A Fair Price for Smallholder Farmers to Reduce the Living Income Gap in Indonesia

Description

The project “A Fair Price for Smallholder Farmers to Reduce the Living Income Gap in Indonesia” is a collaborative initiative between Penabulu Foundation, Oxfam Novib, SPKS and AS Watson Benelux that focuses on promoting economic justice within Indonesia’s palm oil value chain. For many years, smallholder farmers have faced income disparities caused by unfair market structures, lack of price transparency, and weak bargaining power against large corporations. This project seeks to address those challenges through partnership-based approaches and capacity development, aiming to narrow the gap between smallholders’ actual income and a living income standard.

In its implementation, the project facilitates various collaborative initiatives among smallholders, cooperatives, industry actors, and local governments to build a more transparent and fair pricing system. Through multi-stakeholder dialogue and participatory research, the project identifies key barriers in the palm oil value chain and develops a “fair value model” that can serve as a policy reference for sustainable pricing. These efforts are designed to strengthen shared understanding of equitable value distribution across the supply chain.

Furthermore, the project emphasizes the importance of strengthening farmers’ capacity and local institutions. Penabulu will provide training and mentoring for farmer organizations on price negotiation, cooperative governance, and environmentally sustainable farming practices. By reinforcing the institutional position of smallholders, the project aims to enhance not only individual livelihoods but also the long-term socio-economic resilience of smallholder communities.

The project is implemented over a six-month period, with Penabulu Foundation fully responsible for activity implementation, management, and reporting to the donor. Transparency and accountability are key principles guiding every stage of the project to ensure that all activities directly benefit smallholder farmers and local stakeholders.

Ultimately, this project represents an important milestone in building a more inclusive and equitable trade system for Indonesia’s smallholder farmers. By strengthening cross-sector collaboration and promoting responsible business practices, the initiative contributes not only to improving farmers’ income but also to reinforcing social and environmental sustainability within the national palm oil value chain.

Funding

This program is supported by Oxfam Novib, with a program period from September 1, 2025 to February 28, 2026, with total funding support of EUR 46,186.