Assessment of Smallholders’ Barriers to Adopt Sustainable Practices: Case Study on Oil Palm (Elaeis Guineensis) Smallholders’ Certification in North Sumatra, Indonesia
Assessment of Smallholders’ Barriers to Adopt Sustainable Practices 439
to Adopt Sustainable
Practices:
Case Study on Oil Palm (Elaeis
Guineensis) Smallholders’
Certification in North
Sumatra, Indonesia
Diana Chalil
University of Sumatra Utara, Indonesia
EXECUTIVE SUMMARY
The significant increase in oil palm areas has led to concerns about the sustain-
ability of the associated farming practices. To address these issues, the Roundtable
Sustainable Palm Oil (RSPO) organization formulated principles and criteria (P&C)
for sustainable practices for members of the oil palm industry. Initially, only big
companies applied for RSPO’s certificate of sustainable product. However, with the
growing proportion of smallholders, they are strongly suggested to get involved.
Currently, only a few smallholders have obtained the certificate. One possible
reason is that the RSPO P&C might be too complicated for smallholders. Using a
descriptive and correlation method, this study found that lack of information, cost
DOI: 10.4018/978-1-4666-2842-7.ch016
of adoption and incompability with the stage of farm development, social values
and farming conditions, inadequate managerial skills, and profitability explain the
barriers for smallholders to adopt the RSPO’s P&C. These barriers need to be ad-
dressed in order to improve the adoption of sustainable practices among oil palm
smallholders.ORGANIZATION BACKGROUND Sustainable Agriculture
Agricultural has long been an important sector of human life It supplies food, fibers, fuel and raw materials for various industriesandwith increasingpopulationand income levels, demands for agricultural products have also increased. This has lead to a shift from the traditional agricultural patterns towards the more intensiveone. The results intensive agricultural practices have been quite impressive, but they have not always sustainable. For example, in the 1940s the shift known as the Green Revolution, marked the development of high-yield hybrid crops, however, they required the useof extensive fertilizers, pesticides and large quantities of irrigation water. While high-yield hybrid crops increased crop production by almost 3% per year over the period 1961-2004, unintended consequences included excessive ex- ploitation of land and water, and a subsequent decrease in production and profit. For example, in 1961-1963 the average Asian farmer’s fertilizer use was 6 kg/ha (2.5 kg/acre), four decades later, in 2000-2002, it increased more than 20-fold to 143 kg/ha (57.9 kg/acre) (WorldBank, 2008). As a result, the production costs increased and the profit decreased. It was found that an increase in fertilizer price caused a sharp decline in rice yield growth in Asia from 2.6% in 1970 to only 1.5% in 1980 (Kassie and Zihali, 2009).
Giampietro (1994) argued that such technological advances cannot be defined as unsustainable development, which includesnot only productionefficiency and profitability, but also social responsibility and environmental soundness. In fact, genetic engineering tended to address the first two criteria, but was usually not compatibility withother human activities and natural ecosystem processes. The situation is exacerbated when agricultural products are not only grown to meet thefood needs of a country, but are alsoa source of export revenue. For Indonesia, palm oil is recorded as an important export revenue contributor, with an export value of US$109 million in 1981, increasing to US$1.6 trillion in 2009 (Directorate Generale of Estate, 2012).
The Indonesian Palm Oil
Indonesia is the largest palm oil producer in the world producing more than 21 million tons of Crude Palm Oil (CPO) or 46.7% of the total world production. On average, 61% of the Indonesian palm oil is exported to the international market. Increased CPO demands in the international markets incentivize CPO producers to continue increasing their productions, both by improving productivity and expanding production areas. Today, of 43 countries worldwide cultivating oil palm Indonesia has seen the fastest expansion. While the global plantings of oil palm grew eight- fold in the past decade, the cultivation in Indonesia increased 23 times over the same period. In 1980s about 100,000 hectares were under oil palm cultivation, this number doubled in the 1990s. The planted areas recorded about 100,000 hectares of annual growth and doubled in the 1990s. Between 1999 and 2003, demand for palm oil drove expansion to a total of 500,000 hectares, most of which was facilitated by converting forest into oil palm plantations (Chandran, 2010 in Teoh, 2010).
Therefore, palm plantations are often considered a major cause of environmental damages, such as rapid destruction of forests and their biodiversity (van Gelder, 2004; Wakker 2004). This issue has provoked strong feelings among environmen- talist and some have even asked to boycott the use of palm oil products. However, this is likely to be ineffective, as demands for palm oil products keep increasing from both domestic and industrial consumers.The demand for palm oil will likely continue because of its low production costs and and continous supply.Compared to other vegetable oils, palm oil average production cost is very low. Palm oil crops use only 0.26 ha (0.64 acre) of land area to produce 1 ton of palm oil, while soy- bean, sunflower and rapeseed require 2.2 ha (5.4 acres), 2 ha (5 acres) and 1.5 ha (3.7 acres) respectively. Palm oil can be harvested throughout the year, generating nearly 10 times the energy it consumes, while soybean is a seasonal crop and only produces 2.5 of the energy (World Growth, 2009). Palm oil also has a high melting point, has proven to have low o trans-fatty acids content, a rich source of carotenoids andvitamin E, (all vegetable oil has no cholesterol), and is entirely genetically modi- fied (GM) free (Climate Avenue, 2010). Hence, boycotts will not sustainably solve the environmental problems caused by palm oil production.
Palm oil is also often claimed to be one of the majorpull factors for land con- versions. Initially, many producers tried to increase their production by increasing their oil palm crop productivity. However, the productivity improvement was not able to meet the increased demand. Thus, producers extended their planting areas. Forexample; a number of large companies converted their rubber and tea plantations into oil palm plantations. Lately, the conversion has spread to small scale paddy fields. Each paddy field has an average size of less than 1 ha (2.47 acres). This means that if the fields are converted into oil palm plantations, the individual size is far from the efficient scale (Siregar, 2011). Unfortunately, some of those who have not converted their paddy fields encounter problems in maintaining their field. The oil crops tend to decrease water supply for the paddy fields. Previous studies show that oil palm crops need a lot of water supply to optimally grow. On average, the water requirement for oil palm crops is 0.9 lt/sec/ha (0.36 lt/sec/acre) (Harahap and Darmosarkoro, 1999 in Wignyosukarto 2010) or 12-25 lt/trunk/day (Amri, 2004 in Lestari, 2010; Medan Bisnis, 2006). With a decrease in water supply, farmers could no longer continue to cultivate paddy. Therefore, when the conversion starts in one field, usually other adjacent fields will also be converted into oil palm plantations (Chalil, 2011). The land conversion decreases the rice supply. In Indonesia, such a conversion becamea serious problem because rice (that is milled from paddy), is the staple food for most people. However, closing the palm oil plantations is not rational because of their beneficial and increasing market potential.
RSPO and Sustainable Practice
To address such issues, oil palm business management needs to give more attention to sustainable practice. This idea has been formulated in many concepts and agree- ments, including the Roundtable Sustainability of Palm Oil (RSPO). This agreement is composed of 8 principles, 39 criterias and 77 sub criteria. RSPO forum recognised that applying all of these P&C would not beeasy, especially for smallholders who tended to have more technical, financial, capacity and organisational challenges than their larger competitors. In response, RSPO formed a Task Force on Smallholders (TFS) to ensure that smallholders could manage and produce CPO in line with the RSPO P&C. RSPO also adjusted the requirements to suit the production systems and circumstances of smallholders. Major stakeholders such as Governmental agencies (e.g. Ministry of Agriculture, Indonesian Palm Oil Conference (IPOC), Non Gov- ernment Organizations (e.g. Sawit Watch, WWF-Indonesia), Growers (Gabungan Pengusaha Kelapa Sawit Indonesia (GAPKI)/The Assosiation of Indonesian Palm Oil Businessmen and its nucleus companies), and Smallholders’ representatives (Asosiasi Petani Kelapa Sawit Indonesia/The Assosiation of Indonesian Palm Oil Smallholders, Asosiasi Perkebunan Inti Rakyat/The Assosiation of Nucleus Estate Smallholders, Serikat Petani Kelapa Sawit/Palm Oil Smallholders Union) were involved to develop specific P&C interpretation for smallholders.
In 2009 a generic set of standards for smallholders was approved by the RSPO Executive Board. One year later RSPO approved the standards especially for inde- pendent smallholders under Group Certification. They also simultaneously adopted the associated Group Certification Protocol. National Interpretation Working Groups in various countries developed national versions of these standards suited to each national specificification. As of 2011, eight (8) countries have completed their own National Interpretation of P&C for smallholders, including Indonesia, Malaysia, Colombia, Ghana, Nigeria, Papua New Guinea, Solomon Island and Thailand.
Among the 39 criteria in the RSPO P&C, 3 are considered irrelevant for small- holders. These are criteria 5.4 regarding “the use of energy efficiency and renewable energy use,” criterion 5.6 regarding “the availability of plans to reduce pollution and emissions” and criterion 6.6 on the obligation “to respect the company and fa- cilitate the right of all employees become union members.”Each of the sub criteria is used as the basis to assess the RSPO certification process. Each of the eight (8) principles in the RSPO P&C does not have the same number of criteria and sub criteria; therefore each principle is weighted differently.The details can be seen in the following table.
Suprisingly, Table 1 shows that the greatest weight does not lie on the environ- mental responsibility aspect (Principle 6). Rather it gives more weight on the best practices by growers and millers (Principle 4) and responsible consideration of employees and community (Principle 6). The smallest weight lies on the commit- ment to long-term economic and financial viability (Pinciple 3), the commitment to continuous improvement (Principle 8) and compliance with applicable laws and regulations (Principle 2). If we compare these weights to the smallholders’ exist- ing condition, thepriorityseems to fit the needs of smallholders to improve their performance. Many of the smallholders have not implemented the best practices.
Table 1. Weight of RSPO principles Number of Number of sub Principle*
Weight criteria* criteria*
1. Commitment to transparency
2
13
0.17
2. Compliance with applicable laws and
3
3
0.04 regulations
3. Commitment to long-term economic and
1
1
0.01 financial viability
4. Use of appropriate best practices by growers
8
22
0.29 and millers
5. Environmental responsibility and conserva-
6
12
0.16 tion of natural resources and biodiversity
6. Responsible consideration of employees and of individuals and communities affected by
11
16
0.21 growers and mills
7. Responsible development of new plantings
7
9
0.12
8. Commitment to continuous improvement in
1
1
0.01 key areas of activity
- Source: RSPO, 2007
The purpose of RSPO certification is to promote the growth and the use of sus- tainable oil palm. The term “sustainable” refers to economic, social and environ- mental sustainability. Based on her review of various literatures, Partzsch (2011, p.419) suggested that “the RSPO criteria define sustainable palm oil but are far from being consensus.” Inspite of the failure to clearly define the “sustainable” terminol- ogy, each type of the sustainability criteria can be directly related to aRSPO sub criteria. The detail can be seen in the following table.
Table 2 shows that among the 36 relevant criteria, 14 are directly related to the environmental sustainability, while 13 to social responsibility. Economic sustain- ability seems to have less priority, because they are only directly related to 2 of the criteria. Companies that can meet these principles and criteria (P&C) will obtain RSPO certificates. As of 2011, RSPO had 441 registered members comprising oil palm growers, processors, traders, manufacturers, banks, investors and non-gov- ernmental organizations. However, of the ninety-eight (98) oil palm growers, only twenty-nine (29) have been certified, although all of them are big companies with long experience in the industry (RSPO, 2011). This indicates that the adoption and diffusion of RSPO criteria practices is slow, and is limited even among big compa-
Figure 1. Smallholders seed production
Table 2. Type of sustainability in the RSPO sub criteria No Types of Sustainability Sub Criteria
1 Economics 3.1; 6.10
2 Social 2.2; 2.3; 5.3; 6.1; 6.2; 6.3; 6.4; 6.5; 6.7; 6.8; 6.11; 7.5; 7.6
3 Environmental 4.1; 4.2; 4.3; 4.4; 4.5; 4.6; 5.1; 5.2; 5.5; 7.1; 7.2; 7.3; 7.4 ; 7.7
nies. Although each group of growers possess inadequate oil palm plantation size, as a group their total land area is almost 40% of the total world oil palm areas and contribute more than 30% of the total world supply (Vermeulen and Goad, 2006). This shows that smallholders are no longer minor players and have significant contribution to the industry.
Smallholders and the RSPO
Agricultural innovation is defined as new ideas, methods, practices or techniques which provide the means forachieving sustained increases in farm productivity and income (Adams, 1987). Innovations are not only limited to the general and genu- inely new things that have not been created or used previously anywhere, but it can also be ideas, methods, practices or techniques that are new to a group of people or community.The innovations themselves can be divided into commercial and non commercial. The former refers to innovations that are developed to address eco- nomic challenges, while the latter tended to tackle environmental unsustainability. Thus environmental innovations use techniques, methods and approaches to focus more on improving land or water management rather than simply increase farm productivity. Many of the RSPO principles and criteria (P&C) relates to sustain- able oil palm plantation management practices, such as limiting the use of chemical fertilisers, maintaining the water quality, maintaining the biodiversity, or avoiding the use of fire for land preparation, methods which are still new for smallholders. Therefore, the RSPO P&C can be seen as an environmental innovation for palm oil smallholders in Indonesia.
In Indonesia, smallholders can be divided into supported/schemed and independent growers. Initially, smallholders were only a small group with a total ownership of 3125 hectares or 20.1% of the Indonesian total palm oil industry in 1979. However, in just decades, their totalareas have reached more than 3 million ha (7.41 million acres) or 40% of the Indonesia total oil palm plantations in 2009. Unfortunately, the rapid area expansion was not accompanied by increased performance efficiency. In general, smallholders still tended to lack technical knowledge. Many of them could not distinguish between poor and good seeds, and periodically purchased low yielding seedlings. Others still planted their crops on steep areas without terracing, or did not follow the proposed fertilizer application rates.
Smallholders also tended to lack managerial skills. In general, their plantation sizes were less than the efficient scale: on average, supported smallholders’ individual plantations are less than 5 ha (12.36 acres), while those of the independent are less than 20 ha (49.42 acres). On average, the economies of scale of an oil palm planta- tion is at least 4000 hectares, so that it can supply a mill that processes the fresh fruit bunches into crude palm oil (WRM, 2004). Without sufficient economies of scale, both supported and independent smallholders are unable to operate with minimum costs to reach the optimal income. Owners tended to lack the required skill sets to carry out breakeven analysis and therefore they do not have the information to plan for improvements. All of these conditions make it difficult for smallholders to meet the RSPO P&C requirements. Therefore, the certification was only granted to large growers initially. However, with their increasing numbers, many parties involved in the palm oil industry agreed that smallholders’ role can not be ignored. Hence th at the 8 annual meeting in 2010, RSPO members agreed to pay more attention to smallholders and declared “RSPO is also for smallholders” as the meeting theme. Recognizing different conditions and charateristics between smallholders and other producer groups, the general RSPO P&C was then specially interpreted and modified for smallholders. However, even assessed with the special interpretation, only two smallholder groups, both from the supported/schemed smallholders (PT Hindoli, Cargill and Musim Mas Group), have successfully managed to obtain the RSPO certificate as of 2011.
In addition, smallholders lack administration skills. Most do not have any record or document of their farming practices. This also makes it difficult to meet the RSPO P&C because 15 of the P&C (almost 40%) are related to the completeness of records and documentations. This raised concerns that RSPO P&C has not been formulated based on sufficient information and understanding about smallholders existing conditions and needs. Currently, smallholders are still struggling with many things (which will be further described in next sections) that might be more urgent and need to be improved first before focusing on completing records and documentations. Therefore, although the purpose of implementing RSPO P&C is well-intentioned, it could instead create barriers for smallholders’ to be certified and get involved in the international market.A number of researchers suggest that the RSPO certification tend to bring more benefits for large companies and retail- ers, and disadvantage or exclude smallholders, especially those from developing countries where incomes are low (Partzsch, 2011; Dradjat, 2009). As a response, GAPKI (Gabungan Pengusaha Kelapa Sawit Indonesia), the association of Indone- sia palm oil producers, decided to withdraw RSPO membership and together with the Indonesian Government develop its own certification (Indonesian Sustainable Palm Oil/ISPO). In fact, ISPO criteria are not sigficantly different from those of the RSPO: The obvious difference is only in the depth of the law and regulations as- sessment. ISPO assess the law and regulation in 7 specific sub criteria, while RSPO only address it in 1 general criterion (criterion 2.1) (RSPO, 2007 and ISPO, 2011).
In general, Indonesian smallholders have not given much attention to environ- mental issues. The only environment friendly practice that has been widely applied among farmers is the organic crop farmings. However, the development is relatively slow because the market response is inadequate, both in terms of price and quantity. In general, smallholders still focus on the effort to increase their production level and short term income rather than to respond to the environmental problems and long term benefit. Many smallholders still lack capital to buy production inputs, hence have not used optimum input level. To address this, the Indonesian govern- ment often subsidizes fertilizer price. Unfortunately, this makes farmers tend to over use chemical fertlizer.
Influencing Factors of the Adoption
Many factors affect the process of adoption and diffusion. They are not only fac- tors that relate to the innovation itself, but also that to the communication process and the condition of the receivers. Previous empirical studies found that factors that relate to the innovation include the complexity, incompability, flexibility and profitability of implementing the innovation. Innovations that are more triable and observed, or more compatible with climate environment and biomass availability, or more flexible and need less implementation cost and capital outlay, would be easily adopted or diffused. Factors that relate to the communication factors include the communication channel and the social system, such as the access to information, generation and spread of information, social and physical infrastructure, policies or institutional and political constraints. Factors that relate to the conditions of receivers include the intellect and knowledge, economic factors and land tenure (Rogers, 1995 in Adams, 1987; Vanclay and Lawrence, 1994; Baide, 2005; Kassie and Zikhalil, 2009).
In this study the criteria in the RSPO can be considered as a good innovation because it has been developed in detail and have considered all aspects of economic, social and environmental sustainability. Therefore, the scope of this study will focus more on the communication process and the condition of the receivers and choose 8 characteristics that are predicted to affect the rate of adoption. Factors that are related to communication processes are predicted by the farmers’ cosmopolitan and participation rate, while those related to the condition of receivers include the farm- ers’ age, their number of dependant, experience, income, land area, and education.
Objectives of the Study
While the contribution of oil palm smallholders is of growing importance, their performance, compared to their competitiors, is relatively low. Therefore, if the smallholders are going to be involved in the world’s palm oil industry through the RSPO certification, their conditions and characteristic needs must be empirically studied. Despite concerns over the relevancy of RSPO and sustainable practices, to date no studies have been undertaken to investigate the cause of slow develop- ment in obtaining the RSPO certification, especially among oil palm smallholders. Therefore this study was conducted (1) to analyse the smallholders’ characteristics (2) to determine the smallholders’ level of adoption of the RSPO P&C, (3) to analyze the correlation between smallholders level of adoption to their characteristics, and (4) to analyze the factors that impede the adoption of RSPO P&C.
DATA AND RESEARCH METHOD
This study was conducted in North Sumatra, a province of the first and largest oil palm areas in Indonesia. In this province two (2) districts, namelyAsahan and Labuhan Batu Selatan (Labusel), were selected since they consisted of the larg- est number/concentration of palm oil smallholders. Data were collected through interviews with sixty (60) smallholders that were randomly selected. Smallholders from Asahan represented the independent smallholders, while those from Labusel represented the schemed/supported smallholders. Schemed/supported smallholders are growers who cultivate palm oil with with the support of either the state or big private plantations. The support could be technical assistance through trainings or supervision, or financial assistance such as providing loans for buying seeds, fertil- izers and pesticides.
Two types of data were collected; first the smallholders’ characteristics data and second the level of adoption assessment data. Characteristic data include age, level of formal education, farming experience, number of dependents, land area, income, as well as cosmopolitan and participation rates. All of the data, except the cosmopolitan and participation rates, are quantitative. The qualitative data were measured by score. Level of cosmopolitan is determined through the type of news- paper articles that respondent read, the type of television and/or radio programs they followed, and their frequency and destination outside the village. Participation rate is estimated through respondents’ membership in farmers groups or cooperatives, the frequency of their involvement in the group activities and trainings. Both the cosmopolitan and participation rate range from 1 (lowest rate) to 3 (highest rate).
The level of adoption data were measured through 77 indicators and parameters of the 37 RSPO sub criteria. Each of the sub criteria equals one if the respondent applied the indicator and parameter, and zero otherwise. The level of adoption for
n
= each criterion in each of sample is measured with a , where i= 1,...., 37 ij
m
(number of criteria), j = 1,...,30 (number of respondent for each district), n = total i = assessment value for criteria i and m i number of sub criteria for criteria i. Each criterion does not always consist of the same number of sub criteria. Using a from ij all samples, the average value of level of adoption for each sample is determined
a ∑ ij
= with s , and the average value of level of adoption for each criterion is j
37
a ∑ ij = .
determined with c The description can be seen in Table 3. i 30
c i is then used to determine the score of each criterion for each district in Labu- han Batu and Asahan. The score is divided into 5 levels, which are: (a) 0% -19%,
(b) 20% -39%, (c) 40% -59%, (d) 60% -79% to (e) 80% -100%, referring to score 1 to 5, respectively. Score 1 represents the very low level of adoption, while 5 refers to the very high level of adoption.
Table 3. Level of adoption estimation matrix
Respondent Average for each 1 ...
30 Total (%) criterion (%) Criterion 30 30 a a 11 130 c a =
/
30
1 a 1 ∑ 1 j ...
∑ j = 1 1 j j = 1 ... ... ... ... ...
... 30 a 371 a 3730 c 37 a
37 ... 37 37 a a 37 ∑ j j = 1 Total (%) i 1 i ... 30 ∑ ∑ i = = 1 i 37 1 Average for each ... 37
s
30 sample (%) s a / 1 = i 1∑ i = 1
s i is then used as the level of adoption variable and correlated with the charac- teristics data in order to determine association between the factors. The Spearman
Correlation test is used to estimate the association of: (a) age, (b) formal education, (c) farming experience, (d) number of dependents, (e) land area, (f) income, (g) cosmopolitan rate, and (h) participation rate to smallholders’ level of adoption to the RSPO P&C. The land area is expected to have a positive sign, especially if the innovation is related to the production factor efficiency. Age is expected to have a negative sign; as young smallholders are expected to be more risk taker in trying new things. Education is expected to have a positive sign because it can affect the smallholders’ ability to understand the potential advantages of adopting the innova- tion. Income is expected to have a positive sign because it can also affect the abil- ity of adopters to finance or bear the risk of the innovation. Number of dependents is expected to have a negative sign because it is also associated with the ability of adopters to bear the risks of innovation. The participation rate in institutional and the cosmopolitan levels are expected to have positive signs because they might relate to the transfer of information, which might change the adopters’ way of think- ing (Soekartawi, 2005). The level of association is divided into 3 levels of relation- ship from weak, moderate, to strong relationship with range of correlation value of 0-0.33, 0.34-0.66 and, 0.67-1, respectively.
EMPIRICAL FINDINGS Smallholders’ Characteristics
From interviews with 60 respondents in Labusel and Asahan, characteristics of palm oil smallholders can be described as follows.
Table 4 shows that smallholders’ land area, income, formal education, cosmo- politan level and participation level in Labusel are higher than those in Asahan. All of the Labusel smallholders have areas more than 2 ha (4.94 acres). Each of them got two (2) ha when they integrated with the state plantation, PTPTN III program. This size is considered to be enough to support the smallholders’ family expenditure. Fortunately, the number of their dependents is relatively low compared to that in Asahan. In addition, they also received loans to buy production factors during the crops immature period (3-4 years). Smallholders started to repay their loans once the crops reached maturity. After repaying the loan fully, some smallholders used whatever excess money they have to buy additional land area (as many as 18 ha in some cases). In contrast, smallholders in Asahan did not get any land or loan. How- ever, they still established oil palm plantation, even among those who have areas
Table 4. Characteristics of smallholder samples Labusel (n=30) Asahan (n=30) No Characteristics Measure range average range average
1 Age year 37-65 50.5 35-70
50.7
2 Formal Education year 6-12 10.1 0-15
7.3
3 Farming Experience year 9-20 19.3 4-40
24.3
4 Number ofdependents person 1-5 2.8 1-10
3.9
5 Land Area Ha 2-11 4.3 1-8.5
3
IDR million 1.8-18 4.8 0.5-12
3.8
7 Cosmopolitan score 1-3 1.9 1.5-2.5
1.75
8 Participation score 1-3 2.1 1.4-2.1
1.69
less than 2 ha (4.94 acres). Comparing to the schemed smallholders, indepedndent smallholders have longer experience in farming. However, without sufficient land size and capital to buy inputs, their productivity and income are lower than those in Labusel. With more dependents, their income might not be enough to support the whole family expenditure.
The Assessment of Level of Adoption
The assessment of smallholder level of adoption was measured by their ability to fulfill sub criteria in each of the RSPO criteria. It was measured in percentage, with average values and average scores of each criteria of each group is as follows.
Table 5 shows that some of the RSPO criteria have not been implemented at all among smallholders, both in Labusel and Asahan, which is shown by the 0% values (criteria 2.1 for example). In contrast, a number of the RSPO criteria have been completely implemented among both of them, which is shown by the 100% values (criterion 6.7 for example). Labusel has 13 (35%) of 0% value and 5 (13.5%) of 100% value, while Asahan has 21 (57%) of 0% value and 3 (8.1%) of 100% value. This indicates that supported smallholders (Labusel) tend to have farming practices that are more similar to those of the independent ones (Asahan). Although in many area (20 criteria) they still have similar farming practices.
Correlation between Smallholders Characteristics and their Level of Adoption
On the one hand, the smallholder level of adoption in Labusel is higher than those in Asahan. Labusel also has higher incomes, land areas, cosmopolitan levels, par- ticipation levels and education than the latter, while the opposite applies for age
Table 5. Assessment values and scores Labusel (n=30) Asahan (n=30) difference Criteria in score Value (%) score Value (%) score
1.1 Adequate information to other stakeholders
42.16
3
1
2
1.2 Documents are publicly available
56.64
3
46.67
3
2.1 Compliance with laws and regulations
1
1 Land use is not contested by local com-
2.2
1
96.67
5
4 munities.
2.3 Land use does not diminish the legal rights 100
5
1
4
3.1 Long term management plan 100
5
1
4 Grower and mill practices are optimal to
3.2
1
20
2
1 maintain production of high quality CPO Operating procedures are documented,
4.1
38.33
2
1
1 implemented and monitored
4.2 Maintain or improve soil fertility
2.23
1
1.67
1 Minimise and control soils erosion and
4.3
1
1 degradation Practices aim to maintain the quality and
4.4
8.88
1
1.67
1 availability of surface and ground water Use Integrated Pest Management (IPM)
4.5
1
1 techniques Used chemicals in a way that does not
4.6
1.11
1
2
1 endanger health or the environment Implement occupational health and safety
4.7
93.33
5
1
4 requirements All staff, workers, smallholders and con-
4.8
50
3
1
2 tractors are appropriately trained Carry out an environmental impact assess- 5.1 ment and implement the results into plan-
33.37
2
1
1 ning and operational procedures Understand the plant and animal species 5.2 and habitats that exist inside and around the
50
3
43.33
3 planted area Develop, implement and monitor a plan 5.3 to manage biodiversity in and around the
1
6.67
1 planted area Reduce, recycle, re-use and dispose waste 5.5 in an environmentally and socially respon-
37.8
2
37.74
2 sible manner Carry out an the social impact assessment 6.1 and implement the results into planning and
1
1 operational procedures continued on following page
Table 5. Continued Labusel (n=30) Asahan (n=30) difference Criteria in score Value (%) score Value (%) score
Establish open and transparent methods for 6.2 communication and consultation between
1
1 growers and affected or interested parties Establish a mutually agreed and docu- 6.3 mented system for dealing with complaints
1
1 and grievances Documenting negotiations concerning 6.4 compensation for loss of legal or customary
1
1 rights Ensure payments and conditions for em-
6.5
81.67
5
73.33
4
1 ployees meet industry minimum standards
6.7 Not using child labour 100 5 100
5
6.8 Not engage in or support discrimination 100 5 100
5 Prevent sexual harassment and all other
6.9
1
1 forms of violence against women
6.10 Deal fairly and transparently with other
33.4
2
1
1 local businesses
6.11 Contribute to local development 100
5
1
4 Undertaken a comprehensive and partici- patory social and environmental impact
7.1
46.67
3
1
2 assessment and implement the results into planning and operational procedures Use soil surveys and topographic informa-
7.2 tion for site planning in the establishment of
50
3
1
2 new plantings New plantings not replaced primary forest 7.3 or High
86.67
5
46.67
3
2 Conservation Values Avoid extensive planting on steep terrain,
7.4
26.67
2
6.9
1
1 and/or on marginal and fragile soils No new plantings are established on lo- cal peoples’ land without their informed
7.5
80
5 1005 consent, dealt with through a documented system Local people are compensated for any
7.6 agreed land acquisitions and relinquishment
20
2
1
1 of rights Avoid the use of fire in the preparation of
7.7
1
3.33
1 new plantings Regularly monitor and review activities and develop and implement action plans that
8.1
1
1 allow demonstrable continual improvement in key operations and number of dependents. To test the level of association between the level of adoption and these factors, Spearman correlation test was conducted, which result shown in Table 6.
The result shows that experience, land area, level of participation and level of education are significantly related to the smallholders’ level of adoption. However, all of them have correlation values less than 0.67, indicating that none have a strong association. Experience, land area and education have a weak association, while the level of participation has a medium association.
The experience correlation has a negative sign, showing that smallholders with longer experience in farming tend to have lower levels of adoption. It is expected that experience will improve smallholders’ knowledge and skills, thus they will fulfill more of the RSPO P&C. In fact, most smallholders still practice similar farming practice from time to time. However, even supported smallholders that had been trained previously no longer fully practice all of their knowledge about the good agricultural practice.
The land area correlation has a positive sign, showing that smallholders with bigger land area tend to have more farming practice that suit with the RSPO P&C. This happens because they have more income and capital to support the cost outlay for the farming practice.
Education correlation has a positive sign, indicating that the higher the small- holders’ education the higher their level of adoption will be. Smallholders with higher education are likely to have more knowledge about environment, regulation or safety work that is required in the RSPO P&C.
Similarly, the level of participation also has a positive sign, indicating that the higher the smallholders’ level of participation, the higher their level of adoption will be. The level of participation is measured by smallholders’ participation in coopera-
Table 6. Correlation between smallholders’ level of adoption and their characteristics
No Characteristics Correlation Significance1 Age 0.014 0.878
2 Number of Dependent -0.145 0.135
3 Experience -0.221 0.024*
4 Income 0.146 0.107
5 Land Area 0.233 0.016*
6 Cosmopolitan 0.031 0.741
7 Participation 0.349 0.000**
8 Education 0.250 0.014*
- and ** = significant at 5% and 1% level of confidence, respectively
DISCUSSION Barriers to Adoption
Lack of Information for Smallholders
From 36 criteria that are relevant to smallholders, the supported smallholders’ aver- age level of adoption in Labusel is higher than independent smallholders in Asahan, which are 34.24% (score 2) and 18.56% (score 1), respectively. However, with less than 39% of fulfillness, both groups are still considered “low level of adoption.” In fact, many of the smallholders have not even heard about the RSPO yet, although some of them live adjacent to the certified large plantations that have notice boards on the edge of the estates.
For supported smallholders in Labusel, 12 criteria (33.33%) still have a value of 0%, and only 15 criteria (41.67%) have a value above 39% (the minimum percent- age to be considered “moderate”). For independent smallholders in Asahan, this is even worse, with 0% value appears in more than half of the criteria (21 criteria, which equal with 58.33% of the total number of criteria), and only 7 (19.44%) have values above 39% (Table 5). The 0% value means that none of the require- ment indicator and parameter in the criteria is fulfilled by the repondents. In fact, many of these criteria are associated with respondent knowledge, for examples the knowledge about chemical fertilizers and pesticides that are allowed, or about the types of animals and plants that are protected, or the laws and regulations that are related to oil palm plantations management.
Cost of Adoption
For smallholders, barriers to adopt sustainable practices not only stem from the lack knowledge. Some of the non adopted RSPO criteria in fact have already been understood. However, the sustainable practice needs extra activities and some additional funds. This can be an impediment to the sustainable practice adoption (Bryan and Kandulu, 2011). This can be seen in the way smallholders handle the spent pesticides containers. Among the 30 independent smallholder respondents, only 7% buried the containers. The others just left them in the planting areas, some sold them to the recycle agents and some even threw them into the river. In fact, most respondents are fully aware that the used containers still have toxic material and should not be used anymore or thrown to the river. However, they do not bother to bury them because the suggested treatment needs some additional work and there is currently no incentive. Most of them manage their farm by themselves and only hire additional workers only for harvesting the FFB. This means that smallholders only have a limited time to undertake additional work. In contrast, when small- holders can get additional income by selling the waste, smallholders are willing to expend more effort. This can be seen in the way they handle the used fertilizer sacks. Many smallholders wash the used fertilizer sacks in the river and sell them to waste agents. Smallholders understand that the chemical fertilizers can pollute the river, but since they need to expend more effort to avoid it and the impact is not immediately visible, the practice continues.
Another example can be seen in their chemical fertilizer usage. Many of them only use chemical fertilizer and no manure from the very beginning of growing oil palm trees. They realize that they need to increase the dose from time to time as the soil condition tends to degradate, and manure can improve the soil structure. However, the manure is not locally available in adequate quantity and if they buy it from other places, it has an expensive transportation cost. Vanclay and Lawrence (1994) suggest that additional implementation costs of an innovation appear to be the rational consideration for smallhoders not adopting environmental innovations. Smallholders are likely to adopt innovations that suit their income and financial capabilities (Adams, 1987).