InfoSAWIT, JAKARTA - The government has officially issued Presidential Regulation (Perpres) No. 16 of 2025 concerning the Indonesian Sustainable Palm Oil Certification System (ISPO) on March 19, 2025. This regulation replaces the previous Perpres No. 44 of 2020, with an expanded scope covering upstream, downstream, and palm oil bioenergy sectors.

This move marks Indonesia's commitment to strengthening sustainability standards in the palm oil industry while addressing global market demands that increasingly emphasize environmental, social, and governance (ESG) aspects. A key point in this regulation is the mandatory ISPO certification for smallholder palm oil farmers, which will take effect four years after the regulation is enacted, specifically in March 2029.

"This sends a strong signal that farmers must also be part of the sustainable palm oil supply chain. There can no longer be a dichotomy between large companies and smallholders," stated a representative from the Indonesian Sustainable Palm Oil Farmers Forum (FORTASBI).

Incentives and New Financing Schemes

In line with the implementation of this regulation, the government, through the Ministry of Agriculture, is preparing a revision of the Minister of Agriculture Regulation (Permentan) that governs the technical implementation of ISPO. The latest draft of the Permentan includes several crucial points that directly address the interests of smallholder palm oil farmers.

One of the key provisions is the provision of incentives to farmers who have obtained ISPO certification. According to the draft regulation, purchasing companies of Fresh Fruit Bunches (TBS) are required to provide an incentive of 4% of the TBS price to certified farmers. "This is a form of appreciation for farmers' efforts in implementing sustainable cultivation practices. It is hoped that this incentive will encourage farmers to expedite the certification process," an internal source from the Ministry of Agriculture stated.

Moreover, the government is also offering new financing schemes to support ISPO certification. Unlike previous regulations where farmers had to bear the costs themselves or rely on central or regional government budgets, those organized in groups can now apply for financing through plantation fund management bodies, such as the Plantation Fund Management Agency (BPDP).

FORTASBI welcomed this policy but also emphasized the importance of farmers' readiness to face the certification process. The organization representing sustainable palm oil farmers believes that the four years leading up to 2029 should be well-utilized by the government and all stakeholders.

"Certification is not just about administration; it involves a change in mindset, capacity building, and technical assistance. Farmers need training in Good Agricultural Practices (GAP), land legality, and institutional strengthening," explained FORTASBI representatives, as reported by InfoSAWIT.

Furthermore, FORTASBI stressed that ISPO should be seen as an opportunity, not a burden. Therefore, ISPO certification must be accompanied by fair incentives and higher selling prices compared to non-certified products. "ISPO-certified palm oil products are the result of farmers' hard work in maintaining environmental, social, and good business practices. There must be added value in the market to keep farmers' spirits high," they asserted.

The government recognizes that the success of ISPO implementation for farmers heavily relies on strengthening human resources and institutional infrastructure at the grassroots level. Thus, this four-year period is designed as a transition phase to massively socialize ISPO standards and encourage the formation of farmer groups ready for certification.

On the company side, they are also expected to play an active role in supporting their farmer partners, both through direct partnerships and incentive schemes for TBS purchases that comply with the new regulations.

With Perpres 16/2025, the future of Indonesia's palm oil industry will be more structured, inclusive, and responsible. Farmers, who have long been on the sidelines, are now receiving a significant role in the national sustainability agenda. "ISPO is not just a certificate. It is a shared commitment to maintain palm oil as an environmentally friendly and socially just commodity," concluded FORTASBI's statement.  (T2)