SUPPLY CHANGE

 

September 16, 2016

Dear colleagues,

In the palm oil industry "it’s not easy being green," to borrow a lyric from Kermit the frog in the famous Muppets movie. That adage is especially true for the little guys, the independent smallholders who are families or small groups who manage up to 50 hectares of their own land, sell their fresh fruit bunches of oil palm to any willing palm oil mill, and collectively produce around 40% of the world’s palm oil. Achieving sustainability certification by the RSPO (Roundtable on Sustainable Palm Oil), the world’s largest palm oil sustainability standard, can be prohibitively expensive for independent smallholders who are self-funded and typically do not have access to financial and management assistance. Even "associated" smallholders – who are contracted to sell to a specific mill, receiving credit, training, and supplies as part of the contract – struggle with certification. Consequently, smallholders produce only 14.47% of RSPO-certified palm oil. The 2,700 independent smallholders of Sapta Tunggal Madiri (STM) in Indonesia made history this summer by becoming the largest single group of independent smallholders to achieve certification under the RSPO.

STM achieved certification on June 16th with funding from the RSPO’s Smallholder Support Fund, which seeks to boost smallholder certification. The group also recieved sustainablity training and resource support from PT Tania Selatan, a subsidiary of the world’s largest palm oil producer, Wilmar International. Collectively, STM controls 5,500 hectares of land in South Sumatra – producing around 92,000 metric tons of fresh fruit bunches annually. STM is comprised of seven village-level cooperatives, four of which were formerly associated with Wilmar’s PT Tania Selatan mill. Mr. Amin Rohmad, one of the certified independent smallholders and the STM group manager, anticipates that the sustainability training will improve smallholder livelihoods and that certification will increase access to international sustainable markets. Wilmar International’s head of sustainability Jeremy Goon explained in a statement that the company “undertook the challenge with the view of developing an inclusive sustainable value chain model that can be replicated and scaled up in other regions and districts of Indonesia.” Despite the challenges of supporting multiple smallholder farmers in achieving certification compliance, Goon thinks the success of this pilot venture will foster confidence in pursuing this type of engagement in the future.

The RSPO smallholder fund has thus far supported 10,987 smallholders controlling 55,031 hectares across six different countries. In total, the RSPO has already certified 113,833 individual independent and associated smallholders with a combined land area of 264,887 hectares. Support for smallholders has not been limited to direct buyers and large agricultural traders like Wilmar, but has also involved downstream manufacturers. BASF recently joined fellow chemical giant Henkel in providing financial support for a smallholder project run by the development organization Solidaridad and several other non-profits in West Kalimantan. Jan-Peter Sander, SVP at BASF Personal Care Europe, explained to Sustainable Brands that the company wants to reach out to smallholders because “we believe that we can only find solutions for sustainable, certified palm oil products by working together to preserve the forests and improve the living conditions of the people in the farming areas.”

More than 75 companies profiled by Supply Change have committed to supporting smallholder projects. Building capacity among smallholder suppliers to address deforestation risks will be critical for many of these companies to meet their commitments. Companies seeking to learn more about deforestation risk reduction, innovative funding models, and best practice options for engaging smallholders can join Supply Change at the October 19th – 20th conference in Washington, DC – How business can engage smallholder farmers — organized by Innovation Forum.

More stories about changing supply chains are summarized below, so keep reading!

-The Supply Change team

 

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Upcoming Events

Climate Action and Sustainable Land Use in Forestry and Agriculture
New York, 22 September 2016

As part of post-Paris Agreement agenda of Climate Week NYC 2016, the Tropical Forest Alliance 2020, along with partners including Forest Trends, is convening a half day forum to explore how to achieve jurisdictional sustainability in ways that advance climate and development goals. Public sector leaders from Brazil, Indonesia, Liberia, Norway, Peru, and the US will be joined by the leadership of Unilever, the Center for Global Development and others to discuss how climate mitigation, adaptation, land use planning and economic development activities can mutually reinforce each other and lead to sustainable land use.

You can register and learn more about the event here.

 

How business can tackle deforestation: Asia under the lens
Singapore, 27-28 September 2016

As a Supporting Partner, Forest Trends and Supply Change invite you to join us at the Innovation Forum conference bringing together multi-stakeholders in discussion around the latest trends and challenges companies face in removing deforestation from their supply chains, and to debate what measurable actions moving forward will be. Major corporations like Unilever, Sime Darby, Golden Agri Resources, Temasek, J&J, APP, Musim Mas, Wilmar, APRIL, Michelin, Neste, and many more will be participating.

Any contacts of ours are eligible for a 15% discount to attend the event. Please use the coupon code SC15 when registering online here.

 

How business can engage smallholder farmers
Washington, DC, 19-20 October 2016

As a Supporting Partner, Forest Trends and Supply Change invite you to join us at the Innovation Forum conference addressing the major risks for smallholder farmers across agricultural sectors, and focus on how to create scalable solutions to tackle future supply chain vulnerabilities. The event will focus on how US-based companies can engage – and are engaging with – smallholder farmers in key agricultural areas to improve yields and become more sustainable.

Register and learn more about the event here.

 

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Recent News

2020 or bust

Will the end of the decade bring with it an end to deforestation from the production of agricultural commodities such as palm oil, soy, timber & pulp, and cattle? Scores of companies have pledged to rid their supply chains of deforestation by 2020. While early leaders such as Unilever, Nestlé, and Marks & Spencer began working toward this goal around 2010, hundreds of pledges within the last two years have the same 2020 target date – or even sooner. This means that relative newcomers are aiming to achieve in a shortened timeline what the early movers are taking a decade to do. “It’s a round number, and it’s achievable, with a few exceptions,” says Daniel Zarin, Director of Programs at the Climate and Land Use Alliance.
Read more at Ecosystem Marketplace

 

Guac costs extra

You are not alone in your love for guacamole; US demand for avocados has quadrupled since the mid-1990’s.  Farmers in central Mexico are chopping down forests to grow them and pumping massive amounts of carbon dioxide into the atmosphere, which accelerates climate change. Last year’s international Paris Agreement on climate change included market mechanisms which can promote wider adoption of sustainable production practices and forest conservation. But matching sustainable producers with consumers can be a challenge, which requires innovative partnerships like the sustainable food initiative Cumari: From Rainforest to Table. There is no silver bullet for this demand-driven problem; but there are many varieties of demand and supply side solutions to choose from.
Read more from Ecosystem Marketplace

 

Grade D beef

Walmart, McDonald’s, and Mars received the highest marks in a new scorecard on beef procurement standards for 13 big-name fast food restaurants, retailers, and food manufacturers. However, in Cattle, Cleared Forests, and Climate: Scoring Global Brands on Their Links to Deforestation-Risk Beef, the environmental non-profit the Union for Concerned Scientists (UCS) determined that even the leaders had a number of problems, such as: loopholes in their purchasing policies, insufficient or unverified progress reporting, and non-comprehensive monitoring systems. Companies do not adequately protect rain forests at risk of conversion for cattle pastures in South America, according to UCS. Nine of the 13 companies had no policy on purchasing zero deforestation beef.
Read the UCS press release

 

Taking the trees out of tofu

Many of China’s imported agricultural commodities—most notably soy—are produced at the expense of tropical forests. Consequently, these commodities cause more greenhouse gas emissions per unit than imports in any other sector, finds a new report by the Cambridge Institute for Sustainable Leadership (CISL) and two other environmental non-profits. In an interview with the publisher Global Trade Review, CISL’s lead author Thomas Verhagen said Chinese policymakers recognize that greening agricultural commodity imports is important to China’s food security and foreign relations. Mr. Ye Yanfei of the Policy Research Bureau in China’s Banking Regulatory Commission said “Implementing green credit standards in trade finance processes for agricultural commodities is ... an urgent task for China’s banking industry.”
Read more at the Global Trade Review

 

Rank a bank

Ever wonder who is bankrolling deforestation? A new web platform scores banks based on their forest policies. Created by three environmental groups – Rainforest Action Network, TuK Indonesia, and Profundo – the platform offers a glimpse into which investors and institutions are financing tropical deforestation in the Asia Pacific region. In addition to measuring the amount of money invested in forest-risk industries, the platform also assesses bank policies on forest risk management. Dutch bank ABN Amro is at the head of the pack, scoring an impressive 24 out of 30. The release of this platform represents a breakthrough in the finance sector, which has only recently begun to take serious consideration of forest risks.
Read more from the Rainforest Action Network

 

A fiery investigation

Last week, over 100 Indonesian men allegedly took a government team of seven environmental inspectors hostage and threatened to burn them alive. There are “strong indications” that the palm oil company, Andika Permata Sawit Lestari (APSL), mobilized groups of farmers to illegally set fire to 3,000 hectares of forest in preparation for oil palm plantings and to confront the government team during their investigation, according to Indonesia’s Environment Minister Dr. Siti Nurbaya’s recent statement (in Indonesian). In response, APSL’s spokesperson, Novalina Sirait, claimed that farmers took offence to investigators entering their customary land without permission and APSL is being used as a scapegoat for their actions. The investigation is ongoing.
Read more at the Guardian

 

Barely legal

Ninety percent of Peruvian timber arriving in the United States is logged illegally according to the watchdog NGO the Environmental Investigation Agency. The finding is based on a US government verification report released on August 17th that focuses on illegal logging in the Peruvian Amazon. The ranking member on the US Senate Finance Committee Senator Ron Wyden called upon the Peruvian government to address the epidemic and asked the US Fish and Wildlife service to be increasingly vigilant in its documentation of Peruvian timber imports.
Read more from Mongabay.com

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