Landmark agreement marks a shared commitment to ensure that smallholder farmers are not left behind, through the provision of training, access to finance, and sustainability-based incentives
The Roundtable on Sustainable Palm Oil (RSPO) and the Indonesian Palm Oil Farmers Association (APKASINDO) have signed a landmark Memorandum of Understanding (MoU) to accelerate inclusive growth, certification, and market access for Indonesia’s smallholder farmers. With smallholders contributing around 40% of the nation’s palm oil production, this partnership marks an important step towards strengthening Indonesia’s global leadership in sustainable palm oil.
Indonesia is the world’s largest producer of palm oil, contributing 55% of global supply. Yet, while nearly half of production comes from smallholders, their yields remain far lower, at an average of two to three tonnes per hectare compared with six to eight tonnes per hectare in larger estates. This gap, combined with limited access to finance and certification systems,
presents significant risks to both livelihoods and national competitiveness.
Against this backdrop, RSPO and APKASINDO have jointly committed to inclusive growth which goes beyond boosting productivity, encompassing fair participation, empowerment, and the resilience of rural economies, ensuring that millions of smallholders are not left behind amid rising global demands for sustainability and traceability.
Across five key areas of collaboration, the MoU establishes smallholders as full economic partners, rather than marginal suppliers, with fair market access, social empowerment, and sustainable practices. Guntur Cahyo Prabowo, RSPO Head of Smallholders, underlined, “This MoU is not just about certification, it is about fairness, resilience, and inclusive growth. Every
tonne lost to low productivity erodes Indonesia’s global advantage, but closing the yield gap without expanding land secures Indonesia’s competitive edge. In a world where sustainability, traceability, and equity are the new rules of trade, investing in smallholders is a key lever to unlock the growth needed to reach the 8% national target”. Without inclusive action, Indonesia
risks losing billions of dollars annually due to productivity gaps, missed market premiums, and exclusion from increasingly regulated global markets, such as under the European Union Deforestation Regulation (EUDR). By prioritising smallholder inclusion, this MoU ensures that Indonesia’s palm oil leadership remains resilient and sustainable.
Dr. Gulat ME Manurung, Chairman of DPP APKASINDO, emphasized that this Memorandum of Understanding marks a historic milestone for Indonesian smallholders. Until now, farmers have often been regarded as marginal suppliers, even though smallholders contribute nearly 40% of national palm oil production.
“With this strategic collaboration with RSPO, we are recognized as equal partners in the global supply chain. For APKASINDO, this is not only about certification, but also about the future of millions of farming families, access to financing, fair markets, and enhancing productivity without the need to open new land. We believe this partnership will strengthen rural economic
resilience, close the yield gap, and safeguard Indonesia’s leadership in sustainable palm oil.” This cooperation also serves as an open call to government, financial institutions, and industry stakeholders to build an enabling ecosystem for smallholders. By recognising smallholder farmers as equal partners, Indonesia is not only safeguarding sustainability but also strengthening its position as a global leader in a fair, inclusive, and resilient palm oil industry.
