Towards a sustainable palm oil production future

In Indonesia’s Labuhanbatu district, North Sumatra, palm oil has long been the cornerstone of local communities. For over 30 years, smallholder farmers have depended on it for their livelihoods. However, traditional monocropping methods are beginning to strain the land, depleting soil health and resulting in lower yields and poorer-quality crops. At the same time, the global demand for sustainable palm oil is growing - a challenge for many farmers who lack the resources, knowledge, and access to financing needed to adapt.

This is where SNV and the Biodiverse and Inclusive Palm Oil Supply Chain (BIPOSC) project come in. Launched in 2021, this ten-year initiative, in collaboration with Livelihoods Funds for Family Farming (L3F), Danone, Mars, LÓreal, Musim Mas, and World Agroforestry, is transforming palm oil farming in Labuhanbatu.

Our mission is clear: to establish a sustainable palm oil supply chain through regenerative agricultural practices, locally adapted agroforestry models, and ecosystem protection. Ultimately, we aim to move towards a deforestation-free palm oil supply chain that benefits both farmers and the environment.

SNV’s approach: Transforming systems

We know that every transformation is the outcome of countless changes. It requires a deep, community-led approach that focuses on capacity building, practical support, and building lasting systems that could stand the test of time.

Training in regenerative agriculture

Our first step was to introduce smallholder farmers to regenerative agriculture practices. These techniques restore soil health and increase crop yields while being kind to the environment.

Rather than relying solely on theoretical lessons, we established demonstration plots where farmers could apply these practices themselves. By seeing the results firsthand, over 1,000 smallholder farmers began to realise how these changes could enhance their productivity while ensuring the sustainability of their land.

Agroforestry for a resilient future

We introduced agroforestry, an approach that integrates palm oil with other crops to enhance soil health and increase biodiversity. Through regular training and hands-on support, we worked with farmers to establish agroforestry systems in demonstration plots. These systems not only diversified farmers’ incomes but also helped protect their land from further degradation. To date, agroforestry practices have been implemented on over 1,900 hectares of land, using local commodities.

Strengthening farmer groups and cooperatives

Our efforts went beyond individual training. Recognising that community strength lies in collective action, we supported the formation of cooperatives and farmer groups. These groups received training in business management and organisational skills to build their capacity. Additionally, we established a composting unit with a production capacity of 100-150 tonnes of organic compost per month, providing farmers with an essential resource for sustainable farming.

Empowering women, transforming communities

One of the most rewarding aspects of the project was the transformation in women farmers. By providing financial literacy and facilitating access to microcredit, we empowered women to take control of their financial futures. With newfound confidence, women became active leaders in their families and communities, contributing to the overall success of the palm oil transformation.

Access to financial support

A significant barrier for many farmers was access to credit. To address this, we worked with local financial institutions to provide microcredit loans, enabling farmers to replant their crops and invest in their futures. We also provided financial literacy training, helping farmers understand how to manage their finances and repay loans effectively.

A bright future ahead

The journey has not been easy, but it has been incredibly rewarding. We have watched farmers overcome skepticism and embrace sustainable practices. Through ongoing support, training, and cooperative efforts, these farmers are not only improving their yields and the health of their land but also contributing to a more sustainable palm oil industry.

The BIPOSC project is more than just about palm oil - it’s about building a sustainable future for communities in Labuhanbatu. Farmers are adapting to the demands of the global market, improving their livelihoods, and ensuring that their farming practices will benefit generations to come. Together, we are creating a more resilient, inclusive, and sustainable palm oil supply chain - one that will continue to thrive for years to come.