Livelihood outcomes in smallholder schemes in Indonesian palm oil: An examination of recent policy reforms” & “Quantifying the impact of indirect suppliers on the effectiveness of cattle zero deforestation commitments in Brazil

Abstract presentation 1: Oil palm is a globally important, yet highly controversial commodity. Palm oil accounts for 38% of world vegetable oil production, is linked to rural and national development in the countries that grow it, but also to increased greenhouse gas emissions, biodiversity loss, land grabbing and land conflict. In Indonesia, where 55% of world production occurs, palm oil is a major tool for advancing rural development goals by promoting the participation of smallholders in its production. A key vehicle for implementing palm oil as a development tool in Indonesia is the smallholder scheme – whereby smallholders are tied by contract to a central mill/plantation company, in theory ensuring guaranteed supply for the company and agricultural extension and inputs for smallholders. This project examines the livelihood impacts of the “One-Roof Management” or Kemitraan Manajemen Satu Atap (KMSA) smallholder scheme system whereby the plantation company is able to manage both its landholding and that of the smallholder scheme with smallholders receiving only the dividends of production. This is a major change in the smallholder-company relationship resulting from a 2006 legislative change that sought to reduce corporate risk from smallholder schemes. We examine the impacts of these new contractual arrangements via an ethnographic analysis of three divergent villages linked to one plantation in West Kalimantan, Indonesia. Our approach gives explicit attention to differences in livelihood outcomes at both village and sub-village levels. We find differences in the benefits obtained by smallholders and identifies smallholders’ pre-existing wealth and status, as well as village-level land holdings and leadership as critical reasons for these differences. We do not find extreme negative impacts others have found to result from KMSA systems. Instead, reductions in potential benefits (e.g. size of smallholding) appear to be offset by improved security of land tenure. However, we conclude by arguing that these relative benefits may change over the course of the scheme as the benefits of secure tenure may not outweigh reduced monetary returns. This case has relevance to wider debates on the role of private companies in development, because it presents a case of corporate-driven policy reform having some potentially beneficial livelihood outcomes relative to previous government-led schemes.

Abstract presentation 2: The governance of commodity-driven deforestation in tropical regions is increasingly managed by private sustainable supply policies, including zero-deforestation commitments (ZDCs). ZDCs are implemented by the companies that buy, process and trade forest risk commodities and focus on preventing deforestation-linked production entering a committed company’s supply chain. Commitments can be signed collectively or individually and vary greatly regarding their scope, rigor and implementability. Despite having being already suggested theoretically as a critical limitation to ZDCs’ ability to reduce deforestation, few commitments are enforced for indirect suppliers. Not enforcing ZDCs for indirect suppliers means that producers not directly selling to a company with a ZDC can continue to deforest without risk of penalties and deforestation from their activities can enter ZDC supply chains unheeded. Here, we quantitatively examine the impact of indirect suppliers on ZDCs’ effectiveness at reducing deforestation in the Brazilian Amazon’s cattle sector, where both high rates of deforestation and the presence indirect suppliers are common. This paper quantifies the impact indirect suppliers have on overall commitment effectiveness in the Brazilian cattle sector. By examining the production, sales and land use behaviour of 400 randomly selected direct and indirect cattle producers from four municipalities in northeast Pará, Brazil we estimate the effect that sales to ZDC slaughterhouses has on property-level deforestation for direct and indirect suppliers individually to isolate the effect that indirect suppliers have on overall commitment effectiveness. We use a unique dataset combining household and farm surveys conducted in 2019-2020 along with property level remotely sensed data on both deforestation and degradation. We expect to find that although farm directly selling to ZDCs have lower deforestation rates relative to those directly selling to non-ZDC committed buyers, no such relationship can be found for indirect suppliers. This would mean that the effect of indirect suppliers the positive effects of direct suppliers is nullified, creating a net zero effect to ZDCs overall. These expected results imply that by failing to include indirect suppliers, ZDC effectiveness is entirely undermined in our study region and that the huge opportunities for producers to avoid commitments outweigh the risk of exclusion from ZDC value chains. In a context of low political interest in governing deforestation, the need for effective private policies has never been higher. We provide evidence that including indirect suppliers within ZDC implementation is vital to the survival of the Amazon biome.

Presentation was given remotely & delayed until September 2021 due to COVID-19 Pandemic