Palm Oil

Smallholder interventions show palm oil yields triple in West Africa

After three years of co-investment with farmers, Solidaridad’s SWAPP palm oil programme has reported a tripling of smallholder yields in Ghana. In China, the sustainable palm oil working group was launched to stimulate sustainable sourcing in one of the world’s biggest markets.

Number of producers and workers supported

 

Total hectares under sustainable management

 

Achievements

The China Working Group on Sustainable Palm Oil was launched in the wake of Dutch King Willem-Alexander’s state visit in October, in the presence of state-owned and private companies responsible for 70% of Chinese imports. In Indonesia, we provided quality agricultural inputs and training to over 2,500 independent farmers with RSPO member Asian Agri and Credit Union Keling Kumang. In Malaysia, we worked with palm oil trader Teik Joo Chan to provide training to its clients and pilot an RSPO-certified smallholder group of 34 farmers. In Colombia and Honduras, the nationwide Sustainable Trade Platform and the Sustainable Honduran Palm Oil Project (PASH) consortium were developed. In Brazil, Solidaridad’s farmer-first continual improvement system Rural Horizons was piloted with over 250 smallholders in an oil palm land-reform scheme with support from agri-business giant ADM.

Scientific trials conducted under the Sustainable West African Palm Oil Programme (SWAPP) revealed that applying Best Management Practice (BMP) on existing smallholder plantations can increase yields from 6 to 15 tonnes of palm fruit (FFB) per hectare per year. Using improved, locally manufactured equipment, village mill efficiency can be increased by 50% - leading to an increase of crude palm oil output from 0.6 to 2.3 tonnes per hectare. As a consequence, impact investors and rural banks are now providing finance to farmers and small businesses that were not considered "bankable" before entering SWAPP. Roll out of SWAPP BMPs across West Africa will enable the subcontinent to evolve from a current net importer of palm oil to an exporter.

Regional Commodity Programmes

  • Andes

    A few years ago, the region’s palm oil sector started to become aware of the importance of RSPO certification. Today, farmers know they have to obtain the certification to be competitive. Private organizations understand that having sustainability credentials will enable them to remain in the market and, due to this acknowledgement, they have become the perfect channel to influence producers who now apply good agricultural practices.

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  • Central America

    Multi-stakeholder Palma de Aceite Sostenible Honduras (PASH) consortium continues to be a leader in the region as they moved to certify a smallholder base of more than 12,000 producers. Mexico and Nicaragua producers joined the movement when Solidaridad introduced the Mesoamerican Palm Oil Alliance (MAPA), a knowledge platform that accelerates the uptake of sustainable practices and leverages funding and innovation from major players throughout the supply chain.

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  • The Netherlands

    A lot has been done at a global level to build sustainable palm oil supply chains. However, major issues such as deforestation and marginalization of small-scale farmers remain unaddressed. Clearly there is a need for increased and more exigent demand in the major markets. Solidaridad The Netherlands took first steps to unite the Chinese market in buying more sustainable palm oil.

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  • North America

    The growing demand for palm oil has led to the rapid expansion of palm oil plantations, resulting in destroyed forests and increased greenhouse gas (GHG) emissions. In Indonesia and Ghana, Solidaridad is leading the development of climate-smart oil palm production techniques that increase productivity of smallholder farmers, while reducing GHG emissions and preventing further degradation of forests.

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  • South America

    Work with ADM helped smallholder suppliers on their path towards adopting sustainable practices and social and environmental compliance. This enabled a considerable increase in household revenues and created rural employment opportunities, spurring local socio-economic development in the Amazon.

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  • South & South-east Asia

    The palm oil programme was set up to optimize the livelihood potential of oil palm cultivation and reduce negative impacts of palm oil production. Solidaridad works with players in the palm oil supply chain (farmers, processors, traders, end-users, investors) and contributes to a policy environment that is conducive toward better practices.

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Developments

Despite the major slump in oil and commodity prices in 2015, palm oil production has continued to grow. The Roundtable on Sustainable Palm Oil (RSPO) is making a difference: while massive forest fires in Indonesia, caused primarily by land being cleared for pulpwood and palm oil plantations, caught the headlines once again, only two out of over 800 fire hotspots were in RSPO member concessions. Governments in producer countries are also trying to exercise more control over the palm oil sector by launching their own sustainability initiatives.

Although bad practices in palm oil production are being cut out of supply chains which reach European markets, more than 85% of palm oil is consumed in the global South. To create change that matters, investment is also needed outside European supply chains. Solidaridad is addressing this challenge in three ways:

  • Stimulating industry frontrunners such as Henkel and Chanel to continue buying sustainable palm oil materials while also investing in regions where poverty and environmental issues are worst outside their direct supply chains.
  • Supporting sector organizations and national and local governments to drive sustainability at the national level. Solidaridad has supported domestic sustainability initiatives in Honduras, Colombia, Ghana, China and Indonesia.
  • Working with investors, mills and farmers to develop business cases to rehabilitate badly managed palm oil smallholdings. This will reduce the need for grants and in time, enables much larger groups of smallholders to comply with demands for legal and sustainable production.

Programme investments in thousand euros

 

Contracted partners per region excluding producer organizations

 

Partnerships

In 2015, Solidaridad worked closely with corporate partners such as Unilever, Rabobank, Royal Friesland Campina, Procter & Gamble, BASF and Henkel, as well as dozens of palm oil mills, traders and cooperatives. In many producer countries and the Netherlands, Solidaridad partners with the government and civil society groups such as WWF, Oxfam Novib, SNV and IDH. In recent years, Solidaridad has influenced policy through its support for the Roundtable on Sustainable Palm Oil (RSPO) and supported the RSPO national interpretation processes in Guatemala, Honduras, Ghana, Ivory Coast and Nigeria. Solidaridad also partners with governments and industry to develop domestic palm oil standards in Asia.

Challenges

Current market requirements, with their emphasis on traceability, tend to push smallholders out of major brands’ supply chains. For palm oil value chains to be more sustainable, it is essential that smallholders are included. In 2016, Solidaridad will continue its efforts to build sustainable value chains with village communities, mills, traders and end buyers, while also working with RSPO to further improve smallholder guidance and support programmes.

To create truly global sustainable palm oil value chains with benefits for millions of smallholders and the protection of social and ecological values in all geographies, national sector associations and governments need to step in. Solidaridad aims to intensify cooperation with governments in Latin America, Africa, Asia and Europe in 2016 to create a level playing field, disseminate best practices and ensure benefits for smallholders, workers and communities.

Jan Maarten Dros

International Programme Coordinator, Palm Oil