Building a Resilient and Sustainable Palm oil Value Chain in South Papua Province, Indonesia

The oil palm industry in South Papua Province, particularly in the Merauke and Boven Digoel Regencies, possesses significant economic potential, contributing substantially to both regional GDP (Gross Domestic Product) and national revenue. Despite this potential, the region faces complex challenges related to inequality, sustainability and indigenous community rights. This study aimed to analyze the value chain structure of the oil palm commodity and to formulate development strategies that are resilient, socially equitable and environmentally sustainable. A mixed-methods approach was employed, integrating quantitative and qualitative techniques, with Value Chain Analysis (VCA) serving as the primary analytical framework. Respondents were selected through purposive sampling and included representatives from government agencies, plantation companies, local communities, farmers, collectors, and non-governmental organizations (NGOs). Data were collected through in-depth interviews utilizing structured questionnaire, Focus Group Discussions (FGDs), field observations and secondary sources. The research revealed a vertically integrated supply structure dominated by large corporations. The value chain analysis exposed a concerning asymmetrical distribution of profit, as evidenced by Palm Oil Mills (POMs) capturing 56.2% of the total value added—significantly higher than the 21.7% received by farmers. From an environmental perspective, maintaining ecological integrity remains an urgent necessity. Nevertheless, several industry actors have adopted the Roundtable on Sustainable Palm Oil (RSPO) and Indonesian Sustainable Palm Oil (ISPO) standards and implemented zero-waste initiatives through the conversion of biomass waste into biochar and biogas. The primary social challenge stems from the insufficient implementation of the Free, Prior, and Informed Consent (FPIC) principle in relation to indigenous communities. To address these challenges, this study proposes six strategic actions: (1) restructuring institutional relationships to ensure parity among stakeholders, (2) strengthening farmer cooperatives and enhancing capacity-building programs (3) institutionalizing a mandatory FPIC protocol, (4) establishing transparent local Fresh Fruit Bunch (FFB) markets, (5) creating inclusive multi-stakeholder forums for governance and conflict resolution and (6) promoting sustainable land management practices while expanding RSPO and ISPO certification. Key words: oil palm industry, value chain analysis, sustainability, South Papua, Profit distribution