Collaborative Funding Initiative Launched to Support Sustainable Palm Oil Farming and Combat Deforestation

A Sustainable Future for Palm Oil in Indonesia

A new collaborative effort has emerged in Southeast Asia, targeting sustainable palm oil farming and addressing the urgent issue of deforestation. Led by Abler Nordic, an impact fund manager, in partnership with the Temasek Foundation, Musim Mas, and Livelihoods Funds, the initiative marks a pivotal moment for palm oil cultivation in Indonesia. This groundbreaking project aims to effectively support over 400 smallholder farmers through a program known as Sustainable Oil Palm Replanting in Indonesia (SOPRI).

In Indonesia, small-scale farmers cultivate more than 40% of the land designated for palm oil. However, many face challenges due to aging palm trees that diminish yields, thereby necessitating costly replanting efforts. Without access to affordable financing, some farmers might resort to expanding their operations into tropical forest areas, exacerbating the problems of deforestation and climate change.

The SOPRI project forms a central component of Abler Nordic's Climate Smart Fund, which integrates public, philanthropic, and private capital to nourish sustainable, deforestation-free value chains while enhancing the resilience of smallholders. The Temasek Foundation takes this financial model further by dedicating catalytic capital to ensure and de-risk loans extended to these farmers, ultimately lowering their financing costs.

Initially, the SOPRI initiative will aid 400 smallholders across 400 hectares in Sumatra, offering them long-term loans for replanting, financial literacy training, sustainability certification, land title assistance, and community-driven land use planning. In return, these farmers commit to refraining from encroaching on forests, with compliance monitored via satellite and on-the-ground inspections.

The SOPRI project not only illustrates the feasibility of financially sustainable replanting but also aims to eventually support over 20,000 smallholders. The Climate Smart Fund will lead the way in managing the financial operations and coordinating the implementation with local partners like Koltiva and Bank Amar. Musim Mas will provide the necessary technical support to help farmers obtain their