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Palm oil

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Frequent and better smallholder support

In Latin America's top five producer countries there is now sector-wide commitment to sustainable production. But not all producers see the business case for certification. In Africa, an incubator was designed to roll out a successful plantation restoration approach.

Programme setting

Palm oil is the main vegetable oil on the world market: 58 million tonnes were produced in 2013. Although the uptake of certified sustainable palm oil has been rapid (now 15%; 8 million tonnes), traditional market approaches involving certification and sourcing guidelines have limited additional impact, as 80% of the market is in Asia, where there are few certification requirements. In addition, at least 40% of the global palm oil area is managed by smallholders, who face serious constraints when it comes to certifying their production. In Latin America, with its long history of certification, RSPO is now virtually a license to operate. However, in Africa and Asia, the business case for certification is limited to niche players and global multinationals. For smaller producers, the palm oil programme applies a farmer-first approach.

Results

A consortium of eight cooperative and corporate Honduran Palm Oil producers (PASH) comprises 80% of national production and all members have committed to RSPO certification between 2014 and 2016. In Guatemala, five mills - covering 30% of sector output - have joined forces to improve labour conditions. In Colombia, Indupalma has been audited against RSPO and fourteen additional companies have committed to certification. In Ecuador, Natural Habitats Group, which have certified their mill and all suppliers, are working with sector organisation Ancupa to extend good agricultural practices to hundreds of smallholders.
In Ghana, Solidaridad has established 30 sites, where best practice is demonstrated. Improved maintenance and harvesting techniques among smallholders have already delivered higher yields than commercial plantations. Solidaridad is helping middle-sized mills to improve efficiency and an incubator will further professionalise the sector.
In South East Asia innovative projects address the challenges presented by independent smallholders and labourers. Innovative approaches include working through a major credit union (Keling Kumang) in West Kalimantan and a local dealership in the Cargill supply chain in Malaysia. Verité is developing a labour assessment tool that will enable certification bodies and companies to improve the quality of their audits and the implementation of RSPO standards.

Impact

 

Evaluation of the 2009-2012 Palm Oil Producer Support Initiative revealed that relationships between mills and smallholders improved, leading to more frequent and higher quality support as well as increased delivery of palm fruit bunches to mills. Improved plantation practices led to reduced fertiliser applications and fewer accidents. Certification of smallholders has enabled the sale of palm kernel meal certificates to Dutch dairy cooperative Cono Kaasmakers.

Market partnerships

The past year was the last of a three-year RSPO grant to Solidaridad, with support provided to projects in Honduras, Colombia, Ghana, Malaysia and Indonesia. From 2014 onwards, Solidaridad will participate in the RSPO Smallholder Support Fund, a permanent facility financed with RSPO certificate trade revenues. Solidaridad's palm oil programme was also financially supported by Johnson & Johnson, Henkel and Cono Kaasmakers.

Challenges ahead

Although RSPO has been a major success in terms of membership, certified volumes and business model, it is unlikely that all palm oil producers will become certified under this scheme. So, to address the sustainability issues among domestic and Asian markets, other instruments need to be developed, such as improved productivity, efficiency and a local license to operate.

Donors

Cono Kaasmakers, Henkel, Johnson & Johnson, Roundtable on Sustainable Palm Oil, Netherlands Ministry of Foreign Affairs (DGIS-DDE), Royal Dutch Embassies in Accra and Bogotá

Partners with match funding

8 palm oil cooperatives and mills, WWF and SNV in Honduras; 5 plantation groups in Guatemala; 5 plantation groups in Colombia, Natural Habitats Group in Ecuador, ADM and Agropalma in Brazil, Unilever, TOPP and BOPP plantations in Ghana, Cargill, Nestlé and Wild Asia in Malaysia; Asian Agri, CUKK, Setara and Good Return in Indonesia and New Britain Palm Oil in Papua New Guinea