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Unilever signs agreement with local governments in Indonesia to source palm oil

January 31, 2017

Unilever has signed a three-year Memorandum of Understanding (MoU) with the provincial government of Central Kalimantan in Indonesia and two district governments to source sustainable palm oil sector, it announced on 18 January.

, Unilever signs agreement with local governments in Indonesia to source palm oil

The global consumer goods company said it was the first public-private agreement between sub-national governments and an international buyer, and it was taking a jurisdictional approach to commodity sourcing and would preferentially buy from areas that had comprehensive climate and forest policies in place.

The agreement involves the district government of Kotawaringin Barat and Yayasan Penelitian Inovasi Bumi (INOBU) and aims to create “sustainable villages” in Indonesia’s palm oil industry.

Unilever said it was working with the governments to improve yields and livelihoods of smallholder farmers, in exchange for their support in the fight against deforestation in a model know as ‘Produce & Protect’.

“We believe that a production-protection approach to commodity sourcing is the way forward,” said Dhaval Buch, chief procurement officer at Unilever. “As smallholders play a key role in palm oil production, we are working to help them achieve certification and implement sustainable practices.”

Smallholders contribute to some 40% of Indonesia’s palm oil production.

The programme would initially impact around 600 independent smallholders on approximately 1,400h of land and had the potential to be rolled out to other areas in the district. It aims to:

  • Certify all palm oil smallholders in Pangkalan Tiga village according to Roundtable on Sustainable Palm Oil (RSPO) and Indonesia Sustainable Palm Oil (ISPO) principles and criteria
  • Map palm oil smallholders in at least three villages in Kotawaringin Barat district, helping farmers obtain land certificates, business licenses and environmental permits
  • Conduct baseline assessments of palm oil farmer organisations in Umpang and Lada Mandala Jaya villages.

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