SD Guthrie (formerly Sime Darby Plantation), Solidaridad, and Colgate-Palmolive have partnered under the Smallholders Inclusion Project, an initiative aimed at empowering palm prosperity of smallholders through landscape collaborations. SD Guthrie's commitment to transparency and responsible sourcing aligns perfectly with Solidaridad's dedication to sustainable agricultural practices. Together with Colgate-Palmolive's focus on ethical sourcing, the programme fosters a holistic approach that enhances smallholder capabilities, promotes biodiversity conservation, and ensures sustainable livelihoods across palm oil landscapes. This partnership stands as a beacon of integrated sustainability, demonstrating how collective action can drive positive change within global supply chains.
Malaysia is the second largest palm oil producer in the world producing one third of global production. Approximately, 421 thousand oil palm smallholders account for 1.67 million ha, or 28,3% of the total planted area in Malaysia and can play a significant role in transitioning the industry to sustainable palm oil production.
A Social Impact Assessment (SIA) study conducted by Solidaridad Malaysia in collaboration with Universiti Kebangsaan Malaysia (UKM) indicates that most oil palm smallholders have seen improvements in their standard of living compared to earlier generations. Despite this progress, they still rely on oil palm cultivation as their primary income source and struggle to sustain loan payments under situational duress or depressed FFB prices. Additionally, the study revealed that climate change has adversely affected oil palm yield, particularly farmers experiencing losses due to prolonged drought and excessive flooding.
In response to these challenges, SD Guthrie and Solidaridad Network embarked on a 3-year Smallholders Inclusion Project in the fourth quarter of 2022. Recognizing the importance of sustainable practices Colgate-Palmolive joined the project the following year to contribute to the sustainability mission. This project aims to increase the adoption of Good Agricultural Practices (GAP) to improve farmers’ resilience in facing the challenges of climate change, enhance transparency and traceability, and consequently improve the productivity, sustainability and livelihoods of oil palm smallholders. To avoid the need for deforestation which, along with traceability, are key sustainability challenges which smallholders face, the initiative also strives to minimize further land use change by focusing efforts on intensification and boosting the productivity of smallholders’ existing land. Furthermore, it aims to reduce greenhouse gases (GHG) emission through effective use of fertilisers and farm chemicals. By addressing these critical areas, the Smallholders Inclusion Project seeks to create a more resilient and sustainable palm oil industry, ensuring that smallholders are better equipped to navigate the complexities of climate change and market dynamics.
The project focuses on training smallholders within the state of Perak. With 46,973 smallholders, Perak is the second largest state after Johor in terms of smallholder numbers, accounting for approximately 12% of the total planted area. However, Perak experiences monsoon seasons with heavy rainfall throughout the year posing significant challenges such as erosion and flooding particularly in low-lying areas like Teluk Intan. These conditions highlight the need for effective water and fertiliser management programmes to ensure that oil palm smallholders can maintain productivity despite unfavourable weather conditions.
In addition to GAP, the trainings also cover water management, fertilisation application, pesticide management, pest management practices and waste management. The training prepares farmers to be in compliance with MSPO and relevant national laws, such as regulations in prohibition of using child labour, foreign worker employment, rights of workers and local communities, safe and healthy working environment, as well as compliance with workers’ minimum standards of living. Smallholders are also made aware of the need to provide accessibility to grievance mechanisms.
As of June 2024, this project has trained more than 1,200 oil palm smallholders. Based on the assessment performed with a representative sample from this group, many of these farmers are doing well in terms of yield production as most of their palm trees are at young and prime state (13 years old oil palm), the smallholders are in need of proper farm record keeping. Majority of them have low sustainability risk according to a matrix developed by Solidaridad.
In most cases, farmers are at the receiving end of the market supply chain, bearing the burden of sustainability requirements. Various factors, such as logistical and financial issues contribute to the lack of sustainability practices among smallholders. Through this project, the involvement of industry leading stakeholders like SD Guthrie and Colgate-Palmolive sets a fine example for leading oil palm smallholders in sustainable productions This project effectively demonstrates the positive impact of an inclusive supply chain that can help to “raise the floor, instead of raising the bar”. By continuously providing support to farmers, the project aims to improve farmers livelihoods; while ensuring they produce fresh fruit bunch (FFB) in line with sustainability requirements.
The partners will continue to work to empower smallholders, ensuring their vital inclusion in sustainable supply chains. Through ongoing training, resource sharing, and support, SD Guthrie, Solidaridad, and Colgate-Palmolive have committed to helping smallholders thrive and meet sustainability standards. They pledge to never leave anyone behind, fostering an inclusive and equitable palm oil industry where every farmer has a chance to succeed. Together, they aim to create resilient communities and sustainable landscapes, setting a powerful example of how working together can bring about meaningful, lasting change for everyone involved.
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