Country report 2015 · Pulp & Paper The Pulp & Paper sector in Indonesia is dominated by two...
Transcript of Country report 2015 · Pulp & Paper The Pulp & Paper sector in Indonesia is dominated by two...
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Country report 2015 Indonesia
Indonesia program overview
IDH Programs MDG targeted globally Key sustainability issues
Palm Oil MDG 7 and 8 Deforestation
Traceability
Smallholder livelihoods
Pulp & Paper MDG 7 and 8 Deforestation, peat
subsidence, forest & peat fires
Social (land) conflicts
(Water) pollution in
manufacturing process
Tropical Timber MDG 7 and 8 Deforestation
Forest degradation
Coffee MDG 1, 7 and 8 Smallholder productivity Sustainable input availability and use
Farmer organization
Farmer access to finance and bankability
Effectiveness of extension services
Involvement of women and youth
Smallholder livelihoods
Cocoa MDG 1, 7 and 8 Small farm sizes
Low productivity
Lack of access to formal
finance
Spices MDG 1, 7 and 8 Smallholder livelihoods
Good Agricultural Practices
Farmer organization
Tin MDG 7 and 8 Rehabilitation of post mining
sites
Offshore mining threatening
marine ecology
Unsafe working conditions
Aquaculture MDG 1, 7 and 8 Mangrove deforestation
Farm effluents and cross
contamination
Disease surveillance and
environmental monitoring
Farm siting and traceability
Initiative for Sustainable Landscapes (ISLA)
MDG 1, 7 and 8 Natural resource governance
and spatial planning
Deforestation
Peat subsidence
Social (land) conflicts
Rural livelihoods
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Contents Executive Summary ............................................................................................................................. 1
1 Introduction ....................................................................................................................................... 2
Sector-specific introductions ............................................................................................................... 3
2. Program achievements ................................................................................................................. 12
Palm Oil Program ............................................................................................................................... 12
Pulp & Paper Program ....................................................................................................................... 15
Tropical Timber Program ................................................................................................................... 18
Coffee Program ................................................................................................................................. 18
Cocoa Program .................................................................................................................................. 20
Spices Program .................................................................................................................................. 21
Tin Program ....................................................................................................................................... 22
Aquaculture Program ........................................................................................................................ 23
Initiative for Sustainable Landscapes (ISLA) ...................................................................................... 24
3. Project overview per program .................................................................................................... 27
4. Key performance indicators per commodity on country level .............................................. 33
5. Lessons learnt ................................................................................................................................. 36
Cross program lessons ....................................................................................................................... 36
Program specific lessons ................................................................................................................... 37
Conclusion and outlook ..................................................................................................................... 39
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Executive Summary 2015 was the fourth year of IDH’s activities in Indonesia. Eight different sector programs and a
landscape program were implemented. The year also marked the transition from a sector-based
approach towards a landscape-based approach in the country. For the palm oil, pulp and paper, and
ISLA programs, this has resulted in a high level of integration in early 2016. Other programs will
continue their sector-level efforts but are also playing an active role in different focus landscapes.
The most important highlights and key achievements per program were:
Palm Oil: a solid pipeline of projects was built, covering about 20,000 farmers on 40,000 ha. The first projects started implementation. Strategic partnerships with private companies and governments were built for the development of sustainable supply sheds in Aceh and South Sumatra.
Pulp & Paper: a project for protecting and conserving 41,480 ha of peatland and mangrove forest started implementation; baseline studies and management plans for new forest management projects were completed; and agreements were made with APP and APRIL to work on landscape and fire management, integration of the HCS approach and clean manufacturing.
Tropical Timber: 185,330 hectares of tropical forest concessions were certified by the end of 2015 and a significant pipeline was built for certification in 2016
Coffee: The Sustainable Coffee Platform Indonesia was established and developed a national curriculum for training farmers on sustainable agricultural practices. In 5 field level projects, more than 29,000 farmers were trained.
Cocoa: 5,906 cocoa farmers received training and 9,035 obtained certification; the Cocoa Sustainability Partnership (CSP) expanded its membership and activities; a taskforce on Agri-Finance was established.
Spices: Three pilot projects supported farmers to achieve certification, and improve productivity and quality of their products. More than 4,000 farmers were trained, and almost 10,000 ha of spices fields were under sustainable management practices.
Tin: government and key industry players committed to address sustainability issues in the sector and the multi-stakeholder developed of a four-year roadmap towards Sustainable Tin Mining.
Aquaculture: at the end of 2015, the program reached up to 11,500 farmers and workers, accounting for the responsible production of 46,000 MT shrimp ; supports for Aceh Aquaculture Initiative has led to the transformation of the cooperative in which it is now receives direct support, partly, from a commercial financial institution.
Initiative for Sustainable Landscapes (ISLA): completed the inception phase in West Kalimantan and is prepared for implementation in 2016.
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1 Introduction
With its vast and abundant fertile soils and forest and marine resources, Indonesia is a major global
key producer of a wide variety of agri- and aquaculture, mining, and forestry products. The
agricultural sector is an important source of income and employment. Indonesia has a population of
approximately 260 million, of which 120 million live in rural areas, and 50 million of them are
economically active in agriculture (FAO Aquastat, Country Fact Sheet Indonesia). The development of
commodity production for export has been an important driver of Indonesia’s economic growth. In
2015, agricultural exports amounted to 5.6 billion US dollars, equaling 4% of total export (Ministry of
Trade). Furthermore, the tin exports amounted to 1.15 billion US dollar, and the export of paper
products and wood pulp amounted to more than 500 million US dollar (Ministry of Trade). Indonesia
is the number 1 producer and exporter of palm oil and tin world wide, the number 3 cocoa producer,
the number 4 coffee producer, and a top ten producer and exporter of several forest products.
This explains why Indonesia is a strategic intervention country for IDH, with 8 commodity programs
supporting improved environmental and social sustainability through public private partnerships
across the archipelago. These are: Cocoa, Palm Oil, Coffee, Spices, Pulp & Paper, Tropical Timber,
Aquaculture and Tin. The added value of IDH in these sectors is its ability to create, convene and
strengthen public-private partnerships that address the key sustainability issues and to co-invest in
scalable solutions. This ability builds on IDH playing the role of a neutral convener, being able to bring
businesses, government, and civil society together to find practical solutions. Stressing the
importance of precompetitive cooperation, we have been successful to get competitors in several
sectors around the table. Furthermore, we are active in convening stakeholders in both the supply-
side and the demand-side of agricultural value chains. This provides IDH with the unique ability to
ensure that on the one hand, sustainability policies of global industry and retail can be implemented
in a meaningful way, and, on the other hand, the sustainability efforts of producers are rewarded by
global markets.
Since the past two years, IDH has been focusing its efforts on decoupling commodity development
and deforestation, and these are based on the landscape approach. This approach was initially
enacted through “The Initiative for Sustainable Landscapes” (ISLA) that is supporting public private
partnerships in forestry and agriculture related industries including palm oil and pulp and paper in
West Kalimantan. In 2015 we decided to expand this approach towards other critical landscapes in
South Sumatra and Aceh.
The central concept for driving change in these landscapes is production-protection: using a
combination of donor and commercial funding to support investments in improved production
practices, in return for a delivery of conservation, protection and restoration targets. This also
requires cooperation between different land-users in the landscapes, as well as enhanced
cooperation with the government, since many environmental or public good issues need to be
addressed at a bigger scale. These include hydrological management, peat and forest fires prevention
and mitigation, ecosystems or biodiversity conservation, land legality and overlapping status of lands,
and relevant government policies.
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The team of IDH in Indonesia currently consists of 7 FTE and 5 part time senior experts providing
technical and convening support in certain sectors or geographic areas. In the first half of 2016, IDH
Indonesia was formally established as a local foundation.
Sector-specific introductions
Palm Oil
Indonesia is currently the world’s largest producer of palm oil. In 2014, almost 11 million hectares
were planted with oil palm, generating approximately 30 million tons of palm oil. Approximately 35%
of the palm oil is produced by smallholders, 7% by state-owned estates, and more than 50% by
estates of private companies (DG Estate Crops).
Palm oil is of strategic importance to Indonesia’s rural economic development. The sector provides
jobs for the rural population and generates significant export earnings. The exports of refined palm
oil, crude palm oil (CPO) and palm kernel oil had a value of more than 15 billion US dollars in 2015
(Ministry of Trade). Approximately 2.3 million smallholders plant oil palm and an additional 3.3
million people are employed on oil palm plantations (DG Estate Crops). Because of the wide
applicability of palm oil in the food and non-food industries, global demand for palm oil is expected
to increase further after a relative slowdown in 2015. On the domestic market, the subsidies on
biofuel contribute to increased demand. In 2015, CPO production equaled 32.5 million tons. The
Indonesian Palm Oil Association (Gapki) stated that Indonesia has a long-term target of producing 40
million tons of CPO per year from 2020.
There are concerns about whether this increase of production will be sustainable. Tropical forest
conversion and the establishment of oil palm on peat contributing to significant CO2 emissions,
unequal distribution of economic opportunities and benefits between corporations and the rural
population, and land conflicts have been issues in the sector for the past decades. The challenge at
hand is hence to ensure that the sector contributes to environmentally sustainable and inclusive
economic development.
In this context, IDH builds coalitions within the industry to transform these aspirations into workable
solutions, supported by a sound business case in order to achieve the program’s impact claim:
“Avoid potential deforestation due to expansion of palm oil”.
IDH supports smallholders in targeted supply sheds to become organized, increase their
productivity, use better production practices, access working capital and investment finance, and
improve their livelihoods. This should expand market access, reduce pressure to expand into forests
and allow smallholders to become compliant with the responsible sourcing policies of buyers
(through robust monitoring).
At global level, IDH convenes the industry in the Traceability Working Group (TWG) to find a
common definition for traceability and develop a roadmap for the steps needed to increase
understanding on the flow of palm oil products on existing land and transparently link to supply
sheds. This will allow companies to ensure that they are sourcing responsibly (for example that their
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supply chain is deforestation-free), and to identify areas where improvement and support is needed,
such as increasing the productivity and sustainability practices of farmers.
Because IDH is active in both the Indonesian supply and global demand arenas, it is well positioned to
ensure the pledges of global and national industry are translated into practice by working with the
producers and smallholders on the ground. Vice versa, experiences with the producers and
smallholders also provide feedback to the pledges and policies of the palm oil buyers and users.
Pulp & Paper
The Pulp & Paper sector in Indonesia is dominated by two players – APP and APRIL. Between them
they control 80% (1.9 million planted hectares) of the plantation resource and over 90% (5.35 million
tons) of the current total pulp production. These two companies have a fierce rivalry for resources
and production.
Until very recently, a significant portion of the raw material supply for the two big companies came
from the clearing of natural forest, including significant areas from peat swamps. This led to strong
attacks on these companies by NGOs and the international community. Based on that pressure, both
now source exclusively from plantation wood. These plantations are however, under constant threat
from disease, animals, fire and encroachment by other cropping. Fire was a massive issue in 2015
causing the loss of many thousands of hectares of forest and creating enormous emissions of GHG
and public suffering due to the haze. The sustainability of peat land plantations is especially
contentious exacerbated by the lack of scientific knowledge on the long term impacts. Downstream
processing of pulp and paper is not without sustainability issues either with some paper factories
located in heavily polluted but densely populated areas. These sustainability issues led IDH to
formulate the following impact claim for the program: “Develop innovative solutions to address
sustainability bottlenecks in the pulp and paper supply chain”.
Many organizations are actively involved in promoting sustainability in the Pulp & Paper sector.
Major NGOs such as Greenpeace and WWF have been successful in slowing and then stopping the
use of natural wood fiber in the manufacturing. Despite these efforts there remains significant
sustainability issues remain and the current NGO strategy of “naming and shaming” is not
automatically creating changes at smaller, less visible players in the supply chain. At present, weak
institutional capacity for sustainability, a lack of sector coordination, little industry-level best
practices, and a lack of clarity on policy and sustainability standards – such as High Carbon Stock
(HCS) – continue to hamper progress towards sustainability by these smaller companies.
In this context, IDH seeks to support improvements and collective learning to scale best practices in
pulp and paper sustain-ability through two work streams, to be implemented at scale:
1. Convening the industry to define a common framework and innovations fore around
sustainable integrated landscape management and clean manufacturing. This includes all
aspects from fire prevention, fire control through to certification, peatland management,
forest protection, forest restoration, production improvement and alternative species. These
will provide models for replication and upscaling across the sector.
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2. Investing in the development of guidelines, toolkits and standards in best peatland
management, responsible social practices, and high carbon stock. This will incentivize the
acceleration of their adoption by producers with the assistance of industry associations.
Tropical Timber
Indonesia has about 131 million ha of state forest land, of which an estimated 20 million is no longer
forested, leaving about 110 million ha as either conservation forest or production forest. About half
of this, or 57 million ha is assigned as production forest. Part of this is under license via a scheme of
long-term timber harvesting concessions, including 25 million ha of natural forest concessions, and
10 million ha for forest plantation concessions. However, only 13 million hectares of licensed forest
concessions are actively managed, where active means the submission to the Ministry of
Environment and Forestry (MoEF) of annual work plans – but due to operational capacity issues the
truly active number of natural forest concessions is even less (MoEF 2014).
One of the key threats to natural forests in Indonesia is the conversion of these forests to agricultural
land uses that have more immediate economic value – for example for palm oil production. By
increasing the economic value of forests without compromising natural integrity (through SFM), the
attractiveness of conversion can be decreased, and degradation can be prevented. This can be
achieved by increasing demand for sustainable tropical timber. Certification is one of the few ways to
verify legality, ahead of implemented Voluntary Partnership Agreements as required under EU law
(and elsewhere).
Within the above context, IDH has defined the 2015 impact claim of the timber program: “9 million
hectares of tropical forest to be sustainably managed by 2015”. The activities in Indonesia
contribute to this global impact claim.
IDH is active in the tropical timber sector in Indonesia via its sector program and increasingly as part
of the landscape approach in particular in West Kalimantan. In the sector program, IDH works
through its partner The Borneo Initiative (TBI). The objective of TBI is to contribute directly to the
increase of certified natural forest areas in Indonesia. TBI has offered support to around 25% of all
active concessions in Indonesia. With the funding provided, forest concessions need to hire a
certification coach. These coaching services are provided by TFF, TFT, GFTN, TNC and Wana Aksara
who also dedicate their own resources to this common certification initiative. By the end of 2015, 1.5
million hectares have been FSC Certified. IDH provides added value to the work of TBI by stimulating
the demand for FSC-certified forest products in Europe via the Sustainable Tropical Timber Coalition
it finances. Furthermore, concessions certified by TBI and other timber concessions are linked into
IDH’s landscape work in West Kalimantan (see below). A key lesson from the sector program has
been that timber concessions are not the only actors influencing land-use and in some cases, even
certified forests are still threatened. The landscape approach that IDH applies in the province of West
Kalimantan provides an opportunity to convene these different land users. Furthermore, the
approach addresses rural livelihoods, which help reduce the pressure on forests created by illegal
logging and smallholder encroachment.
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Coffee
Coffee was the first cash crop where voluntary standards reached scale, especially to address
livelihood challenges for smallholder farmers. Certification/verification although recognized as an
important tool towards sustainability, has not sufficiently addressed the systemic issues for
mainstream coffee related to unsustainable production practices, especially low yields and quality
(resulting in farmer poverty, lack of access to finance) and climate change. To overcome these issues
the IDH-led Sustainable Coffee Program (SCP) targets mainstream impact for coffee farming by up
scaling a more systemic approach to sustainable coffee production. SCP has stretched the pre-
competitive collaboration in the sector by convening front running roasters, traders and NGOs in a
committed sector platform representing 30% of global coffee demand. The impact claim of the SCP
for 2015 is “25% of coffee sales worldwide is sustainable by 2015”. The work in Indonesia
contributed to achieving this target.
Indonesian coffee is produced by an estimated 1.5 million smallholder farmers (of which only 0.5
million are actively managing their crop), with farm sizes averaging less than one hectare of coffee.
Over 60% of Robusta coffee production is concentrated in Southern Sumatra. Indonesian coffee
farmers increasingly lag behind farmers in Brazil and Vietnam in terms of productivity. Indonesia
produces 741 kg of robusta beans per hectare and 500 kg of arabica beans per hectare. In Vietnam
this figure stands at 1,500 kg per hectare and in Brazil at 2,000 kg. Profitability is relatively low at 873
US dollars per hectare (Technoserve, 2013). To become more competitive on the global coffee
market and increase their income, Indonesian farmers can improve on productivity, effective farmer
groups, fertilization and pesticides including access to finance, replanting/grafting, climate and water
management.
The SCP in Indonesia provides support to field level projects with coffee farmers and convenes the
public, private and civil society stakeholders in the sector in the Sustainable Coffee Platform
Indonesia (SCOPI).
IDH led the development of SCOPI and the platform was launched in March 2015. The platform,
consisting of 30 members so far, is already well recognized by all stakeholders. Its executive and
advisory boards and active and the platform employs two full time coordinators. With its members,
SCOPI has developed a multi-year plan to improve coffee sustainability by 2020 and has set up
different task forces that will guide implementation. One of the key tasks accomplished in 2015 was
the development of a National Sustainability Curriculum and Training Manual on Sustainable Robusta
Coffee, with the aim of streamlining and expanding of training on Good Agricultural Practices to
coffee farmers. This was done in close collaboration with the Ministry of Agriculture.
In addition to the work with SCOPI, IDH co-funded 5 field level projects through which 29,688
farmers were trained in 2015. In addition, IDH supported access to a loan of a KUB project organized
by Rabobank Cooperation together with a private sector partner. IDH also convened the different
implementing partners in a learning workshop.
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Cocoa
Indonesia is, with a production of over 400 thousand tons of cocoa (about 10% of global production),
the third largest cocoa producing country in the world (Cocoa Barometer, 2015). There are 1,3
million cocoa farmers in Indonesia. Lack of cultivation expertise, unproductive and aging trees,
limited access to high quality farm inputs, and a high incident of pest and disease infestation hinders
them to unfold their full production potential to improve their livelihood. In this context fits the
global impact claim for 2015 of IDH’s Cocoa Program: “300,000 farmers to have improved
livelihoods by 2015”.
The goal of the Widodo administration is to make Indonesia the largest cocoa production country in
the world and hence takes itself an active role in supporting cocoa production. In 2015, the
Government of Indonesia continued the Cocoa Sustainable Development Program (Pengembangan
Program Kakao Berkelanjutan - PPKB), which was launched in 2014. Through this program, the
government focused on re-planting, rejuvenation and rehabilitation programs, for example
distributes free cocoa seedlings and multi-year free support of agrochemical inputs to cocoa farmers
all over Indonesia. The predecessor of the PPKB struggled to achieve meaningful impact and suffered
from many operational challenges.
An important overarching sustainability issue in the sector is the difference in opinions on how to
achieve higher cocoa productivity and farmer incomes between the public and private sector.
Whereas the government is in favor of providing free inputs to farmers, the private sector is of the
opinion that this hampers the development of a commercial cocoa farm services industry in
Indonesia, whereby farmers invest in their farm.
IDH contributes to the sustainable development of the cocoa sector in Indonesia via two main
streams of activities:
1. The Sustainable Cocoa Production Program (SCPP). This program is implemented by the NGO
Swisscontact. The overall objective of SCPP is to increase the farmer household income from cocoa
by 75% and the reduction of Greenhouse Gas emissions from the cocoa sector by 20%. SCPP work
with central and decentral government, as well as with a large number of international cocoa
traders, processors and users. Within this program Swisscontact has implemented four projects that
were part of IDH’s global Cocoa Productivity and Quality Program (CPQP), which ended in 2015. The
private sector partners in these projects were Ecom, Nestlé, Olam and Mars.
2. The Cocoa Sustainability Partnership (CSP). This is a platform with members of the public and
private domain including all major cocoa traders, various public organizations and civil society
organizations. This platform aims to align public and private partners on the actions needed to
achieve sustainability of the Indonesian cocoa industry. The CSP is therefore an important vehicle to
IDH and its private sector partners to work towards a more constructive collaboration with the
Indonesian government. IDH supports the CSP financially and in kind through active engagement and
leadership in several task forces of the platform. IDH is a member of the board since 2010, and was
elected end 2015 as the chairman of the board.
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By chairing the “Governments and Donors” taskforce and by assuming chairmanship of the board
end 2015, IDH has worked hard to foster cooperation between CSP and the Government. As a result
of IDH’s convening efforts, the Ministry of Coordinating Economic Affairs is now part of the advisory
board of the CSP, and an agreement was signed in March 2016 for cooperation in the above
mentioned PPKB program to improve its impact. Furthermore, IDH succeeded to bring Nestlé on
board of the SCP as an additional private sector member. In the task forces of the CSP, IDH brings in
knowledge and experience from the cocoa sector in West Africa, notably on fertilizers and service
delivery models.
Spices
Indonesia is the second largest world exporter of cinnamon, the third for pepper, as well as for
nutmeg, mace and cardamons (ITC). The country plays a crucial role in supplying the European spices
market.
The Sustainable Spices Initiative (SSI), hosted by IDH, brings together leading national and
international processors, blenders, food industry/brands, retailers and NGOs to transform the sector
sustainably. The SSI is developing and benchmarking sustainability standards recognized by the
market, implementing pilot projects leading to the first certified volumes, and sharing good practices
and learnings. Convening local government and market actors has become increasingly important in
the spices program. This approach is now implemented in India, Vietnam and Madagascar, but not
yet in Indonesia. The focus in Indonesia was on implementing three pilot projects with Indonesian
producers, European off-takers, and NGOs supporting project design, implementation and
management. The projects cover the products white pepper, cassia (cinnamon), and nutmeg in the
regions Bangka, Kerinci, and Maluku respectively.
When the pilot projects started 3 years ago, sustainability was very new to the spices sector. The
pilot projects were co-funded to produce the first sustainable supply for the European spices market
and to make the spices sector familiar with sustainability. Making sustainable supply available
contributes to the objective of SSI to have 20% of all pepper imported in the EU to be produced
sustainably.
Tin
Indonesia benefits economically and socially from the production of one-third of the world’s mined
tin each year, the vast majority of which comes from the two focus islands of the program, Bangka
and Belitung.
Indonesian Ministries overseeing the sector include the Ministries of Trade, Mining and Mineral
Resources, Marine Affairs and Fisheries, Environment and Forestry. A significant part of the
Indonesian mining industry is under direct control of the government (public companies), therefore
this government endorsement is crucial. Furthermore, a number of medium to large sized private
companies are active in tin mining, as well as informal, small and artisanal miners. On the civil society
side, the environmental NGO WALHI (Friends of the Earth) is especially concerned with the negative
environmental impacts of tin mining.
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Reports of unsafe working conditions and environmental concerns, including the damaging of coral
reefs by offshore mining and the limited rehabilitation of post mining areas, in Indonesia’s tin
industry are concerning and are a major reason for the establishment of the IDH Tin Working group
in 2013. The goal of the IDH Tin Working Group is to positively contribute to addressing the
sustainability challenges of tin mining and smelting in Indonesia, while recognizing the economic
benefits of the sector. In this context originated the Program’s impact claim for 2015: “Explore
interventions for post-mined land reclamation and low impact offshore mining; create ownership
for the improvement agenda with local stakeholders”.
Members of the IDH Tin Working Group include global tin users (downstream and midstream
industry), the Electronics Industry Citizenship Coalition EICC, Friends of the Earth, and the global tin
trade association ITRI. The TWG works with local partners from the Indonesian tin industry (including
PT Timah and AETI, the association of private tin smelters), and the Indonesian government both
centrally as well as from Bangka and Belitung.
After a situational analysis conducted in 2013-14, the TWG committed to and followed a one-year
multi-phased action plan, from July 2014 until July 2015. The action plan enabled the TWG to
successfully engage with international and local stakeholders, such as the national and regional
governments, and key mining companies. Getting their buy-in was instrumental for entering the next
phase of our intervention: designing a single four-year Roadmap of Sustainable Tin Mining
Operations in Indonesia.
As the convener of the TWG members and of the local Indonesian stakeholders, IDH coordinated
each phase of the program, while making sure that stakeholders are an inclusive part of the decision-
making process and, where possible, the implementation.
Aquaculture
Indonesia is one of the world’s largest shrimp producing and exporting countries with over 650,000
ha of land being used for shrimp farming (Aquaculture Statistics, 2013). The shrimp farming industry
in Indonesia first took off in the late 80’s in East Java (Banyuwangi and Situbondo), West Java
(Tangerang, Serang) and Lampung. Whereas the sector initially focused at farming black tiger shrimp
(P. monodon) – widespread disease outbreaks in 1996 – 1997 made the industry shift to intensified
production of whiteleg shrimp (L. vannamei). Current production exceeds 500,000 MT per year
(MMAF, 2014).
Mangrove deforestation, farm effluents and cross contamination affecting water quality, feed
sourcing and efficiency, disease surveillance and environmental monitoring, farm siting and
traceability are key sustainability issues for the Indonesian shrimp industry to overcome. Especially
the water quality issue linked to disease risks is prevalent given the landscape with tens of thousands
of smallholders whose ponds are more or less interlinked into the same watersheds. A holistic,
landscape (zonal) approach is needed to mitigate cumulative impacts.
The importance of Indonesia as shrimp producer as well as the above mentioned sustainability issues
in the sector, explain the importance of the contribution of Indonesia to the program’s impact claim:
“15% of EU imports of pangasius, shrimp and tilapia to be responsibly produced by 2015”.
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IDH is active in Indonesia through its Farmers In Transition (FIT) Fund (www.fitfund.com). The Fund
supports producers to shift to more responsible practices, especially focusing on improving aquatic
animal health management as well as the use and sourcing of aquaculture feeds, as the two key
drivers for responsible production. The FIT Fund is operational in the Indonesian aquaculture
landscape through two of its key implementing partners: SFP and WorldFish. Within the current
project scope these partners are providing BMP trainings on aquatic animal health and feed
management, biosecurity, zonal management and fish handling to over 10.000 beneficiaries. Both
partners strongly align with local and national government (MMAF, Department of Fisheries, Brackish
Water Center) and industry organizations (Shrimp Club Indonesia, KPRI Budidaya Mina) within the
scope of the IDH program. The sustainability and improvement framework provided through the FIT
Fund is the instrumental driver for current market transformation efforts, recognized and
operationalized by both WorldFish and SFP.
Given the fact that a large part of the Indonesian aquaculture products are consumed locally or
exported to other Asian markets, the aquaculture program aims to enhance its efforts with regard to
convening public and private stakeholders locally around a joint sustainability agenda. This will be
closely linked to the landscape approach, because issues such as water quality have an impact
beyond the sector.
Initiative for Sustainable Landscapes (ISLA)
The Initiative for Sustainable Landscapes (ISLA) started its implementation in 2015. It differs from
other programs in IDH by taking a “landscape approach” to development, instead of a sectoral
approach. The landscape approach is about engaging stakeholders from multiple economic sectors,
government and civil society to improve the management of natural resources, contributing to
improved rural livelihoods. In Indonesia, IDH selected the Province of West Kalimantan as a focus
landscape in Indonesia based on a global “Call for Landscapes” organized in 2014.
West Kalimantan covers an area of 14.7 million hectares and consists of diverse ecosystems ranging
from peat lands to coastal mangroves to highland forests. These ecosystems are home to many
endemic species such as orangutan, as well as a source of water, fire and flood control and
microclimate regulation. Indigenous people living in the landscape base their livelihoods primarily on
rice farming, rubber, palm oil and a range of smaller scale agricultural crops. Policy incentives to
encourage commodity growth have contributed to the challenge of competing claims for land use. A
balance needs to be found between large scale commodity production and maintaining natural
forest and peat ecosystems for biodiversity conservation, ecosystem services and use by local
communities.
The inception phase of the program in 2015 has led to the selection of a focus area of 2 million
hectares, including large parts of the districts Kubu Raya, Kayong Utara and Ketapang. Approximately
1 million hectares of the selected landscape are still covered with forest (primary, secondary, logged)
and 560,000 ha of the landscape is peat land. Like South Sumatra, West Kalimantan has many fire
hotspots occurring this year.
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The development landscape in West Kalimantan is characterized by the absence of joint efforts by
public, private and civil actors. There are several international NGOs focusing on nature conservation
and local NGOs focusing on community development, but both have limited experience and capacity
of working with the private sector as major land user in the province. The relations between civil
society and the government are mixed and even tense in some cases. IDH supports all actors in
designing new public-private landscape management concepts, focusing on how to reduce the
opportunity costs of forest and peat land protection, while ensuring socio-economic development of
the rural population.
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2. Program achievements
Palm Oil Program
The IDH Palm Oil program officially launched late 2013, and the program gained traction in 2015. Strong relationships with palm oil producers, buyers and
users as well as governments of key producing provinces have been built in the sector in 2015. The number of projects that started actual implementation in
2015 was lower than targeted, but a catch up in 2016 is expected.
Program impact claim on the global level
Planned country activities for 2015
Progress Explanation for any type of deviation
Avoid potential
deforestation due
to expansion of
palm oil
Certify the first
smallholders in the
program against RSPO
standards in North and
South Sumatra. Trial
monitoring the World
Resources Institute’s
(WRI) Global Forest
Watch system,
supported by the mills.
The program’s call for proposals was successful, and
IDH has reached agreements with relevant partners
such as Cargill/Winrock and Asian Agri. It is expected
that contracts to support training in good agricultural
practice of at least another 13,000 farmers in key
supply sheds will be signed by Q3 2016. More than
350 smallholders have received sustainability
training and group organization support in 2015. A
catch up in 2016 is expected.
IDH works with WRI, Daemeter and Rainforest
Alliance to support the development of a risk
assessment tool for palm oil production by the
Traceability Working Group (TWG) members.
Together we align environmental risk assessment
methodologies at industry level and develop desktop
social risk assessment tools. This will be presented to
the TWG in early 2016 and will support mills to
effectively monitor their risks.
The target was for 10,000 smallholders to be organized, 2,000
smallholders to be trained in GAP and 150 certified. Only
about 350 have been trained and none have been certified.
Certification of the first smallholders in the program was not
achieved in 2015 due to bureaucratic delays, baseline data,
and operational issues and challenges with government
bureaucracy (e.g. slow progress on land registration). Poor
performance on training and organization was due to slow
progress with London Sumatra to late delivery of consultant
baseline report and long contracting period for supporting
implementer, as well as the collapse of a planned project
with Prosympac as a result of the company’s internal
problems.
IDH organized meetings in Jakarta and South Sumatra with
partners to discuss expediting the process to meet the 2015
target. One of the plans agreed was to pilot the acceleration
of legalization for farmers (namely STDB and SPPL) together
with the provincial and district government. IDH expects to
catch up in 2016.
13
Prototype innovative
financing for small-
holders in partnership
with one of the biggest
palm oil companies
supporting the
smallholders in
replanting.
An initial project was shelved when it became clear that
interest rates available from IDH financial partners
(FMO) were not lower than could be offered by local
banks. IDH is now exploring new projects and have
made significant progress with a different grower on a
new innovative finance project in South Sumatra. The
project will likely involve de-risking for commercial
smallholder loans in partnership with Wilmar, Nestle,
local banks and ABN AMRO. This project is also
innovative in the context of providing an alternative
livelihood to farmers during the “valley of death” period
(four-year immature period) – e.g. chicken farming to
cater the needs of Nestle.
Progress has been slower than expected due to the
abandonment of the original project. However, we are now
moving forward with the new project and hope to begin
implementation in 2017. 2016 will be spent on project
design, due diligence, farmer capacity building and
preparation, ahead of replanting and funds disbursement in
2017 (if the project is approved once due diligence and
design are complete).
Collaborate with Nestle
and TFT on at least one
project site.
IDH is working with several major TFT members
(Wilmar, Musim Mas, Cargill) and are cooperating with
TFT through the IPOP group in developing a program for
Aceh.
IDH is in discussions with Nestle regarding the
innovative finance project mentioned above, and will
shortly sign an MOU to formalize this, expected in Q2
2016.
IDH has made slower progress than anticipated since our
working areas were not previously aligned, but we expect
these relationships to develop into productive partnerships
now that we are working in similar areas such as Aceh and
South Sumatra.
14
Develop further
strategic partnerships
(e.g. with Wilmar,
Cargill, GAR and local
companies such as
Sampoerna Agri) on
projects on the ground.
IDH has continued to develop strong relationships, as
evidenced by our role as a convener in the Aceh supply
shed (mandated by IPOP Secretariat with GAR, Wilmar
and Musim Mas) as well as new projects/proposals
elsewhere with Cargill, Wilmar, Asian Agri, Makin, and
others covering more than 20,000 farmers and 40,000
hectares. In 2015, we agreed and signed projects to
work with Cargill in Riau and Wilmar in Sabah, with
further deals including ANJ, Bumitama, PT. Pasifik Agro
Sentosa in West Kalimantan, Asian Agri in Jambi (on
border with South Sumatra) and Makin in South
Sumatra expected to be signed in 2016. IDH also signed
a MoU with IPOP to lead work in Aceh, and with
Zoological Society London (ZSL) to collaborate on a
major landscape program in South Sumatra. A MoU with
the governor of South Sumatra on green growth plan
development was signed in late 2015. Commitment to
develop sustainable palm oil supply sheds in South
Sumatra was jointly declared in November 2015, and a
MoU with CPO Fund was also prepared.
Play a convening role in
relation to supply sheds.
IDH was asked by major growers to convene Indonesian
Palm Oil Pledge (IPOP) members and other stakeholders
around the development of a supply shed in the
province of Aceh and the threatened Leuser ecosystem.
In September 2015, IDH signed an agreement with IPOP
to co-fund investigative work together in Aceh. Based
on this, IDH has developed a concept which will be
proposed to the IPOP group in 2016.
IDH has also been asked by the governor of South
Sumatra to convene private stakeholders around a
multi-commodity supply shed, building on our existing
15
projects in the province. IDH co-chaired a workshop
initiated by the governor on this concept in mid-2015,
and a further focus group discussion (FGD) was held in
November 2015. The November FGD was followed by a
declaration of support from major and mid-sized palm
oil companies in the province to support the
development of a sustainable palm oil supply shed,
starting with strong action on fire prevention. IDH also
supported the governor in articulating a vision and
roadmap for development of the supply shed, which will
cover critical areas such as land legality, peatland
management, productivity and improved conservation.
Since then, IDH has also been working closely with the
Estate Crops Investment Fund (CPO Fund) to develop
pipeline projects for improved sustainability and
productivity in the province.
Pulp & Paper Program
Although significant progress has been made in opening up dialogues with key stakeholders in the sector, driving the program forward proved to be more
difficult than originally envisaged. Although a landscape project with significant scale started in 2015, the targeted number of hectares under sustainable
management were not achieved. The start of interventions related to clean manufacturing was delayed. The acceptance of the High Carbon Stock (HCS)
approach by government is slow due to political sensitivities.
Program impact claim on the global level
Planned country activities for 2015
Progress Explanation for any type of deviation
Develop
innovative
solutions to
address
sustainability
Increase areas under
sustainable forest
management and
reduce social conflict
by supporting a
Convened multi-stakeholder parties in the coastal area
of landscape Kubu Raya to develop a project for
protecting and conserving 41,480 ha of peatland and
mangrove forest.
IDH realized that achieving sustainable forest management
covering 400.000 ha or providing training for 20.000 forest
communities members, as targeted in West Kalimantan,
would take longer than was expected to achieve. However,
there is opportunity to work in other provinces such as South
16
bottlenecks in
the pulp and
paper supply
chain
sustainable landscape
project initiated by the
private sector. This will
include group
certification and
alternative livelihood
development on
400,000 hectares in
West Kalimantan.
Completed baseline study for integrated sustainable
forest management as a starting action to convene
five forestry companies covering 328,420 ha in Kubu
Raya, Kayong Utara and Ketapang districts in West
Kalimantan. The project implementation will start in
2016.
Became the main partner of Asia Pulp and Paper (APP)
in supporting its landscape approach for their
concessions in West Kalimantan and South Sumatera
(and parts of Jambi) covering an area of almost one
million ha of pulp plantation. A number of projects are
in development with APP with further progress
expected in 2016.
MOU signed with the governor of South Sumatra for
Green Growth Plan that includes sustainable forest
management practices and covering around 900.000
ha of industrial forest plantation.
Entered early phase of partnership with the Governor
of West Kalimantan and Governors’ Climate and Forest
Task Force that aims to realize the implementation of
sustainable forest management practices within
forestry concessions.
Supported the ZSL landscape consortium in South
Sumatera that is funded by the Norwegian and UK
Governments. This covers more than 1 million ha of
land consisting of mixed commodities and protected
areas mainly in Musi Banyuasin and Banyuasin
Districts.
Supported West Kalimantan Government in preparing
the proposal to the National Government for Forest
Management Unit (KPH) Development in Kubu Raya
district, by providing the baseline study and
Sumatra and Jambi provinces where reaching the 400.000 ha
target is more realistic.
SMEs that the program targeted in the private sector are
reluctant to partake in a collaborative/landscape initiative.
This is because they find it financially challenging to
contribute with cash and because they greatly feel the
imbalance in resources compared to the major industry
players. They also worry that the poor past reputation of the
major players will reflect badly upon them.
17
management plans
Engaged with APRIL in developing the generic model
of its Fire Free Village concept and the development of
a national fire free alliance.
Engaged with and advised the Government of South
Sumatera for the development of a provincial level fire
prevention and control plan.
Support the
government of
Indonesia and industry
in the development of
high carbon stock
standard/guidance in
order to help define
‘go/no go’ areas for
development.
Made significant progress in engaging with government
where IDH facilitated the process of government
understanding for the HCS standard. This was mostly
within the Ministry of Environment and Forestry. IDH also
successfully encouraged APRIL to incorporate the HCS
standard in their sustainability commitment. IDH is also
pushing for convergence between HCSA (mainly driven by
mixed pulp and palm companies) and HCS+ study (driven
by palm companies). This is significant for industry
players.
IDH realized that the government sees HCS approach to be an
international and private sector driven approach whose initial
development did not involve the government. The current
HCS standard/ guidance also does not fit with the current
government regulations in some key areas. As the result the
government does not yet endorse the implementation of the
HCS approach and does not acknowledge it as a valid
standard. Therefore, IDH’s main focus is to continue
supporting the private sector, while looking for opportunities
to reengage with the government.
Upscale clean
manufacturing by
supporting producers
to improve resource-
efficiency and clean
production by
benchmarking and
implementing good
manufacturing
practices.
Made agreement with one APP mill in implementing pilot
of clean manufacturing project in 2016.
IDH discovered that the clean manufacturing concept is still
new for the sector especially in Indonesia and that most mills
are not willing to spend more if it is not mandated by the
government. There is little current incentive from the market
for clean, manufacturing application (e.g. energy efficiency,
waste and water use management). IDH thus learned that
convening pulp and paper mills requires a different approach
such as involving the buyers to achieve market pressure.
18
Tropical Timber Program
The target for the certification of natural forest areas has not been achieved due to delays in various (government) processes, which are not uncommon in
Indonesia. Yet, IDH expects that these delays will be compensated for in 2016, so that the 2016 end target can still be achieved.
Program impact
claim on the
global level
Planned country
activities for 2015 Progress Explanation for any type of deviation
9 million hectares
of tropical forest
to be sustainably
managed by 2015
Support certification of
natural forest areas in
Indonesia, by providing
co-funded services that
are crucial to achieve
certification.
The Borneo Initiative (TBI) certified 185,330 hectares in
2015, including the world’s first certified mangrove
forests. Concerning market links, TBI focused on
improving trade links, and is on target regarding the
number of importers relationships have been established
with.
In 2015, the target of The Borneo Initiative (TBI) was to
certify 703,165 hectares of forest, while only 185,330
hectares were actually certified by the end of 2015, due to
delays on government approval of management plans, delays
in awarding certificates after the audits had taken place, etc.
TBI is facing severe delays but foresees no long-term
problems as the pipeline of the program has sufficient
hectares to realize the 2016 end target.
Coffee Program
The Sustainable Coffee Platform Indonesia was established and developed a national curriculum for training farmers on sustainable agricultural practices.
The roll-out of the curriculum was delayed to Q33 2016. In 5 field level projects, more than 29,000 farmers were trained, achieving the target set for 2015.
Program impact
claim on the
global level
Planned country
activities for 2015 Progress Explanation for any type of deviation
25% of coffee
sales worldwide
to be sustainable
by 2015
Establish a well-
functioning public-
private dialogue
platform in Indonesia
The Sustainable Coffee Platform Indonesia (SCOP)I was
launched on 31st March 2015. IDH was leading the
development of SCOPISCOPI is already recognized by
coffee stakeholders (government, private sector and
civil society) in Indonesia as a progressive platform.
19
SCOPI has 30 active members (1 member, Syngenta
resigned as member of SCOPI) and productive board
members (Executive and Supervisory boards), and
employs 2 fulltime coordinators.
Develop and agree on
a common national
sustainability
curriculum (NSC) for
robusta to address
nationally agreed
sector priorities to be
rolled out by both
public and private
extensionists.
In close cooperation with the Ministry of Agriculture the
Taskforce on transfer Technique already developed the
National Sustainability Curriculum and Manual Training
on Sustainable Robusta Coffee. 1000 copies are printed
and will be used to train trainers and farmers on GAP
and GMP. The roll-out of the curriculum is planned for
Q3 2016.
The roll-out of the curriculum was delayed, because the
coordination with a large amount of stakeholders in the
development of the curriculum took more time than planned.
The first training of trainers of both public and private
extensionists took place in June 2016
At farm level, Field
Level Projects (FLPs)
ensure large scale
prototyping of
effective and
innovative farmer
improvement
approaches to
encourage private
sector partners to
increase and upscale
their investments in
sustainable
production. For 2015
28000 farmers were
targeted.
Through IDH co-funded field level projects 29,688
farmers were trained. A learning workshop was
oragnized among project implementers to discuss and
learn from common challenges.
20
Cocoa Program
All CPQP field level projects have been completed as planned by the end of 2015. The evaluation of this program is postponed to the second half of 2016.
The work related to capital financing for cocoa farmers is still in the scoping phase and will continue in 2016 and beyond.
Program impact claim on the global level
Planned country activities for 2015
Progress Explanation for any type of deviation
300,000 farmers
to have improved
livelihoods by
2015
• Closing of the four
CPQP projects with
Mars, Nestlé, Olam and
Ecom.
• Evaluate the
program’s
achievements.
• Share lessons learned
and knowledge among
the partners at country
level.
While all four CPQP project have ended by December
2015, the evaluation and sharing of lessons learned has
been postponed to Q3 2016.
The focus will be on providing an aggregated overview
of what has been achieved within the CPQP program
and what innovations learnings happened during its
execution. This evaluation will reflect on all CPQP
project in Indonesia but also West Africa.
Due to staff changes, the evolution and sharing of has been
delayed and will take place in Q3 2016 instead.
• Scope cocoa working
capital financing for
farmers in Indonesia:
• Innovate financial
mechanisms to
support farmers’
business development,
“business leading
model”.
• Develop extension
• A Taskforce (TF) on Agri-Finance of Cocoa
sustainability Partnership (CSP) was established. This TF
is lead by IFC, while the members consist of
representative of the private sector (Mars, Mondelez,
Olam, Nestle) and NGO (IDH, Swisscontact, IFC,
Brightwater Foundation).
• A MoU was signed between CSP and Ministry of
Agriculture (MoA) on cooperation program synergy
between CSP and MoA on Sustainable cocoa
development in Indonesia.
• CSP need to have better management and governance by
enhance capacity of the secretariat members (currently there
are 8 members of staff).
• The taskforces are organized and established but there have
no concrete result yet. In 2016 it is expected that some
taskforces have significant and tangible result which can
provide information on the impact of behavior change at
farmers level (adoption levels are increased).
21
services to improve
economic performance
of cocoa producers
(farmers) through
inclusive business
development.
• Strengthen cocoa
producer (farmer)
forum capacity on
organization and
services development.
• CSP grows as a PPP platform for sustainable cocoa
development in Indonesia which main members of CSP
are private sectors. Other members are NGOs, research
institutes, cocoa association and farmer’s forums.
• CSP endorsed by national and regional governments
as a main partners working on cocoa sustainability.
Spices Program
In 2015 three spices projects were being implemented; in nutmeg cassia and white pepper. The nutmeg project was finalized by the end of 2015. Due to the
training in this project they are ready to be included in a financial credit project in 2016 (without co-funding of IDH). The cassia and white pepper projects
experienced some delays and will be finalized in 2016.
Program impact
claim on the
global level
Planned country
activities for 2015 Progress Explanation for any type of deviation
20% of all pepper
imported in the
EU to be
produced
sustainably
Finalizing the
implementation of 3
pilot projects
1 project finalized, 2 projects extended In the spices sector sustainability is very new. Our partners
learned it is difficult to find reliable and experienced
implementing partners and that this is key. Not having an
experienced implementing partner, or not having a strong
relation with the implementing partner leads to ineffective
trainings and delays.
There are no good training materials available because:
addressing sustainability is so new in the spices sector and
the Indonesia spices sector is very scattered. This is an extra
set back in implementing the pilot projects.
22
Tin Program
The program achieved some of its key milestones, including the commitment of government and key industry players to address sustainability issues in the
sector and the multi-stakeholder developed of a four-year roadmap towards Sustainable Tin Mining. At the end of 2015 however, IDH made a conscious
decision not to exit the program as planned because structures to support the local implementation of the roadmap were not yet in place.
Program impact claim on the global level
Planned country activities for 2015 Progress (for Tin there are no KPIs)
Explore
interventions for
post-mined land
reclamation and
low impact
offshore mining;
create ownership
for the
improvement
agenda with local
stakeholders
Identify a scalable supply chain incentive
for the stimulation of onshore land
reclamation and offshore environmental
impact mitigation in Indonesia.
Environmental Impact Assessments (EIAs) of five Indonesian tin mining companies were brought into
the public domain for further scrutiny, based on which an extensive assessment and advice report was
published by the NCEA (Netherlands Commission for Environmental Assessment). The
recommendations of the NCEA have been included in the roadmap to stimulate best practices.
Obtain local buy-in from the Indonesian
government and the local miners and
smelters, reflected in a group of three to
eight smelters (including state-owned
PT Timah) that commit to addressing
the most pressing sustainability issues in
Bangka and Belitung. This will entail
discussions between the local convener,
the relevant authorities, and local
smelters.
IDH secured (formal, in writing) support from the four related Indonesian ministries, as well as from all
the local provinces of Bangka and Belitung, to work together with the local companies to address the
sustainability issues of the sector. In addition, the leading tin smelters in Bangka became engaged
formally (the Indonesian Association of Tin Exporters via a Memorandum of Understanding) and
informally (PT Timah in a joined meeting with the TWG representatives).
Translate the commitments of the local
smelter group into a concrete
implementation plan.
A four-year Roadmap of Sustainable Tin Mining Operations in Indonesia was developed through a
multi-stakeholder strategy, including different roles for the industry, government and civil society. It
includes programmatic interventions to achieve the program sustainability goals.
23
Broaden the representation of the
entire downstream user industry for
tin.1
IDH strengthened the TWG by engaging two tin plate companies (Tata Steel and Arcelor Mittal) and the
biggest solder company (Alpha) which expanded the engagement of the various downstream user
industries towards the upstream supply.
Create the necessary incentives that
midstream and downstream tin users
(TWG private members) can implement
to incentivize front-running smelters to
implement the roadmap and support
lasting tin industry transformation.2
In collaboration with other TWG members, IDH developed a TWG Incentive Guide that describes the
ways that downstream industry can support and incentivize upstream industry in Indonesia to
implement more sustainable tin mining practices. The members of the TWG have endorsed the guide's
principles, which will be publicly shared on the IDH website.
Aquaculture Program
Investments in scalable and cost-effective producer support (with a focus on shrimp farming) are well on track. The building blocks for a national public-
private partnership around aquaculture are in place, but have not been formalized yet.
Program impact claim on the global level
Planned country activities for 2015
Progress Explanation for any type of deviation
15% of EU
imports of
pangasius,
shrimp and
tilapia to be
responsibly
produced by
Through the FIT Fund,
IDH will further co-
invest in scalable and
cost-effective producer
support (with a focus
on shrimp farming).
This will enable
farmers to improve
In Indonesia, the FIT Fund has instigated two large field-
level projects in Indonesia, accounting for €650K in
private sector investments, targeting improved working
conditions and reducing environmental pollution through
implementation of good farming practices.
Through contracting an ambitious zonal management rollout
project, implemented by SFP and co-funded by Walmart
Foundation, IDH has been able to significantly increase the
leverage of the FIT Fund in Indonesia, adding 10,000 farmers
across 10 regions to the portfolio.
1 This activity was not formally part of the annual plan for 2015 but it is nevertheless part of the TWG agenda and contributes to the initiative’s credibility.
2 This activity was not formally part of the 2015 Annual plan, however provided IDH’s exit strategy, there was need to work towards developing linkages between upstream
and downstream players to incentivize the supply creation of responsible tin, and the implementation of roadmap.
24
2015 business performance,
reduce impact on the
environment, improve
social responsibility,
and increase supply
chain resilience.
The total impact of the program in Indonesia now reaches
up to 11,500 farmers and workers, and the responsible
production of 46,000 MT shrimp.
Strengthen scalable
public-private
partnerships in at least
four key countries of
production.
A scoping study to work on responsible health and feed
management has started in Indonesia, outlining the
potential future role of IDH to convene public and private
sector actors within these countries.
The building blocks for a national public-private partnership
around aquaculture are in place through our partnership with
SFP, but have not been formalized yet.
Initiative for Sustainable Landscapes (ISLA)
The inception phase took longer than expected and IDH had to revise the original business case for the engagement with companies in West Kalimantan.
Together with internal capacity constraints, this contributed to a delay of the implementation phase to 2016.
Program impact claim on the global level
Planned country activities for 2015
Progress Explanation for any type of deviation
Overall targets
for ISLA in 2015:
Shared trend
and problem
analysis as a
basis for
joint vision
of multi-
stakeholder
Capacity building:
• Contract a landscape
manager
• Make agreements
with implementing
partners
NGOs/consultants Aidenvironment and FFI were
contracted as implementing partners for the program
inception phase lasting from May through December. A
senior landscape manager was hired, and was shortly
promoted to IDH country director. An interim manager
was recruited to fill part of the gap.
We were unsuccessful in contracting a full-time landscape
manager in West Kalimantan. After a trial period with a part-
time consultant, the program is now again managed by the
IDH office in Jakarta.
Data collection:
• Make inventory of
available (baseline)
data about landscape.
Extensive baseline mapping of the area and description of
the key supply chains were completed. Maps and
documents include all concession areas and owners,
remaining HCV areas, peatland, and forest cover.
The original business rationale for the landscape (land swaps
as part of RSPO) proved to be insufficient, and a new business
cases needs to be developed in 2016 and beyond.
25
coalitions
per
landscape
Intervention
planning for
the 2016-
2018 period
on the basis
of the joint
vision well-
functioning
multi-
stakeholder
coalitions
with a clear
governance
structure
ISLA
learnings are
mainstreame
d inside and
outside IDH
• Conduct
complimentary
baseline studies (e.g.
remote sensing)
Project planning and
stakeholder
management: refine
vision/approach;
define landscape
boundaries,
stakeholder mapping
and engagement
strategy; hold regular
meetings; set up
governance
structure.
Stakeholder mapping and definition of the boundaries
have been completed. The vision and approach to the
landscape have been further defined – also using focused
group discussions with relevant stakeholders – but will
need to be continuously improved.
IDH, together with Aidenvironment and FFI, engaged
private-sector partners and started developing projects in
sub-areas within the bigger landscape.
Relatively little progress was made on multi-stakeholder
convening. This was partly due to the lack of capacity (a full-
time manager) of IDH in the landscape.
Joint actions:
• Define/agree on first
interventions.
• Start implementing.
Focus areas for the first interventions have been
identified, and discussions with private-sector
companies around intervention ideas have started.
Joint actions have not yet started. IDH expects the
first interventions to start in Q2 2016.
Joint actions have not yet started. IDH expects the first
interventions to start in Q2 2016.
Co-funding:
Identify and secure co-
funding.
In December 2015, IDH secured additional investments in
the West Kalimantan landscape from
NICFI.
The private sector is willing and able to co-fund
projects of a substantial size.
The government’s Crude Palm Oil (CPO) fund is another
source of co-funding, and an MoU is in progress.
26
Communication:
Develop and
disseminate
communication
materials.
Presentations and leaflets were developed and used
throughout the year. The landscape was promoted at a
number of events such as the RSPO Round Table in
November 2015 by IDH and Aidenvironment.
27
3. Project overview per program In the following table each project per program is listed, including the partners IDH works with. For each project the planned as well as the progress
on key performance indicators (KPI) are indicated and linked up to the global impact claim of each commodity program.
Project title Partners Planned key project KPIs for 2015 Progress per key project
KPIs for 2015
Contribution to global impact
claim
Palm Oil
IndoAgri Sustainable
Smallholder Program
Lonsum (IndoAgri group), RSPO Number of smallholders trained
in palm oil GAP: 1,150
More time than expected
was needed for the
establishment of a baseline
and building internal
capacity, hence no progress
on the KPIs has been
achieved.
In the 2015 program plan, the
overall rationale was that
contributing to increased
smallholder productivity on
land already planted with oil
palm and (deforestation free)
traceability will (indirectly)
contribute to reduced
deforestation. This assumption
hence applies to all projects
listed here. Yet, in 2015 IDH
has learned that substantial
changes in governance and a
reduction of the opportunity
costs for not deforesting are
needed in addition to support
to agricultural production and
traceability to achieve a
reduction in deforestation.
Number of hectares
certified/verified sustainable: 318
Change in smallholder
productivity: 20%
Number of farmers in effective
farmer organisations: 300
Proportion of mills linked to a
monitoring or verification system:
100%
28
SHARP funding 2015-2016 for Responsible Supply Shed (RSS) framework
3
Proforest, several private partners Formal recognition from key
private stakeholders of the value
of RSS: at least 10 companies
acknowledging value of RSS
framework
Palm oil in SEA - Prosympac,
P&G, Wilmar, Unilever, GAR
(5)
Number of major companies
committed to implementation of
RSS at scale (totalling at least
100,000 ha): 1
0, but P&G now piloting
with a view to scaling up
and discussions ongoing
with Wilmar
A simplified HCV for Smallholders
approach proven for application:
completion controlled field test in
Sumatra
Completed with group of
palm oil smallholders
seeking to achieve RSPO
Group Certification
Endorsement by key private
stakeholders of the simplified
HCV tool: 10 companies
None, but keen interest
from IPOP Secretariat
reflecting felt need for the 5
company members of IPOP.
Number of major companies
involved in field implementation
of RSS and HCV tools: 6 2: Prosympac and P&G
PTPN3 Sustainable Smallholder Program
PTPN3, De Guru, RSPO Private sector sustainability
investments in the project:
74,151 USD 5,523 USD
3 This was a globally implemented project. KPIs and targets listed here are only those that are applicable to Indonesia. The targets listed here are global targets (unless
stated otherwise), yet the results are specific to Indonesia only.
29
Number smallholder producers
aggregated by project partner to
efficiently receive services: 150
75
Number of M/F smallholders
trained on key subjects for
sustainable production,
environmental and social
sustainability issues:
M: 132, F: 18
M: 63
F: 12
Adoption rate by producers of
improved practices: 60% 30%
Ha of Farmland area where
trained practices (GAP, RSPO
P&C) are applied: 1,160 525ha
Yield improvement from baseline
(MT FFB/ha/yr on average): 21
(basline 15.7)
19.87
Traceability reporting platform
FoodReg, Unilever Number of leading companies
signed up and using the platform
9
Volume of product containing PO/PK received by buyers and recorded on KnownSources during Q3 2015
500,000 mt
List of unique coordinates believed to be mills, prior to validation
3,834
30
Validation of mill GPS data, internally or incorporated from external parties
2,200
Tropical Timber
The Borneo Initiative The Borneo Initiative
652.000 ha FSC certified 185.330 ha FSC certified
9 million hectares of tropical forest to be sustainably managed by 2015
Coffee4
Coffee Made Happy in Semendo
Applicant: Jacobs Douwe Egberts (JDE) Implementing partner: Ecom - IndoCafCo (ICC)
Number of farmers trained: 3,000
Number of farmers trained: 2,746
25% of coffee sales worldwide to be sustainable by 2015
Mondelez Neumann Stiftung Indonesia
Applicant: Jacobs Douwe Egberts (JDE) Implementing partner: Hanns R. Neumann Stiftung North America Inc.( HRNS)
Number of farmers trained: 2,000
Number of farmers trained: 3,474
Strengthening the smallholder Robusta sector in Sumatra, Indonesia
Applicant: Hanns R. Neumann Stiftung North America Inc.( HRNS) J.M. Implementing partner Smucker Company (Orrville, OH, U.S.A.)
Number of farmers trained: 2,000
Number of farmers trained: 4,019
Green and Social Coffee Sumatra
Applicant: Hivos South East Asia Implementing partner: Ecom - IndoCafCo (ICC)
Number of farmers trained: 5,000
Number of farmers trained: 2,049
Scaled sustainability through brand led collaboration
Implementing Partner: Rainforest Alliance
Number of farmers trained: 18,000
Number of farmers trained: 18,875
4 Due to the competitiveness of the FLPs in the coffee sector and hence the confidentiality of monitoring data, we can only report on the number of farmers trained.
31
Cocoa
CPQP Swisscontact, Mars, ECOM, Nestlé and Olam
Nr of farmers trained in certification modules: 5,500 5,906
300,000 farmers to have improved livelihoods by 2015
Nr of producers certified: 14,500 9,035
Area (ha) of cocoa trees rehabilitated: 3,900
8,039
Average volume (kg/ha) of inorganic fertilizer used per hectare of land: 572 (global target)
274
Volume (mt) of cocoa produced – certified: 925 7,125
Average yield (kg/ha/year): 1,000 689
Value (USD) of financial products provided to producer groups/organizations: 300,000
32,900
Nr of institutions/entities trained: 65 (55 public, 10 private) 6 (only private)
Nr of best practices shared in sector (through websites, events, etc.): 1
2
Spices
Sustainable Cassia
production Kerinci;
Cassia Coop Number of farmers trained:
1,072 farmers
ha under sustainable practices:
3,000ha
Number of farmers trained:
1,072 farmers
ha under sustainable
practices: 2,958 ha
Contribution to spices program
overall objective by brining
the first sustainable certified
cassia supplies to the market
and sets an example for the
rest of the sector
32
Empowering smallholders
for sustainable nutmeg
production; Nutmeg in the
Mollucas
ICCO and Agriproducts Number of farmers trained:
3,000 farmers
ha under sustainable practices:
10.000 ha
Number of farmers trained:
2,853 farmers
ha under sustainable
practices: 6986 ha
Contribution to spices program
overall objective by brining
sustainable nutmeg supplies
to the market and sets an
example for the rest of the
sector
Stainable Production of
Muntok White Pepper in
West Bangka
Verstegen Spices & Sauces BV,
Hivos, PT Can
Number of farmers trained: 305
farmers
ha under sustainable practices:
193 ha
Number of farmers trained:
174 farmers
ha under sustainable
practices: 0 ha
Contribution to spices program
overall objective by brining
sustainable white pepper
supplies to the market and sets
an example for the rest of the
sector
Aquaculture
Sustainable Shrimp Farming
in Aceh, Indonesia
WorldFish, Aceh Aquaculture
Cooperative (AAC)
AAC members: 450
FCR: 1.5 1.3
Survival: 60 85%
AAC members: 341
FCR:1.44
Survival: 71%
15% of EU imports of
pangasius, shrimp and tilapia
to be responsibly produced by
2015 Adopting a zonal management approach
SFP, Walmart Foundation BMP & zonal training: 10,000 farmers Survival:60% 70%
BMP & zonal training: 5,000 Survival: not yet available
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4. Key performance indicators per commodity on country level This table links the KPIs at global level to those at the country level. It shows how the
achievements at country level in 2015 contributed to the overall programs targets for 2015.
Please note that for Apparel, Pulp & Paper and Tin and the Initiative for Sustainable Landscapes
(ISLA) no KPIs have been defined in the annual plan for 2015 due to the development phase of
these programs.
Palm Oil Program KPIs
Coffee Program KPIs
KPI
Overall program
Target 2015
Result 2015
Country level 2015
Target 2015
Result 2015
Deviation explanation
Number of
smallholders trained
in palm oil GAP
(T): 2000
(R):353
(T): 1300
(R): 75
Poor performance on training
and organization was due to
slow progress with
London Sumatra (late delivery
of consultant baseline report
and long contracting period
for supporting implementer),
as well as the collapse of a
planned project with
Prosympac as a result of the
company’s internal problems.
Number of supply
sheds facilitated
by IDH
(T): 2
(R): 2
(T): 2
(R): 2
KPI
Overall program
Target 2015
Result 2015
Country level 2015
Target 2015
Result 2015
Deviation explanation
Number of farmers
trained
(directly and
indirectly)
directly (T): 100,000
indirectly (T): 400,000
directly (R): 120,000
indirectly (R): )100,000
directly (T):28,000
indirectly (T): 70,000
directly (R):29,688
indirectly (R): 0
The indirectly reached
farmers will be reached
through training farmers on
the National Sustainability
Curriculum (NSC). The NSC
has been developed but the
training of trainers started
only in 2016.
34
Cocoa Program KPIs
KPI
Overall program
Target 2015
Result 2015
Country level 2015
Target 2015
Result 2015
Deviation explanation
Number of farmer
trained in
certification module
(T): 62,000
(R): 102,427
(T): 5,500
(R): 5,906
Value (in US $) of
financial products
provided to producer
groups
(T): 11,290,000
(R): 26,658,419
(T):300,000
(R): 32.900
Volume of metric
tones of certified
cocoa
(T): 68,656
(R): 200,456
(T): 925
(R): 7.125
Tropical Timber Program KPIs
KPI
Overall program
Target 2015
Result 2015
Country level 2015
Target 2015
Result 2015
Deviation explanation
Number of hectares
of forest under
certified sustainable
management (T): 3 million
(R): 7,271 million
(T): 703.165
(R): 185.330
Due to delays on government
approval of management
plans, delays in awarding
certificates after the audits
had taken place, etc. TBI faced
severe delays over 2015,
however the 2016 end target
has been achieved at the time
of writing.
Spices Program KPIs
KPI Overall program Target 2015 Result 2015
Country level 2015 Target 2015 Result 2015
Deviation explanation
Number of smallholders trained on sustainable production practices in Spices Producer-support Investment Fund (SPIF)
(T): 3000 (R): 15,922
(T): 4,377 (R): 4,099
On track. Please note that the Country targets are higher than the global targets because in country targets were adjusted on a yearly basis while the country global targets were not
Number of hectares of land managed using sustainable techniques
(T): 4,000 (T) (R): 12,072 (R)
(T): 13,193 ha (R): 9,944 ha
The ha under sustainable production are lower than targeted in Indonesia because the average number of hectares owned by a farmer is significantly lower than expected
35
Aquaculture Program KPIs
KPI Overall program
Target 2015
Result 2015
Country level 2015
Target 2015
Result 2015
Deviation explanation
Volume of
responsibly
produced fish
(whole fish) metric
tons
Shrimp (T): 75,000
Pangasius (T): 0?
Tilapia (T): 0?
Shrimp (R): 64,059
Pangasius (R): 46,000
Tilapia (R): 28,000
Shrimp (T): 27,500
Pangasius (T): 0
Tilapia (T): 0
Shrimp (R): 20,500
Pangasius (R): 0
Tilapia (R): 0
Production output is slightly
lower than targeted which is
related to the slower
membership uptake of AAC.
Exact production figures for
the SFP project (18,500 MT
for 2015) need to be
determined upon final
assessment in summer 2016.
Volume (in metric
tons) of responsible
feed produced
(T): 100,000
(R): 311,558
(T): 36,500
(R) 25,000
Responsible feed sourcing is
lower than targeted related
to the lower uptake of
members by the AAC and
delayed switching to
intensified (= feed usage)
production though not
accounting to the tally of
end-buyers committed to the
program, IDH and its partners
have connected a total of 5
domestic and international
supply chain actors to the
supplier improvement
projects (Grobest Jakarta,
Ecohub, SSP Medan, Shrimp
Club Indonesia, KPRI
Budidaya Mina )
36
5. Lessons learnt
Cross program lessons
2015 was the fourth year of operation in Indonesia. It is a year in which key lessons were learnt,
because all programs were either in the implementation or an advanced scoping stage.
A first important lesson is the need to move from a sector-based approach towards a more
integrated approach at country level. As one can read throughout the report, it has become
increasingly clear that sustainability issues such as deforestation are not confined to a single sector.
These need to be seen from a systems perspective including all land-users. The oil palm, coffee
cocoa, plantation forests, logging concessions, fish ponds and food crops such as rice all compete for
land. Addressing deforestation in one sector may just mean displacing the problem to another
sector.
Second, in order to support socioeconomic and environmental impact, we need to involve the
government more in our activities. There are several reasons for this. In Indonesia, political and
bureaucratic actors are an inextricable part of the production and supply systems of commodities.
Notwithstanding the value of international certification initiatives, only the government is in a
position to create a level playing field for all land-users, instead of only working with the front
runners, while illegality still continues among the laggards. Furthermore, the risk of contributing to
agricultural intensification without improved governance over forest and/or higher benefits for
forest protection, is that it will drive deforestation even further by increasing the opportunity costs.
Related to this, the government needs to be involved in the design and operation of interventions in
order to ensure a sustainable exit strategy for IDH.
Third, there is substantial overlap between sector programs with regard to the government agencies
and public-private platforms that IDH is engaging, as well as regards overlap in geographical areas
where projects are implemented. For example, the palm oil and aquaculture program are both active
in Aceh, the coffee, pulp & paper, and palm oil programs in South Sumatra. This calls for a country-
based or, in some cases, jurisdictional or landscape-based engagement strategy towards these
actors.
Several programs already started deeper engagement with the government as well as a move
towards landscape-based approaches, notably the pulp & paper and the ISLA programs. Lessons
learnt in this context were that building trust between stakeholders, gaining meaningful political
commitments, and creating a shared agenda and vision take time and require intensive interactions
with all stakeholders. Landscape-wide interventions touch multiple stakeholders by definition, and
there are tradeoffs that need to be managed. This requires good stakeholder analysis of the power
balance, distribution of benefits, and risk mitigation options.
However, we also learnt that the move towards a landscape approach in 2015 could not have come
at a better time. It provided IDH with the opportunity to convene some critical and important public
37
and private actors at District and Provincial levels. It coincided with a move to landscape planning by
large Indonesian companies such as Asia Pulp and Paper (APP), and recognition of this approach by
both NGOs and senior public figures.
Program specific lessons
Palm Oil Program
Progress on GAP training has been significantly delayed due to the bureaucratic nature of
farmer land registration. We have learned that this is a major issue across Indonesia. Starting
with South Sumatra, we are working with the provincial government to develop mechanisms
within the civil service to improve the speed and efficiency of this process, so that land titles
can be formalized at scale.
There is an increasing need to link, or facilitate a connection between the commitments on
the ground (supply shed of traceable/verified/sustainable commodities) with the promises
made by downstream supply chain actors. We need to explore the potential for incentives
and shared investments to realize the changes (avoid deforestation, conserve
forests/peat/HCV areas, improve productivity, etc.).
Pulp & Paper Program
Convening pulp and paper industry stakeholders in Indonesia has been challenging for IDH due to a lack of reputation and track record within the pulp and paper sector. Furthermore, the industry, especially at the plantation level, is complex and politicized, where the government is still struggling to prevent deforestation, premium market (incentive) for the products is limited and the big companies in the industry have long had a secretive and “go it alone” approach to business while the remaining small to medium scale forest plantation companies have not made any commitments towards sustainable forest management. We need to put this program in a neutral position and back it up with strong baseline and business case to avoid dragging in the political dimension.
Tropical Timber Program
Sustainable management of forests directly reduces the opportunity costs of prevented
deforestation.
Until now, certification is still the only manner to verify legality, as there is still no FLEGT
timber coming from Indonesia. However, FSC certified tropical timber is a niche product, and
so support to market outreach in Europe and North America is essential. However, on 21
April 2016, the Presidents of Indonesia, the European Commission and the European Council
confirmed that Indonesia had met the final major requirement of the Voluntary Partnership
Agreement and is on course to become the world’s first country to issue FLEGT licenses. This
may change the situation significantly.
Coffee Program
Alignment with government and multi-stakeholder on this NSC development was taking a lot
of times and resource (man power and money), we learned that these time investments are
needed and are rewarded with government support for both the NSC development and role
out of the NSC.
Managing "politics" of groups/associations in the multi stakeholder cooperation is time
consuming
38
Cocoa Program
It is unrealistic to expect national governments to replicate a project which they did not design and have not clearly identified available budget and staff to run within their systems. However, it is still very worthwhile involving local government representatives in activities as it engenders ownership and has indirect flow on effects toward improving government services.
Care should be taken with regard to agro-financing. To ensure that farmers do not end up with debt that they cannot pay, there should be a focus on financial literacy and capacity building as much as on lending.
Ensuring traceability as part of third-party certification systems is highly resource-intensive in remote areas of developing countries and prone to falsification.
Strengthening the capabilities of the Secretariat of the CSP to improve the professionalism and value adding services provided to members will further increase communication, alignment and cooperation between stakeholders working through CSP taskforces (CSP engine) toward a more sustainable future for cocoa farming in Indonesia. Improving the performance of the Secretariat will also encourage greater engagement and commitment from members assuring the sustainability of the CSP itself as an ongoing platform for identifying, prioritizing, developing and implementing solutions for a sustainable cocoa farming system over the long term.
Spices Program
In the spices sector sustainability is very new. Our partners learned it is difficult to find
reliable and experienced implementing partners and that this is key. Not having an
experienced implementing partner, or not having a strong relation with the implementing
partner leads to ineffective trainings and delays.
There is not a strong party in Indonesia that wants to take the lead in sustainability in the
spices sector.
We also learned that there are no easily accessible training manuals for farming spices.
Aquaculture Program
Indonesia will remain a priority country for the IDH Aquaculture Program given it is a key sourcing origin for farmed shrimp. The WorldFish / AAC project in Aceh is progressing very strongly with the AAC as an established and recognized industry organization, providing trainings om BMP and biosecurity to its members and acting as a broker, negotiating on favorable prices for inputs on behalf of their members. Recently the AAC has secured a working capital loan with Rabobank Foundation. The successful application for the Rabobank loan validates the IDH/WorldFish supported business model for the AAC and opens up avenues for public goods investment which will be accessible on the back of similar partnerships as IDH, WorldFish and AAC. For IDH this helps to provide a security of exit from the project.
Tin Program
Harnessing the international market demand through our pre-competitive working group in
order to place sustainability on the agenda of the Indonesia tin mining industry was a critical
factor. IDH used the unique position of the TWG to get the buy in of critical stakeholders in
Indonesia. However to shift brand commitment from CSR engagement to stepping up
sourcing guidelines proves a huge challenge.
39
Ensuring that the Indonesian industry follows up on its commitments towards the roadmap
calls for solid governance structures and operating routines. Setting these requires time, and
especially finding a neutral local convening partner to coordinate and lead it. IDH decided to
continue another year before exiting the tin program to agree with local stakeholders on
ownership of content and implementation of the 2016-2020 roadmap.
Local political realities and historical divergences between industry competitors were more
pronounced than anticipated. In 2016 IDH will also continue to build trust and confidence
between Indonesian mining companies about the pre-competitiveness, importance and
shared benefits of the 2016-2020 roadmap.
Conclusion and outlook
The lessons learnt in 2015 have led to several changes in IDH’s work in Indonesia.
The push for a landscape-based approach that started in 2015 continued into 2016. The ISLA, palm
oil, and pulp & paper programs agreed on sharing resources to jointly address rural livelihood
improvement and environmental issues in three focus geographies: Aceh, South Sumatra, and West
Kalimantan. A significant part of the future financial allocations to these programs will now be spent
on joint interventions in these areas. Other sectors, such as tropical timber, coffee, cocoa and also
aquaculture will play an important role in the landscape-based approaches in these geographic focus
areas. Either they are associated with environmental risks in the landscape or they can provide
alternative land-use options. The timber program, through its partner in Indonesia, has developed a
number of valuable lessons and tools for sustainable forest management, which can be used across
all landscapes. Integrations between the tin and the palm oil program are also visible, with the
planting of oil palm being an option for post-mining land-use. Across all programs, joint field trips and
program planning are already happening.
A lot of work remains to be done however to improve sustainability within the sector framework.
National platforms and strategies in the coffee, cocoa, and tin sectors were established in 2015 to
drive sector transformation, among others via the multi-stakeholder development and dissemination
of national strategies and farmer training curricula. Especially across sectors including smallholder
farmers, we will continue to support professional service delivery mechanisms and develop
innovative finance options as tools in improving rural livelihoods.
IDH will continue to strengthen the links between convening the global demand side and supporting
the Indonesian supply side of agricultural value chains. Especially in palm oil, coffee, and timber this
approach has proven to be successful. In palm oil, for example, IDH has supported the European
Sustainable Palm Oil (ESPO) project, which led in December 2015 to a European commitment to
achieve ‘100% sustainable palm oil in Europe by 2020’. This provides an excellent opportunity to link
the commitments of the industry to source sustainable palm oil to the sustainability efforts
undertaken by producers in Indonesia. In addition, IDH’s excellent network among individual buyers
and users of palm oil also allows us to help establish buying commitments from clients to Indonesian
producers in return for sustainability improvements.