New Report: Smallholders – Costs and Challenges of Small-Farmer Certification

In June 2012, members of the United Nations reconfirmed the UN consensus on sustainable development which was adopted at the Rio Earth Summit 20 years ago.  It stipulates that action to ensure sustainability should go hand in hand with action to raise living standards.

A campaign to require smallholders to be certified as RSPO-compliant breaches that consensus.  It elevates environmental outcomes over economic outcomes, undermining national strategies to raise living standards.  It also requires producers to disregard national policies set by governments.

It is being run by large ENGOs, in particular WWF; and prominent food retailers who have a commercial stake in reducing the attractiveness of palm oil in food processing. 

Retailers in France recently rallied against palm oil in order to promote their own private-label products over established food products that rely on palm oil for recipe consistency demanded by consumers. Large retailers with private-labelled products have found a competitive edge; by attacking palm oil, or demanding procurement of RSPO certified palm oil, they promote their own private-label products.

RSPO certification is an expensive process. It is beyond the means of most smallholders due to a lack of capital and technical expertise; and insufficient economies of scale that make certification an economically viable option for large farm operators.

As a result, large retailers are pitting their considerable resources against small scale farmers. In France, anti-palm oil campaigns run by retailers have had significant detrimental effect on the livelihood of palm oil growers in Africa and Asia who cannot afford RSPO certification.

When the Roundtable on Sustainable Palm Oil (RSPO) was established, there was no intention to apply its sustainability standard to small scale farmers.

This was appropriate.  RSPO was modelled on the Forest Stewardship Council’s (FSC) sustainability standard.  Its original purpose was to enable producers who voluntarily opted to apply the standard to demonstrate to buyers that they practised a high standard of sustainability.  Like the ISO quality management standards which they mimicked, these standards were designed for large and complex systems.  They were costly and users expected to secure a premium on the sale of products generated in these systems.

WWF, which initiated these sustainability systems, has now decreed they should be used not to enable producers to demonstrate they practice a superior standard of sustainability, but to drive adoption of these standards across whole industries.

WWF is lobbying large palm oil consuming markets in developing countries to also embrace these sustainability standards. WWF has initiated a campaign to promote procurement of RSPO certified palm oil in India, using questionable methods in an attempt to reduce the attractiveness of imported palm oil.

India’s key priority is to acquire affordable palm oil to feed poor populations; not embrace expensive certification standards which raise the price of food staples. WWF’s efforts to lobby the Indian market to accept RSPO certified palm oil are contemptible. The campaign directly impinges on the ability of Indian consumers and families to afford staple foods.

It also potentially affects the many smallholders who derive their livelihood supplying consumers in developing markets. India is the largest palm oil consumer in the world, importing the vast majority from South East Asian suppliers. Smallholders produce around forty per cent of global palm oil, mainly located in Malaysia and Indonesia.  Clearly these small-scale farmers have to be certified to the RSPO standard if the WWF ambition to see all palm oil produced according to its preferred standards is to be realized.

This can only come at a cost.  Small farmers cannot afford the expense of installing the systems that RSPO mandates.  The result would be a loss of income by small scale farmers and reduction in the number of smallholder producers.

The RSPO has announced a fund to subsidise eligible smallholders pursuing certification; but it appears that the fund is largely tokenistic. The root problem is that the RSPO system currently does not add value to smallholder farmers. In many cases, it adversely affects their viability. Limited external funding does not resolve this.

Ultimately the campaign undermines the growth strategies of the Malaysian and Indonesian Governments to foster production by small-scale farmers – a strategy commended by the World Bank for reducing poverty.

None of this is necessary.  Certification systems exist which enable small scale growers to both improve production and enhance sustainability.  In Malaysia for example, a system has been developed by the Malaysian government to encourage ‘Good Agricultural Practices’ (GAP) amongst small farmers. A Malaysian Sustainable Palm Oil (MSPO) standard is also being developed, based on input from local stakeholders such as Malaysian small farmers.

The inevitable result of this campaign would be a reduction in the amount of land used for production. This would fit WWF’s objective of seeing a reduction in the amount of land used by farmers and commodity producers worldwide.

Read the full report here: http://worldgrowth.org/site/wp-content/uploads/2013/03/smallholders_Final.pdf

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