IOI Loders leads farmer support program

IOI Loders Croklaan, Kerry Group, Wild Asia and the Fortuna Palm Oil Mill announced a three-year Small-Growers Support Program for smallholder farmers in Sabah. The objective is to help farmers (with farm size of up to 500Ha) implement sustainable agricultural practices to boost their productivity, and eventually allow their inclusion in IOI’s supply chain.

The program will guide IOI’s directly sourced 3^rd party supplying mills in achieving staged compliance to IOI’s Sustainable Palm Policy and helps them prepare for certification requirements. Wild Asia, a not-for-profit social enterprise founded in Malaysia, is the implementation partner for the program that will be managed by both Kerry Group and IOI Loders Croklaan.

Smallholders are responsible for 40% of total worldwide palm oil production

“We have a few potential participating non-RSPO certified mills in the Telupid, Beluran and Kinabatangan landscape (Sabah) with approximately 5,000 smallholders and small growers. We start with one mill – Fortuna – and will increase the number throughout the duration of the program,” says Ben Vreeburg, Sustainability Director at IOI Loders Croklaan, which is a leading producer and supplier of premium quality oils and fats for the food manufacturing industry. “Smallholders will see a decrease in FFB (Fresh Fruit Bunch) production costs in the 1^st year and a gradual increase in FFB yield in the 2^nd year. Through this program millers are ensured of a steady supply and better control of FFB and a higher extraction rate.”

Fortuna is a palm oil mill based in Beluran, Sandakan, Sabah. Their business activities include the cultivation, harvesting and processing of palm oil fruits into Crude Palm Oil (CPO) and Palm Kernel (PK). The company is also involved in the manufacturing of pelletized bio-organic chemical fertilizers for the palm oil industry. Fortuna is a direct supplier of Crude Palm Oil to the IOI Group.

Smallholders play a major role in the palm oil supply chain, since they provide 40% of the total worldwide palm oil production. “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 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 program is designed to help Kerry, an Ireland-based provider of functional ingredients and nutrition technologies and systems, 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 program aims to deliver a positive impact for communities and workers within our supply chain.”