Sourcing palm oil from smallholder farmers
We want to purchase sustainable palm oil which is traceable to known smallholder farmers.
Creating opportunities for smallholders
The palm oil we source comes from upstream suppliers, manufacturers, processors and traders. It also comes indirectly from smallholder farmers who work with our suppliers. They are a key part of Unilever’s supply chain and we are firmly committed to improving their livelihoods and incomes.
In recent years, there has been a rapid expansion in plantations owned by smallholder farmers, particularly in Indonesia. However, many smallholder farmers face challenges in productivity, profitability and sustainability. These can include land tenure, poor agricultural practices, and a lack of access, both to finance for replanting and certification, and to sustainable markets.
Our priority is to purchase sustainable palm oil from suppliers with traceability to known smallholders. We are also developing effective programmes that support the inclusion of smallholders in sustainable supply chains.
Palm oil facility supporting traceability
In 2015, we inaugurated a palm oil facility in the Sei Mangkei Special Economic Zone of North Sumatra. The facility, which represents a €130 million investment, will help us move progressively to 100% physical certified palm oil over 2015-2019.
Our palm oil facility supports a more traceable and certified supply chain, and will bring more smallholder farmers into Unilever’s supply chain. The facility will not only generate jobs, it will also create opportunities to protect forests, increase agricultural productivity, and improve rural livelihoods.
In North Sumatra, we're working with PT Perkebunan Nusantara III Persero (PTPN 3), IDH Sustainable Trade Initiative and the Roundtable on Sustainable Palm Oil (RSPO) on an independent smallholder pilot project surrounding our Sei Mangkei palm oil facility.
So far, at least 60 farmers covering 182 hectares of land have agreed to participate in the RSPO certification programme, and RSPO training in Good Agriculture Practices (GAP) began in early 2017. We expect the first batch of farmers to be certified in mid-2017.
Around 5,000 independent smallholder farmers are linked to Sei Mangkei, and we plan to include them in our projects, with the further aspiration of scaling the pilot across Sei Mangkei, or other priority landscapes.
Working with smallholders in Central Kalimantan
Supporting smallholders to achieve certification is an important element in our work to source sustainable palm oil.
In Central Kalimantan in April 2016, we signed a Memorandum of Understanding with the provincial government and the district government of Kotawaringin Barat to collaborate on a project supporting smallholders to attain the Indonesian Sustainable Palm Oil (ISPO) and RSPO certifications.
The jurisdictional smallholder project with Yayasan Inovasi Bumi (Inobu), the sister organisation of the Earth Innovation Institute, covers several villages in the district of Kotawaringin Barat. It supporting the villages by mapping independent smallholders, ensuring that smallholders have the required legal documents for ISPO certification, and conducting various RSPO training on good agriculture and best management practices.
Around 600 farmers on around 1,400 hectares of the Tani Subur Cooperative are currently on track to obtain RSPO certification by the end of 2017. If this pilot succeeds, activities can be expanded to other areas in the district, potentially reaching more than 12,000 independent smallholder farmers on 20,000 hectares of land.