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Growing momentum for smallholders globally

Smallholders News | March 17, 2016
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Increased drive for sustainability of smallholders in Thailand

As the third largest producer of crude palm oil (CPO) in the world, over 70% of oil palm in Thailand is produced by independent smallholders.

Thailand was the first market in the world to have its independent smallholders RSPO certified under group certification. The certification of this group of independent smallholders was supported by GIZ, an organization funded by the German government. The support was in the form of training services on best management practices such as seed selection, fertiliser application; proper health, safety and environment practices.  The experience generated from this success and the model was emulated for subsequent initiatives.

Thailand, has since then certified an additional 7 initiatives, with supports from Shell Thailand and Patum Vegetable Oil Ltd., comprising 1,150 individual smallholders over 6,626 hectares of production area, with an estimated production of close to 32,000 metric tonnes of certified sustainable palm oil (CSPO). This marks a significant milestone for Thailand as the market with the largest volume of CSPO from independent smallholders currently worldwide.

Private & public sector collaboration effective for smallholders in Indonesia

In Indonesia, the world’s largest producer of palm oil, smallholders account for more than 40% of national palm oil production.  The first independent smallholders initiative in Indonesia to be RSPO certified is a community based in the Indonesian province of Riau involving 349 smallholders over 763 hectares of total certified area. The certification process was guided and supported by WWF Indonesia, Carrefour Foundation International and PT. Inti Indosawit Subur. An analysis implemented on this group’s certification clearly outlined a few distinctions before and after certification in management practices, yield and production output, decreased use of herbicide and chemicals.

Since then - there are two additional projects certified in Jambi and Palembang. This brings the total number of independent smallholders who have been certified in Indonesia to 658 individual smallholders over 1,687 hectares of production area with an estimated volume of 4,679 metric tonnes of CSPO.

Three way collaboration reaps reward for smallholders in Malaysia

Peninsular Malaysia’s first group of smallholders were recently RSPO certified through collaboration between multinational Cargill (world’s leading provider of food, agriculture, financial and industrial products and services); Solidaridad (an international organization in creating fair and sustainable supply chains) and Wild Asia (a social enterprise working to increase the growth of traceable and sustainable palm oil). The group comprising 34 independent smallholders in Perak, Malaysia, is now connected to a global certified sustainable supply chain by connecting a network of independent players including fresh fruit bunch dealers, the mill and the refiner.

The partnership between Cargill, Solidaridad and Wild Asia was focused on providing technical assistance and training towards RSPO certification, which covered best agricultural practices, improved farm management practices, health and safety as well as environmental and social impact management. The longer-term aim is to replicate a self-sustaining model that enables certification of independent smallholders, dealers and mills for sustainable palm oil production.

Three other initiatives have since received RSPO certification:

Kinabatangan, Sabah - collaboration between Nestle, Sime Darby Foundation, Solidaridad and Wild Asia

Beluran, Sabah - collaboration between Malaysian Palm Oil Board, Johnson & Johnson, Wilmar and Wild Asia

Segamat, Johor - under FELDA Segamat scheme smallholder

To date - a total group of 2,421 individual of independent smallholders are certified in Malaysia over a production area 6,118 hectares with an estimated volume of 19,519 metric tonnes of CSPO.

Greenpalm - a strategic incentive for independent smallholders

Collaboration and inclusivity is key to transforming the palm oil industry towards a sustainable future. The trading of GreenPalm certificates, whose key strength is inclusivity, represents a producer’s certified output while enabling any palm oil producer, of any scale, to play a role in foreign demand for sustainable sourcing.

As some markets move towards demanding 100% physical segregated palm supplies, it’s important not to dismiss the estimated 30 to 40% of global palm producers that are smallholders selling fresh fruit bunches (FFBs), or the vast number of independent growers and mills that are located far from any port. GreenPalm is currently the only supply chain option that links independent smallholders to the global market for sustainable palm products.

Sheila Senathirajah, Technical Program Manager, Wild Asia, which has sold on behalf of its farmers in Beluran, Borneo, told us: “GreenPalm is a great way to encourage independent smallholders to produce sustainably. The farmer receives a financial incentive that shows the support of the buyer towards his commitment. Particularly for independent farmers, who produce small volumes, this comes as a big boost of support.”

Gapoktan Tanjung Sehati in Indonesia is among the organizations of independent farmers that have obtained RSPO certification. Its members anticipate the RSPO would bring improved institutional governance, sustainable and environmentally friendly plantation practices – and economic benefits.

Solikin, Secretary of Gapoktan Tanjung Sehati, said: “We, the independent farmers, are very much helped by the model developed by GreenPalm because we cannot bring physical certified FFBs (fresh fruit bunches) to the international market as large companies do. Gapoktan Tanjung Sehati has benefited from trading via GreenPalm since November 2014, when a German buyer purchased their certificates. The additional income has enabled the member farmers to continue improving their sustainable plantation practices and increase business.

Thai smallholder Anongnit Jaikliang was among the first group of independent smallholders to receive RSPO certification, combining traditional, family-learned expertise with modern sustainable methods. The group sold its first batch of GreenPalm certificates to Johnson & Johnson to cover a proportion of palm and PKO based ingredients in the brand’s personal care products.

Anongnit and other sustainability-trained farmers share techniques such as improved cultivation methods, selective use of fertilisers and pesticides, and cooperation with mills and agencies. One of the immediate benefits to farmers is increased yields, while both farmers and workers can benefit from improved health and safety practices.

While improved farming methods have inherent benefits to independent smallholders, those farmers must also have the opportunity to earn a premium for producing RSPO-certified sustainable palm oil. Since Nov 2012, independent smallholders have collectively received over $530,000 via the sale of their sustainably certified palm FFBs, enabling them to continue investing in their sustainable businesses.

Their produce continues to be sold locally, fulfilling an important local need – but by trading GreenPalm certificates globally they are part of a vital, international movement.

As of 1 January 2017, the RSPO no longer endorses GreenPalm as the service provider for the trade in Book and Claim certificates. From this date, RSPO-certified volumes can be sold via Credits on the RSPO PalmTrace platform