This report analyzes the palm oil value chain governance in North Labuhanbatu Regency, North Sumatra, as part of the Sustainable Farming in Tropical Asian Landscapes (SFITAL) project. The study aims to enhance the capacity of smallholder farmers to meet sustainability standards and improve their global market access through strategic partnerships and better environmental and social management systems. Using a Rapid Market Appraisal (RMA) methodology, the research identifies six distinct marketing channels and evaluates the roles of various stakeholders, including smallholders, collectors (tauke), collection points (ramp), and palm oil mills (PKS). The governance structures observed range from relational and market-based to modular and hierarchical, reflecting different levels of coordination and power dynamics among actors.
The findings highlight several critical challenges for smallholders, such as suboptimal plantation maintenance, limited knowledge of Good Agricultural Practices (GAP), high fertilizer costs, and the use of uncertified seeds. While most farmers are aware of sustainability certifications like ISPO and RSPO, the implementation of the People's Palm Oil Rejuvenation (PSR) program remains hindered by institutional and technical barriers. The report provides strategic recommendations to improve value chain efficiency, strengthen farmer organizations, and formalize partnership schemes. These interventions are essential for ensuring the long-term sustainability of the palm oil industry and improving the livelihoods of smallholders in the region.