Investing in the productivity of independent smallholders (ISH) has the potential to generate an additional IDR 70.3 trillion higher GDP, IDR 36.4 trillion increased exports, and 4.73 million tonnes greater crude palm oil (CPO) output, and enhance ISH competitiveness.

However, ISH continues to face challenges associated with low productivity, with yields 0.5 to 1.3 tonnes per hectare lower compared to other types of plantations, as well as limited capacity to comply with sustainability standards.

To improve productivity and sustainability performance, ISH needs greater access to good agricultural practices (GAP), affordable financing, and quality agricultural inputs. Access to these productivity-enhancing factors is constrained by aging oil palm trees, rigid land legality requirements, limited access to finance, and weak collective action among farmers.

Therefore, this policy brief proposes the following recommendations: »The government should employ targeted policy instruments by prioritizing BPDP funds for replanting and by implementing flexible DBH allocations. »Relaxing land legality requirements by simplifying STD-B application and shifting the implementation through a multistakeholder process and a jurisdictional approach.