This will result in the diversification of farming systems, with concomitant benefits in terms of ecosystems services

Although oil palm certification standards have been criticized for not being inclusive enough for smallholder oil palm growers (Giovannucci and Purcell 2008), we argue that the sustainability debate has actually failed to address the fact that oil palm landscape on a whole would be more sustainable if smallholders, for whom palm oil is not an economic viable avenue, would engage in other forms of land use. The palm oil industry has to internalize what has become common knowledge to the worlds’ leading companies: that long-term financial success goes hand in hand with social responsibility, environmental stewardship, chatiw com and corporate ethics (Kell 2014). In 2007, called the “Economics of Mutuality” to recognize that value creation is more effective and sustainable when all parts of the value chain are considered. The research program reflects Mars’ understanding that investing in the human capital of communities in their sourcing landscapes leads to higher productivity and profit for themselves (Roche and Jacob 2014).

Capitalizing on their expertise to develop value chains for alternative land-based products would make oil palm truly the “golden” crop

Insetting is not simply a different packaging of CSR, it is a new way of doing business directly linked to the industry’s core interest: increasing productivity. The livelihood insetting approach we propose aims at improving smallholders’ livelihoods and welfare while increasing and diversifying their options for income generation. Farmers with diverse livelihoods are more resilient in terms of fluctuating global prices as well as climate shocks (Kremen and Miles 2012). Farmers who are happier and better off are more likely to produce high palm oil yields than farmers who eke out a marginal existence (Reardon and Vosti 1995). There have been a number of recent studies that have shown that investing in on-farm productivity alone will not support social mobility, but that in fact a diverse livelihood portfolio is needed to drive agricultural productivity (Ellis 2009, Wanjala and Muradian 2013).

Investing directly into the human capital of oil palm landscapes, the farmers that grow one of the most successful and one of the most demanded ingredients of human diets today, goes beyond the interest of individual companies. Malaysia and Indonesia are both middle-income countries with an impressive track record of economic gains and poverty reduction. However, the rural poor still account for two thirds of poor households and the Gini coefficient has not substantially improved over the last two ). Although both governments have made substantial investments into a variety of agricultural schemes to improve the livelihood of rural people, the only crop that has succeeded is oil palm (Voon 1981). The oil palm industry has proven that they are uniquely effective in making human effort productive through effectively linking smallholders into global value chains.

A new initiative on insetting will not solve all of the challenges in the oil palm industry. We have thoroughly explored the issues involved and argue that a well-established industry has the capacity and capital to tackle them. The smallholders, including people who have recently moved into a rapidly changing and evolving industry require greater attention from the industry overall and from the international community if they are to play their part in ensuring that a truly environmentally, economically, and socially sustainable oil palm industry emerges from this time of turbulent change.

RESPONSES TO THIS ARTICLE

This paper is a result of the Oil Palm Sentinel Landscape Project funded through the CGIAR Program on Forest, Trees and Agroforestry. We are also thankful to the support provided by the Sabah Land Development Board.