Mr. Daniel May_giz

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


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


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


% 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


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


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


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


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


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

[email protected]

www.giz.de/sustainablepalmoil

Documents

Mr. Daniel May_giz