#Singapore #Abler Nordic #Temasek Foundation #Musim Mas

A New Initiative for Sustainable Palm Oil in Indonesia

In a significant move towards sustainable agricultural practices, Abler Nordic, in partnership with the Livelihoods Funds, Musim Mas, and the Temasek Foundation, has initiated a project aimed at supporting small-scale farmers in Indonesia through sustainable palm oil replanting. This project, officially known as the "Sustainable Oil Palm Replanting in Indonesia" (SOPRI), targets urgent challenges faced by local farmers, particularly aging palm oil plantations that yield diminishing returns.

Addressing Immediate Challenges

In Indonesia, smallholders manage more than 40% of the palm oil plantations across the nation. However, many of these farmers encounter major obstacles due to the high costs and risks associated with replanting their aging oil palms. Without access to affordable financing, the temptation for some farmers might be to expand their operations into nearby rainforest areas, thereby contributing to rapid deforestation and exacerbating climate change.

The SOPRI project, part of a broader initiative by the Climate Smart Fund managed by Abler Nordic, has secured initial funding from Norway's Ministry of Climate and Environment. This fund uniquely combines public, philanthropic, and private investments to create deforestation-free supply chains and bolster the resilience of smallholders.

Innovative Financing Models

Key to this initiative is the introduction of a blended financing model facilitated by the Temasek Foundation. By providing catalytic capital, the foundation aims to guarantee loans for small farmers participating in SOPRI, which lowers financing costs while mitigating risks for private investors.

Initial Impact and Goals

In its first phase, the project aims to support approximately 400 farmers across 400 hectares in Sumatra. Key components of this support include:

• - Long-term loans for replanting oil palms.
• - Financial literacy training sessions.
• - Assistance with sustainability certifications.
• - Help in securing land titles.
• - Community-driven planning to promote responsible land use.

In return for this support, participating farmers are committed to preventing encroachments into forests, with their adherence to this commitment being monitored through satellite and on-ground inspections.

Long-Term Vision

The overarching goal of SOPRI is to demonstrate that sustainable replanting can be both financially viable and scalable. Future phases aim to reach over 20,000 farmers, solidifying the role of the Climate Smart Fund as a key actor in finance management and project implementation. Local partners such as Koltiva and Bank Amar will be instrumental in facilitating these processes.

Expert Insights

Arthur Sletteberg, Managing Director of Abler Nordic, emphasized the importance of long-term relationships with local farmers and communities, noting, “What we are doing is complex and unprecedented, but the results thus far indicate that we have the right model in place for long-lasting change.”

Meanwhile, Sébastien de Royer from Livelihoods Ventures stated, “Our goal is to empower farmers with the technical assistance and guidance they need to transition to sustainable and resilient farming systems.”

Rob Nicholls from Musim Mas echoed this sentiment, highlighting that the initiative goes beyond just financial aid: “It’s about equipping farmers with the knowledge and resources they need to implement sustainable practices.”

In a similar vein, Heng Li Lang, Head of Climate and Liveability at the Temasek Foundation, remarked that the pilot initiative is transformative, providing avenues for sustainable practices without imposing excessive financial burdens on farmers.

Conclusion

The SOPRI project represents a meaningful collaboration between private, public, and philanthropic entities that could redefine palm oil production in Indonesia. By enabling smallholders to adopt sustainable practices while maintaining financial security, this initiative holds promise not just for farmers, but for the preservation of critical rainforest ecosystems in the region.

As the project navigates its initial phases, stakeholders remain hopeful about its potential for growth and impact, paving the way for scalable, long-term solutions that benefit both the environment and the communities reliant on palm oil cultivation.