Deforestation-free agricultural supply chains for renewable raw materials with global markets are established

The GIZ/SASCI project, in collaboration with its main government partners, Directorate General of Estate Crops, Ministry of Agriculture (National), the Estate Crop and Livestock Agency (W. Kalimantan), and the Agriculture and Food Crop Agency (Kapuas Hulu), supports the Government of Indonesia in its efforts to reduce GHG emissions from deforestation and forest degradation by promoting sustainable supply chains for palm oil and natural rubber by smallholder farmers in Kapuas Hulu district, West Kalimantan. Kapuas Hulu district is since 2018 a UNESCO Biosphere Reserve and the project supports a jurisdictional approach to sustainable production in the Biosphere, including support to the Multi-Stakeholder Forum, which was created by Regent’s Decree in 2020.

The project comprises four main outputs: (1) Strengthening the capacity of smallholder farmers for sustainable production of palm oil and natural rubber; (2) Increasing the capacity of government organisations, civil society actors and the private sector for sustainable agricultural commodity supply chain implementation, including conflict-resolution mechanisms; (3) Strengthening national initiatives for implementation of sustainable agricultural commodity supply chains; (4) Smallholder farmers in Kapuas Hulu district, West Kalimantan have access to global markets (with products traceable to production sites)

SASCI targets four sub-districts in Kapuas Hulu: Mentebah, Bunut Hulu, Pengkadan in its support to rubber smallholder farmers, and Silat Hilir for support to independent palm oil smallholder farmers. SASCI has two implementation partners: (1) The NGO “Working Group – Tenure” supports conflict resolution and mediation in land use, while (2) the NGO “Solidaridad” supports independent palm oil smallholder farmers in Silat Hilir.

Implementation strategies:

1. Multi-stakeholder jurisdictional approach
2. Global market access through direct agreements with global markets, certification (e.g., ISPO/RSPO) and traceability
3. Increases in productivity and household income through sustainable and holistic smallholder farm management
4. Support to a green economy for the Biosphere Reserve through ‘green product portfolio’, communication, branding, and marketing

• Natural rubber and palm oil smallholder farmers in Kapuas Hulu
• Agricultural extension professionals from government, private sector, and civil society at district and provincial level
• Multistakeholder forums (W. Kalimantan, Kapuas Hulu)
• Partner staff of the West Kalimantan Provincial government
• Partner staff of the Kapuas Hulu District government

• Strengthening the capacity of smallholder rubber farmers: by 2020, a total of 397 natural rubber farmers were actively participating (out of 455 farmers officially registered in the traceability system). During 2020, 257 of the actively participating smallholders sold 34.3 tons of good quality rubber in 11 monthly sales sessions.
• Strengthening the capacity of palm oil smallholder farmers: In 2021, the support to rubber smallholders continues and the project expands its support to some 250 independent palm oil smallholder farmers in Silat Hilir sub-district.
• Increased smallholder income: despite the persistence of low global rubber prices (dropping from the baseline price of USD 1.47/kg to an average price in 2020 of USD 1.22/kg – a price reduction of 16.8% compared to baseline), the supported farmers consistently fetched higher prices for their better-quality rubber (on average 16.6% higher).
• Reduced GHG emissions due to reduced deforestation: based on official deforestation monitoring data by the Ministry of Environment and Forestry (KLHK), the deforestation in Kapuas Hulu within legally protected forests was lower than the year before, with only 462 hectares of deforestation registered, corresponding to 0.17 Mt CO2e.
• Improved women participation in the supply chains: out of the total 399 family data sets recorded, 238 (60%) responded that both spouses work on the rubber plot. Overall, 39% women (154) and 61% men (243) attended project capacity building events and are actively producing and selling good quality natural rubber.
• Support to MSH Forum for Kapuas Hulu Biosphere Reserve ongoing. The support is being scaled up in 2021 by strengthening the Secretariat and by collaborating with UNESCO MAB, the Sustainable Districts’ Association, and a consultancy on “Green Economy”.
• A multi-stakeholder team of GIZ trained conflict mediators, called ‘Desk Resolusi Konflik’ (DRK) has been established and is operational in Kapuas Hulu but has not yet been institutionally anchored.
• An MSH team at provincial level for promotion of sustainable agricultural supply chains has been formed, based on the results of the GIZ/UNDP Jurisdictional Dialogue in W. Kalimantan.
• Capacity building of extension professionals from government, private sector and civil society organisations is ongoing and will be scaled up in 2021.
• A Provincial Action Plan for Sustainable Palm Oil in West Kalimantan province has been prepared and is awaiting formalization by a Governor’s decree.
• A Traceability system (from smallholder farm to global buyer in Europe) for rubber in place (RubberTrace). A Traceability system for palm oil is being implemented (Bentang Sawit).
• A delivery agreement with a global rubber buyer (Continental AG) is in place but a similar agreement is still outstanding for delivery of palm oil.

Kapuas Hulu District is located in the Heart of Borneo and is home to two national parks (Betung Kerihun and Lake Sentarum national parks). In addition, it still has extensive natural forest cover with high biodiversity, and this ecologically valuable area was in 2018 declared a UNESCO Man and Biosphere Reserve. Agriculture in the district is dominated by two main commodities, palm oil and rubber, the latter being produced mainly by smallholders. The traditional rubber cultivation practices often lead to environmental risks and a generally low productivity often results in deforestation to open new areas for cultivation. GIZ has been implementing a DeveloPPP project with the German car tire maker, Continental AG, in the district since early 2018 with the aim to improve the incomes of local rubber smallholder farmers and to make rubber cultivation more sustainable. The project, implemented by SASCI since 2019, has trained the smallholder farmers in efficient and sustainable cultivation practices and strengthened their capacity in natural rubber production, handling, and storage. This has resulted in higher yields, better quality rubber, and higher prices because of higher dry rubber content and a cleaner product being bought directly by the processing company from the rubber smallholders.

“For the first time ever, we been trained (by the project) in sustainable rubber cultivation and processing and we are now producing pure, air-dried natural rubber coagulates, that fetch considerably higher prices than the soaked cup lumps we used to produce in the past.”(Rika Suriani, one of the supported rubber smallholder farmers).

“The best evidence of the project’s success and appeal is the growing number of farmers who want to join. I hope that the rubber prices, which largely determine the income of the farmers, will bounce back soon.” (The Head of the subdistrict, Mister Tabri).