In the discussion, there was an exchange of thoughts and ideas between Earthqualizer as an institution actively engaged in strengthening smallholders and supply chain traceability of palm oil commodities, palm oil business associations as industry players who are directly affected, as well as with the government as the regulator. The institutions that participated in the discussion were representatives from the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency, Indonesian Sustainable Palm Oil (ISPO), Presidential Staff Office, Commodity Futures Trading Supervisory Agency (BAPPEBTI), Ministry of Agriculture, and Indonesian Palm Oil Association (GAPKI).

From the discussion, it is known that Indonesia currently faces a common challenge in ensuring the compliance and legality of plantation permits within forest areas. According to the research conducted by Earthqualizer, at least out of 16.8 million hectares of Indonesia's oil palm plantation area, there are around 3.4 million hectares of oil palm plantation land located inside forest areas, or around 20.2% of the total oil palm cover in the archipelago, and as many as 68% of them do not yet have a Cultivation Permit (HGU). Moreover, the deadline for the legal management of plantations in forest areas proposal is also only a matter of days since the enactment of the Job Creation Law, which is on November 2, 2023.

To support the compliance of actors who still have obligations, collaborative work between palm oil industry actors and the consistency from all Ministries/Institutions are needed. Mr. Edi Suhardi, the Stakeholders Engagement of GAPKI, said that currently there are three problems that continue to haunt palm oil actors in Indonesia, inter alia legal clarity, legal certainty, and legal enforcement, where there are many legacies of policy mechanisms from the past that overlap and are not resolved until the Job Creation Law and its derivative regulations regarding forest areas and oil palm plantations are stipulated.

While referring to the presentation from the representative of the Presidential Staff Office (KSP), it was stated that since 2015, there have been 1,300 reports of agrarian conflict cases received, and almost half of them were issues in forest areas. Of this number, not a few conflict cases were also found regarding oil palm farmers. Currently, a draft of the Presidential Decree on Agrarian Reform has been prepared, which will be directed by the Coordinating Ministry as the conflict resolution manager and command in charge of cross-ministries/agencies to address this issue. According to the explanation, it can be concluded that currently, the formulation of regulations is in place, and the implementation team is also in place, so it is only the implementation that needs to be monitored together.

In addition to issues regarding area permits and land conflicts, in the scope of international trade, the European Union Deforestation-Free Regulation (EUDR) is also becoming a mutual concern because its policies are considered to be less suitable for ecological and social conditions in Indonesia. There was a common perception among all stakeholders present at the discussion that EUDR will have a major impact, especially on independent smallholders, due to the legalization and certification that they must comply with in order to be considered compliant and able to sell their FFB in accordance with EUDR regulations.

In the commodity trading sector, the Commodity Futures Trading Supervisory Agency (BAPPEBTI) is currently establishing a commodity futures exchange for CPOs from Indonesia. According to Mr. Santoso Wibowo, a representative of BAPPEBTI, CPO specifications that will be traded on the exchange have been designed, both for ISPO and RSPO-certified CPO and even local-level trading. The creation of the futures exchange for CPO exports aims to create an Indonesian Price Reference Palm Oil, so that the benchmark price for CPO exports will refer to prices on the Indonesian Exchange itself, not from Malaysia or Rotterdam. According to an explanation by Mr. Edi Suhardi, in the past year, palm oil exports from Indonesia to the European Union have decreased by 20%. This has also encouraged palm oil companies in Indonesia to start exploring and expanding to other palm oil markets, such as China, the Middle East, and Pakistan.

Indonesian Sustainable Palm Oil (ISPO) is an oil palm plantation business system that is economically viable, socio-culturally viable, and environmentally friendly based on the provisions of laws and regulations. ISPO certification needs to be monitored together so that it can become a reference in the Indonesian palm oil trade. Mr. Herdradjat Natawidjaja, a spokesperson from ISPO, stated that one of the obstacles in the implementation of smallholder certification is related to land legality and the acquisition of Cultivation Registration Certificate (STDB), which is a requirement for ISPO certification. Land legality, deforestation-free, geo-location, and traceability are required for trade to the European Union. For smallholders to be ISPO certified, pre-conditioning activities, assistance, and costs are required. Currently, these costs are sourced from BPDPKS funding. Additionally, it is expected that business players through partnerships can appreciate ISPO-certified smallholders by buying their FFB at a different price from smallholders who are not ISPO-certified.

At the discussion, all participants agreed that the current national problem for palm oil management in Indonesia is the lack of consolidation (centralization) of data and maps owned by ministries and technical institutions. The government should be able to bridge this, especially to keep the EU market running.

There is a need to consolidate and synchronize data on plantations and independent smallholders nationally. Collaboration and synergy between the government, industry players, and other institutions are needed to achieve the target of sustainable palm oil management. In addition, the government as a regulator is expected not only to be able to create regulations but also to oversee the policy implementation process together with the industry and farmers. As an institution that focuses on working in the field of supply chain traceability for more than 5 years, Earthqualizer is willing to assist and be actively involved in delivering research results and data management for the national interest.

At the end of the session, Earthqualizer was willing to support the government in following up on several points from this discussion by inviting all Ministries/Institutions and related parties to accelerate the process of implementing oil palm plantation permits in forest areas, strengthening ISPO, and continuing to encourage national consolidation efforts to face local, national and international problems.

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