Self-reliance KUD Karya Mandiri Cooperative to Achieve Roundtable Sustainable Palm Oil for Independent Smallholder Certificate
By Dani Rahadian P. Hidayat
Agus Purwanto raises his hand and asks whether his cooperative could follow Roundtable Sustainable Palm Oil (RSPO) certification for independent oil palm smallholders. The 50 years old cooperative manager was curiously searching for more information on the sustainable certification scheme. He contemplated his cooperative member future while he has participated in SNV (Netherland Development Organization) training which was discussing farmer organization and sustainable practices.
Village Cooperative Unit (KUD) Karya Mandiri – the cooperative which Agus manages - is located in Tri Mulya Jaya Village, about 2 hours drive from the city of Jambi. Karya Mandiri has been set up since 2001, with its 292 smallholder farmer members and 625 hectares of land. Their main source of income is generated from oil palm fruit productions.There are some business units that flourished in supporting the oil palm production unit. You may name it; fertilizers, pesticides, herbicides, tools, and equipment. But Agus think that he has to make sure the business should grow and be capable to compete. He is eagerly in favor to expand the cooperative membership. Since there are many independent oil palm smallholder farmers that have not capable to reach proper services in providing support for their oil palm production.
Internal control system (ICS) is one crucial pillar in making sure the smallholder farmers complying sustainability standards. These new structures under the cooperative will can also function as oil palm smallholder hubs in the region. There are some newborn villages nearby Karya Mandiri where it is dominated by a lot of beginner oil palm independent smallholder farmers who operates their plot individually. Agus intended to embrace these individual smallholders as part of his farmer organization.
KUD Karya Mandiri’s mandate confines within village administrative boundaries. They cannot operate and deliver services exceeding its boundary. While group certification’s internal control system can be flexible and they can operate beyond an administrative limit. The ICS may involve the spread out farmers into their group certification members.
This has created a way out to embrace all independent oil palm smallholders, regardless of their domicile, to receive services and benevolences in supporting their agriculture business. Agus has concerted his intention to set up a group certification ICS and pursue RSPO certification as a stepwise toward better livelihood for his member and surrounding smallholder farmers.
Seeking Support
SNV Indonesia has a program to improve the independent oil palm smallholder agriculture practices and strengthen farmer organization which setting up an internal control system (ICS). These pieces of training are required by the sustainable certification scheme in complying with some of its aspects related to environmental, social, and economic practices. These are golden opportunities for KUD Karya Mandiri to trigger their member motivation in pursuing the certification.
Agus and his cooperatives staff were holding in-depth discussions during one of SNV’s ICS and cooperative training. It has been becoming clear for him and the rest of the KUD organizers that they need some capital in pursuing RSPO certification. Human, financial, social, physical, and natural capital are needed in paving the way toward sustainable practices compliance.
They have to map the road and unpack the resources that they already have within their farmer organization. Human and financial capital is the biggest challenge for KUD Karya Mandiri to transform their practices. While SNV Indonesia support is very limited up to oil palm BMP, social impact assessment, ICS, and cooperative training and coaching activities. Whilst, it is a major undertaking to bring all their cooperative member switching their oil palm practices. They need to strengthen their capital.
Agus and the rest of the cooperative finally come up with the decision that they will try to transform the practices through complying with RSPO requirements. They brought it to the cooperative supervisory board. The idea to strengthen the cooperative’s 5 capitals especially human and financial aspects will require investment priority. The board should approve this new investment priority in order to accommodate cooperative managers' decision to pursue RSPO certification.
It is kind of “Russian Roulette”, yet not sure when you pull the trigger. The ultimate goal set is able to gain a positive margin from selling the RSPO certificate to the buyer. It is to cover the certification cost and future maintenance. Thus, there are some steps that Karya Mandiri should take. First, KUD Karya Mandiri has to pass the main audit, second, they have to sell all of their RSPO credits, and third, the price should be significantly more than their cost.
The advisory board has agreed that KUD Karya Mandiri will fully finance the RSPO compliance cost. Agus will ask SNV to strengthen its human capital to master RSPO requirements. Karya Mandiri will also ask a local NGO based in Jambi Alam Hijau Indonesia (AHI) to provide man power support.
Once SNV and AHI agreed to support KUD Karya Mandiri thus it is time for Agus and his comrades to spin the magazine. Investment is ready to roll out, the confidence and guts were nailed into their hearts in order to move forward. There was no chance to retreat once the money and time have been spent.
KUD Karya Mandiri ICS, SNV, and AHI staff have been working together. It was starting from a prudent planning development - each penny counts - through intensive focus group discussion. They have been assigning each person based on expertise. Everybody involved should be reliable since KUD Karya Mandiri's investment is neither cheap nor easy. Agus and his comrade should present and be responsible before the shareholders -which is the cooperative member- for each rupiah spent for RSPO certification compliance.
Their career and cooperative member shares are at stake. They must pass the aforementioned 3 steps otherwise they will all go ruined. The stepping ladder should be strong, there is no room for mistakes. Agus can not afford to jeopardize his farmer organization if they failed to gain RSPO certification and are unable to sell their future certificate credit at a decent price.
Strategy
A prudent budget spending through an efficient and cost-effective approach is a basis for KUD Karya Mandiri to roll out the action. While SNV staff -Adhe Ferdiansyah- provide sharp guidance and monitoring along with the effort of Karya Mandiri ICS and AHI staff synergistic to adopt and implement RSPO standard compliance.
SNV, Karya Mandiri managers, and AHI regularly conduct a monthly evaluation, they were seeing whether the action taken is on the right track to fulfill the cost-effective reference. Time precision is also crucial in Karya Mandiri's effort in complying with RSPO standards. They have to avoid any delay due to many causes in each criteria compliance. Since it will impact their cost spent, thus maintaining compliance quality is inevitable.
This process has become an important part of the SNV coaching approach to KUD Karya Mandiri. Although it is beyond SNV signed deliverable to their donor. it is considered as project outcome from the intervention in making sure the oil palm best management practices, social and environmental impact assessment, and cooperative internal control system knowledge and skills are adopted and implemented.
SNV has been forging Karya Mandiri ICS managers in elaborating the planning, action, monitoring, and evaluation to transform their conventional to sustainable practices. We guide the smallholder to step in the thin line where their career and shares are at stake. It is completely a business risk for KUD Karya Mandiri when they have to decide and lead the RSPO certification process without external funding supports. They should pay almost most of their expenses (thanks to RSPO Smallholder Support Fund who granted funds to cover audit costs).
The constant pressure received by all parties involved will fruiting a more mature attitude on how to maintain the certification and furthermore to jump into the new risky innovation in the future. Strengthening the 5 capitals of KUD Karya Mandiri and its members are also the tactic taken to fulfill their transformation. Cohesiveness and trust are also the modalities that need to be maintained in facing pressure resilience.
This resilience has made KUD Karya Mandiri ICS become stronger and self-reliant. It is an important part of the adoption process especially in implementing sustainable practices. It will also give rise to ICS on their capability in applying proper planning, organizing, action, and control measures.
Audit
Finally, KUD Karya Mandiri invited the RSPO certification body - Mutu Agung Lestari - to conduct the main audit. There are Internal Control systems, SNV, and AHI staff present during the audit process. Agus and his comrades were facilitating the auditors during inspecting RSPO criteria compliance.
The audit had been conducted from 30 August - 2 September 2021, Mutu Agung Lestari’s auditors were checking all RSPO requirements profoundly. It was started from document checking and field verification. The 3 sustainability aspects were challenged, where environmental, social, and economic implementation as well as its proof.
Mutu Agung Lestari auditor finally completed their task to audit KUD Karya Mandiri RSPO compliance. Surprisingly, there were not any signs of noncompliance finding which theoretically they have passed the audit already. Agus's effort in bringing his farmer organization and its member to transform toward sustainability practices has materialized.
His determination and confidence have defeated his hesitation doubt. The ability to knit the intertwined interest through strengthening and utilizing the organization and his community group livelihood capital has fruited a good result. Agus and KUD Karya Mandiri will enter a new chapter as sustainable farmer groups who willfully implement RSPO standards during managing their oil palm business operation.