Since our policy was established in 2014, we recognize that issues such as the well-being of forests, food security, biodiversity, and livelihoods are interconnected. The best chance for maximizing impact is to integrate these themes in the same communities or geographical areas.
From our projects, engagement, and independent diagnostic studies, we learned that:
- Many suppliers do not have the capacity to adopt sustainability practices due to limited resources, including conducting traceability exercises or engaging their independent smallholders like our smallholder programs.
- Independent smallholders face limited access to knowledge (eg. On Good Agricultural Practices) and resources to plant sustainably.
- There is uncertainty in land legality, especially around critical areas such as the Aceh-Leuser Ecosystem.
- The involvement of the government and local stakeholders is crucial to scaling up projects and prevent a leakage market.
Therefore, a coordinated response within companies across the industry and sectors, and levels of government is needed.
Landscape approach: A coordinated response to meeting our roadmap
As the saying goes: If you want to go fast, go alone. If you want to go far, go together.
We acknowledge the limitations one company can have and we capitalize on our relationships with our customers, technical partners and NGOs to collaborate and integrate their efforts into our current projects with our suppliers and smallholders.
As we aspire to be leading sustainable palm oil company, we want to show leadership through the landscape approach and our commitment towards our roadmap towards a responsible supply chain, including setting targets for supplier engagement and independent smallholders.
Based on our sourcing areas, volume, and pertinence of issues in geographical locations, we identified four provinces in Indonesia:
Riau is one of our top supplier provinces. We estimate that our supplier mills make up 70–80% of the total mills in the province, forming 23% of our total crude palm oil (CPO) procurement.
Riau is the largest provincial contributor to the national production of palm oil and is the fifth-largest contributor towards Indonesia’s gross domestic product (GDP). Deforestation in the landscape has been severe. It has been estimated that illegal oil palm plantations have taken over at least 40% of the Tesso Nilo National Park. Another critical protected area is the Giam Siak Kecil peatlands, of which a significant portion is dominated by the pulp and paper sector. Riau is prone to forest fires during the annual dry season.
Read our diagnostic report for Riau here.
As part of our independent smallholder program with IFC (International Finance Corporation), a member of the World Bank, we engaged smallholders supplying to our mills located in Riau. These mills are PT SAR (Sinar Agro Raya), PT BANI (Bahana Nusa Interindo), and PT ISB (Indomakmur Sawit Berjaya). More on this program here.
Musim Mas is working with UNDP (United Nations Development Programme) to engage villages in Riau to establish smallholder programs.
Musim Mas is a member of the Tesso Nilo Taskforce since 2016. We are working with WWF Indonesia and Tesso Nilo National Park Foundation to mitigate human-elephant conflict around Tesso Nilo national park.
We are also part of WWF Halt program, which helps supply chain stakeholders to register and digitally track FFB from plantation to mill. This traceability program would enable buyers (mills and traders) to identify and assess the legality of where the FFB originated, starting with a pilot around Tesso Nilo National Park.
We are collaborating with an industry peer on a bottom-up, participatory landscape-level project to understand and map HCV-HCS areas, as well as existing and potential plots for smallholder expansion. We have finalized Siak district and PT. Teguh Karsa Wana Lestari (TKWL) as our mill for engagement, and have conducted in-depth analysis, training to build awareness with the mill staff, and assessments on the ground to identify potential HCS areas.
Additionally, we are involved in a private-sector coalition, called the Siak-Pelalawan Landscape Program, which aims to support the government’s Siak Green District Initiative in its efforts to achieve sustainable palm oil production and align the delivery of sourcing commitments with the development goals of the district. These goals include protecting and enhancing forests, improving the livelihoods of smallholders and local communities, and establishing traceability data. Stakeholders involved include Cargill, Neste, PepsiCo, Golden AgriResources, Unilever, CORE, Sustainable District Platform (LTKL), Siak regent (local government).
To improve the deforestation monitoring and verification system, we invested in the development of a new, publicly available radar-based forest monitoring system known as Radar Alerts for Detecting Deforestation (RADD). Siak-Pelalawan would be one of its pilot areas and it will be integrated into our landscape programs.
Musi Banyuasin (MUBA) district has one of the highest numbers of supplier mills in our supply base. MUBA is the province’s second-largest district and its largest palm oil producer. Although deforestation in MUBA has been severe, there is still much remaining forest (160,000 hectares). This includes three protected areas covering 75,000 hectares that provide protection for important tiger habitats, including the Sembilang-Dangku landscape. MUBA offers a unique combination of supportive local government, numerous progressive companies, and multiple landscape initiatives that create a rare platform for change. The regency is the first to work towards RSPO Jurisdictional Certification.
We are implementing our Extension Services Program (ESP) for the independent smallholders in the supply chain of one of our suppliers’ mills, PT Bastian Olah Sawit (PT BOS), to assist them in improving their productivity through the implementation of good agricultural practices. PT BOS belongs to one of the supplier groups prioritized for engagement.
We are also working with Daemeter, the Cadasta Foundation, and IT consultant GeoTraceability, to develop and implement a fully functioning Oil Palm Supply Chain Traceability System at one site in MUBA. The System will be a chain-of-custody mobile application that enables individual fresh fruit bunches (FFBs) to be tracked through the supply chain. This pilot project will cover the supply chain of PT BOS.
As mentioned above, we implemented an ESP program for our supplier PT BOS, assisting to train their smallholders on good agricultural practices. As of Sep 2019, 395 smallholders were engaged.
In addition, we completed a project with Rainforest Alliance in 2019 to address sustainability issues relating to independent oil palm farmers in the region. The program also served to support the development of a jurisdictional approach for the entire regency. In the period of one year, 525 smallholders were engaged.
We intend to support a landscape program with IDH using the district government’s Green Growth Plan as a guide and develop a Smallholder Hub via the Centre of Excellence – a multi-stakeholder unit by LTKL (Sustainable Districts Association) and IDH aimed at sustainable development of a district. This includes training agriculture officers stationed in the district office or villages.
West Kalimantan contributes 5% of our supply base and is one of the six provinces that contribute 80% of our supply base. We are able to trace up to 88% to plantation within the province, representing the highest percentage among the six provinces.
We have also conducted numerous mill verifications as part of our risk assessment on our suppliers. A diagnostic report on mill verifications conducted in Central Kalimantan aims to provide a clear roadmap on what it means to achieve sustainability transformation in concrete terms. The report provides input that helps us develop a strategic approach to address issues raised at the landscape level. Read the full report here.
We have established a smallholder program targeting smallholders supplying to our mill, PT Sarana Esa Cita.
We are working with Aidenvironment to explore the Sambas conservation project potentially in the areas of agroforestry. The program aims to balance forest conservation with economic development, by supporting local communities on social forestry knowledge and capacity by:
- Providing access to local forest areas and land legalization.
- Establishing sustainable use and forest management practices.
- Establishing small business models to improve land use.
Read more about the project here.