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Harnessing Smallholders: CPOPC-UNCTAD Joint Research

CPOPC puts smallholders issue at the forefront of its programs, and seeks to bring this issue into global discourse by engaging multilateral organization such as the United Nations Conference on Trade and Development (UNCTAD).

On 3 November 2017 in Bali, Indonesia, CPOPC facilitated a working dinner with UNCTAD aimed to further discuss the joint research project. The project was initially talked about and agreed during CPOPC’s visit to UNCTAD headquarter in Geneva, Switzerland on late September 2017.

The CPOPC-UNCTAD joint research shall focus on “harnessing Indonesia’s palm oil potential for smallholders” as stated in the proposed terms of reference. The working dinner attended by CPOPC, UNCTAD, Indonesian palm oil business and government senior officials, where Mr Janvier Nkurunziza, Chief of Commodity Research and Analysis Section (CRAS) UNCTAD, led a presentation on this topic.

”The potential for increasing productivity in smallholder oil palm operations is very significant,” said Janvier. It is estimated that smallholders annually produce only around 2 tons of crude palm oil per hectare, compared to 6 tons of large commercial plantations, and potentially 8 tons for frontier producers.

The study aims, among others, to find out and understand the multiple factors causing smallholders’ low productivity. Some of the issues to investigate include: access to credit and finance, challenges arising from input and output markets, challenges relating to land tenure, and market structure along the value chain.

Why investigating smallholders productivity is of importance?

Global demand on palm oil is foreseen to peak 78,3 million ton in 2020, or increasing 30 percent from the current level (58,9 million ton, 2016). To meet the burgeoning demand, Indonesia, the biggest palm oil producer, could rely on smallholders. ‘’Productivity gap between smallholders and large plantation is wide, hence there is still room for improvement to increase production,’’ added Mr Mahendra Siregar, Executive Director of CPOPC.

In a broader context, increasing capacity for agricultural productivity and protecting small farmers are underlying strategies of ending hunger, as stated in the Sustainable Development Goals (SDGs) 2030. Smallholders in Indonesia own 40 percent of a total 11,6 million hectares of land planted with oil palm. Despite their significant portion, smallholders gain little economic benefits from oil palm sector, indicated by low income, that is linked to low productivity. (ed: CPOPC)

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