FACS organized a workshop session in Jakarta, in collaboration with PERBANAS (the Indonesian banks association) and Partnership for Forests. Attendees were local banks, international impact investors and plantation companies – this wide and diverse crowd spurred an interesting discussion on the financing structures available to un-lock oil palm replanting credit for smallholders. This event created the basis for the development of partnerships which will eventually lead to a pilot and a much-needed proof of concept.
Edoardo Cavallo, associate at FACS, presented to industry leaders at the 10th Asia Sustainable Oil Palm Summit in Bali. His presentation focused on the existing innovative financing models for oil palm smallholders and what it takes to scale them up. Three main partnership models were presented:
This week the FACS team went out in the field. We visited the newly established mill by PT Prosympac in the Jambi region where we were shown the latest development in oil palm sustainable practices and established an interesting dialogue with the company to better understand the dynamics of the mill-farmer relationship.
FACS was invited to present at the in-house workshop held by CIMB Niaga Indonesia in Jakarta. This “Managing Palm Oil Risks” is part of a series of events driven by RSPO to engage with the financial sector in Indonesia with the long-term goal of shifting the preference of the targeted banks to actively support sustainable palm oil, and to gradually depart from supporting unsustainable companies.
Eelko Bronkhorst, our managing director, introduced to CIMB Niaga’s staff the innovative end-to-end finance scheme developed by FACS, which aims at de-risking investment in oil palm smallholders, and highlighted some of the opportunities for blended-finance available in the Indonesian landscape.
This week was the kick-off of the Smart Agriculture Myanmar (SAM) project in Myanmar. The FACS team joined Satelligence, Impact Terra, Wageningen University and CESD for a week of team-building and project planning in Yangon, Myanmar.
The SAM program is funded by the Netherlands Space Office’s Geodata for Agriculture and Water (G4AW) Facility, which supports projects in developing countries that convert geodata from satellite imagery into usable insights for farmers about local climate conditions, weather patterns and other hazards. In a country where agriculture equals 25% of GDP, and smallholder farmers make up 95% of all farmers, agriculture is seen as a primary tool for economic development and poverty alleviation. Unfortunately, many farmers experience high rates of crop loss and limited access to finance, a problem the SAM Program aims to address. The objective of the SAM Program is to expand the provision of tailored information to smallholder farmers about crop timing, pest management and irrigation to empower them to improve their farming practices, yields and market access. In addition, the program will accelerate the delivery of affordable financing to smallholder farmers in a scalable manner. The services will be developed through the combined use of satellite, farmer and other data and will be delivered through Golden Paddy, Impact Terra’s mobile and web-based app. The Golden Paddy platform provides daily information about local crop prices, flood and drought warnings, and can connect farmers to financial services. It is actively used by over 200,000 smallholder farmers in Myanmar. Read more about the Golden Paddy platform here: https://www.impactterra.com/golden-paddy
FACS plays a central role in the SAM Programme and will:
1) Design and deliver a data-led smallholder credit scoring methodology and tool to support financial institutions in their assessment of the creditworthiness of smallholder farmers.
2) Develop and implement a scalable smallholder lending scheme, with selected local financial institutions, which will be tailored to the input and other financing needs of smallholder farmers in Myanmar.
3) Provide technical assistance to local financial institutions to develop their smallholder finance knowledge, lending capacity, and risk management capabilities.
CIFOR Research published: Current Practices and Innovations in Smallholder Palm Oil Finance in Indonesia and Malaysia
Financial Access, together with SNV Netherlands Development Organisation, has undertaken a profound research on past and current policies and financing schemes for oil palm smallholders in Indonesia and Malaysia and prepared a research paper and an info brief which have been published by the Center for International Forestry Research (CIFOR) this month.
The report proposes potential models to increase the mobilization of long-term finance to smallholders in the palm oil sector. Furthermore, it identifies and reflects on the key enabling conditions that would help overcome the bottlenecks in smallholder long-term financing and create an enabling environment for sustainable oil palm investments.
The full research paper can be accessed here and info brief can be accessed here.