Context

The province of South Sumatra spans almost 9 million hectares, is home to the endangered Sumatran tiger, and is an important production area for palm oil, timber, pulp & paper, and rubber. Natural forest cover has reduced significantly and, coupled with forest and peatland fires, creates an urgent need to balance commodity production with forest protection. IDH brought public and private stakeholders together and drove the development of a green growth plan for the province. We aim to conserve 80,000 hectares of HCV/HCS forests and peatland, restore 20,000 hectares of forest and peatland, and increase sustainable agricultural production on 33,000 hectares, improving the livelihoods of 9,000 smallholder farmers and community members in and around Sembilang-Berbak National Park. We also aim to pilot jurisdictional certification in Musi Banyuasin Regency for palm oil.

Market transformation

IDH works in South Sumatra with the established producers and traders of key commodities in the region. In 2017, we focused on establishing relations with provincial and district governments, and started bringing companies, governments, farmers, and civil society together to discuss more detailed land-use plans and roles and responsibilities in PPI Compacts in the Sembilang and Lalan areas. In terms of field-level change, we supported two ground-breaking initiatives to invest in responsible production of palm oil by smallholders. In 2018, we will leverage these early successes to achieve our
targets by 2020.

Impact Focus

KPI progress 2017

  • Change in business practice

    Private-sector (sustainability) investments: Target 2020 (Revised in the Annual Plan 2018) 3,000,000
    Target 2017 5,000,000
    Result 0
    Business cases for sustainable practices delivered: Target 2020 3
    Target 2017 1
    Result 1
    IDH concluded the project with palm oil company Indofood Agri/Lonsum, resulting in RSPO certification of 183 independent smallholders. We proved it can be done, and it is the first step towards certifying all their circa 45,000 smallholders. This will be done by Indofood Agri/ Lonsum via its own funding. We developed a Fire-Free Village toolkit (a document of guidelines and best practices), which has been disseminated within the Fire Free Alliance (FFA), consisting of palm oil and forestry companies that have a special interest in the concept. Asia Pulp and Paper (APP), PT Tania Selatan (Wilmar) and Pinago Utama are implementing the concept in the first and second ring of their concessions in South Sumatra. This is one of the innovations that contributed to reducing hotspots from around 21,298 in 2015 to 2,567 in 2017.

  • Changes in landscape governance

    Green growth plans delivered: Target 2020 1
    Target 2017 2
    Result 2
    Sustainability embedded at corporate level: No target. Result: IDH is coordinator of the national Sustainable Districts Platform (LTKL). 0
    The South Sumatra green growth plan was launched at the Bonn Challenge in South Sumatra in May 2017. The province will integrate the plan in the improved RPJMD (medium-term development plan). The Planning Agency (BAPPEDA) of South Sumatra facilitated the issue of Governor Regulation No. 16 2017 on the green growth plan, in particular for its governance in South Sumatra. They also hosted a meeting with district-level governments and asked them to include these in their own medium-term development plans. A green growth plan for Lalan sub-district (in Musi Banyuasin) was finalized in early 2017 following the commitment of Musi Banyuasin district to become a Verified Sourcing Area by 2025. 4,000 smallholders have been mapped in preparation for ISPO/RSPO certification. This triggered RSPO to trial its jurisdictional certification in the district. RSPO selected Sabah in Malaysia and Musi Banyuasin to pilot this new scheme. IDH worked with the multi-stakeholder group Sahabat MuBa to design a Centre of Excellence to provide services to farmers (like GAP training, seedlings, fertilizer and finance, managing land rights, and protecting HCV/HCS). IDH has been selected as the coordinator of the Sustainable Districts Platform (LTKL), in which Musi Banyuasin district was appointed leader among the other eight districts across Indonesia. In the area adjacent to Lalan, IDH has explored how to establish a PPI Compact in and around Sembilang-Berbak National Park.

  • Field-level sustainability

    Smallholders trained in GAP: Target 2020 (South Sumatra) 9,000
    Target 2017 (all Indonesia) 15,000
    Result (South Sumatra) 3,517
    # of hectares under sustainable land use: Target 2020 (South Sumatra) 33,000
    Target 2017 (Indonesia) 100,000
    Result 2,812
    The first independent smallholders replanting project was realized, supported by the CPO Fund in Musi Banyuasin for 4,446 hectares. IDH facilitated a local bank providing the loans, supported by the province. IDH realized a project with palm oil company Indofood Agri/Lonsum to certify 183 independent smallholders under RSPO, and link this to potential European buyers of sustainable palm oil. The field-level impact that was achieved in 2017 includes pilots that will be scaled in 2018 and beyond. The number of 183 certified palm oil smallholders may seem insignificant in light of the challenges the region faces, but IDH showed it can be done and replicated. Moreover, IDH is increasingly seen by people on the ground as an organization.

IDH brings palm oil competitors together that would normally rather avoid each other. I do not know any other organizations that can do that.

Daniel Prakarsa, Commercial Sustainability Lead at Golden Agri Resources

Relevant SDGs

Lessons Learned

The big learning from the Lonsum project is that the palm oil mills need to put real skin in the game, right from the start. Without their commitment and energy it becomes a long and expensive process (it took us four years). But this had never been done before, and the potential to replicate the model to cover 45,000 smallholders on 90,000 hectares is significant and can have a huge knock-on effect in the region. The PPI Compact approach is new for implementing partners, and requires capacity building to ensure the approach is understood and can be organized. The innovative finance agenda brings a new boost of enthusiasm among our partners. The concept still needs to be proven, but everyone feels this might be the missing link to unlock scale.

Our Partners