This program supports the inclusion of smallholders into IOI's supply chain and will boost small farmer's (farm size between 0 to 500 Ha) productivity by helping them to implement sustainable agricultural practices.
It also guides IOI's directly sourced third-party supplying mills in achieving staged compliance to IOI's Sustainable Palm Policy and helps them prepare for certification requirements.
Wild Asia is the implementation partner for the programme that will be managed by both Kerry Group and IOI Loders Croklaan.
"We have a few potential participating non-RSPO certified mills in the Telupid, Beluran and Kinabatangan landscape (Sabah) with approximately 5000 smallholders and small growers. We start with one mill - Fortuna - and will increase the number throughout the duration of the programme," says Ben Vreeburg, Sustainability Director at IOI Loders Croklaan.
"Smallholders will see a decrease in FFB (Fresh Fruit Bunch) production costs in the first year and a gradual increase in FFB yield in the second year. Through this programme, millers are ensured of a steady supply and better control of FFB and a higher extraction rate."
Forty per cent of the total worldwide palm oil production is ultimately provided by smallholders. They play a critical role in the palm oil supply chain.
"If you look at the palm oil yield, there are still large variances between the yield of smallholders and big plantation companies," explains Vreeburg.
"You could increase FFB production by up to 50% without any new developments if you increase the current yield of smallholders. Helping smallholders to get good sustainable manufacturing practices in place will increase their productivity and further lift them out of poverty."
The programme is designed to help Kerry work more collaboratively with its suppliers, Maarten Butselaar, Responsible Sourcing Manager at Kerry Group, explains: "As a buyer of palm oil we have limited interaction with mills or palm growers, so we rely on our supply partners to help meet our sourcing commitments."
"This partnership gives us a more direct influence on practices at mill and farm level in the project area. Alongside our broader requirements on palm oil, the programme aims to deliver a positive impact for communities and workers within our supply chain."