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Palm oil industry
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Sustainability is possible!
How smallholders in Thailand
benefit from sustainability
certification
16.09.2011 Seite 1Seite 1
Daniel May, PalmEx, 9.9.2011
Overview
GIZ
Sustainable Palm oil production in
Thailand
16.09.2011 Seite 2Seite 2
Thailand
Challenges
The Project
Conclusions
Deutsche Gesellschaft
fr Internationale Zusammenarbeit GmbH
As an international cooperation enterprise for
sustainable development with worldwide operations,
the federally owned Deutsche Gesellschaft fr
Internationale Zusammenarbeit (GIZ) GmbH supports
16.09.2011 Seite 3Seite 3
Internationale Zusammenarbeit (GIZ) GmbH supports
the German Government in implementing its
development policy objectives.
Our corporate objective is to improve peoples living
conditions on a sustainable basis.
We work on behalf of the German Federal
Government and other public and private sector, and
national and international clients.
Oil palm production in South-East-Asia
Item / country Indonesia Malaysia Thailand Papua NG
Total land area
(Mln Ha)
181.16 32.85 51.29 45.29
% Forest area 46.78 62.73 28.19 64.39
% Agricultural area 26.77 23.95 38.66 2.30
16.09.2011 Seite 4Seite 4
% Agricultural area 26.77 23.95 38.66 2.30
Oil palm harvested
area (Mln Ha)
5.00 3.90 0.45 0.096
% Oil Palm to
Agricultural area
10.31 49.56 2.28 9.23
FFB Yield (Mln. ton) 85 83 7.9 1.4
FFB Productivity
(ton/Ha)
17.00 21.28 17.49 14.58
Area under
smallholder(%)*
33 11 76 50
Source: FAOSTAT (2010), * World Bank (2010)
Sustainable Palm Oil Production in Thailand
No rain forest destruction
Production costs higher than
in Indonesia and Malaysia
16.09.2011 Seite 5Seite 5
Smallholders dominate ca.
80% of the production
60 palm oil mills with
overcapacity
Diverse agricultural landscape
INDEPENDENT & LOOSE COOPERATION
Challenges of the TH Palm Oil Industry
Market FailureLoss of 0.4 billion USD / year*
Poor
agri. practices
& management
Lack of
Agricultural
Harvesting of
unripe fruit
bunchPoor ramp
management: water
spray and sand mixture
16.09.2011 Seite 6Seite 6
Smallholder Palm Oil Crushing MillsHarvest team Ramp (middleman)
Ministry of Agri.
(DoAE, DoA, ACFS)
Academic
Institutions
Provincial Govt.
Office
Agr. Inputs
Supplier
Asso. of Palm
Oil mills/refinery
National Palm
Oil Board
Low quality
control of FFB
purchasing
* Own calculation
Agricultural
knowledge &
inputs: fertilizer,
credit, etc.
Low quality
seedlings Low OER (ineficient) of
crushing mill
The Project
Funded by German Federal Ministry of
Environment, Nature Conservation and Nuclear
Safety (BMU)
Jointly implemented with the Office of
16.09.2011 Seite 7Seite 7
Jointly implemented with the Office of
Agriculture Economics
Project duration: 3,5 years
Volume: 3,5 Mio.
Goal: Certified sustainable palm oil from
smallholders is available on the market
Agroindustrie seeks for:Farmer seeks for:
Win-Win-Situation of commodity partnerships
16.09.2011 Seite 8Seite 8
Planning reliability
through long term
secured
supply/feedstock
chain: Sustainability
CSR, marketing
Sustainable
developement
through
market access, knowhow/
education social
Security processing
Partnership Farming
Definition: Partnership Farming is an approach
which promotes sustainable agriculture and
contributes to improved agricultural capacity
necessary to access domestic quality and
Partnership Farming
16.09.2011 Seite 9Seite 9
necessary to access domestic quality and
international markets
Whats new: The most innovative aspect of
Partnership Farming is that it is not commodity
specific, enabling farmers to be self-sufficient
decision-makers which allows for a more
flexible production system
Age (average) 50,4 years
Formal education level:
Primary education level and under
Secuandary level
Higher level
63,4 %
22,3%
14,3%
Family size 4,0 Persons
Key Characteristics of oil palm smallholders in
Thailand
16.09.2011 Seite 10Seite 10
Area of Oil palm production 7,2 HA
Oil palm farming experiences 14,9 Years
Household annual income (THB)
200,000 (6,666 USD)
200,000 400,000 (13,333 USD)
400,000 600,000 (20,000 USD)
> 600,000 (20,000 USD)
24.4 %
41.2 %
20.5 %
13.9 %
Household income depending on Oil palm
Up to 25 %
25 50 %
51 75 %
More than 75 %
12.7 %
32.0 %
24.5 %
30.8 %
Source: (n = 503 of total 118,354)* , *Project baseline study in Thailand (95% confidence level)
**Exchange rate: 1 USD = 30 THB (15th, October, 2010)
Develop sustainable Palm Oil certification system in Thailand
Support Thailand National
Support the implementation of a certified Palm Oil production in
pilot areas
Select mills and small
Projects intervention: Strategy
Aims:
-Support 1,000
SHs
certified RSPO
-Develop concepts
National Level (policy, framework) Local level (field, production)
16.09.2011 Seite 11Seite 11
Support Thailand National Initiative Working Groups
Facilitate the TH NI process
Thai NI on RSPO P&C:
- Large plantation: Approved on July, 2010
- NI for Smallholder Task Force is formed
Select mills and small farmer/groups in pilot areas
Value chain coordination, technical supports, and better
farm practices: productivity, quality, reduce costs
Improve livelihood of smallholders (Socio-economic
& environment)
Sustainable Palm Oil Production
-Develop concepts
for
group certification
Opportunity
-Transfer &
upscale
the concepts
within
Thailand and other
countries
Project intervention: Processes
FRESH FRUIT BUNCH QUALITY
SUSTAINABILITY
Best Management
16.09.2011 Seite 12Seite 12
FARM PRODUCTIVITY
Best Management
Practices (Th GAP, IPM, OSH, etc)
Farmer group &
institutional development
Database management
system
Internal Control System
Mutual interest, benefit &
information sharing
Long-term relationship &
interdependence
Training & technical support: Fertilizer Management,
Leaf & soil analysis, Plantation management
Farm inputs coordination
Price premium based on
quality
Grading system
Harvesting and fruit
handling guidelines/training
Project
Director
Technical
Field Manager
AssistantFarm Advisor 1
Mill Coordinator 1
Mill Coordinator
Private MillsSupport office in Bangkok/Eschborn: Certification
system, GHG calculation, Monitoring, Policy &
advocacy
Project intervention: Steering structure
16.09.2011 Seite 13Seite 13
Project Manager
TechnicalManagement
Officer
Farmer Coordinator
(1, 2)
Farm Advisor 2Mill Coordinator
2
Farm Advisor 3Mill Coordinator
3
Farm Advisor
4, 5
Mill Coordinator 4
Farm AdvisorK Coordinator
Oil Palm Expert
Admin. Officer
Ao Luek Cooperative In brown color: Personnel financed by the project
Project intervention: Cooperation
16.09.2011 Seite 14Seite 14
Project intervention: Learning & Innovation
Partnership Agreement:
Interdependent agreement
Mills support
Fertilizer at the mills price & quality
Seedlings provision (price & priority)
Free empty fruit bunches (EFB)
16.09.2011 Seite 15Seite 15
Free empty fruit bunches (EFB)
Premium price based on QUALITY
Express delivery channel
Technical & training supports
Farmers commitment
Regular delivery
Plantation Best Management
Commitment to the groups agreement &
rule towards sustainability on socio-,
economic and environmental aspects
Direct Impact on Smallholders/Mills
Productivity
Better farm practices
Farm records
Cost reduction on fertilizer: appropriate application & group purchase via the mills
Quality-based pricing mechanism
16.09.2011 Seite 16Seite 16
Quality
Quality-based pricing mechanism
Interactive platform between smallholder & processor
Sustainability
Farmer Group formation
Learning & exchanges among groups
Strong linkages between mills & Smallholders
Mills provide a range of sustainable products
Challenges & Solutions
FRESH FRUIT
SUSTAINABILITYPoor agriculturepractices &
management
Challenges
Communication
Capacity building
and traing for
smallholders:
Guidelines for GAP,
Solutions
Improve
16.09.2011 Seite 17Seite 17
FARM PRODUCTIVITY
FRUIT BUNCH QUALITY
Limited
financing effort
by Smallholders
Communication
lack between
smallholders
and mills
Lack of
incentives for
quality
Improve
cooperation in
value chain. Result:
lower production
costs & higher
quality
Partnership
Agreement
Financial support
for smallholders
Conclusions
Thai palm oil industry has great potential to achieve
sustainability standards
Smallholders are key and they can comply with the
standards, if provided capacity
Capacity building and training are required
16.09.2011 Seite 18Seite 18
Capacity building and training are required
Fertilizer Management, Farm Management, Harvesting and
Quality Management etc. -> all training material is available
in Thailand!
Institutional support and funding needed!
Palm oil production in Thailand is on the right right,
but still a lot need to be done
Thank you for your attention!
16.09.2011 Seite 19Seite 19
Contact: Daniel May Project Director
Daniel.May@giz.de
www.giz.de/sustainablepalmoil
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