An Origin Story

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29 October 2018 | By Yos Kusuma 

Palm Oil is the most widely consumed vegetable oil on the planet, being present in about half of all packaged products sold in supermarkets. The plant grows in tropical rainforests, which are typically rich in biodiversity. While Palm Oil is the most efficient source of vegetable oil, its rapid expansion may threaten parts of the planet’s most important and sensitive habitats. In order to nip this issue in the bud, more and more companies are starting to place importance on tracing the Palm Oil to its original supply base.  

How would this then help us to conserve rainforests, you may ask?

Well, the answer is simple – if we can trace the Palm Oil back to its origin, we could identify if it is legally sourced, as well as produced from an environmentally and socially conflict-free area. However, the supply chain is complex, and we have to understand the complexities involved before we can achieve traceability.

There are several actors in Indonesia’s Palm Oil sector: Plantation owners, mill owners, companies who own both plantations and Mills, as well as integrated companies like Musim Mas who owns plantations, mills and refineries (and have our own supply chain logistics). Attaining complete traceability in Musim Mas’ “in-house” supply chain is almost surely guaranteed. In addition to best management practices in all our estates, mills, and refineries, we are committed to producing our Palm Oil in a socially and environmentally responsible manner. This is demonstrated by us being the first Indonesian company to join RSPO (in 2004), and then being the only major Palm Oil company in POIG (since 2015). Our RSPO certified plantations currently span 139,318 hectares.

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Our Third-party Suppliers harvesting the ripe FFBs from Oil Palms 

Musim Mas’ traceability commitment extends to our third-party suppliers. Some of these third-party suppliers may own mills and plantations but also source Fresh Fruit Bunches (FFB) from independent Smallholders . To be fully compliant with our commitments, traceability efforts should be enforced throughout the entire supply chain, including identifying each independent smallholder’s plots. However, these FFB producers are neither bound nor obliged to be a part of our traceability efforts.  Muji, an agent from the area of Sungai Lilin, South Sumatra, explained that “Even though we have good relations with PT Bastian Olah Sawit (PT BOS, one of Musim Mas’ third-party supplier mill), we would still send our fruits to the mill offering the highest price each day, because we also need to cover our operating and manpower expenses.”

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Team at PT BOS, together with staff from Musim Mas

PT BOS is one of Musim Mas’ third-party suppliers in the Musi Banyuasin regency in South Sumatra. The company runs a Palm Oil mill, its own Plantation , and sources from nearby independent Smallholders . As Musim Mas’ supplier, PT BOS is also committed to supporting traceability efforts. “Recently we have placed and disseminated fliers announcing our commitment to sustainable Palm Oil production and traceability to the Smallholders ’ level,” explained Santoso, General Manager at Indah Group, the holding company of PT BOS. Santoso further adds that the mill does not accept FFB coming from conservation areas or those with illegal origins. Indah Group and Musim Mas recently partnered with Daemeter Indonesia and Kelola Sendang to pilot a digital system that would assist the companies in achieving traceability to Plantation level, especially for the case of independent Smallholders .