Smallholder RSPO certification, economic benefits and agrochemical use

Abstract

Sustainability standards, such as the Roundtable for Sustainable Palm Oil (RSPO), can potentially mitigate the trade-offs between economic benefits and environmental harm of oil palm expansion. Using unique primary household and farm level panel data collected from Jambi Province, Indonesia, we first document the differences in agricultural inputs and outputs between certified and non-certified smallholder farmers. Second, we illustrate the potential implications and mechanisms of certification. In this study, therefore, we aim to first document agricultural input and output differences between certified and non-certified smallholder farmers, second to illustrate potential effects of certification with observational data and third to provide guidance for future rigorous causal analyses. We find generally positive correlations between RSPO certification, land productivity, profits, and fertilizer use, and a negative correlation with toxic herbicide use. However, we do not find price premiums for RSPO-certified farmers. Overall, the results of this study are indicative of potentially modest effects of RSPO-certification that may operate through higher productivity due to improved management practices that remain agrochemical intensive but avoid some particularly harmful chemicals. Our findings are relevant to better understand the strong sustainability claims of RSPO marketing and to provide guidance for rigorous causal experimental and quasi-experimental studies.