A SMILE for Smallholder Inclusion

There is yet another reason for Indonesia’s independent oil palm smallholders to SMILE! Apical and Asian Agri have joined forces with Kao Corporation to launch an 11-year programme to help participating independent oil palm smallholders improve yields, incomes and livelihoods.

According to the Central Bureau of Statistics for the Republic of Indonesia (2018), independent oil palm smallholders contribute more than 28% of the nation’s palm oil. With certification and intensification, these independent smallholders will be better placed to not only increase productivity and yields.

Optimal and environmentally-friendly fertilisation, integrated pest management, best and safe plantation management practices, and the use of superior seedlings are just some of the many approaches to intensification of land. With improved agronomic knowledge and plantation management practices, a smallholder can cultivate healthier and resilient crops, while maximising the productive lifecycle of the plantation.

When an independent smallholder obtains certification, it validates the sustainable practices on his or her plantation. Certification allows a smallholder to secure wider market access and sell oil palm fresh fruit bunches to sustainability-minded companies that only purchase certified palm oil. This paves the way for higher income from sales.

SMILE With 5,000 Independent Smallholders

SMILE will improve independent smallholders’ knowledge, skills, plantation productivity and incomes.

The Smallholder Inclusion for better Livelihood & Empowerment programme, or SMILE, is a partnership between downstream producer Kao Corporation, mid-stream processor and trader Apical Group, and upstream producer Asian Agri.

Implemented in accordance with the framework provided by the RSPO (Roundtable for Sustainable Palm Oil), the 11-year initiative seeks to not only improve the knowledge and technical expertise of independent smallholders, but also support their journey in obtaining RSPO certification by 2030.

SMILE will have a dedicated team of experts to work closely with 5,000 independent smallholders who manage approximately 18,000ha of plantations across the provinces of North Sumatra, Riau and Jambi.

The trio of companies remain united in their cause to not only strengthen the sustainable palm oil value chain with RSPO standards, but also promote greater inclusion and improved livelihoods to help the community collectively realise the United Nations Sustainable Development Goals.

Tapping On Commercial Partnerships For Sustainable Development

SMILE is not the first joint initiative that involves Apical Group and Kao Corporation. In May 2019, both companies commenced a US$80m joint venture PT Apical Kao Chemicals, an oleochemical facility in Dumai, Indonesia with an annual output capacity of about 100,000 tonnes.

The joint venture allows major Japanese consumer and chemical products maker Kao to establish a production base for fat and oil products in Indonesia, and is expected to boost Kao’s global output capacity to increase by 130%; its proportion of self-procured fatty acids will increase to 60%.

PT Apical Kao Chemicals commenced operations in May 2019.

SMILE Shared Virtually

Executives of Kao Corporation, Apical and Asian Agri joined as panellists in a special webinar organised by CNN Indonesia on 28 Oct 2020, sharing SMILE’s goals and insights into the palm oil industry. They was accompanied by representatives from RSPO and Yayasan Setara Jambi, an NGO focused on supporting independent oil palm smallholders. 

While championing the greater inclusion of independent smallholder, the panel believed there had to be support systems and mechanisms to drive and sustain inclusion. Multi-stakeholder partnerships would be key to driving this inclusion.

RSPO’s Chief Operating Officer Bakhtiar Talhah echoed the panel’s sentiments that smallholders are key actors in market transformation, although they lack support to meet certification standards. Mr Bakhtiar said RSPO wants greater smallholder inclusion and among other efforts, this can be achieved through certification. Certification, he explained, will give consumers the assurance that the palm oil has been grown and sourced sustainably.

The webinar provided multiple insights and perspectives from key players in various nodes of the supply chain – upstream to midstream to downstream, as well as voices from the ground.

Key actors in the sustainable palm oil value chain are working together through SMILE to uplift independent smallholders and secure a sustainable palm oil supply chain.

Win-Win Solutions

In the webinar, Apical Group’s President Dato’ Yeo How outlined the important role independent smallholders play in the palm oil industry, further stating that with certification and better agronomic practices, there can be win-win solutions for the sustainable palm oil supply chain and for smallholders themselves.

Dato’ Yeo stressed the importance of partnerships such as SMILE to uplift independent smallholders who face challenges such as insufficient agronomic knowledge and access to larger markets. He further shared that in 2018-2019, there were independent smallholders who could not afford to fertilise their plantations and there were brief periods in which some did not harvest because of negative cashflow.

With these challenges compounded, Dato’ Yeo noted that some smallholders even considered clearing new land for other cash crop, which would have been an environmental risk. SMILE was conceptualised to address these challenges and empower smallholders instead of shunning them. In addition to being open to welcoming more like-minded partners, Dato’ Yeo later expressed hope that SMILE can be a catalyst for other similar programmes.

Extensive Experience In Partnerships

Through training, skills and knowledge transfer, Asian Agri walks together with its independent smallholder partners.

Asian Agri‘s Managing Director Kelvin Tio highlighted Asian Agri’s extensive experience in smallholder partnerships.

Having worked closely with Plasma scheme smallholders for over 30 years, the company understands intimately the key concerns of smallholders in relation to plantation management knowledge and skills, access to funds, access to mechanical land-clearing tools, and even access to quality seedlings. Asian Agri combines its own plantation management best practices with that of RSPO-aligned standards to impart into its smallholder partners the necessary skills and knowledge to increase their yields and incomes. 

Furthermore, Asian Agri has played an instrumental role in actively supporting its partnered smallholders in their certification journeys while supporting the Indonesian’s Government’s call for intensification. 100% of Asian Agri’s partnered Plasma scheme smallholders are RSPO certified. The company also has the distinction of helping its independent smallholder partners (members of the Amanah Association cooperative) obtain RSPO and ISPO certification – the first in Indonesia for any independent smallholder cooperative.

Mr Kelvin Tio said that SMILE provides a suitable platform for Asian Agri to share its experience and extend its best practices to a wider community of independent smallholders. With capacity-building efforts in place, Mr Tio believes that the gap between Plasma smallholder and independent smallholder partners can be bridged. This then strengthens the inclusion of independent smallholders in meeting palm oil demand, while maintaining Indonesia’s competitiveness in the global market and securing a responsible and sustainable supply chain.

There is therefore a reason to SMILE. The firm commitments to improved standards, securing certifications as well as a sustainable palm oil value chain will certainly create a brighter future for smallholders and go a long way to very responsibly safeguard global food security.

More in the News Release: Kao, Apical And Asian Agri Launch ‘SMILE’ Program To Help Oil Palm Smallholders Improve Yields, Acquire Certifications, And Secure Premiums

View the News Release on the Webinar: Kao Corporation, Apical and Asian Agri Partner to Empower Smallholders with SMILE Programme