The importance of smallholders
Unlocking the potential of smallholder farmers through sustainable agriculture will play a vital role in transforming the palm oil industry and strengthening our supply chain.
Bringing more smallholders into our supply chain
Of all palm oil in SE Asia comes from smallholder farmers
Smallholder farmers already play an important role in the palm oil industry, producing 40% of all palm oil in South East Asia. Increasing the amount of sustainable palm oil we buy from suppliers who can trace it to known smallholders is a real opportunity for us to both help transform the sustainability of the palm oil industry, and ensure that we have a secure supply of a vital ingredient.
But many smallholder farmers face issues in terms of their productivity, profitability and sustainability. These include land tenure challenges, poor agricultural practices, and a lack of access to markets or to finance for replanting and certification.
We want to include more smallholders in our supply chain and help them overcome these barriers – and have been developing a range of programmes that support sustainable agricultural practices, improve the visibility of our supply chain, and in many cases enhance the livelihoods of smallholder farmers. Examples can be found in our interactive map.
Since we stopped buying GreenPalm certificates in 2016, our aim has been to repurpose $50 million over five years that we would have spent on GreenPalm certificates and invest it in place-based partnerships. This will help increase the availability of physically certified sustainable palm oil and scale up direct sourcing from smallholder farmers. We’re investing directly in a number of projects with strategic suppliers and in 2017 we committed to contribute up to $25 million to the &Green Fund.
Investing in the &Green Fund
In 2017 we committed to contribute up to $25 million to the &Green Fund (target size $400 million) for investments in projects that remediate or avoid the need for deforestation. The &Green Fund aims to protect 5 million hectares of forests and peatlands by 2020.
We aim to support 25,000 farmers and work with NGO partners to help and incentivise smallholders to adopt sustainable management and agricultural practices.
Farm Start for Palm smallholders
Working with independent mills and the networks of smallholder farmers they buy from is a major opportunity to improve practices and increase the visibility of our supply chain.
In 2017, we began a pilot of our Farm Start for Palm programme in Riau province, Indonesia. This aims to give smallholders the knowledge and resources they need to commit to the principles of no deforestation, no development of peat and no exploitation, while increasing their profitability.
In its first year, the programme mapped nearly 4,000 smallholdings supplying one independent mill and began sustainable agriculture training with nearly 600 smallholder farmers.
Over time, the programme aims to integrate thousands of smallholders into our supply chain – expanding across Sumatra and using digital technology and traditional field training approaches to monitor, analyse and change practices to make them more sustainable.
To put our policies into practice and make our projects happen, it’s essential with work with expert partners on the ground. Our six key implementation partners are:
- IDH – the Sustainable Trade Initiative
- Institut Penelitian Inovasi Bumi (INOBU)
- World Resources Institute (WRI).
For instance, we are testing the potential of a jurisdictional approach with the research institute INOBU in Central Kalimantan.
A jurisdictional approach – a first for Kalimantan’s smallholder farmers
We believe one of the best ways to achieve transformational change is through adopting a 'jurisdictional approach' – which means we preferentially buy from areas that have comprehensive climate and forest policies in place.
In Central Kalimantan, Indonesia, we are testing this new approach with independent smallholder farmers, addressing a set geographical area and working with communities of smallholders and local government to increase yields and prevent deforestation.
We’re working with Yayasan Penelitian Inovasi Bumi (INOBU), a leading non-profit research institute based in Indonesia, and a number of other partners in the district of Kotawaringin Barat, mapping independent smallholdings and training farmers according to the Roundtable on Sustainable Palm Oil (RSPO) principles on good agricultural and management practices.
In 2017, 190 independent smallholder farmers of the KUD Tani Subur cooperative became RSPO and Indonesian Sustainable Palm Oil (ISPO) certified – the first cooperative in Kalimantan to achieve this. Overall, the initiative will reach some 600 smallholders farming 1,400 hectares.
More training in 2018 is setting another 400 smallholders on the path to certification. If this new approach continues to be successful, we think it has the potential to reach 12,000 farmers in the region.
As Roni, a palm oil farmer explains: "I’m 64 and married with three children. I became an oil palm smallholder in 2009 as it provided a higher income for me to support my family. Being part of the Unilever-Inobu programme has helped me improve my knowledge – in areas such as fertiliser use – to increase the amount and quality of my crops, while cultivating them in a more sustainable way. I’m very proud to say that, with the additional income I now earn, I was recently able to send my youngest son to university."
A traceable supply chain: putting our ambition into action
Smallholder farmers will benefit from training for certification
By working closely with suppliers, we're able to include more smallholders in our supply chain while driving progress towards certification and sustainable agriculture.
One example is our partnership with our supplier PTPN 5 in Rokan Hulu District, Indonesia. We agreed this in 2016 to develop a traceability and certification mechanism for smallholder farmers.
The project began with the mapping of over 1,000 smallholdings supplying one PTPN 5 mill. With the World Resources Institute Indonesia and other partners, we're developing plans to expand the project to include more than 5,000 smallholders and more PTPN 5 mills.