The oil palm replanting imperative: Are smallholder farmers willing to participate?

Abstract

Smallholder oil palm farmers have been pivotal in Indonesia's Crude Palm Oil (CPO) production for decades. However, their plantations lag behind private and government estates in terms of productivity. Moreover, these farmers often resort to unsustainable practices. Replanting presents a viable solution to enhance sustainability by bolstering yields and mitigating harmful practices. The Indonesian government, through the Palm Oil Fund Management Agency (BPDPKS), offers subsidies for replanting to incentivize farmers to implement replanting. However, replanting program uptake remains low. This study aims to investigate factors underlying the smallholders' propensity to engage in replanting by examining (1) their intention (stated preference) to replant their oil palm plantation with the financing scheme from BPDPKS, and (2) their actual replanting implementation (revealed preference). Combining survey data with in-depth interviews, the research identifies three key factors influencing their decision: a lack of funds and financing access, difficulties in obtaining land ownership certificate and business registration certificates, and challenges to meet the sustainable palm oil certification. Encouraging smallholders to participate in the replanting program is crucial for curbing further land expansion, as this expansion poses a significant threat of encroachment upon forests and protected areas. Findings from the analysis of both intention and actual implementation provide valuable insights into smallholders' perspectives on replanting, underlining the need for comprehensive policy development and implementation. This will secure full engagement with smallholder farmers in replanting program, which offers a critical path to prevent further loss of nature, particularly forested area, due to land expansion for oil palm plantations.