Smallholders - Thailand

Approximately 95% of overall palm oil production in Thailand comes from smallholders. Currently, there are about 285,000 farmers across Thailand with an average plantation land of approximately 2.5 hectares. Most palm oil mills in Thailand are independently owned and lack the resources necessary to implement sustainability and certification programmes. As we work further down the supply chain, it becomes increasingly challenging to reach smallholders and work with them. Due to the significant contribution of smallholders in Thailand, we are mindful that strong collaboration with other stakeholders in the supply chain is integral to move everyone on the sustainability journey.

Our refinery in Thailand, Morakot Industries, has established a smallholder programme in collaboration with local mill partners, to help smallholders achieve certification, and to secure a steady and reliable supply of Certified Sustainable Palm Oil (CSPO) into its supply chain.

In 2019, we committed to expanding our current supply of CSPO Mass Balance to Identity Preserved (IP) / Segregated (SG). This means we ensure sustainable palm oil from a single identifiable certified source and different certified sources are kept separately from other palm oil throughout the supply chain.

The smallholder certification programme was established in 2018 and identified 6,000 smallholders with a production capacity of over 300,000 MT of Fresh Fruit Bunches (FFB) per year. These smallholders are divided into 10 groups based on their location – that is, whether they are located within 50 km radius of an identified mill. We then run a series of engagement sessions to raise smallholder awareness about certification processes and to better understand the needs and challenges faced by the smallholders in Thailand.

We encourage smallholders to complete certification processes by paying out premiums as an incentive for the production of certified sustainable palm oil. As of 2019, we now have a supply of fully segregated CSPO from 592 smallholders. During this period, we also signed a Memorandum of Understanding with Narathiwat Cooperative and Panom Cooperative, two out of 10 smallholder collectives. Panom Cooperative has successfully received its RSPO certification and currently supplies to S.P.O. Agro-Industries Co. Ltd. Mill.

Our aim is to enable 700 smallholders in our Thai supply base to supply certified Identity Preserved palm oil by the end of 2020.

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