Sustainability starts at the source
Golden Agri-Resources (GAR) recognises we must source our raw materials (both palm and non-palm) from responsible suppliers who follow the same high standards of production as we do, if we are to fulfil our sustainability commitments. Guidelines outlined in the GSEP and Responsible Sourcing Policy inform our sourcing practices.
We emphasise the importance of these guidelines with all our suppliers, and make substantial investments in time and resources to help our supply chain transform and change for the better.
Who we buy from
As a palm-based agribusiness, the bulk of our sourcing concerns palm products. Our crude palm oil (CPO) and palm kernel (PK) come from 47 GAR-owned mills and almost 400 third-party mills in Indonesia.
In our drive for sustainable palm oil production, we are striving towards 100 percent traceability. Ensuring GAR’s third-party palm suppliers and their agents and smallholders adhere to the same strict guidelines we do requires extensive supplier engagement, assessment and training.
For non-palm procurement, such as fertiliser, spare parts and services, we make concerted efforts to support local business and small and medium-sized enterprises (SMEs). We buy from local vendors close to our operational sites and more than 80 percent of our procurement is from SMEs.
Smallholders are a critical part of the palm supply chain in Indonesia. Over two million farmers control about 40 percent of total oil palm plantation area in the country. We believe that improving their livelihoods while driving responsible practices is key to improving the palm oil industry.
For almost three decades, our Plasma Programme has helped over 70,000 smallholders to practice responsible farming. We do not own these plantations but integrate these plasma smallholders into our management system. We provide plasma smallholders with high-yielding seeds, quality fertilisers, and conduct regular training on good agricultural practices. In 2019, our smallholders achieved a CPO yield of around 4.8 tonnes per hectare, among the highest in Indonesia.
GAR also supports thousands of independent smallholders through technical and financial assistance initiatives as part of our mission to drive transformation across the industry.
Replanting with better quality, higher-yielding seeds is a focus area in our work with independent smallholders. However, the loss of income while waiting for the new plants to mature is often a barrier to many smallholders undertaking the necessary replanting that can help them earn more from their crop.
The Independent Farmers Replanting Programme gives farmers access to financing, helping them sustain their livelihoods during the four years it takes for the new seedlings to mature. Since 2014, GAR has helped independent farmers secure loans of nearly IDR 400 billion from state-owned banks.
Specifically, in East Kalimantan, GAR has provided assistance and interest-free credit to independent farmers through the Smallholders Development Programme since 2013. Farmers have access to high-yielding seeds, fertiliser and herbicides, and heavy equipment rental, at below market rates. To date, we have disbursed more than IDR 30 billion in interest-free loans and other aid.