In a unique partnership between Cargill, Wild Asia and Solidaridad, a group of 34 independent smallholders in Perak, Malaysia, achieved sustainable palm oil certification by the Roundtable on Sustainable Palm Oil (RSPO) on 20 March 2015. Through the partnership, this group of smallholder farmers is now connected to a global certified sustainable supply chain, and they are leading the way for more smallholder farmers to join the programme by the end of this year. The ultimate aim of the project is to develop a replicable, self-sustaining process that includes independent smallholders, dealers and mills, to achieve certified sustainable palm oil production.
In Malaysia, which is the second largest producer of palm oil in the world, Cargill, Wild Asia and Solidaridad have provided assistance and technical training to help oil palm smallholders achieve RSPO certification. The goal of the programme is to help an additional 100 independent smallholders in Malaysia meet RSPO sustainable palm oil production standards by the end of 2015. The certification, driven by Cargill as part of their commitment to achieving a fully sustainable supply chain, sets the stage for the long-term production of RSPO certified palm oil in Malaysia.
Cooperation is key to success
The programme began in 2013 and involves a comprehensive network of independent players in the supply chain. The smallholders, the oil palm fruit dealers, the mill and the refiner have come together with a common goal to improve productivity and smallholders’ incomes in a sustainable way.
To increase the participation of smallholders, encourage new entrants to the scheme and ensure the long term sustainability of the programme, Cargill is currently working with the Wild Asia Group Scheme (WAGS) and the oil palm mill to provide incentives for the current group of certified smallholders to continue to produce certified sustainable palm oil.
Following the initial success of the pilot WAGS programme, two new palm fruit dealers also have been engaged to participate in a similar smallholder scheme. The efforts will go towards driving progress and improving Cargill’s palm oil supply chain sustainability in Malaysia.
“Smallholder oil palm farmers are a key part of the palm oil supply chain. They are also the least prepared to achieve RSPO certification. Together with our partners Wild Asia and Solidaridad, we wanted to see how we can assist smallholders to get into the global sustainable supply chain. We are pleased with the certification of this pilot group of smallholders in Malaysia. The training has helped build the farmer’s capacity, maximise productivity, increase yields and improve their livelihoods. In the long run, the certified smallholders will benefit from the added value of having a traceable and sustainable supply chain, and be able to supply the world, sustainable palm oil, ” said Chai Wei Joo, managing director of Cargill Palm Products Sdn Bhd.
Teaching sustainable farming
The programme started with a baseline assessment of smallholders and an oil palm fruit dealer, Teck Joo Chan, located in Air Kuning, Perak. Since then, WAGS provided the management system to support and certify the independent smallholders according to RSPO standards. The smallholders received direct training and support on best agricultural practices, improved farm management practices, health and safety as well as environmental and social impact management.
“We look forward to seeing how this initiative can contribute to a broader adoption of sustainable practices and increased production and uptake of RSPO certification in Malaysia,” Hendry Yang, Asia Pacific manager for Solidaridad explained. “This pilot project is innovative as fresh fruit bunch (FFB) dealers have an active role in providing smallholders access to good management techniques. So far, we have understood from smallholders that they recognise the benefits when the different stakeholders in the supply chain come together. They are interested to see how this arrangement will work out in the long run.”
“We appreciate the fact that Cargill, a trusted supplier of sustainable agricultural goods, is focused on promoting sustainable palm oil production among independent smallholders. More customers are demanding traceable and sustainable palm oil, and we are glad that the independent components of the supply chain are working together through this program, for the common good of the industry,” said Stevan Tan, group executive director, Tian Siang Group.
In Malaysia, there are close to 205,000 independent oil palm smallholders with a total planted area of 807,000 hectares (15% of Malaysia’s total oil palm planted area in 2014). These smallholders play a significant role in the rural development and economic progress of the country.