  • Farm-forestry in the Peruvian Amazon and the feasibility of its regulation through forest policy reform

Farm-forestry in the Peruvian Amazon and the feasibility of its regulation through forest policy reform

Posted by

FTA COMMUNICATIONS TEAM

In 2015 the Peruvian government launched a new set of regulations associated with the forest law aimed to increase competiveness of the timber sector, ensure the conservation and sustainable production of timber on public and private forestlands, and improve rural livelihoods. Small-scale timber producers have been marginalized in the sector in the past, and the new regulations claim to provide pathways to formalization for these actors. We draw on policy analysis and field research in the central Amazon region of Peru using mixed methods to characterize smallholder on-farm timber production and evaluate the feasibility of the new regulatory mechanisms for formalizing small-scale timber producers. Through examining a case study on the production and sale of the fast-growing pioneer timber species Guazuma crinita, locally known as bolaina, we found a diversity of management practices, with the strongest reliance on natural regeneration in agricultural fallows, an informal supply chain, and no case of formal documentation at time of sale. We assessed that none of the new regulatory mechanisms will accommodate the sale of timber produced in agricultural fallow stands. We recommend the inclusion of fallow timber in the new forest plantation registry, which could result in the formalization of the supply chain and create an incentive to increase production by small-scale producers.

  • Home
  • Celebrating and rewarding excellence in producing high-quality cocoa: The 2017 International Cocoa Award winners

Celebrating and rewarding excellence in producing high-quality cocoa: The 2017 International Cocoa Award winners

Cacao pods lie on the ground after harvesting. Photo by J. Raneri/Bioversity International
Posted by

FTA COMMUNICATIONS TEAM

Cacao pods lie on the ground after harvesting. Photo by J. Raneri/Bioversity International

As the only event in the world celebrating the work of producers and the richness of expression of cocoa, a unique cocoa initiative is helping to further mutual awareness and reinforce collaborations between producers and chocolate makers.

Every two years, the Cocoa of Excellence Programme spearheaded by Bioversity International and Event International recognizes the quality, flavor and diversity of cocoas according to their origin, with the participation of countries that can directly present the fruits of their labors to chocolate makers and the press.

The Cocoa of Excellence Programme is the entry point for the International Cocoa Awards (ICA). It aims to increase awareness and promote education along the cocoa supply chain on the opportunity to produce high quality cocoa and preserve flavors resulting from genetic diversity, terroir and know-how of the farmers who prepare cocoa.

Cacao diversity is also vital for production, as it provides not only different flavors, but also resistance to pests and disease outbreaks, and resilience in changing climatic conditions. Providing opportunities and incentives for safeguarding diversity to farmers and national organizations ensures that a portfolio of options remain available for future needs.

Celebrating the shortlisted entrants at the 2017 International Cocoa Awards at the Salon du Chocolat. Photo by Bioversity International

Following the selection and evaluation of 166 cocoa samples submitted from 40 countries, the wait was finally over on Oct. 30, 2017, for the 50 entrants shortlisted for the 2017 Edition of the ICA. The 18 ICA winners were celebrated at the Salon du Chocolat in Paris, shining an international spotlight on the work of cocoa farmers and cocoa diversity around the world.

“It is the highest reward for the Salon du Chocolat to be with Bioversity International at the origin of this unique program that gathered so many great and indisputable international experts in the world of cacao. Our initial wish was to create a direct link between chocolate makers and producers for reciprocal enrichment, in the qualitative aspects of chocolate and cocoa with all the benefits they entail,” said Francois Jeantet, Creator of the Salon du Chocolat.

“Today our wishes are fulfilled. A big thank you to all the team and all those that participate with passion,” he added.

“The program facilitates communication and linkages between the producers of this wonderful crop that is cocoa that delights the bean buyers and chocolate makers. This communication needs to be standardized so that all the actors along the value chain understand each other, from the farmers to the chocolate makers,” explained Brigitte Laliberté, Expert on Cacao Genetic Resources at Bioversity International.

“We are coordinating an effort on the development of international standards for the assessment of cocoa quality and flavor, for which we convened a consultation at the Salon just this morning,” Laliberté continued. “The meeting led to some very exciting group decisions and innovations in this important area.”

The Cocoa of Excellence Programme is the entry point for the International Cocoa Awards.

After a physical quality evaluation, the beans were carefully processed into liquor and untempered chocolate for blind sensory evaluation by a panel of international experts who are part of the Cocoa of Excellence Technical Committee.

Following the evaluation, the best 50 samples were selected and processed into tempered and molded chocolate (following the same recipe of 66 percent cocoa) for sensory evaluation by a broader panel of 41 chocolate professionals.

“Never before has there been such an assemblage of superb cocoas as we have had expressed as chocolates in these 2017 Edition of Cocoa of Excellence. The flavor evaluation has been both daunting as well as exhilarating. There is more outstanding flavor and diversity from more countries than ever before. The Technical Committee and the additional jury have performed superbly,” said Ed Seguine, Cacao Cocoa and Chocolate Advisors/Guittard Chocolate.

“We continue to believe that the Cocoa of Excellence as well as the International Cocoa Awards will shine the spotlight of flavors, craftsmanship and diversity on these farmers and bring real, meaningful value to them for their beans,” he added.

The 18 International Cocoa Awards for 2017 are:

Africa & the Indian Ocean

  • Ghana Simon Marfo – associated with Cocoa Abrabopa Association
  • Madagascar Mava Sa – Ferme D’ottange
  • Sierra Leone Sahr Bangura – associated with Kasiyatama
  • Tanzania Kokoa Kamili Limited

Asia, Pacific & Australia

  • Australia Australian Chocolate Pty Ltd
  • Hawaii Jeanne Bennett and Bruce Clements – Nine Fine Mynahs Estates
  • Hawaii University of Hawaii
  • India Regal plantations
  • Malaysia Teo Chun Hoon

Central America & Caribbean

  • Dominica Stewart Paris – Paris Family – associated with North East Cocoa Growers Cooperative
  • El Salvador José Eduardo Zacapa Campos
  • Guatemala Asociación Waxaquib Tzikin
  • Guatemala Mariel Ponce – Kacaou
  • Martinique Kora Bernabe and Elizabeth Pierre-Louis – associated with Valcaco – Association des Producteurs de Cacao de Martinique

South America

  • Bolivia Chocoleco
  • Brazil Emir De Macedo Gomes Filho
  • Ecuador Asociacion Quiroga
  • Peru Cooperativa Agraria APPROCAP Ltda.

Adapted from the press release originally published by Bioversity International. For more information, contact Ines Drouault at the Cocoa of Excellence Programme: i.drouault(at)cgiar.org.


The Cocoa of Excellence (CoEx) Programme is the entry point for cocoa-producers to participate in the International Cocoa Awards (ICA). The programme is coordinated by Bioversity International, and jointly organized with Event International in partnership with the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), Guittard Chocolate, Seguine Cacao, Cocoa and Chocolate, Barry Callebaut, Puratos and the International Cocoa Organization (ICCO) with sponsorship from the European Cocoa Association (ECA), the Association of Chocolate, Biscuit and Confectionery Industries of Europe (Caobisco), the Federation of Cocoa Commerce (FCC), Nestlé, the Lutheran World Relief (LWR), Mars UK, Valrhona and with in-kind contributions from the Cocoa Research Centre of the University of the West Indies (CRC/UWI), Valrhona, Weiss Chocolate and CocoaTown.

This work contributes to the CGIAR Research Program on Forests for Trees and Agroforestry, supported by CGIAR Fund Donors.

  • Home
  • Celebrating and rewarding excellence in producing high-quality cocoa: The 2017 International Cocoa Award winners

Celebrating and rewarding excellence in producing high-quality cocoa: The 2017 International Cocoa Award winners

Cacao pods lie on the ground after harvesting. Photo by J. Raneri/Bioversity International
Posted by

FTA COMMUNICATIONS TEAM

Cacao pods lie on the ground after harvesting. Photo by J. Raneri/Bioversity International

As the only event in the world celebrating the work of producers and the richness of expression of cocoa, a unique cocoa initiative is helping to further mutual awareness and reinforce collaborations between producers and chocolate makers.

Every two years, the Cocoa of Excellence Programme spearheaded by Bioversity International and Event International recognizes the quality, flavor and diversity of cocoas according to their origin, with the participation of countries that can directly present the fruits of their labors to chocolate makers and the press.

The Cocoa of Excellence Programme is the entry point for the International Cocoa Awards (ICA). It aims to increase awareness and promote education along the cocoa supply chain on the opportunity to produce high quality cocoa and preserve flavors resulting from genetic diversity, terroir and know-how of the farmers who prepare cocoa.

Cacao diversity is also vital for production, as it provides not only different flavors, but also resistance to pests and disease outbreaks, and resilience in changing climatic conditions. Providing opportunities and incentives for safeguarding diversity to farmers and national organizations ensures that a portfolio of options remain available for future needs.

Celebrating the shortlisted entrants at the 2017 International Cocoa Awards at the Salon du Chocolat. Photo by Bioversity International

Following the selection and evaluation of 166 cocoa samples submitted from 40 countries, the wait was finally over on Oct. 30, 2017, for the 50 entrants shortlisted for the 2017 Edition of the ICA. The 18 ICA winners were celebrated at the Salon du Chocolat in Paris, shining an international spotlight on the work of cocoa farmers and cocoa diversity around the world.

“It is the highest reward for the Salon du Chocolat to be with Bioversity International at the origin of this unique program that gathered so many great and indisputable international experts in the world of cacao. Our initial wish was to create a direct link between chocolate makers and producers for reciprocal enrichment, in the qualitative aspects of chocolate and cocoa with all the benefits they entail,” said Francois Jeantet, Creator of the Salon du Chocolat.

“Today our wishes are fulfilled. A big thank you to all the team and all those that participate with passion,” he added.

“The program facilitates communication and linkages between the producers of this wonderful crop that is cocoa that delights the bean buyers and chocolate makers. This communication needs to be standardized so that all the actors along the value chain understand each other, from the farmers to the chocolate makers,” explained Brigitte Laliberté, Expert on Cacao Genetic Resources at Bioversity International.

“We are coordinating an effort on the development of international standards for the assessment of cocoa quality and flavor, for which we convened a consultation at the Salon just this morning,” Laliberté continued. “The meeting led to some very exciting group decisions and innovations in this important area.”

The Cocoa of Excellence Programme is the entry point for the International Cocoa Awards.

After a physical quality evaluation, the beans were carefully processed into liquor and untempered chocolate for blind sensory evaluation by a panel of international experts who are part of the Cocoa of Excellence Technical Committee.

Following the evaluation, the best 50 samples were selected and processed into tempered and molded chocolate (following the same recipe of 66 percent cocoa) for sensory evaluation by a broader panel of 41 chocolate professionals.

“Never before has there been such an assemblage of superb cocoas as we have had expressed as chocolates in these 2017 Edition of Cocoa of Excellence. The flavor evaluation has been both daunting as well as exhilarating. There is more outstanding flavor and diversity from more countries than ever before. The Technical Committee and the additional jury have performed superbly,” said Ed Seguine, Cacao Cocoa and Chocolate Advisors/Guittard Chocolate.

“We continue to believe that the Cocoa of Excellence as well as the International Cocoa Awards will shine the spotlight of flavors, craftsmanship and diversity on these farmers and bring real, meaningful value to them for their beans,” he added.

The 18 International Cocoa Awards for 2017 are:

Africa & the Indian Ocean

  • Ghana Simon Marfo – associated with Cocoa Abrabopa Association
  • Madagascar Mava Sa – Ferme D’ottange
  • Sierra Leone Sahr Bangura – associated with Kasiyatama
  • Tanzania Kokoa Kamili Limited

Asia, Pacific & Australia

  • Australia Australian Chocolate Pty Ltd
  • Hawaii Jeanne Bennett and Bruce Clements – Nine Fine Mynahs Estates
  • Hawaii University of Hawaii
  • India Regal plantations
  • Malaysia Teo Chun Hoon

Central America & Caribbean

  • Dominica Stewart Paris – Paris Family – associated with North East Cocoa Growers Cooperative
  • El Salvador José Eduardo Zacapa Campos
  • Guatemala Asociación Waxaquib Tzikin
  • Guatemala Mariel Ponce – Kacaou
  • Martinique Kora Bernabe and Elizabeth Pierre-Louis – associated with Valcaco – Association des Producteurs de Cacao de Martinique

South America

  • Bolivia Chocoleco
  • Brazil Emir De Macedo Gomes Filho
  • Ecuador Asociacion Quiroga
  • Peru Cooperativa Agraria APPROCAP Ltda.

Adapted from the press release originally published by Bioversity International. For more information, contact Ines Drouault at the Cocoa of Excellence Programme: i.drouault(at)cgiar.org.


The Cocoa of Excellence (CoEx) Programme is the entry point for cocoa-producers to participate in the International Cocoa Awards (ICA). The programme is coordinated by Bioversity International, and jointly organized with Event International in partnership with the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), Guittard Chocolate, Seguine Cacao, Cocoa and Chocolate, Barry Callebaut, Puratos and the International Cocoa Organization (ICCO) with sponsorship from the European Cocoa Association (ECA), the Association of Chocolate, Biscuit and Confectionery Industries of Europe (Caobisco), the Federation of Cocoa Commerce (FCC), Nestlé, the Lutheran World Relief (LWR), Mars UK, Valrhona and with in-kind contributions from the Cocoa Research Centre of the University of the West Indies (CRC/UWI), Valrhona, Weiss Chocolate and CocoaTown.

This work contributes to the CGIAR Research Program on Forests for Trees and Agroforestry, supported by CGIAR Fund Donors.

  • Home
  • CGIAR Research Program on Forests, Trees and Agroforestry Annual Report 2015: Landscapes – livelihoods – governance

CGIAR Research Program on Forests, Trees and Agroforestry Annual Report 2015: Landscapes – livelihoods – governance

Posted by

FTA communications

Authors: CIFOR

With more than 600 publications from research spanning smallholder livelihoods, biodiversity, commodities, climate change, landscapes and many other topics, 2015 was a remarkable year for the CGIAR Research Program on Forests, Trees and Agroforestry (FTA). In the just published Annual Report 2015, the six FTA partners look back on their most important achievements. Illustrative stories come from the Congo Basin, the Amazon and the Indonesian archipelago, among others. For the first time, the FTA Annual Report was designed in the form of a brochure.

Series: CRP Annual Report

Publisher: Center for International Forestry Research (CIFOR), Bogor, Indonesia

Publication Year: 2016

Also published at Center for International Forestry Research (CIFOR)

 

  • Home
  • When small meets big in the value chain

When small meets big in the value chain

Storage of gum for export. Photo: Ollivier Girard/CIFOR
Posted by

FTA

Market in the village of Minwoho, Lekié, Center Region, Cameroon. Photo: Ollivier Girard/CIFOR
Market in the village of Minwoho, Lekié, Center Region, Cameroon. Photo: Ollivier Girard/CIFOR

By Michael Casey, originally published at CIFOR’s Forests News

For centuries, life for smallholder farmers in Africa and Asia was relatively simple. They grew crops, kept the necessary amount to feed their families and then sold the rest at the local market.

But these days, the value chain is much more complicated.

Multinational conglomerates, development agencies, conservationists and even certification groups often play a role in what is grown, which can influence the price a farmer fetches for products like cocoa and palm oil.

Now, a new study has found that these value chain collaborations can be a force for good for smallholder farmers, who produce 80 percent of the food in Africa and Asia.

“These partnerships potentially give farmers benefits in terms of addressing poverty, food security and sustainable production,” said Mirjam Ros-Tonen of the University of Amsterdam and a former visiting scholar at the Center for International Forestry Research (CIFOR).

“There is also some evidence that these farmers are better off when they are integrated in the value chain,” said Ros-Tonen, who is the study’s lead author.

She noted that multinational companies embark on these kinds of partnerships because it is in their own interest.

“They have an interest in sustainable supplies and they have an interest in their suppliers doing well,” she said. “That’s why they invest in food production and farmers’ livelihoods.”

FARMING WATCHDOG

Smallholders face challenges... Photo: Ollivier Girard/CIFOR
Smallholders face challenges… Photo: Ollivier Girard/CIFOR

But such relationships have to be monitored, as farmers are often at a distinct disadvantage when it comes to working with multinational companies or government agencies.

“There is evidence that farmers lose autonomy in certain types of partnerships,” Ros-Tonen said.

Pointing to palm oil in Africa as an example, Ros-Tonen cites reports of companies coming into a region and convincing growers to combine their plots into larger ones. Although that might be good for production, this could expose communities to shortages of other food crops that they depend on to survive.

“Farmers are losing their say over what happens with their land because oil palm is going to be planted on it,” she said.

“That might jeopardize their access to food because they might have less land available for food production. It might not be sustainable at all because the production system implemented is monoculture.”

...when they enter the supply chain. Photo: Murdani Usman/CIFOR
…when they enter the supply chain. Photo: Murdani Usman/CIFOR

Commodity and agriculture companies can also make matters worse by failing to distribute the benefits of these value chain collaborations to all farmers, including women.

SHARE THE KNOWLEDGE

A ‘landscape approach’, which recognizes that land is used in multiple ways and considers both the environment and human systems that depend on such land, can contribute to resolving these issues.

Terry Sunderland, a co-author of the study and a principal scientist at CIFOR, said that such an approach could help people who usually don’t have a seat at the table.

“With stakeholders in landscapes, people will only engage if they feel they have some influence on the process. If they feel that the process has a trajectory already, they’ll just turn their backs. They’ve got other things to do, like feed their children,” he said.

“Having strong facilitation, whether it’s individual or institutional, is key to these kind of relationships. You can’t just have farmers talking to a company. There has to be some kind of process of facilitation.”

In the study, the authors call for all parties to work together more closely and share knowledge.

Storage of gum for export. Photo: Ollivier Girard/CIFOR
Storage of gum for export. Photo: Ollivier Girard/CIFOR

That might sound simple enough, but often this does not happen because of traditional barriers that exist between government agencies, the private sector and NGOs.

“We need new methods and new institutional arrangements to get diverse stakeholders together and have joint knowledge exchanges,” Ros-Tonen said.

Ros-Tonen and her co-authors dismissed concerns that farmers opt out of value chain collaborations because market integration “unfolds through a number of crises across different scales, which include the steady erosion of local farming knowledge, a narrowing of choices for producers and consumers, and an increased incapacity of food systems to feed the world in a sustainable and healthy manner.”

While they said those concerns weren’t completely unfounded, they said it should be up to farmers how they proceed – many of whom told the researchers that they want to be part of the global economy.

“There is an ideological stand in rejecting value chain integration, and proponents of food sovereignty and those who reject value chain integration claim to speak on behalf of the farmers,” Ros-Tonen said.

“But when we speak to cocoa farmers in Ghana, they say: ‘We want to be part of this market. It improves our lives. We have bigger income because cocoa has a fixed price.’”

Striking the right balance is essential, and at the 2016 Global Landscapes Forum: The Investment Case, discussions between the finance, corporate, government and NGO sectors took place with the objective to improve investments in sustainable landscapes.

Such work can help bridge the gap between private finance and sustainable landscapes, working toward enhancing the livelihoods of smallholders and the environment, and is an example of the facilitation and knowledge exchange that the study’s authors call for.

  • Home
  • The Investment Case: Financing smallholders for sustainable commodity supply

The Investment Case: Financing smallholders for sustainable commodity supply

How will smallholder farmers get access to sustainable financing? Photo: Iddy Farmer/CIFOR
Posted by

FTA

By Pablo Pacheco

How will smallholder farmers get access to sustainable financing? Photo: Iddy Farmer/CIFOR
How will smallholder farmers get access to finance to start producing crops sustainably? Photo: Iddy Farmer/CIFOR

The ongoing search for sustainable agricultural supply brings the role of finance into the center of the debate. The key question is how can smallholder farmers gain access to sources of financing that supports the transition to more sustainable production systems. Pablo Pacheco, Coordinator of Flagship 5 of the CGIAR Research Program on Forests, Trees and Agroforestry will discuss this issue at the Global Landscapes Forum: The Investment Case in London on 6 June 2016. Ahead of the event, he shared his reflections on the burning question of linking smallholders to finance. He argues that sustainability in the commodity trade can only be achieved, if smallholders are part of the picture.

Several approaches have been tried to connect farmers to financial services such as rural micro-credit under relatively flexible conditions or formal credit through small-scale lending operations. Many success stories have been observed in a pilot scale as documented by institutions dealing with rural finance. Yet many constraints still prevent smallholders from accessing affordable and flexible sources of credit, the main ones being

  • financial inflexibility and limited potential to access inexpensive credit,
  • inability to meet requests from banks,
  • lack of tenure security which is still requested as collateral.
So this is a good time for FTA scientists to expand their research to finance for farmers. Photo: Kate Evans/CIFOR
So this is a good time for FTA scientists to expand their research to finance for farmers. Photo: Kate Evans/CIFOR

We live in times in which sustainability of agricultural supply is the order of the day. Both large-scale farmers and smallholders are under pressure to embrace environmental standards as part of their production systems. This may have benefits on improved yields that could ultimately translate into higher income and profits. But the danger is that these benefits will only materialize for some companies and smallholders who are not short on capital. Affordable credit is needed for expanding the supply base of smallholders while helping them to embrace more sustainable production systems.

Less-endowed farmers continue to struggle to adopt improved practices, either due to the low quality of planting material, or lack of access to fertilizers and poor knowledge of management techniques. Particularly, this is the case for smallholder growers in the palm oil sector who still face low yields. Part of these barriers could be overcome with improved access to financial resources in flexible conditions. But not in all cases there is a shortage of credit, since flexible sources of capital also originate from informal sources, but those sources often comes at higher costs, and do not help with intensification of production.

There are two challenges: how can we promote the transition to more sustainable production systems and who will pay for the associated costs? Often commercial banks are only interested in financing the most profitable land-use activities under relatively rigid conditions, and mills only make money available to those smallholders under contract schemes. They did not care too much about sustainability in the past, but that is changing due to the increasing demands from manufacturing companies and retailers.

Also read White Paper
Also read White Paper

The transition to a more sustainable production is more difficult for independent smallholders. It will need concerted efforts from all stakeholders, including traders, industry, service providers, state agencies, and intermediaries to help smallholders overcome these difficulties. The financial service providers have a key role to play. They are starting to adopt environmental, social and governance criteria for screening their investments, and to more actively support inclusive business models. Yet, it will still take a long time for these efforts to materialize in effective outcomes on the ground.

In spite of that, new financing approaches are emerging which could be signs of hope for smallholders engaged in global commodity markets. They are related to efforts to link formal and informal finance providers, by leveraging local value chain actors for smallholder finance, and making use of technologies that can expand access to money while at the same time reducing its associated costs.

The emerging lessons in the palm oil sector will surely be taken up in future debates on how to reduce the sustainability gap that exists for smallholders and how to overcome their exclusion.

So this is a good time for Flagship 5 on Global Governance, Trade and Investment to expand its research agenda to include financing for farmers. We want to understand a few things:

  • what are the incentives and constraints that shape the implementation of responsible financing practices?
  • which factors restrict smallholders’ access to financial products and services? And
  • under what conditions can access to financing services be enhanced to support inclusive and sustainable development objectives?

At the Global Landscapes Forum: The Investment Case we will bring together representatives from finance, science, government and the corporate sector to discuss how to best support sustainability among smallholders.

 

 

  • Home
  • FTA event recap - 2015 Global Landscapes Forum: Shaping sustainable supply chains of the future

FTA event recap – 2015 Global Landscapes Forum: Shaping sustainable supply chains of the future

Posted by

FTA


Watch this Discussion Forum on the first day of the Global Landscapes Forum 2015, in Paris, France alongside COP21. The Global Landscapes Forum is the major event related to the CGIAR Research Program on Forests, Trees and Agroforestry (FTA). Tony Simons, Director General of FTA Partner World Agroforestry Centre (ICRAF) played an active role in the discussion.

The session examined sustainable-sourcing solutions – mobilizing large companies’ purchasing power and using real-world case studies. Participants pondered questions such as:

What are the trends regarding strategic resource cycles?

What are the conditions required and the obstacles?

How to encourage private investment in landscape restoration?

Find out more at Global Landscapes Forum


Back to top

Sign up to our monthly newsletter

Connect with us

X