Group certification helps Malaysia’s Sabah aim for palm oil sustainability
Sep 19, 2023
In 2015, the government of Sabah in Malaysian Borneo committed to gaining sustainability certification for 100% of the state’s palm oil by 2025, becoming the first region in the world to pilot such a jurisdictional approach.
As the deadline nears, getting smallholders certified has proved to be a major challenge; out of an estimated 30,000 smallholders in the state, just 885 have been certified.
The certification process can be difficult and expensive for small farmers, but NGOs like WWF are working to overcome this barrier by supporting growers’ cooperatives.
Other obstacles in the statewide certification process include debate over whether any deforestation should be allowed for oil palm, and the continued issuance of licenses to clear forest in the state.
In May, 25 members of a growers’ cooperative in the Tawau region of Sabah became the first in Malaysia to receive certification as a group from the Roundtable on Sustainable Palm Oil.
Though a small step, it was an important milestone in realizing Sabah’s ambitions for statewide certification.
RSPO certification is widely accepted as the most rigorous sustainability standard for palm oil, and obtaining it can potentially improve a farmer’s profitability. But the certification process presents a daunting challenge for smallholders, who typically lack the necessary technical and financial resources.
“To obtain RSPO certification is not an easy journey, and it needs a lot of money to be certified and sustain with the certification,” says Mohd Razzeman Siswanto, group manager of the Sabah Palm Oil Landscape Cooperative, or LKSS by its Malay acronym, the growers’ cooperative in Tawau.
A new certification paradigm
In 2015, Sabah, a Malaysian state on the island of Borneo, became the world’s first region to pilot a jurisdictional certification approach to sustainable palm oil (JCSPO), when the government committed to reaching 100% RSPO certification by 2025. Adopting this model means a significant shift to focus on the sustainability of the landscape as a whole, rather than focusing on certifying individual estates.
Sabah’s jurisdictional certification pilot was driven by a few pioneers within the forestry department and civil society who believed that adopting the RSPO standard as a whole state would improve sustainable practices. In particular, they hoped it would deliver better protection to areas that are critical to the survival of the many endemic and threatened species that reside in the landscape, such as orangutans and pygmy elephants.
In recent years, land conversion for oil palm plantations has slowed from a peak a decade ago, mainly because there’s so little suitable land left to cultivate. However, as Mongabay witnessed during a visit to east Sabah earlier this year, illegal planting within forest reserves still goes on in some areas. Usually, communities living on the outskirts of the forests are involved. Disputes over Indigenous land rights are commonplace, and in some cases, where there’s been political pressure, this has even led to the degazetting of parts of protected areas for oil palm plantations.
Improving the livelihoods of smallholder communities is key to preventing unsustainable agricultural practices, says Cynthia Ong, co-founder and chief executive of civil society organization Forever Sabah and one of the initiators of the JCSPO pilot.
Proponents of the plan say they hope RSPO-certified smallholders will gain advantages with market access, as it’s the sustainability standard most widely recognized and accepted in the big Western export markets, including the EU and U.S. (The domestic certification scheme, the Malaysian Sustainable Palm Oil standard, is also gaining traction, and Sabah is now pursuing both standards concurrently.)
However, with less than three years before it’s supposed to reach 100% RSPO certification, Sabah still has a long way to go. Getting all Sabah’s estimated 30,000 smallholders to RSPO certification is posing one of the greatest challenges. To date, just 885 independent smallholders have been certified from four growers’ groups, according to the RSPO.
The idea now is that the cost-efficient approach used by the LKSS, the recently certified growers’ cooperative in Tawau, will help to ease barriers to certification and increase uptake.
“A cooperative is one of the ways you can do this because everybody has equal share irrespective of land size, so we think it’s a very fair format,” says Max Donysius, produce lead of WWF-Malaysia’s Sabah Landscapes Programme, one of several initiatives in Sabah supporting smallholder readiness for jurisdictional certification.
The LKSS began working with WWF Malaysia in 2019 to develop a system for expanding RSPO certification with smallholders. Membership has since grown to 380 farmers. Most are smallholders with landholdings of 50 hectares (124 acres) or less, but medium-size growers make up the bulk of landholdings, which cumulatively cover 16,000 hectares (39,500 acres).
Members contribute 1 ringgit ($0.21) per metric ton of production to the cooperative, meaning that larger landholders effectively subsidize smaller growers, Donysius says. These funds pay for five full-time employees, and have supported the first 25 members through training in RSPO standards, including education on sustainable agricultural practices, health and safety, land tenure rights, and social rights, such as child and migrant labor laws. “Members are now able to manage their estates in a way that is more sustainable such as less use of chemicals and no open burning,” Siswanto says.
There are financial benefits, too. Participating smallholders are allowed to start selling RSPO credits at the first stage of the certification process. These credits enable growers who don’t have access to an RSPO-certified buyer to sell sustainable palm oil credits, each representing 1 metric ton of produce, to buyers looking to support sustainable growers. “So, you can start earning credits on the journey,” Donysius says of small farmers. “But medium and big growers have to be fully compliant first.”
Glen Reynolds, director of the South East Asia Rainforest Research Partnership (SEARRP), based in Sabah, says he agrees that incentivizing smallholders to go for certification has the potential to improve sustainability.
“If enough support is provided, then there will be significant advantages to smallholders in certifying to a sustainability standard, not least in terms of potential profitability,” he says.
Forever Sabah is also running training programs to support smallholder communities in readiness for certification. “We know they are getting far more support with this initiative in place,” Ong says. “Otherwise they are just planting everywhere, in forest reserves and buffer zones, to try to get the best yield. For smallholders who are already RSPO certified, it is reducing illegal practices.”
As they usually sell their fresh fruit bunches to processing mills through subagents, smallholders across the region have little influence in the supply chain, which can result in unfair pricing. These often informal arrangements can make it difficult to prove the legality of their crops, and they risk becoming further marginalized as demand for palm oil traceability increases, according to a briefing by smallholder rights organization Solidaridad Network.
Proponents of the new scheme say Sabah’s smallholders will have a stronger voice to address these issues through the JCSPO multistakeholder committee, which brings together the state government, businesses, including smallholders, and civil society organizations to decide how the approach is implemented.
“If there’s state certification, it means smallholders are part of the table in a more equitable way, they are not being exploited with regard to price and land access,” Ong says.
To support cooperative smallholders with market access, WWF Malaysia is working to facilitate direct partnerships with large buyers of sustainable palm oil. In this case, it has a partnership with Unilever, which recently started trading with the LKSS and has so far been snapping up available credits, Donysius says. “We are hoping that more big companies will come on board and the 25 certified members will be a catalyst for more people to join,” he adds.
The success of the LKSS model has inspired two more growers’ cooperatives in Sabah, in the Sandakan and Tabin areas, to pursue group certification with WWF’s support.
One of the big hopes for Sabah’s jurisdictional approach is that it will lead to preferential sourcing agreements, the idea being that it’s easier to reach an agreement with the whole state rather than to source certified palm oil from individual companies. But, so far, apart from the partnership with Unilever, these agreements haven’t been forthcoming.
“We need to continue finding allies to purchase smallholder certified oil palm, otherwise it’s a lot of pain with no gain,” Ong says.
The demand for sustainable palm oil could increase greatly with a new set of EU regulations set to come into force in November 2024. The European Union Deforestation Regulations (EUDR) aims to block the import of goods linked to deforestation by requiring producers to prove crops like oil palm weren’t grown on land deforested after 2020. While potentially a boon for sustainable growers, the regulations are causing consternation among smallholders across Malaysia and Indonesia, who fear they’ll be disadvantaged by requirements for geolocation of produce down to plot level.
But if the whole of Sabah is RSPO certified, then it’s possible there could be advantages for its smallholders. It’s expected that certification could be used as an indicator of due diligence compliance under the new European regulations, Donysius says.
All this feeds into Sabah’s wider economic and political aims of being able to market itself as the go-to state for sustainable palm oil, which are underpinned by a target to increase totally protected areas to 30% by 2025. These stood at 11% in 2000 and are now at more than 26%.
“The idea with jurisdictional certification is that anything that comes out of this landscape should be certifiable and coming from a sustainable landscape,” says Robert Ong, the Sabah Forestry Department deputy chief conservator and Cynthia Ong’s brother.
To support the JCSPO pilot, the forestry department has reassessed its high conservation value (HCV) and high carbon stock (HCS) areas and is proposing an expanded protected area network. The focus is on protecting large natural landscape areas that are most important for wildlife conservation, Robert Ong says.
If this revised network is politically and legally endorsed, then it would streamline jurisdictional certification by not having to assess for HCV/HCA for each estate.
“Within protected areas, we want to prohibit any plantations of any kind, whether trees or oil palm,” Robert Ong says.
Whether clearing should be allowed to continue outside of these protected areas is a contentious issue that’s yet to be resolved, says researcher Julia Ng, who recently published a Ph.D. thesis on the JCSPO pilot.
“The NGOs think it’s very straightforward, that the jurisdictional approach means no more deforestation, and companies agree,” says Ng, who previously represented WWF Malaysia on the jurisdictional certification steering committee.
But, according to her paper, a patronage system continues to operate at the highest levels of state government, which in the past has resulted in trade-offs that have enabled the gazettement of large tracts of forest in return for the clearing and cultivation of other parts of forest reserves.
Even in the years since the JCSPO commitment was made, licenses have been granted to clear forests. These include sections of forest reserves planned for oil palm and a 400,000-hectare (990,000-acre) industrial tree plantation also within a forest reserve, Ng says.
There are also question marks over areas that are designated for agriculture that are still forested but not within a forest reserve. “It’s a very small percentage, but these areas either belong to the state or a private owner, including smallholders, so most likely they will be converted. So, can RSPO give state certification if they continue conversion in these small areas? This is something that they are still debating on,” Ng says.
Reynolds says there should be no further deforestation if the RSPO’s low-bar threshold for critical forest is to be met. “Anything that is forest right now is HCV,” he says, adding that he’d like to see the jurisdictional approach focus on areas outside of the forest estate “that should be returned to forest cover and could provide crucial connectivity for wildlife.”
With only two other regions piloting the RSPO jurisdictional approach worldwide — Seruyan district in Indonesian Borneo, and a district in Ecuador — it’s perhaps not surprising that Sabah’s pilot has such complex issues to resolve.
“I see one of the main advantages in doing this as getting the multistakeholders together to thrash out the problems,” Ng says, adding that she believes the approach does have the potential for transformational change. “It shows that Sabah is looking into the future and knows that there will be growing demands for sustainable palm oil.”
Banner image: Plantation workers loading oil palm fruit off a truck in Sabah, Malaysia. Image by Mokhamad Edliadi/CIFOR via Flickr (CC BY-NC-ND 2.0).
Ng, J. S. C., Chervier, C., Ancrenaz, M., Naito, D., & Karsenty, A. (2022). Recent forest and land-use policy changes in Sabah, Malaysian Borneo: Are they truly transformational? Land Use Policy, 121, 106308. doi:10.1016/j.landusepol.2022.106308
Editor’s note: This article was updated to correct the English translation of LKSS, the grower’s group, and the job title for Max Donysius of WWF.