Policy Reform for Forest Positive Agriculture in Indonesia: the Impact of the Good Growth Partnership
August 24, 2022
One of the most essential building blocks of sustainable agricultural commodities production lies in policy reform. If the policy environment for valuing and protecting natural ecosystems is weak – or if it is not well enforced – then producers will find few impediments to expanding their agricultural activities into forests, peatlands, and wetlands. If the legal and fiscal environment makes it possible, and easy, to cultivate in vulnerable ecosystems, and if there are no penalties for doing so, most rational producers will choose the path of least resistance. And if the financial rewards are higher for doing so, then both the legal and economic frameworks are encouraging ecologically unsustainable practices, and discouraging forest-positive system change.
“We can seek to optimize outcomes by integrating Production, Financing and Demand aspects of commodities production, but without enabling policies, the process will not work.”Paul Hartman, former Senior Environmental Specialist, Global Environment Facility Secretariat.
Traditionally, approaches to sustainable transformation in agricultural commodity supply chains have tended to segregate these elements, treating them as separate, unconnected issues. This has not led to system transformation, because systems are interlinked. What happens in one part of the system translates into multiple responses elsewhere – even across and between different commodity systems like beef and soy. Over five years, the Good Growth Partnership (GGP) has been working hard with many partners to build the enabling environment for sustainable agricultural commodities supply chains, combining our insights into production, demand, finance, and governance as indivisible elements within a connected, integrated supply chain system. What, then, have been the outcomes of the UNDP-led GGP work on policy reform for forest positive agriculture in Indonesia? What policies have been adopted and implemented? What barriers are being revealed? What are the enforcement issues, and are the right capacity-building and monitoring processes in place?
Effective land-use planning in agricultural commodities production helps remove incentives to convert forests, peatlands, wetlands and, ultimately, deforestation, and once effective land-use plans are in place, policies regulate the changes that follow. There have been notable achievements in Indonesia. A total of 824,424 ha of High Conservation Value (HCV) and/or High Carbon Stock (HCS) areas (including 194,321 ha of High Conservation Value Forest (HCVF)) have been brought under protection as a result of UNDP support. That support included guidance on how to identify – before the authorisation of any land-use changes – the environmental and social values that might be affected by land-use plans and policy developments. In addition, local regulations were developed to provide a legal framework for the protection of important conservation areas which, along with training for smallholders, allowed over 110 million tonnes of direct and indirect CO2 emissions to be avoided.
UNDP, through the GGP, has been facilitating work to strengthen land-use change policies, to develop new regulations and initiatives to promote sustainable production, and to improve support to palm oil smallholders, in order to reduce deforestation and protect important conservation areas. In addition to our support to the Indonesia's National Action Plan on Sustainable Palm Oil (NAP SPO) , UNDP has been supporting specific policy and regulatory processes at district and national levels, to help build and strengthen the enabling environment for sustainable palm oil. Regulations have been developed on Corporate Social Responsibility (CSR), partnerships between smallholders and companies, and community plantation development, helping to align more CSR funds with district priorities on sustainable development, helping smallholders get better access to market, and increasing extension services support from the private sector to smallholders.
 The HCV/HCS approaches identify and protect areas that are important for conservation and livelihoods, and support no deforestation commitments. HCV is a methodology to identify, manage, and monitor important environmental and social values in production landscapes across any ecosystem or habitat type (including aquatic ecosystems, grasslands and other non-forest ecosystems). There are six categories of HCVs covering biodiversity, rare ecosystems, ecosystem services, landscapes, and livelihoods and cultural values. HCS is an integrated conservation land use planning tool to distinguish between forest areas in the humid tropics which should be conserved, and degraded lands that may be developed while ensuring that the rights and livelihoods of local peoples are respected. There are four main classes of HCS forests which range from high to low density forests and young regenerating forests. Different areas within a landscape can be attributed with one or more HCVs. There is also a high degree of overlap between HCS forests and the location of HCVs. More information here.
A key challenge of the palm oil sector is that there are too few plantation extension service workers to pass on experience and knowledge about which practices are ecologically unsustainable and why, and about how to produce sustainably, increase productivity and extend production while minimising negative environmental externalities. Jobs needed to be created to help plug this gap, but state funding has not been sufficient. Private finance can be a solution, but often, private and independent extension services are not aligned with public ones, creating more confusion in the sector. To address this gap, with the support of UNDP through the GGP, policies have been established to diversify and strengthen extension services, providing tangible support to smallholders for sustainable palm oil production. The Minister of Agriculture Decree on Guidelines for Growth and Development of Private and Independent Agricultural Extension Agent in Oil Palm Plantation Area was legalised in 2020, encouraging the increase of private and independent extension agents, and providing better alignment between public, private, and independent extension services for smallholder farmers. Since 2020, approximately 1,000 additional independent/self-help extension workers have been delivering information and support on sustainable production practices, to enable smallholders to make forest-positive choices in agricultural development.
These are encouraging achievements, but the continuation of these positive developments will depend on how well regulations, policies, and action plans are implemented. A support phase is now needed. An assessment on policy implementation has identified several crucial points where the GGP’s support and facilitation are still essential in strengthening capacity so that national and subnational government officers can implement and monitor new or enhanced policies. In particular, monitoring tools still need to be developed, along with guidance on how to apply them.
Perhaps most importantly in terms of forest-positive policy reform, there is still considerable room for improvement in enforcement. Having made good progress in developing the regulatory and policy frameworks for sustainable palm oil production, it is now essential to develop, put in place, and monitor robust enforcement mechanisms which are equipped with clear sanctions. These will also need to be communicated, coordinated, and socialised to ensure that they are effective. There have been improvements in data gathering and technical infrastructure, however issues like incomplete smallholder databases, and limited access to companies' concession data (for example on cultivation permits), cause problems with some regulations. Going forward, it will be important to understand the relevant regulations above any policies or regulations which do not have enforcement mechanisms, to determine how they can act as de facto legal umbrellas for enforcement. The appointment and training of staff for the National and Subnational Implementation Teams in charge of the action plans for sustainable palm oil will also make a critical difference to the successful implementation, dissemination, and coordination of regulations supporting the action plans. The UNDP through GGP hopes to provide essential support and facilitation in this next phase of transitioning to sustainable palm oil production.
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