Smallholders play a significant role in the Indonesian palm oil industry. They cultivate more than 40% of the total plantation area, and their production contributes to the national revenue. However, despite their significant role, smallholders continue to face crop management, financial and environmental challenges. The fact that some smallholder plantations are illegally located in state forestland poses challenges for smallholders as regards getting access to finance, improving yields, and obtaining sustainable certification. Government policy on the collection of levies from exported crude palm oil (CPO fund) and its derivative products provides smallholders the opportunity to replant and support their sustainable practices, thereby reducing deforestation. This paper discusses how fiscal incentives of the CPO fund may have been optimized to prioritize these outcomes. We should prioritize the use of the fund not only to support smallholder replanting, but also to clarify their land tenure rights, so that they could get access to sustainable certification and financial institutions. It is also recommended that funds be allocated to subsidize loan interest to the bank and build productive capital during the grace period. These efforts have to be accompanied by building and improving smallholder databases and strengthening local government.

Peatlands support the daily needs of people in many villages in Indonesia, including in Central Kalimantan Province. They provide the natural resources to enable fisheries, agriculture, plantations, and forestry. However, peatland utilization comes with various challenges, including fire, soil acidity, inundation, low fertility, and limited choice of suitable species. Many of the current uses of peatland can result in its degradation, oxidation, and increased risk of peat fire. Avoiding further environmental degradation will require the development of new technology that allows the community to both earn a livelihood and protect the peatland. In this study we assessed a range of technologies applied by 14 farmers at Tumbang Nusa village, Central Kalimantan province, in managing degraded peatlands in their home yard for agricultural business. The study shows that for endemic peatland species, good success can be achieved if they are planted directly. However, for species endemic to mineral land, there are four technologies applied by farmers in managing degraded peatland. The choice of technologies is influenced by their economic capacity/cash flow flexibility and their understanding of peatlands. Technologies intended to adapt to land inundation include the use of polybags, development of raised beds, and making peat mounds with mineral soil in the centre. Technologies to address the acidity and soil fertility include amelioration with dolomite lime and fertilizer. The use of polybags filled with peat soil is the easiest technology to adopt and can be conducted by all family members. However, a farmer’s choice of technology needs to always consider the potential environmental impacts in addition to increasing soil fertility so that peat conservation is maintained.

Palm oil is considered a key commodity in supporting the Indonesian economy, generating both domestic revenue and foreign exchange. Such revenue needs to be distributed equally for the benefit of the government and society. This paper discusses the opportunities and challenges of the proposed revenue-sharing scheme, DBH Sawit, sourcing from palm oil, particularly between central and local governments. It examines how the proposed scheme can be implemented and what strategies can reward regions for moving toward environmental sustainability practices. Research methods used in this paper include a literature study, stakeholder interviews, the SWOT method and analytical hierarchy processes. Results indicate that DBH Sawit is one of several fiscal instruments that could potentially incentivize sustainability. It has both strengths and anticipated opportunities, such as increased CPO production and global demand for palm oil. It faces, however, serious weaknesses, such as unauthorized oil palm plantations and the absence of traceability systems. It is also threatened by unfair market and global policies. This paper recommends diverse strategies to increase palm oil productivity, accelerate sustainability certification and develop a tracing system. To accelerate the adoption of environmental sustainability, the paper advocates an ecological-based fiscal transfer system.

There has been a dramatical change in Indonesia’s tropical peatland ecosystem in the last three decades due to various causes and climate change issues. This decreases the function of peatland ecosystem to support ecosystem balance and the rural livelihoods, including influencing the food systems. This paper highlights the prospects of food security in the changed and degraded peatland landscape in South Sumatra. A case field study was conducted in this research, followed by qualitative analysis. Peatland degradation, mainly from peatland conversion, illegal logging, and recurrent fires, lead to the decline of food availability from the peatland, such as, fish, honey bee, vegetable, and fruit. To deal with, several field actions are taken: (1) Local initiative in vegetable and fruit production on degraded peatland; (2) Government initiative in developing rice fields as part of food estate program; (3) Community, non-government organization (NGO) and government collaboration in introducing adaptive and prospective agroforestry. More prospective food security on the peatland can be achieved through the commodity diversification, improvement of the techniques, infrastructures, market access, and capacity of rural community. Harmonizing the policies between peatland management and food estate potentially can improve food security in tropical peatland landscape in Indonesia.

Peatland degradation and community livelihood are often driven by market forces. Successful peatland restoration including community livelihood improvement programs is therefore highly correlated with market development of various local peatland commodities that are introduced to replace fire-using farming activities. However, since the development of local peatland commodities is often under subsistence marketplaces, investigation of their market is not attractive and has received little attention. This paper investigates the market structure of the local peatland commodities developed by the local community under peatland livelihood programs using Rapid Market Appraisal (RMA) technique and market structure analysis to quickly draw challenges and opportunities of market development of peatland commodities. We also analyze a business model applied by the local community, particularly their strategy to adapt to market dynamics and to secure market competition. The information is essential to serve as a basis for formulating appropriate interventions needed to develop a more established market of local peatland commodities, which as a consequence will prevent peat forest conversion. The investigation finds that at least three types of peatland commodity market structures are evolving in the research site. Each of them has different challenges and needs different interventions to make the livelihood programs more sustainable. Meanwhile, the local community is more oriented towards sales than the marketing of peatland products. They have not prepared a specific strategy yet to adapt to and win the dynamic market competition. It needs significant efforts to change its business culture if relevant stakeholders intend to develop the local peatland commodity market as a part of peatland restoration and community livelihood improvement programs.