Sime Darby Berhad : Plantation Extends Sustainable Supply Chain to Include Small Producers

Kuala Lumpur, 8 June 2016
- Sime Darby Plantation (SDP) is collaborating with Wild Asia (WA), a Malaysian-based social enterprise, to assist small oil palm producers in the Lower Kinabatangan area in Sabah to be part of its sustainable palm oil value chain.

Under the partnership, SDP, the world's biggest producer of Certified Sustainable Palm Oil (CSPO), will secure the supply of certified oil palm Fresh Fruit Bunch (FFB) from small producers under the Wild Asia Group Scheme (WAGS) for its Sandakan Palm Oil Mill. To date, there are about 1,000 small producers in the Lower Kinabatangan area, of whom 400 have been identified by WA, including 115 that have achieved the Roundtable on Sustainable Palm Oil (RSPO) certification for their operations. The project will also see WA work closely with SDP to assist the rest of the small producers in the area to achieve RSPO certification.

This will help to ensure a more steady income for the small producers in the area, as they look forward to improving their operations to meet international standards with the RSPO certification.

'Small producers cultivate a significant percentage of the total oil palm areas in Malaysia. Helping them to be certified will boost the amount of CSPO in the market and hopefully improve their income. Sime Darby Plantation has already embarked on a full RSPO certification programme for our own estates and now we are going to work on traceability, zero deforestation and zero burning commitments for our third party suppliers such as these small producers,' said Datuk Franki Anthony Dass, Managing Director of Sime Darby Plantation.

'Our long term vision is to integrate certified small producers across all our Mills and this is very much in line with our efforts in promoting a more sustainable palm oil production across the industry,' he added.

Dr. Reza Azmi, the Founder and Executive Director of Wild Asia, shares a similar view. 'This is a partnership that we are excited to forge, to be able to work with the world's largest CSPO producer to develop innovative solutions to meet traceability and zero deforestation commitments'.

This partnership, he added, 'will bring tangible benefits to the small producers in Sabah'.

The small producers that will be involved in this initiative are currently funded under Project RiLeaf, a joint project by Nestle and the Sime Darby Foundation to preserve and sustain the environment and ecosystems specifically along the Kinabatangan River. Participants of the programme will also benefit from SDP's commitment to purchase their FFBs even during peak cropping seasons.

This effort would also change the status of SDP's Sandakan Bay Mill from its current Mass Balance to Identity Preserved Mill, once it starts to get fully certified supply from all its third-party sources.

Small producers in the lower Kinabatangan area are a group of independent oil palm growers, each with less than 500 hectares of planted areas. They also include smallholders with even smaller plantation size of 50 hectares and below (based on RSPO's definition). While SDP's mills currently receive about 11,000 metric tonnes (MT) FFB from 24 independent smallholders throughout Malaysia, the partnership with WA will significantly increase the participation of smallholders in SDP's supply chain. In addition to this, SDP's operations in Indonesia also source about 695,000 MT of FFB from its smallholders' KKPA (Members' Primary Credit Co-operative) and Plasma schemes which cover an approximately 45,270 hectares of land, 24,000 hectares of which have been RSPO certified. SDP is committed to support the certification of the remaining estates under its out-growers' scheme by 2018.