Nowadays, Indonesian palm oil faces agrarian, environmental, and social issues and has been subject to sharp criticism from the international community for many years. To answer this problem, the Indonesian government implemented a strategy through certification which ensured the achievement of sustainability standards, especially on the upstream side of the palm oil supply chain. The implementation of Indonesian Sustainable Palm Oil (ISPO) was an ultimate instrument that applied in particular to smallholders oriented towards managing land legal issues, plantation business licenses, plant seeds, and environmental management and to farmer organizations at the local level. However, this process faced quite complex challenges in the form of structural barriers that are very constraining. This study revealed the occurrence of the phenomenon of hollow governance when regulations are absent or collide with each other. The study also revealed institutional power and multi-level governance that made the governance process ineffective or counterproductive. With a qualitative approach to research conducted in three important palm oil provinces of Indonesia, this article aims to look at the issues of oil palm governance a bit more comprehensively. The study conceptualized what was referred to as low-functioning governance to describe how weak the institutions, organizations, actors, and resources are that support ISPO implementation, especially at the regional and local levels. This paper suggests improving and strengthening the ISPO oil palm governance if Indonesian palm oil companies and smallholders want to gain better credibility on sustainability abroad.

The fast-growing palm oil economy has stimulated a significant expansion of oil palm plantations in Indonesia. The uncontrolled development of large oil palm plantations has raised complex socio-ecological issues, including changes of ecological landscapes, organization of production, and farming household livelihood systems. For two oil palm villages with different ecological settings, this article describes changes in land cover, how production is organized, and the income structure changes due to rural economic development. The research used survey approaches and analysis of earth maps, assisted by data obtained from satellite imagery. A qualitative approach was also used to support a survey via in-depth interviews. The research was carried out in two oil palm economy-based villages of Kutai Kartanegara District, of the Province of East Kalimantan of Indonesia. The first village is located very close to the center of regional administration and has evolved into a non-farming economy. In contrast, the other village is more isolated and solely relies on farming activities. The study found that changes of land cover caused by oil palm expansion could be categorized into two types, concentrated and spotted, following the influence of oil palm investment activities. It was also found that organization of the production of most smallholders existed in two types of arrangements, partial and total integration of production. From the perspective of livelihood, two different types of income structures emerged, diversified and uniform. This article concludes that responses of smallholders to palm oil spread varied depending on the ecological setting, the existence of the already established plantation economy in the region, the capacity of the smallholders to diversify economic activities based on palm oil, and the exposure to external economic activities.

The expansion of oil palm plantation has caused adverse impacts on the ecosystem. It has been associated with deforestation, biodiversity loss, disturbances to environmental services and livelihood change. The government of Indonesia has made an effort to control the negative effects by issuing relevant policies. One of the policies is Indonesian Sustainable Palm Oil (ISPO)’s sustainability standards to which large-scale plantations and smallholders are obliged to adhere. This study assesses the readiness of two types of smallholders, namely, the nucleus–plasma scheme and independent smallholders to adopt ISPO standards. Using a case study research approach in two oil palm plantation villages in East Kalimantan, the study found out a number of ISPO implementation challenges, grouped into structural and socio-cultural challenges, which make smallholders less ready to adhere to this mandatory policy. Coping with these challenges, this study proposed that land and business legality programs be expedited to strengthen property rights, and that training and education programs be intensified to enhance awareness, knowledge and capacity of smallholders to enable them to comply with sustainability standards.

Desa Pangumbahan memiliki dinamika sosial masyarakat dengan adanya kegiatan ekonomi skala makrodalam bentuk konsesi perkebunan kelapa serta alternatif ekonomi baru untuk pengembangan industriekowisata ini. Tujuan penelitian ini mencoba untuk melihat seberapa jauh pola adaptasi ekologi danstruktur rumah tangga yang tinggal dalam masyarakat desa Pangumbahan yang ada saat ini. Penelitianini menggunakan pendekatan kualitatif dan didukung dengan pendekatan kuantitatif. Hasil penelitianmenunjukkan bahwa pola adaptasi ekologi Pangumbahan desa antara lain ditentukan oleh adanya konsesiperkebunan dan konservasi penyu yang membatasi kehadiran budaya masyarakat desa Pangumbahan.Keterbatasan sumber daya alam, manusia dan rumah tangga kekuatan keuangan untuk melakukan berbagaistrategi untuk bertahan hidup. Strategi yang dilakukan warga desa pendapatan rumah tangga Pangumbahanbervariasi. Dalam satu rumah tangga dapat menerapkan dua atau lebih jenis strategi penghidupan.Kata kunci: dinamika sosial, pola adaptasi ekologi, strategi mata pencaharian

Many companies have adopted zero-deforestation commitments (ZDCs) to remove products linked to forest loss from their supply chains. A common concern is that such policies may lead to the supply chain exclusion of smallholder farmers. Here, in this study of the Indonesian palm oil sector, we draw on surveys with 1,541 farm households and 53 interviews with supply chain actors to assess whether and how ZDCs reach non-industrial producers, including effects on market access, prices, training and village-level deforestation. We find that access to ZDC markets depends largely on location within company sourcing areas, while active exclusion appears to be limited. Certification-based engagement reaches some tied smallholders, but ZDC awareness remains low, with weak policy dissemination, limited bottom-up traceability and almost no ZDC-focused capacity building or price differentiation for producers, especially independent smallholders. Deforestation levels in villages within the sourcing areas of ZDC firms are low but similar to patterns elsewhere. These findings highlight effectiveness and equity gaps in current ZDC approaches.