Danish government partners with Ferrero, Musim Mas and NGOs to advance sustainable palm oil in Indonesia

A Danish government-backed initiative is teaming up with consumer goods maker Ferrero and palm oil producer Musim Mas to launch a $multi-million effort to improve the sustainability of palm oil production in Indonesia’s Rokan Hulu region.

The five-year project, part of Denmark’s broader climate partnership with Indonesia, aims to train 5,400 smallholder farmers and help 2,500 of them achieve certification in line with global sustainability standards such as the Roundtable on Sustainable Palm Oil (RSPO) and Indonesia’s own ISPO scheme. The initiative also targets deforestation-free compliance under the European Union’s Deforestation Regulation, which imposes stricter requirements on commodity imports starting in 2025.

“The program will empower smallholders with training on good agricultural practices, certification processes, and environmental safeguards,” said Musim Mas’ Director of Sustainability Olivier Tichit. “It also includes plans for forest and peatland conservation and strengthening farmer cooperatives.”

The project will focus on villages within Rokan Hulu, a district in Riau Province that forms part of Indonesia’s palm oil heartland. The area has experienced high rates of deforestation linked to agricultural expansion. Organizers say the program will map smallholder supply sheds, identify deforestation risks, and offer targeted support for compliance.

Denmark’s Climate Partnership Facility will fund the project in collaboration with Ferrero, one of the world’s largest buyers of palm oil for use in food products, and Musim Mas, one of Asia’s top palm oil exporters.

The initiative is part of a broader shift among consumer goods companies to de-risk supply chains amid mounting pressure from regulators and investors to demonstrate environmental compliance. The EU regulation, in particular, requires importers to trace the origin of palm oil and other commodities and prove that products entering the bloc are not linked to deforestation or forest degradation.

“Helping farmers comply with international standards is not only critical for forest protection—it’s essential for market access,” said Thomas Lehmann, Denmark’s ambassador to Indonesia.

The program includes outreach to local authorities, civil society groups, and local cooperatives to build support and integrate sustainability into village planning.

Musim Mas said the project reflects its long-term commitment to smallholder inclusion. Since 2015, the company has operated training programs in the region. The new initiative will expand those efforts, with a particular focus on preparing farmers for international compliance audits.

Ferrero, which sources all its palm oil from certified sustainable sources, said the project aligns with its commitment to responsible sourcing and smallholder livelihoods.

Palm oil is a critical export for Indonesia, accounting for over $30 billion in annual revenues. Smallholders—those managing plots of less than two hectares—produce more than 40% of the country’s output but often lack the technical resources or market access to meet global standards.