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. We’ve been developing a range of programmes that support sustainable agricultural practices, improve the visibility of our supply chain by, and in many cases enhance the livelihoods of smallholder farmers. Examples can be found in our interactive map.
Why we support a jurisdictional approach
‘Jurisdictional approaches’ seek to align governments, businesses, NGOs and other stakeholders around shared goals of conservation, supply chain sustainability and sustainable economic development. They are integrated landscape planning initiatives that focus on the political level at which land use decisions are made and enforced. Based on the concept of ‘produce and protect’, they’re used to join up and scale up efforts to decouple deforestation from commodity production.
We pledged to support a jurisdictional approach to protecting the climate and forests at the COP 21 climate negotiations back in 2015. We believe it’s one of the best ways to achieve transformational change in commodity production such as palm oil.
There are different models of jurisdictional approach. Our pledge was part of the Consumer Goods Forum ambition to combat deforestation by preferentially buying from areas that have comprehensive climate and forest policies in place. See below for other examples such as Sabah, Malaysia’s 10-year plan to achieve full jurisdictional RSPO certification and INOBU’s work in Central Kalimantan, Indonesia.
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, scale up direct sourcing from smallholder farmers and support sustainable jurisdictional and landscape approaches. 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 palm oil mills and the networks of independent 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 engagement with smallholders succeed, it’s essential to work with expert partners on the ground. The key implementation partners we work with on palm oil smallholder projects include: IDH – the Sustainable Trade Initiative, Institut Penelitian Inovasi Bumi (INOBI), Daemeter, SNV and the World Resources Institute.
A jurisdictional approach – a first for Kalimantan’s smallholder farmers
In Central Kalimantan, Indonesia, we are testing a new jurisdictional 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."
This work contributes to the following UN Sustainable Development Goals
Joining up partners & places
We’re also working on a jurisdictional approach that benefits farmers and forests in Sabah, Malaysia. Malaysia and Indonesia between them produce the majority of the world’s palm oil. The initiative aligns with the aims of one of our major customers, Walmart, to reduce its emissions.
Shared aims in Sabah
At San Francisco’s Global Action Summit in September 2018, we committed to help sustainably certify 60,000 hectares of palm oil in Sabah, Malaysia as part of a programme led by Forever Sabah, World Wildlife Fund (WWF) Malaysia and PONGO Alliance.
Sabah is pushing to certify 100% of the state’s palm oil production to Roundtable on Sustainable Palm Oil (RSPO) certification by 2025. According to WWF, this will help to reduce 17 million metric tonnes of CO2e in greenhouse gas emissions by 2030.
Our programme will help to restore two ecological corridors and two riparian reserves and help up to 300 farmers achieve RSPO certification. It will help Walmart too as we both share an ambition to implement a jurisdictional approach to production and protection.
At the same Summit, Walmart announced it’s developing a platform within one of its emission reduction initiatives, Project Gigaton. Through Project Gigaton, Walmart seeks to work with its suppliers (such as Unilever) to reduce emissions from its value chain by a gigaton (or a billion metric tons) by 2030. The new platform will link up suppliers sourcing commodities from regions with deforestation risk to create and support place-based partnerships such as the Sabah project.
This work contributes to the following UN Sustainable Development Goals
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.