On the 25th January 2018, Unilever and PTPN signed a Memorandum of Understanding (MoU) to partner in Indonesia and cooperate to back local mills and smallholder farmers to produce palm oil.
MoU agreement
The palm oil will be made in Indonesia according to the standards of no deforestation, no development on peat and no exploitation of people and communities (NDPE).
Together, the duo hopes that this produce-protect partnership will support farmers and enable them to boost their yields and improve their livelihoods.
As the companies team up, PTPN will give Unilever access to its mills and its supplying farmer base. This will give Unilever the opportunity to help these mills and farmers gain sustainability certification by applying a combination of dedicated resources, funding and technical expertise.
Smallholder farmers will then be able to up their productivity and will be better positioned to enter the palm oil supply chain in accordance with the appropriate standards.
Adhering to standards
Describing their efforts in recent years, Marc Engel, Chief Supply Chain Officer at Unilever, disclosed: “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.”
Today, the company is “involved in various partnerships to help smallholder farmers improve their yields while protecting the environment and local communities".
Commenting on how this latest partnership marks a positive leap forward in these efforts, Engel went on to say: “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.”
Promoted practices
Government-owned PTPN has a substantial part to play in the Indonesian palm oil industry as it has numerous relationships with smallholder farmers. This latest MoU with Unilever now offers an important incentive for smallholder farmers to “adopt sustainable agricultural and business practices”.
This provides a serious and progressive business case for sustainable palm oil, along with providing training and skills.
Local palm oil community
“As a Holding Company, PTPN III manages ± 61% of its area as oil palm plantations divided into 10 subsidiaries, some of which are already certified as sustainable. We are committed to continuing sustainable palm oil management,” added 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.”
Consequently, this new relationship enables PTPN to “source from certified smallholder farmers gives us the ability to produce quality and sustainable palm oil products”.
Looking to the future, 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”, Pelawi concluded.