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Creating a sustainable palm oil supply chain – 2

Posted: Apr 26, 2016 2 minute read Lim Shu Ling 0 Likes

GAR is taking another step forward in mapping its supply chain by announcing a time-bound plan to achieve traceability all the way to the plantation – at the end of 2020, we aim to know all the sources of palm oil Fresh Fruit Bunch (FFB) which go to GAR-owned and independent mills that supply our refineries in Indonesia.

This follows on from the first stage of mapping our supply chain to the mills which GAR completed at the end of 2015. We know all the 489 mills which supply our eight downstream locations. And now we have started working with those mills to map their supplies to the plantations.

At GAR, the Downstream team is working out the technical ways to map and verify our sources of FFB. This will involve strengthening processes to document the procurement of FFB all the way from the farmer to the mill. They will kick off a pilot involving a GAR-owned and an independent mill and will use the lessons learnt to replicate the process at the rest of the mills.

 Processing palm oil fresh fruit bunch at a GAR facility
Processing palm oil fresh fruit bunch at a GAR facility

It will be a complex task. We will have to convince all our third party mills to adopt these systems and to report back to us. Some mills which buy from a handful of plantations will find it easier to finish their mapping, while other mills which may be buying from middlemen who in turn buy from many different small growers may find that the process requires more effort and takes much longer.

Realising this we have set realistic timelines: end 2017 for GAR mills to achieve full traceability to the plantation and for everyone else to complete this by end 2020.

“The engagement effort to reach out to around 450 supplier mills and have them in turn reach out to their suppliers which includes other plantations, middlemen and smallholders is a challenging endeavour. But we also see this bringing opportunities to engage an even more extensive range of stakeholders in our efforts to improve sustainability and production practices,” says Daniel Prakarsa, Head of Downstream Sustainability Implementation.

We see this mapping to the plantation as key to transforming our palm oil supply chain and by extension the industry into a more sustainable sector.

Over 40% of all palm oil estates in indonesia are managed by some two million smallholders

Not many people outside the palm oil sector realise how much it is dominated by smallholders. But the reality is that over 40 percent of all planted palm oil land is in the hands of around two million smallholders in Indonesia. One of the greatest challenges for us is to find ways to help those millions of smallholders improve their environmental practices while boosting their yield, productivity, incomes and welfare. It’s a huge task, but it is only by helping them on those fronts that we can truly say we have created a sustainable palm oil supply chain and transformed the industry. And by taking the next step to map our supply chain to the plantation we are intensifying our efforts to know and reach those smallholders.

As for our independent suppliers, they are willing to embark on the exercise because they too are beginning to see that it will be good for them, “As a business, we recognise the long-term benefits that this mapping exercise will bring. We will be meeting customer demands for a traceable product and at the same time we will be playing our part in making our industry more sustainable by helping individual farmers who may need support to adopt better practices,” said Mr. Hendrikus H Nauli, Director of PT Sugih Riesta Jaya, one of GAR’s third party suppliers.

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