The FINANCIAL — Unilever and Indonesian government-owned palm oil plantation company PT Perkebunan Nusantara (PTPN) signed a Memorandum of Understanding (MoU) to work together in Indonesia to support local mills and smallholder farmers to produce palm oil according to the standards of no deforestation, no development on peat and no exploitation of people and communities (NDPE). This produce-protect partnership will help farmers to increase their yields and improve their livelihoods.
As part of the partnership, PTPN will provide Unilever access to its mills and its supplying farmer base. Unilever will support the mills and farmers to obtain sustainability certification through a combination of dedicated resources, funding and technical expertise. This will ensure smallholder farmers are better positioned to enter the palm oil supply chain – they will be able to increase their productivity while producing palm oil to the right standards to protect people and planet, according to Unilever.
Marc Engel, Chief Supply Chain Officer at Unilever: “Unilever’s ambition is to make sustainable palm oil mainstream. We have been working really hard to make this a reality and we have been evolving our approach over the years. We are involved in various partnerships to help smallholder farmers improve their yields while protecting the environment and local communities. The MoU with PTPN is the first time we can apply the produce-protect model at scale – our partnership will have a positive impact in Indonesia from an environmental, social and economic perspective which makes it unique to the industry.”
PTPN is government-owned and a large player in the Indonesian palm oil industry working with an extensive network of smallholder farmers. The MoU with Unilever is an important incentive for smallholder farmers to adopt sustainable agricultural and business practices as it supports the business case for sustainable palm oil as well as gives them access to the necessary training and skills to make the switch.
“As a Holding Company, PTPN III manages ± 61% of its area as oil palm plantations divided in 10 subsidiaries, some of which are already certified as sustainable. We are committed to continuing sustainable palm oil management” said Erwan Pelawi, Operating Managing Director PTPN III Holding Company. “Palm oil from smallholders also enters our supply chain through PTPN Group’s palm oil mills. Therefore, being able to source from certified smallholder farmers gives us the ability to produce quality and sustainable palm oil products. The MoU with Unilever is expected to improve the quality of how smallholder farmers manage palm oil cultivation and will also accelerate the process of sustainable palm oil certification which will in turn provide better benefits for the welfare of oil palm farmers in Indonesia”.