On September 4, 2023, the webinar "Sustainable Palm Oil - Thinking about Sustainable Palm Oil Supply and Farmers' Livelihoods" was hosted by Solidaridad Japan, with Yoshida as a speaker. The following is a reprint of the activity report article with permission from Solidaridad Japan.
While global demand for palm oil, the world's most produced vegetable oil, is increasing, concern over environmental destruction caused by oil palm cultivation and human rights issues is growing, and companies, mainly in developed countries, are working to establish sustainable palm oil supply chains.
On the other hand, for smallholders, who are responsible for one-third of the oil palm cultivation area, improving their own living standards is also an important factor in sustainability. In this seminar, we presented an overview of the certification system for sustainable palm oil, as well as the actual situation of oil palm cultivation in Indonesia and Malaysia, local initiatives by European companies, and support for smallholders by Solidaridad.
Complementary role of private and government certification
First, Dr. Etsuyo Michida, Senior Researcher of JETRO-IDE introduced the overall picture of the debate on palm oil sustainability, including how palm oil production contributes to job creation and economic development in Indonesia and Malaysia, but also faces environmental and social sustainability issues.
As an effort to address sustainability issues, the Roundtable on Sustainable Palm Oil (RSPO) certification system was developed under the initiative of the private sector in Europe, a consumer market, but it has been pointed out that it is not always easy for smallholders to adopt the system. Therefore, the governments of Indonesia and Malaysia, the two largest palm oil-producing countries in the world, have taken the lead in establishing ISPO (Indonesia) and MSPO (Malaysia), respectively.
The RSPO targets markets in developed countries and is characterized by differentiation from non-certified products, and non-certified products may be excluded from the market. In contrast, ISPO and MSPO are characterized by inclusiveness, requiring the participation of all producers, including smallholders. However, even ISPO and MSPO have a long way to go to reach independent smallholders, and more needs to be done. The RSPO, a private certification, and the ISPO and MSPO, both government certifications, are considered to play complementary roles, and there are attempts at cooperation between the certifications in palm-producing countries.
In a new phase in Europe, the EU Deforestation Free Products Regulation (EUDR) was enacted in the European Union in 2023. Agricultural products, including palm oil, soybeans, and livestock, are now required to undergo due diligence (DD) throughout the supply chain to ensure that they are not involved in deforestation.
While this does not preclude the use of certification systems, each company must take responsibility for risk management, and it will be important to promote the spread of ISPO and MSPO, as well as to cooperate with NGOs and other organizations with local knowledge.
Henkel's Sustainability Promotion Case
Next, a video message was shown from Marjon Stamsnijder, Director of Sustainability, Henkel Consumer Brands.
Henkel's sustainability strategy for palm oil procurement includes full compliance with NDPE (No Deforestation, No Peat, No Exploitation) and "100% responsible sourcing" as well as a commitment to "improve the living standards of smallholder farmers and conserve nature" at the landscape level.
In Indonesia, the company has been cooperating with Solidaridad's smallholder farmer support activities in West Kalimantan since 2015. From 2015 to 2017, the company provided guidance and training to more than 6,000 farmers to improve their farming methods and supported the establishment of farmers' associations.
From 2022 onward, the program has been helping farmers access new markets and initiating projects to restore degraded forests and farmland, and until June 2023, it trained 160,000 farmers in the provinces of Sangau and Landak on climate change adaptation practices. The project also assisted 127,000 farmers in Sanggau in registering their land ownership and mapping their land parcels to prove that they are not forest reserves or private property of others (as RSPO certification cannot be obtained without this certification).
Sustainability of oil palm cultivation and livelihoods from the perspective of smallholder farmers
Next, Hidemi Yoshida, Representative Director of JIZOKEN introduced how smallholder farmers in Indonesia and Malaysia work on their farms, how they use their farmland, and how they live, using photos and videos from their field research.
Even oil palm producers face different challenges in different countries and regions. In West Kalimantan (Indonesia) and East Malaysia (Sabah and Sarawak), productivity is low, and expanding farmland to increase income may lead to deforestation.
Interviews with RSPO-certified farmers indicate that they plan to promote the certification of their farmer association members, as their productivity has increased with technical guidance from Solidaridad and they are now earning credit income from the certification.
However, the acreage of RSPO-certified farmers as a percentage of total small farmers is negligible. Except in areas with favorable conditions and farmers, it is not easy to obtain certification.
She also raised the question of whether the issue of sustainability in production areas can be solved simply by companies procuring 100% of their oil from RSPO-certified sources.
Solidaridad initiatives
Finally, Denka Yanagi, Executive Director of Solidaridad Japan, introduced the support Solidaridad is providing, focusing on its activities in Asia.
As for advocacy activities in Asia, Solidaridad has established a platform called APOA (Asia Palm Oil Alliance), which consists of procurement companies from palm oil importing countries such as India and Pakistan, to promote the exchange of information on sustainable palm oil. We also expect Japanese companies to participate in APOA. CPOPC (Council of Palm Oil Producing Countries ) has been established among palm oil-producing countries, and Solidaridad Asia participates in two joint working groups under CPOPC (one working group in Indonesia and another in Malaysia). Soledad Asia participates in two joint working groups under the CPOPC (an Indonesian working group and a Malaysian working group).
Support for small-scale farmers includes training in farming methods and farm management and assistance in establishing and managing cooperatives and improving livelihoods. For farmers with low productivity, simply teaching them appropriate farming methods can increase their productivity by 1.5 times. For example, spreading fertilizer around tree trunks has little effect. The guidance is to guess where the root tips are, based on the way the leaves grow, and apply fertilizer there so that nutrients are absorbed without waste and prevent runoff from rainfall.
In this way, Solidaridad works both with local farmers and with government agencies to transform the palm oil supply chain into a more sustainable one, aiming for inclusive development that is in balance with nature.
What is the sustainability of oil palm production?
The Q&A session was moderated by Hiroshi Sato, co-chairman of Solidaridad Japan. An audience member asked, "Isn't it an exaggeration to say that private certification leads to exclusion?" while others commented that "the certification system appears to be a barrier to entry for newcomers.
Finally, the speakers shared their perspectives on the sustainability of oil palm production, agreeing that RSPO certification + α approaches (e.g., compliance with laws in producing countries and direct support to producers) are needed.
Comments and feedback from the audience
Although our company deals with other commodities, we combine certification with direct local support, and I could strongly sympathize with their efforts that do not rely on certification alone. I think the most important thing is local sustainability.
I learned about the problems faced by small-scale farmers.
I think there is not much recognition of the certification system in Japan.
I was interested in the certification system, so I could learn about it.
The comments in response to the questions at the end of the session and the discussion were also very helpful.
I learned about a perspective that does not completely deny production itself.
I hope the certification will spread. How can we promote understanding of even the background of the mark in ethical consumption?
It was a very valuable and good experience to hear real stories from people who are actually involved in the initiatives.