This is the second of two Inside RGE posts covering RGE Founder and Chairman Sukanto Tanoto’s keynote address to a visiting group of MBA students from the Wharton School of...
Asian Agri, one of the world’s leading palm oil producers and a longtime partner of Indonesia’s smallholders, distributed USD 267,000 (IDR 3.7 billion) to 12 heads of the Association of Village Unit Cooperatives (KUD), representing over 30,000 farmers in a premium sharing ceremony in Jakarta.
Indonesia’s Secretary of the Ministry of Cooperatives and Small and Medium Enterprises (SMEs) Ir. Agus Muharam MSP witnessed the symbolic handover of premiums to the smallholders. Commenting on the positive partnership between Asian Agri and the smallholders, Agus said, “The sharing of palm oil sales is an example of a good relationship between a company and its partners.”
Also present was Ir. Bambang MM, the Director-General of Plantations from the Ministry of Agriculture, who said, “Indonesia must face the challenges of the international market in terms of establishing traceability in its sustainable palm oil supply.”
Traceability of the supply chain has always been a key priority for Asian Agri. To date, the company has 100% traceability for its own estate as well as for its plasma scheme smallholders. While traceability for independent smallholder partners is currently at 96%, Asian Agri is on track to achieve 100% traceability with independent smallholders by end-2018.
Palm oil premiums result from the adoption and recognition that smallholders have adopted best practices in plantation management. Asian Agri partners with smallholders as well as with other organisations such as IDH and Setara to support the implementation of sustainable practices as well as the acquisition of certifications from ISPO and RSPO.
Asian Agri Director of Corporate Affairs Dr M Fadhil Hasan reiterated the partnership with farmers as core to the company’s business model. “Our partnership with smallholders is integral to our operations and success. In turn, the welfare of the farmers is part of our responsibility.”
Apart from teaching best practices in sustainable operations, Asian Agri also runs several community development programmes including training farmers to identify and pursue alternative sources of income, improving community infrastructure including health and sanitation services, improving the quality of education, as well as providing donations and gifts to various communities.
Pawito Saring, one of the company’s smallholder partners, shared, “Asian Agri assisted us not only through providing training, but also providing on-the-ground assistance and guidance. These enabled us to adopt best practices which in turn allowed us to get the certifications and earn the premiums that greatly benefit us and our cooperatives.”