Indonesian Palm Oil Smallholders The Pawns for Global Market Access

Indonesian palm oil smallholders and the EUDR

• Indonesian palm oil farmers are often quoted as a crucial part of what makes Indonesia’s palm oil industry sustainable
• Their existence has been milked endlessly in Indonesia’s trade talks with countries that sought to put restrictions on Indonesian palm oil due to its infamous role in the deforestation of tropical forests
• As Indonesian President Prabowo cracks down on illegal activities in the Indonesian palm oil industry, the same smallholders often quoted in trade talks are being squeezed out of the picture as the government and corporations fight over money.

The most recent fights between the Indonesian government and the corporations that control its palm oil industry started with the problem of legality and revenue losses suffered by the government.

“The Indonesian government plans to reclaim millions more hectares of land that it believes are being used illegally in 2026, according to a report by The Edge Malaysia citing a Bloomberg article.”

Indonesian smallholders were the biggest victims of this purge of illegal palm oil plantations in Indonesia where land claims by small farmers have never been firmly established. 

Hans Nicholas Jong reported for Mongabay that:

"Indonesia has launched a sweeping and militarized crackdown on illegal forest use, reclaiming millions of hectares of land — but civil society groups warn the campaign is displacing Indigenous peoples while sparing corporate offenders and entrenching land inequality."

It is therefore laughable to see folks writing a fancy report about the "limited reach of zero deforestation commitments to Indonesian palm oil." 

The problem with Indonesian palm oil smallholders 

The report by Chandra, A., Grabs, J., Meemken, EM. et al. was published by the website Nature.com under the tag "Nature Sustainability."

There's a lot of colorful graphs and impressive scientific words in Chandra's report which may earn the authors another round of funding by whoever pays for these reports. Fanciful terms like "Supply Chain Analysis" and "Geospatial Analysis" must surely warrant more funding for Adelina Chandra and her cohorts for studies on Indonesian palm oil.

If that is not enough, then maybe fanciful acronyms like "ZDC policies" may convince funders to pay for more reports with highly scientific words and terms. Here's a sampling.

​"We conducted household surveys in 2021/2022 to collect primary data from a total of 1,541 households in seven regencies in Sumatra, following a random selection of villages as mentioned previously."

That would be good scientific work if it didn't end up with Adelina Chandra pigeon holing Indonesian smallholders in her "six criteria for high quality ZDCs."

"classifying them based on the quality of their ZDC policies and implementation in line with the six criteria for high-quality ZDCs developed by Chandra et al.28 (Methods)9. Companies were categorised as ‘ZDC’ or ‘non-ZDC’, wherein ‘non-ZDC’ companies lacked a ZDC for all suppliers. ‘ZDC’ was further divided into ‘high-ZDC’ for high-quality ZDC companies that committed to zero..."

What did she honestly expect from Indonesian smallholders who may not have completed elementary school?

Where does the the opinions of Adelina Chandra with her PhD in Environmental Policy, an MSc in Environmental Studies and Sustainability Science (Lund University, 2020), and a BSc in Geography (University of Indonesia, 2015) fit in with Indonesian smallholders who have not found a similar source of income from merely expressing an opinion?

Sustainability for Indonesia's palm oil smallholders may need a champion like Disney's fictional character Renegade Nell to get media like Nature to "Stop Printing This Muck" about Indonesian smallholders.

Renegade Nell should also silence the handful of rich folks at Global Witness who harp on deforestation in Indonesia with no regard for the livelihood of Indonesians. 

These printed muck may see the smallholders mentioned by Hans Nicholas Jong being excluded from any share of the UK market as the British government looks to tighten its palm oil imports based on tackling illegal deforestation in its imports. 

Indonesia's Middle Finger to Sustainability Demands

Deforestation and illegal land use, whether by corporations or small farmers is a non-issue as Indonesia seeks to control revenue from its palm oil industry.

It will not matter which Indonesians are available for hire for Stockholm Environment Institute and Global Canopy which stacked up their opinions with Trase.

Indonesia's latest effort to control exports revenues from its world leading palm oil industry may be criticized as nationalism by foreign media like Reuters.

It may lead to more deforestation, abuse of human rights as this report from the Basel Institute on Governance hints at.

“Indonesia's centralization of strategic exports (like palm oil and coal) under state-controlled entities linked to the sovereign wealth fund Danantara has sparked major corruption concerns. While the policy targets tax evasion and transfer pricing, critics warn state takeovers inadvertently create lucrative new avenues for rent-seeking, bribery, and political cronyism.”

This is not to say that the Prabowo administration is failing to clean up Indonesia’s palm oil industry or that his mandate will only change who benefits from a corrupt system. 

Truth be said, Indonesia should not be expected to eradicate corruption and fraudulent business practices in its industries. 

Not when its major competitors in the global markets are equally corrupt but are labelled with the kinder description “cronyism.”

Take the EU market as an example due to its strong anti palm oil stance.

The EU's massive agricultural budget has frequently created a modern feudalism. In regions like Hungary, state lands are auctioned off to political allies and family members, ensuring that lucrative EU subsidies directly benefit ruling-class networks.
The United States of America led by Donald Trump provides an even worse case study of corruption and cronyism. 

Where Prabowo’s move to control export revenues to pay for social programs in Indonesia was labeled as “nationalism”  by Eve Warburton from The Australian National University as if it was a bad thing, it has to be preferable to what is happening with US foreign policies.

As Ryan Bourne describes Trump’s policies:

"There’s a word for the government owning the means of production, of course: socialism."

It's not surprising therefore that Indonesian palm oil exports to the EU and the US have been beggared to plead the plight of Indonesian palm oil smallholders to appeal for mercy and market access.

In light of the EU and the US’s strict adherence to protecting their farmers, the only play Indonesia has is to protect their palm oil farmers with better farmgate prices first.

Indonesian palm oil smallholders who are so often quoted by the Indonesian palm oil industry GAPKI and government as a symbol of sustainable development based on definitions by the United Nations are meaningless when findings from Indonesia’s National Police Food Task Force suspects cartel activity may be behind the sharp decline in Fresh Fruit Bunch (FFB) prices received by palm oil farmers, despite rising global crude palm oil (CPO) prices

In light of this finding, Indonesian President Prabowo has issued yet another order for farm harvest prices to match the global demand for palm oil. 

His ambitions for Indonesia may be earnest but in these days of corporate interests, his ambitions are likely to fall on the wayside much as the needs of Indonesian palm oil smallholders has.

There is hope yet for Prabowo and the sustainability of Indonesia 's palm oil industry with all its corruption, and fraudulent corporate practices.

If "experts" like Adelina Chandra would respect the opinions of others like Kanni Wignaraja and Sara Ferrer Olivella who asked to square sustainability rhetoric to fit the circle represented by Indonesia's economic circle.

"From palm oil and coffee in Sumatra to cacao in Sulawesi, over 40 million people sit at the center of global supply chains. They are expected to manage climate risks, meet evolving sustainability standards—many set in high-income consumer markets such as the EU’s new deforestation rules—and remain competitive, often with limited access to finance, technology and markets. 

The imbalance is stark. Smallholder farmers who underpin these sectors operate on thin margins, bearing most of the risk while capturing only a fraction of value. In oil palm, for example, smallholders capture only around 6 percent of the value in a $280 billion global industry, while downstream firms retain roughly two-thirds of profits." UNDP

Published June 2026 CSPO Watch