Posted on 09 March 2023
WWF’s new study analyses a range of incentives for smallholders on a landscape level that support sustainable production of palm oil. Smallholders play an important role in the palm oil industry as they are often responsible for a significant portion of global palm oil production. However, they can also face challenges such as limited access to resources and markets, which can impact their ability to adopt sustainable practices.
Sustainable production and consumption of palm oil is critical for the health of our natural ecosystems and for people. It involves practices such as conserving biodiversity, protecting water sources, and minimising greenhouse gas emissions. The case studies in this report from Malaysia and Indonesia demonstrate that by incentivising smallholders to adopt sustainable practices, it is possible to reduce the negative environmental impacts of palm oil production and promote the long-term sustainability of the industry. The report also outlines key success factors for each of the incentives within the case studies.
WWF conducted this research and developed this analysis to define what and how incentives can support smallholders to shift towards no deforestation, no peat and no exploitation (NDPE) palm oil production. The type and delivery of incentives varies and can be in the form of direct monetary payments to compensate for the costs associated with sustainable production practices, certification or obtaining legality, or as in-kind goods and services, indirect monetary payments or facilitative incentives, which includes benefits such as capacity building and training for certain technologies. We recognise that incentive schemes are very contextual and need to be adapted, combined and adjusted based on the specific regional characteristics. In most cases, a combination of several incentives will be most effective to incentivise smallholders to adopt sustainable practices and can also improve their livelihoods and social welfare.
The world cannot achieve a livable climate - 1.5 °C - without taking deforestation and conversion out of global commodity supply chains. Therefore, incentivising smallholders to adopt sustainable palm oil production practices can accelerate the transition to both environmental and social sustainability in the palm oil industry. According to RSPO’s impact report 2022, there are over 7 million smallholders dependent on oil palm plantations for their livelihoods. They are a key stakeholder in the palm oil value chain. It is crucial to understand how to embed these incentives into agricultural food systems so that smallholders can derive financial gain from protecting and restoring natural ecosystems.
For more information, please contact:
Prachi Jadhav, Manager, Communications and Advocacy, WWF-Singapore, pjadhav@wwf.sg
