Palm oil giant sets ‘fully traceable’ supply chain goal for 2020

The world's second largest palm oil plantation company has told edie it wants to achieve "greater awareness of the production practices in the supply chain" as it sets itself an ambitious goal of 100% traceability to plantation by 2020.

Golden Agri-Resources (GAR) aims to reach this sustainability milestone for the seven million tons of palm oil it purchases and processes through its own mills by 2017, with independent mills to follow by 2020.

Speaking exclusively to edie, GAR’s sustainability and strategic stakeholder engagement managing director Agus Purnomo said the introduction of this time-bound plan offers “opportunities to engage with an extensive and wider audience” to improve yields and environmental practices throughout the Singaporean company and its supply chain.

“We led the way in committing to delink palm oil production from deforestation in 2011 and hope that we can now set a new example of how to improve engagement, productivity and sustainability across the industry,” Purnomo said. “The journey will not be easy or straightforward, and will require the involvement of thousands of farmers, but with the support of our partners we have set a goal of 2020 to realise our ambition.”

Traceability challenges

The first phase will establish traceability to plantation for the 44 mills owned directly by GAR, which accounts for approximately 40% of its total palm oil supply. For GAR-owned mills, the source is already known for around 90% of the fresh fruit bunch (FFB) oil palm that enters the site.

The second phase is to achieve full traceability to plantation for the independent third-party mills that supply GAR. Purnomo believes the biggest challenge here lies in the scale and scope of engagement that GAR will have to carry out to achieve full traceability at the independent mills.

“There are some further 445 independent mills that we will have to work with over the next four years to achieve full traceability,” he added. “Some mills are buying from middlemen who in turn buy from many independent farmers may take longer to complete their mapping.

“In practice, this could mean they have to engage with hundreds of individual plantation managers, intermediaries and smallholder farmers. However, this process will bring us opportunities to engage with an extensive and wider audience which will allow us greater awareness of the production practices in our supply chain, and where we can best help to support our suppliers adopt and strengthen their sustainable practices.”

Purnomo insisted that GAR did not want to approach the endeavour as an exercise to catch out errant palm oil suppliers, but rather as a means of convincing suppliers to join the group in adopting more responsible social and environmental practices and, consequently, helping to create a more sustainable palm oil supply chain.

Supplier mapping

Earlier this year, edie reported that GAR had completed the mapping and traceability of its supply chain through to each of its 489 mills in Indonesia – its primar source of palm oil. That project ensured that more than seven million tonnes of palm oil and kernels are sustainably sourced from GAR’s supply chain and mills.

More recently, the plantation company revealed that it was engaging with individual supplier mills which had allegedly been using ‘tainted and illegal’ palm oil sources, in an attempt to clarify revelations uncovered in an earlier report. GAR, which was mentioned in the report alongside Wilmar, Royal Golden Eagle and Musim Mas, stated that it was concerned about the allegations and was in process of addressing the issue with specific suppliers.

On a broader level, a number of major palm oil plantation companies and brands that use palm oil-based products have recently come under fire from campaigners for apparent inadequate palm oil policies.

Last month, Greenpeace claimed that a raft of consumer goods companies were “letting their customers down” by failing to break the link between the use of palm oil in everyday products and deforestation.

And earlier today, (27 April) Greenpeace issued a call for legal action against fellow palm oil giant IOI, which the organisation claims is continuing to “drain and develop fire-prone peatland concessions” in West Kalimantan, despite an Indonesian government ban on further peatland development and sanctions from both the government and the Roundtable on Sustainable Palm Oil.

Writing in an exclusive blog for edie this week, Aida Greenbury, managing director of sustainability at Asia Pulp & Paper (APP) – which is owned by the same Indonesian company that owns GAR (Sinar Mas Group) – analysed what a new timber agreement between the EU and Indonesia will mean for forests, communities, and the future of global trade.

George Ogleby

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