Book & Claim Blog
Mon 24th April 2017
Examining the differences across smallholder palm oil producers
Tags: Smallholder // Standards // Johor // India
Smallholders are widely recognised as a critical element in the drive for transformation of commodity markets – as they comprise a significant proportion of the supply of many agricultural commodities globally. But how do sustainability standards cater for smallholders, and do these standards help or hinder the inclusion of smallholders in the vision and mission of transformation?
Johor Malaysia

It seems that smallholders are referred to with an increasing frequency throughout the supply chain and particularly amongst manufacturers and retailers. They all want to support smallholders, who of course, are extremely important as they contribute over 40% of the oil palm production in Indonesia & Malaysia, and up to 80% in other growing regions. We use the term smallholders in a generic way but are all smallholders the same? A recent trip to Malaysia and India illustrates that they are clearly not.

My first port of call was the Johor region of Malaysia to visit two collection centres for the Fresh Fruit Bunches (FFB) from all the local smallholders. The collection centres are the focal point for about 300 smallholders and provide a route to the palm mills to process their FFB.  Johor is a four hour drive from Kuala Lumpur and is in the southern part of peninsular Malaysia.

The first collection centre I visited was run by Mr. K; he was very pleased to receive us. He went on to explain that very few people from outside the area had shown interest in them. The smallholders supplying FFB into his collection centre had been established for a long time and the smallholdings had been farmed by the same families for several generations. These farmers are very set in their ways and their farming practices result in very poor yields. Mr. K invited me to visit one of the smallholders who delivers to the collection centre.

The smallholding is two hectares in size and the trees are approaching 30 years old. These trees are suffering from a variety of issues ranging from disease, deficiencies in vital nutrients and all round poor care. The problems do not stem from the farmers themselves rather they result from a lack of up-to-date farming techniques. Farmers the world over are proud and hardworking and strive to produce more out of their land, these smallholders are no different. All they lack is some knowledge that will help them make small but meaningful changes.

The second collection centre I visited was managed by Mr H and he conveyed a very similar situation to Mr K. He also had not experienced any external interest and was very grateful for my visit. Mr H is passionate about the environment and recounted a story from his childhood that as a boy he used to fish in the local river. As a man he can longer fish in the same river as it is so polluted there are no fish left.

Sustainability resonated well with him as better farming practices form part of the Roundtable on Sustainable Palm Oil (RSPO) standard together with the environment, biodiversity and social element. Mr H also mentioned that his local smallholders were long established and very set in their ways and needed help in better farming practices.

It was very clear that some basic training for the smallholders in better farming practices could make big differences to the livelihoods of the farmers. Training on fertilizer and pesticide use and developing new harvesting techniques would all lead to an improvement in yields.

At this point you are probably wondering about the start of this piece, are smallholders all the same?  Onto the second part of my trip – India.


India

India is not the first country that people associate with oil palm production – and they would be right. Consumption yes but not production. Because India consumes so much palm oil they are the largest importer and initiatives are being taken to redress this major imbalance by investing in plantations and oil production.

I visited three mills in the Andhra Pradesh region of India and the similarities between these mills were astonishing. The mills are all supplied by smallholder farmers, and the mills have a direct relationship with the farmers, coordinating collections and deliveries of FFB.  Each mill has a dedicated team to provide technical support to farmers and also provides access to high yielding seedlings.

When visiting the farmers themselves the difference from Johor could not be clearer.  The smallholdings in India are relatively new – established 8-10 years ago. The holdings have been converted from other crops such as mango so there are no deforestation concerns. There is no peat issue, no water management issues –save operating drip irrigation systems. There are no diseased trees; the land is clear and well maintained. There is intercropping with other products like cocoa and the farms generate their own compost from old fronds and empty fruit bunches collected back from the mills.

There is, however, one major consistency between the farmers in Johor and those in India – they want to improve the yields being generated from their land. There are clearly different baselines here and my trip has highlighted perhaps the two extremes. Oil palm smallholders around the world have different needs and requirements. But how can sustainability standards, such as that operated by RSPO, be sympathetic to this and adapt accordingly? Because clearly, one size does not fit all – even amongst smallholders there are major differences as we have seen, never mind the chasm between large integrated multi-national operations and the very extensive body of smallholders across the globe.

One group of smallholders, such as those seen in India, could presumably progress to certification very quickly, whereas the others in Malaysia could not. But we need all smallholders to be engaged, if we are to transform the market. Can certification provide the answer? Food for thought!

Blog Contact Details:
Bob Norman
General Manager

+44 (0)7776 144731