RISS execution by an independent smallholder association

The Center for Sustainable Small-owners (CSS) was established to improve the livelihoods of Independent Smallholders (ISH) of oil palm ensuring ethical and responsible production of oil palm with commitments to no deforestation, no new plantation on peatlands, and no exploitation (NDPE) in the supply chain. The CSS has a two-pronged approach i.e., improving livelihoods through yield intensification while sourcing responsibly ensuring ethical and sustainable oil palm production and ensuring sustainability through certification and compliance while empowering communities through farmer associations to safeguard their interests. The RSPO independent Smallholder Standard (RISS) was adopted by RSPO members on 6 November 2019. As part of its strategy, CSS helped facilitate RISS certification for the very first batch of Independent Smallholders through an ISH association, PERTANIAGA, in August 2021 who received full premium as of September 2022. Today, with 306 ISHs certified, this paper outlines the certification journey of these ISH. CSS aims to have 640 ISH certified through 2023 while diffusing its impact on a larger community through sustainable and good agricultural practices (GAP).


Introduction
Oil palm is an economically important crop that provides income to three million smallholders worldwide, these smallholders contribute roughly 30 percent of global palm oil production [1].Smallholders also play a vital role in the Malaysian palm oil industry [2].Their production makes up 40 percent of the total output of the country's palm oil production [3].Smallholder farmers can be categorized as organized or independent smallholders.The former category normally will participate in public land development schemes, and they are under the management of various government-linked agencies such as in Malaysia, there is Federal Land Development Authority (FELDA) and Federal Land Consolidation and Rehabilitation Authority (FELCRA).Vermeulen and Goad (2006) distinguished smallholders as those supported by the government or a private sector organisation, independent smallholders, collective landowner schemes where land is rented out to grow oil palm, and landowner mini estates.They showed that smallholder yields were lower than estate yields, with 'scheme' smallholders outyielding independent smallholders.In both Malaysia and Indonesia, scheme smallholders achieved 90% of estate yields, but independents averaged 79% in Malaysia and only 57% in Indonesia.In PNG, smallholders, most of whom are in schemes, averaged only 68% of estate yields [4].
The Independent Smallholder (ISH) farmers in Malaysia are defined as one with less than 40 hectares of land and their contribution to national output is around 40 percent [2].Since ISH is a small-scale producer entity, generally this sector has a limited size of farmland and high production cost which cannot be scaled up due to scattered geographical locations.Most of the ISH are second or 1308 (2024) 012063 IOP Publishing doi:10.1088/1755-1315/1308/1/012063 2 thirdgeneration or old generation, therefore lack in the knowledge and experience on oil palm farm management and the exposure and training needed on good agricultural practices which results in much lower Fresh Fruit Bunch (FFB) Yield [5].In Malaysia, one in seven independent smallholders are family-run.They usually experience poor social, environmental, and livelihood standards due to capital constraints.On average, their monthly household income is about RM1600 (400 USD), well below the RM 2,208 (550 USD) new national poverty line.Additionally, most independent smallholders are not certified.They make up of only roughly one percent of the oil palm land is certified by the Roundtable on Sustainable Palm Oil (RSPO) [6].This lack of certification hinders their ability to access premium market and higher price for their products.
With a commitment to no deforestation, no new plantation on peatlands, and no exploitation (NDPE) in the supply chain, the Center for Sustainable Small-owners (CSS) aims to improve the livelihoods of Independent Smallholders (ISH) of oil palm.The CSS uses two two-pronged approaches in advancing sustainable development within the palm oil industry.The first approach focuses on improving livelihood through yield intensification with responsible sourcing for ethical and sustainable palm oil production.The second approach focuses on empowering, communities, farmers, and farmer associations in ensuring sustainability through certification and compliance.
This paper also explains the RISS certification of ISH, who struggle to gain relevant sustainability certification.New to the literature, this paper also explains a new engagement model, through private and public partnership helping an independent smallholder association to become the first independent association to receive RSPO's latest RISS certification.Hidayat et al. (2015) investigated how certifications might help scheme farmers and independent smallholders improve their standard of living.According to them, all smallholders perceive financial consideration as their main motivation for joining sustainable certification schemes like RSPO [7].Besides, Motives related to social and environmental impact did not play a significant role in their decision to join RSPO.Many smallholders view certification as a marketing tool rather than a mean to create more sustainable production.
The Roundtable of Sustainable Palm Oil, (RSPO) made an official announcement on the endorsement of the RSPO Independent Smallholder Standard (RISS) during the annual Round Table (RT-17) at Bangkok in November 2019.One of the major criteria in the standard is a requirement for the group of Independent smallholders(ISH) to register their group under a legal entity that has the organizational capacity to comply with the RISS [8].For ISH, this group certification allows scaling up the certification process in addition to introducing a step-wise process allowing intermediate rewards to keep the ISH engaged on the certification journey.
The RSPO ISH Standard proposes a simplification of the overall process to certification and has adopted following measures • Lower burden of entry for ISH into the RSPO system, • A phased approach to full compliance, • Principle and Criteria (P&C) tailored to ISH • Simplified assessment and verification, • Easier and quicker access to market.RSPO has further established the following criteria to determine independent smallholder status based on if the smallholder is associated with a group or scheme, the size of their land, which should be less than 50 hectares, whether they have enforceable decision-making power on the operation of their land and production practices and if they have the freedom to choose how do they utilize their land, type of crops to plant, and how they organize, manage, and finance the land [8].
The total size of production areas is defined by accumulating all plots owned by a smallholder, including existing plots as well as plots for future expansion.Smallholders have roughly three years of phased certification process which starts with smallholders forming or joining a group.Assurance made to smallholders with timely processing helps establish trust in the process.Once the smallholders are on-boarded into the system, group managers conduct internal quality check and audits to assess eligibility indicators.If smallholders meet eligibility indicators, group managers allocate 40% of the volume for RSPO credit and a certificate is issued which is valid for two years stating the ISH being met the Eligibility phase.Smallholders must achieve Milestone A within these first two years for continuing the RISS certification journey.Upon verification by an independent third party, a certificate valid for 1 year is issued and Milestone A is achieved.The smallholder is allowed to use 70 percent volume for RSPO credit.Smallholders must achieve Milestone B within the next year to sell 100 percent of the volume as RSPO credits or as physically certified crops.Once they achieve full compliance with RSPO standards, smallholders also obtain a certificate valid for 5 years.Surveillance audit is conducted each year to make sure that the quality of the crop is maintained.This process for assurance and claim is described below in Figure 1.

The establishment of ISH association PERTANIAGA
During RSPO annual RT-17 in Bangkok in November 2019, the RSPO made an official announcement on the endorsement of the RSPO Independent Smallholder Standard (RISS).One of the major criteria in the standard is the requirement for independent smallholders (ISH) to register themselves as a group under a legal entity that has the organizational capacity to comply with the RISS.CSS establish an ISH association with smallholders who were part of its smallholder program and registered it under the Registry of Society (ROS) Malaysia.A meeting with ROS officers was held on October 2 nd 2019, to understand the legal requirements for association establishment, followed by the development of a constitution by CSS.The constitution was reviewed by CSS advisory council, ISH, and participating collection centres (CCs) in a meeting on November 2019.Subsequently, on February 17 th 2020 it was decided to formally onboard the committee members and establish the association.During the meeting, participants agreed to name the organization Pertubuhan Tani Niaga Lestari Negeri Johor (PERTANIAGA).Concurrently, CSS developed a sustainability policy as part of the Internal Control System or ICS for PERTANIAGA.As of March 11 th 2020, PERTANIAGA was officially registered and received its certificate of registration in April 2020.Subsequently, as of December 2020, PERTANIAGA was officially registered as an RSPO member under the ordinary-oil palm growers' category.As of today, PERTANIAGA is fully owned by the ISH under the supply chain of Bingan Jaya Sdn Bhd, which comprises of eight collection centres under its network.
The main objective of this independent smallholder association is to help its members achieve RISS certification.As of today, CSS is working with other ISH under Bingan Jaya Sdn Bhd, the account holder for more than 30 collection centers under its network.PERTANIAGA members today come primarily from 8 collection centers under this network.These are Perniagaan Bingan Jaya, Sudiana Enterprise, Al-Iman Jaya, Desa Enterprise, Naajihin Enterprise, Naaza Maju Enterprise, Syarikat Seteguh and Hj Arshad Matirok.

CSS Sustainability Journey to RISS Certification
The journey of embarking on RISS certification begins with a series of smallholder engagements.The purpose of these engagements are to collect information and seek concurrence from ISH to onboard the CSS sustainability journey for the certification.Subsequently, these engagements create awareness and provide inputs on the benefits of certification to the smallholders.As the next step, the ISH sign a participatory agreement to join the smallholder program.Subsequently, CSS assists the ISH to comply with local laws such as registering with Malaysian Palm Oil Board (MPOB).CSS also conducts risk assessments to ensure that the farm meets the requirement for certification for both Malaysia Sustainable Palm Oil (MSPO) and Roundtable on Sustainable Palm Oil (RSPO).Each ISH is assigned a score that determines whether the farm is in the low, medium, or high risks category.
The Independent Smallholder Farmers for oil palm or ISHF exist most upstream, are the least regulated and furthest away from any endorsement of sustainability in the Palm Kernel Oil supply chain.
By having these farmers join the CSS Sustainability Journey, CSS aims to help them meet the local legal requirements and the RSPO Independent Smallholder Standard (RISS).CSS Sustainability Journey has four phases.This is depicted in Figure 3. 2. Onboarding and Data Collection -Through several engagements, the small farmers sign the participatory agreement while CSS agrees to a non-disclosure agreement with the farmers and CCs.The data collection exercise then follows.
3. A baseline sustainability gap assessment survey is conducted.Documents required for certification and compliance are gathered and the farm coordinates are tagged.This process is digitized with data collection through mobile applications and data storage in an online oil palm data warehouse (OPDW).The historical super dealer purchase data and the sales record for the collection centers are crosschecked.The CCs purchase data and small farmers' sales are also reconciled.Baseline sustainability gap analysis is performed through sustainability scorecards using the survey data.Field verification checks are performed for compliance with No deforestation, no new plantation on peatlands, and no exploitation in the supply chain i.e., NDPE policy.This is followed by environmental and social risk assessment.
4. The fourth and final stage includes certification and livelihood improvement efforts.For certification, the farmers are registered with MPOB for MSPO compliance.CSS officers facilitate their need for document gathering, submission, and follow-ups.The farmers join the CSS smallholder association which facilitates through different stages of RSPO Independent Smallholder Standard (RISS) viz.eligibility phase, Milestones A and B.

The RISS Certification and Execution Process
Once the ISH are fully onboard the CSS sustainability journey and joined PERTANIAGA, they follow the RISS process developed by CSS for PERTANIAGA from the three main guidelines involving RSPO Principle and Criteria, RSPO Smallholder Training Guide (STG), and the RSPO Group Manager Training Guide (GTG) to support the 4 principles and 23 criteria of RISS.The three initiatives under CSS viz.Traceability and Verification (TV), certification and Compliance (CC), and Livelihood Improvement (LI) perform various activities to facilitate the RISS process.These are depicted in Table 1.
Table 1 The ISH farmers are highly encouraged to participate in a series of training led by CSS master trainers.The CSS master trainers have been trained by RSPO Smallholder Academy (STA) and are supported by RSPO with guidance on training materials.RSPO Smallholder Academy (STA) taught the CSS master trainers, and RSPO provides support, advice, and training materials.Alongside CSS Master Trainers, ISH as PERTANIAGA members are supported by various university partners of CSS.Towards the end of the training, ISH can implement sustainable and good agricultural practices on their farms.After scoping the ISH and through stakeholder engagement, program participants are introduced to the RISS certification process.ISH express their interest and register to participate in the program.Group managers verify the documents and collect data about farms, crops, soil, age etc.Once data collection is complete, risk assessments are carried out to map the risksa group is as strong as its weakest link.
Risk profiling is followed by internal and external technical assessments before smallholders get the required training for sustainable farming techniques.Each ISH must pass through milestones A and B in the stipulated time of 2 and 1 year.RISS internal and external auditorsgroup managers and independent third parties may recommend corrective actions or certify the ISH.Successful completion of these peer review processes requires that ISH be compliant in the long term.
The farms are further vetted through agronomic criteria to qualify as model farmers for the Learning Farm (LeFa) development under the CSS Livelihood Improvement initiative.With help from consultant agronomists and crop nutrition experts, these farms focus on yield intensification through good agricultural practices and proper application of fertilizer.These model farms and GAPS are further diffused into the greater farmer community through Innovators and Early Adopters.

PERTANIAGA RISS Certification
CSS took selected farmers from Bingan Jaya Sdn Bhd to participate in the RSPO annual RT-17 in Bangkok in November 2019.The ISH had a chance to exchange views and information with farmers from other countries, especially Indonesia and Thailand.The Malaysian farmers were very impressed with how RSPO certification helped the ISH from Indonesia and Thailand to improve their livelihood and were inspired when other countries' ISH names were called on to the stage to receive certification.These motivated small farmers were determined to establish an association and help their friends and family members who are ISH to improve their livelihood through RSPO certification and practicing sustainable and good agricultural practices.The main challenge for the farmers was a lack of awareness and knowledge of what to do on the ground and how to do the paperwork related to the association formation and certification process.Facilitated by CSS today PERTANIAGA members feel empowered to sustain themselves on their own and continue to grow and scale up.
As of August 2021, PERTANIAGA became the first independent smallholders' association to be certified by RSPO-RISS in Malaysia with 107 ISH and 130 farms certified with RISS Milestone B. Today that number has reached 306 ISH with 370 farms.1. Establishing legality of land with various land documents 2. Group formation posed challenges such trust issues, and time to create a group 3. Financial sponsorship to cover certification and audit cost, capacity building for enforcement of the RISS standard 4. On going challenge of record keeping, maintenance and updates. 5.With poor agricultural practices, productivity below standard and minimum training received these farmers lack motivation for any change 6. Limited access to information in the local language of the farmers with relevant examples.7. The opacity of the supply chain and a disconnection with the market creating dependence on third party or middleman 8.At an organization level, the farmers are used to working independently in silos lacking any bargaining or negotiation power with other players PERTANIAGA has embraced the latest RSPO Independent Smallholder Standard (RISS) which is a stepwise approach with interim milestones and rewards and provides visibility to the farmers on the impact and use of their certified sustainable fruit addressing the challenges above.Beyond the Premium received through the RSPO certification, the farmers are guided through Good Agricultural Practices (GAP) designed by CSS' consultant agronomists and crop nutrient experts to improve the yield.The Learning Farms' data shows that yield has improved by one-third over the 18 months of the GAP implementation period and for every additional RM1 spent on Learning Farms, an additional net income or profit of 91 percent is received over this period.This data helps to build an economically viable case for sustainability and our work.
There is an immense global pressure to use certified, sustainable, and traceable palm oil in a company's supply chain while ensuring no deforestation, no conversion of peatlands and no 9 exploitation.These difficulties are amplified when sustainability is defined by certification standards that are not financially rewarded.This combined with a lack of clear value proposition for these smaller players, especially as the certification process involves investment of time, money and resources that are coupled with delayed returns, if any.Then there are systemic issues.With most palm oil mills in Malaysia designed to serve large capacities, these mills do not receive the product directly from small farmers but rather from a layer of intermediaries or aggregators, making the supply chain even more opaque to these upstream smaller players.Not having the knowledge of the impact their sustainable produce is making and where it lands also kills any motivation for a change.
By managing some of the independence of these ISH by creating an independent smallholder farmer association that allows the farmers to be certified as a group CSS has facilitated these farmers on a sustainability journey where certification is not the end goal but a step to compliance, which ultimately leads them to livelihood improvement through yield intensification.At the end of this journey, these farmers are expected to pay it forward.They would then act as ambassadors of the program and local environmental leaders to advance environmental and social change in their communities.If certification can be used as a proxy for sustainability, designing certification standards that are rigorous, encompass all stakeholders, have a business case for those adopting them, and are scalable, should be the goal.
PERTANIAGA has also been able to promote women participation in community leadership with 100 women farmers from the first 306 to be certified.Today PERTANIAGA serves as a platform for smallholders to exchange ideas, build business as an association and voice their suggestions.PERTANIAGA's success provides a reference for other independent smallholders in Peninsular Malaysia.Rietberg and Slingerland (2016) [1], Brandi et al. (2015) [9], and Hutabarat et al. (2019) [10] studied the main barriers to RSPO certification focusing on independent smallholders.Their study discusses the challenges smallholders encounter in complying with RSPO's Principles and Criteria (P&C).Their findings reveal that oil palm smallholders, and specifically independent smallholders, lack organisation, information, costs, and skills required by certification.They also state that the most important compliance gaps for independent smallholders are related to land titles, keeping records, adoption of Good Agricultural Practices, pesticide usage, fertilization, and seedlings.It is estimated that between five to ten percent of smallholders are excluded from certification due to land use and title issues.

Conclusion
Therefore, there is a need to provide organizational and technical support to independent smallholders for them to meet the sustainability certification requirements.Rietberg and Slingerland (2016) [1], Brandi et al. (2015) [9] and Hutabarat et al. (2019) [10] also infer that certifying scheme smallholders is easier than certifying independent smallholders.This is because the scheme's smallholders are supported by related institutions due to its design and background.However, these studies do not consider RSPO's 2019 RISS Certification requirements and standards.
Hutabarat et al. ( 2019) [1] and Jelsma et al. ( 2017) [11] in their study on different types of smallholders conclude that not all independent smallholders are the same.Different smallholders have different starting points in the process of certification.Hence the certification standards should be adapted to reflect the local requirements and heterogeneous needs of the smallholders.This applies to the latest RISS standard as well.At the same time the cost of certification is not covered by RSPO premium alone.These very small farmers with less than 1 hectare of land will need financial support to continue with RISS certification.On the other hand, farmers with higher yields do not see voluntary certification schemes such as RISS as benefitting them.
Once their eligibility is established smallholders are given a maximum of two years to achieve what is classified as Milestone A and an additional one year to meet Milestone B. Upon achieving Milestone A and B, and passing subsequent audits, the smallholders achieve full compliance with RSPO standards [8].The RISS comprises of 4 principles [8] • Principle 1 -Optimize productivity, efficiency, positive impacts and resiliencewith 3 criteria tracked by 8 indicators • Principle 2 -Ensure legality, respect for land rights and community well-beingwith 11 criteria tracked by 27 indicators • Principle 3 -Respect human rights, including worker's rights and conditionsclubbed with principle 2 and tracked using same 11 criteria and 27 indicators • Principle 4 -Protect, conserve and enhance ecosystems and the environmentwith 9 criteria tracked by 26 indicators

Figure 2 .
Figure 2. Collection Centers under scope

Table 2 .
Table 2 lists the various intermediate steps and statistics leading to RISS certification.CSS Accomplishment As of August 2021, PERTANIAGA became the first independent smallholders' association to be certified by RSPO-RISS in Malaysia with 107 ISH and 130 farms certified with RISS Milestone B. Today that number has reached 306 ISH with 370 farms.Table 2 lists the various intermediate steps and statistics leading to RISS certification.However, there were various challenges that PERTANIAGA must overcome which included but are not limited to: