Henkel and BASF collaborate to make Indonesia palm production more viable

The biggest questions facing the team on this collaboration project was how to improve things in existing farms without negatively impacting the livelihood of the farmers and also making the whole process more sustainable and eco-friendly.

The quest to improve yields has invariably led to more and more rainforests being cleared to make way for palm oil plantation, leading to potentially devastating repercussions for the environment. So one of the biggest aims is to maintain the existing footprint of those farms, while still improving yields

In recent years, palm oil has come under the microscope because of organisations such as Green Peace, which have fought hard to bring about public awareness of the damage that can be done to the environment through palm oil.

Palm oil is one of the main ingredients for soaps and liquid soaps, so the cosmetics and personal care industry is a big customer. But palm oil is also one of the most effective ingredients, while other alternatives such as vegetable oil and coconut oil require far more farming land to reach the same type of yields as palm oil

Training Indonesian farmers​

That is why sustainable farming methods, efficient production and high occupational health and safety standards have become some of the most important conditions for certified palm oil production. Smallholders can learn how to fulfill these requirements locally in dedicated training programs.

Henkel's work in this area began in 2015 with a 5-year-project in the Indonesian province of West Kalimantan aimed at meeting all of these objectives.

And earlier this year, BASF joined the effort as an additional industrial partner, while the smallholder program is implemented by Solidaridad in cooperation with its partners Good Return and Credit Union Keling Kumang (CUKK). The Australian non-governmental organization Good Return coaches and supports the teachers who carry out the trainings on the ground and who will continue the farmer support programme after the project ends. The teachers are employees of CUKK, the second largest local credit organization in Indonesia.

Through the project, Solidaridad and its partners want to establish sustainable supply chains for palm and palm kernel oil that both effectively improve smallholders’ living conditions and are eligible for certification according to the criteria of the Roundtable on Sustainable Palm Oil (RSPO).

Of the around 5,500 farmers that will be reached by the project, 1,600 will learn about the different aspects of good agricultural practice (GAP) in direct trainings that include measures for sustainable farming as well as for increasing crop yields. Furthermore, around 3,900 smallholders will be reached not only through a multiplier effect, but also via farmer field days and regular text messages on their mobile phones. The project spans an area of roughly 16,000 hectares.

A more sustainable palm oil industry

“We want to change the market to develop a sustainable palm oil industry. To do so, we also need solutions and projects that allow small farms to increase productivity on their plantations – and we are making an important contribution to that by supporting local partners and initiatives,”​ explained Thomas Müller-Kirschbaum, Corporate Senior Vice President in the Laundry & Home Care business unit and Deputy Chairman of Henkel’s Sustainability Council.

“With BASF supporting this smallholder project as an additional industrial partner, we’re sending the signal that we are joining forces to make the palm oil market more sustainable.”​

“BASF is one of the largest global manufacturers of ingredients for the cosmetics industry as well as the home care industry and one of the links in the palm oil supply chain from smallholders to end consumers. We believe that we can only find solutions for sustainable, certified palm oil products by working together to preserve the forests and improve the living conditions of the people in the farming areas,”​ said Jan-Peter Sander, Senior Vice President at BASF Personal Care Europe. ​

“That’s why we are collaborating intensively with our customers and suppliers, and also want to involve more smallholders in the dialog. The project in West Kalimantan is an important step in this direction.”​

Higher yields and increased income

The productivity of small farms in the palm oil industry is estimated to be 40 percent lower than the average when compared with larger companies. Measures ranging from farmer trainings to sustainable farming methods are expected to increase palm fruit yields and increase smallholders’ revenue.

“We are delighted that Henkel and BASF are supporting this project in West Kalimantan,”​ said Marieke Leegwater, program manager palm oil at Solidaridad.

“We think that it is of great interest that companies using palm oil products take responsibility beyond just buying sustainable palm oil, and contribute to investing in more sustainable and inclusive palm oil supply chains on the ground. This project certainly contributes to building such inclusive and sustainable chains, as it is expected to make a significant contribution to improve the livelihoods of independent oil palm farmers in the province of West Kalimantan, one of the poorest regions in Indonesia.”​