General Assembly 23-2C

Background:

RSPO is a global multistakeholder forum involving all stakeholders in the palm oil sector, including smallholders. Since 2013, independent smallholders have been actively involved in encouraging sustainable palm oil production in villages. The involvement of independent smallholders is further strengthened when the RSPO and the market incentivise independent smallholders through credit. In 13 years (2013-2026), the number of independent smallholder involvement has increased by 800%. Let's look at the growth of the involvement of independent smallholders in the last 5 years, where in 2020 the number of independent smallholders involved was 19,813 farmers, in 2025 it grew rapidly to 83,808 farmers, as well as the land area where in 2020 the land area of RSPO-certified farmers was only 56,695 hectares, in 2025 the area increased sharply to 209,658 hectares. This growth certainly encourages the growth of the credit volume of independent smallholders, be it IS-CSPO, IS-CSPKO or IS-CS-PKE. This growth is certainly good news for RSPO where the increasing involvement of independent smallholders in RSPO certification proves that sustainable palm oil standards are widely accepted at the grassroots level around the world. The involvement of independent smallholders is also an indicator that RSPO standards are becoming more relevant and inclusive.

About 4 years ago, RSPO-certified independent smallholders (ISH) faced serious market challenges. This means that the absorption of the volume of credit by buyers has decreased, due to a drastic decline in the price and demand for ISH credit. In light of this situation, on February 11, 2025, RSPO-certified smallholders from various countries submitted a petition "Moratorium on Independent Smallholder Certification, Until the Availability of a Comprehensive Market Transformation Strategy for RSPO Independent Smallholder Credits" signed by 55 independent smallholder groups from Indonesia, 3 farmer groups from Latin America, 2 farmer groups from Africa and 1 farmer group from Malaysia. This petition was also supported by 6 NGOs, both social NGOs and environmental NGOs. This petition should be an early warning to RSPO that independent smallholders are in a state of uncertainty in access to the RSPO credit market.

RSPO-certified independent smallholders are highly dependent on credit sales, as credit is the most dominant incentive mechanism in the RSPO system to support smallholders' involvement in sustainable palm oil supply chains and help them finance and maintain certification. Efforts by smallholders and support organisations to attract credit buyers have been successful, such as telling stories of attracting independent smallholders through publications and communicating directly with buyers. However, all efforts have not seemed to have yielded positive results. Instead, the situation has worsened, with the period from December 2025 to January 2026, and when this resolution was tabled in August-September 2026, there were no bids from buyers on the prisma platform.

The concern is even greater, when the data shows a high volume of loans of independent smallholders that are not absorbed, if from January to April 2026, there are around 87,132 Mt of IS-CSPO and 6,119 Mt of IS-CSPKO that are not absorbed and this volume is in high-risk areas, in July 2026 this figure will rise sharply to 145,831 Mt of IS-CSPO and 7,644 Mt for IS-CSPKO. Although there is a Carry Over option provided by the RSPO, this solution is only temporary, because without a practical market solution, the License renewal strategy will only increase the accumulation of credit and credit will accumulate if it is not absorbed by the market, making it more difficult to sell.

The accumulation of IS-CSPO and IS-CSPKO volumes is in line with the trend of increasing the number of new certified independent smallholder groups, amid weakening market demand for integrated smallholders. Every year the growth of smallholders involved in RSPO certification increases significantly. For example, in 2025 the number of new groups that receive RSPO certification will be 21 groups from 10 countries, and this year, 2026, the number of new groups will also be as large as in 2025. The growth of smallholders involved in RSPO certification is not accompanied by market growth, so this puts RSPO-certified independent smallholders in a critical condition, as the certification costs they have to incur continue to increase while income from RSPO credits decreases and does not even exist.

The low demand for ISH credit and volume absorption, as well as the underdeveloped market for independent smallholder credit, is due to the un-availability of a practical and comprehensive market development strategy developed by the RSPO for the integration of smallholder markets after certification. At the time this resolution was proposed, the RSPO did not have a clear holistic market development and transformation strategy to encourage the absorption of the volume of loans belonging to independent smallholders, instead the narrative developed was that the RSPO could not pressure the market to buy independent smallholder credit. In addition, the RSPO does not have an Emergency Contingency Plan for the situation faced by independent smallholders today, when volumes are stacked and not absorbed by the market.

Taking into account the above situation and background, the independent smallholders submitted this resolution for consideration by all RSPO members. This resolution aims to avoid the transfer of sustainable palm oil risks and market failures to smallholders.