Global oils and fats supplier IOI Loders Croklaan has partnered with nutrition and ingredient firm Kerry Group to develop and implement a three year Small-Growers Support Program in Malaysia.
In collaboration with palm oil promotion group Wild Asia and the Fortuna Palm Oil Mill, the two firms were looking to include Sabah state’s smallholders into IOI’s supply chain, boost their productivity and help them implement sustainable agri practices, IOI said on 15 February.
The programme was aimed at small-scale oil palm farmers operating farms sized between 1 and 500ha.
It also looked to guide IOI’s directly sourced third party supply mills towards compliance with IOI’s Sustainable Palm Policy and help them prepare for certification requirements.
IOI sustainability director Ben Vreeburg said the company had some potential non-Roundtable on Sustainable Palm Oil (RSPO) certified mills in the Telupid, Beluran and Kinabatangan areas in Sabah that worked with approximately 5,000 smallholders and could later be rolled into the programme.
“We start with one mill – Fortuna – and will increase the number throughout the duration of the programme,” said Vreeburg.
According to Vreeburg, smallholders would see a decrease in fresh fruit bunch (FFB) production costs during their first year in the programme and a gradual increase in FFB yield in the second.
“Through this programme, millers are ensured a steady supply and better control of FFB and a higher extraction rate,” he said.
There were large differences in the yields between smallholders and large plantation companies, Vreeburg said, arguing that FFB production could be increased by 50% without expanding farms onto new land simply by increasing current smallholder yields.
“Helping smallholders, who provide 40% of total worldwide palm oil production, to get good sustainable manufacturing practices in place will increase their productivity and further lift them out of poverty,” he added.
Maarten Butselaar, responsible sourcing manager at Kerry Group, said that as a palm oil buyer, the company had limited interaction with mills and palm growers and, as such, it relied on its supply partners to help meet its sourcing commitments.
“This partnership gives us a more direct influence on practices at mill and farm level in the project area,” Butselaar said.