The impact of ISPO certification on economic, social and environmental aspect in the palm oil plantation

Abstract

The Indonesian Government requires all Palm Oil Plantation Companies to have an Indonesian Sustainable Palm Oil (ISPO) certificate. Indonesia issued a policy known as ISPO so that Indonesia management of palm oil plantations pay attention to aspects of economy, social, and environment. ISPO certification obligations are financially burdensome for businessmen because large certification costs certainly affect the company’s production costs, sales and revenues of palm oil companies. The research objective was to describe the process to get ISPO certification for Palm Oil Plantation Companies, to determine the impact of the application of ISPO certification on the economic, social, and environmental aspects of palm oil companies. Data analysis was carried out by comparing the impact ISPO implementation to PT. Perkebunan Nusantara VI Ophir at the time before (2013, 2014, 2015) and after (2016, 2017) ISPO certification. The results showed that stages of procedures for recognizing PT. Nusantara Plantation Ophir VI’s ISPO certification is in accordance with the mechanism as stipulated in Minister of Agriculture Regulation No. 11/Minister of Agriculture Regulation/OT.140/3/2015. The impact of the application of ISPO certification on PT. Perkebunan Nusantara VI Ophir has an effect on increasing production costs, production levels, selling prices, sales, and income. The results of the calculation of the revenue to cost ratio, obtained by the R/C value is greater than one, which means that the application of ISPO is financially efficient over the costs incurred. The impact of ISPO implementation aside from the financial aspects received by the company after obtaining ISPO certification affects the aspects of operational, social community relations, the company’s concern for the environment, as well as trading CPO and Kernel. ISPO certification received by PT. Perkebunan Nusantara VI Ophir affect operational aspects, relationships with the social community, the company’s concern for the environment, as well as trading CPO and Kernel.