The scheme aims to support the inclusion of small holders into the supply chain, boost productivity and encourage the implementation of sustainable agricultural practices.
Not-for-profit social enterprise Wild Asia is the implementation partner for the program that will be managed by both Kerry Group and IOI Loders Croklaan.
“We have a few potential participating non-RSPO certified mills in the Telupid, Beluran and Kinabatangan landscape (Sabah) with approximately 5000 smallholders and small growers. We start with one mill – Fortuna – and will increase the number throughout the duration of the program,” said Ben Vreeburg, Sustainability Director at IOI Loders Croklaan.
“Smallholders will see a decrease in FFB (Fresh Fruit Bunch) production costs in the first year and a gradual increase in FFB yield in the second year. Through this program millers are ensured of a steady supply and better control of FFB and a higher extraction rate.”
The program is designed to help Kerry work more collaboratively with its suppliers, Maarten Butselaar, responsible sourcing manager at Kerry Group, added.
“As a buyer of palm oil we have limited interaction with mills or palm growers, so we rely on our supply partners to help meet our sourcing commitments. This partnership gives us a more direct influence on practices at mill and farm level in the project area. Alongside our broader requirements on palm oil, the program aims to deliver a positive impact for communities and workers within our supply chain.”
Smallholder focus
As large food corporations work to support more sustainable practices in their palm oil supply, the focus has increasingly shifted to the contribution of smallholders.
Around 40% of the total worldwide palm oil production is currently met by smallholders.
“If you look at the palm oil yield, there are still large variances between the yield of smallholders and big plantation companies,” noted Vreeburg. “You could increase FFB production up to 50% without any new developments if you increase the current yield of smallholders. Helping smallholders to get good sustainable manufacturing practices in place will increase their productivity and further lift them out of poverty.”
The Roundtable on Sustainable Palm Oil (RSPO), the certification body for sustainable palm oil, has also increased its efforts to promote the interest of small hold palm oil producers. The RSPO, in collaboration with the UN, recently launched a fund to support small-scale palm oil farmers in Sabah.