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The report finds that Berau Regency can meet its palm oil production goals and fill its mill capacities by increasing productivity on existing land rather than expanding into forests. While company plantations operate efficiently, smallholders face significant barriers, including lack of land certificates (only 28% have them), limited access to finance, and poor integration into the supply chain, often forcing them to sell to distant mills or intermediaries. Additionally, Berau lacks CPO refineries, meaning most crude palm oil is exported to other provinces or Malaysia, limiting local value addition.

This report by the Climate Policy Initiative (CPI) analyzes the palm oil supply chain in the Berau district of East Kalimantan, Indonesia. It examines the potential for increasing production through yield improvement rather than land expansion to support regional sustainability goals. The study identifies significant inefficiencies facing smallholders, including lack of land tenure and financing, while noting that large plantation companies operate more efficiently. It also highlights the absence of local refineries, which results in most crude palm oil (CPO) being exported from the region raw.