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Transforming palm oil at greater scale
Transforming palm oil at greater scale
News Nov 8, 2016

As part of our #peopleofpalmoil series, Rudro Roy introduces the ART approach

As of January 2019, The Forest Trust has become Earthworm Foundation.

Our work in palm oil has led us to a new approach that focuses on using the buying power of palm oil refineries to influence the way their supply of palm oil mills, and any associated plantations, are managed. This, in turn, influences the way the landscape they are active in is managed. We call this the Aggregator/Refinery Transformation plan – or ART for short. In this, the first of a series on the subject, TFT Malaysia’s Rudro Roy introduces ART.
In terms of yield, palm oil is significantly more efficient than other commercial oil crops.
Thousands of plantations and mills supply to several refineries

Palm oil’s efficiency and versatility makes it the most widely used vegetable oil of our times. It is the backbone of many farming households across Asia, Africa and Latin America. However, there are also accusations that the industry has a negative effect on indigenous communities, workers, forests and wildlife.

With that being said, the global market for palm oil is changing. Sustainability is a much more prominent word now than it was in years past. As such, many companies have made commitments to transform their supply chains in an attempt to tackle deforestation and exploitation.

TFT sees the palm oil supply chain as an hourglass – thousands of plantations and mills supply to several refineries. These refineries ship palm oil to many brands and retailers globally. The bottle-neck occurring at a refinery can thus be used as an acupuncture point in order to cascade transformation down to the mill and plantation level.

The basis of the ART (Aggregator/Refinery Transformation) plan

The growth in market demand for sustainable palm oil positions suppliers at the mill and plantation level as a vital part of transformation efforts. This is because a bulk of the efforts to ensure sustainability in the industry occurs in the landscape of the mills and plantations. While not immediately apparent, sustainability efforts can bring long-term benefits to the industry as a whole by ensuring the implementation of best practices and increasing efficiency.

Prevalent deforestation and exploitation issues in certain landscapes have hastened the need for transformation efforts to be scaled up. This is the basis of the ART (Aggregator/Refinery Transformation) plan, which starts off with an engagement with a refinery in a particular company’s supply chain.

The next step is to look at where the palm oil comes from (traceability). This involves working with the refinery to determine the mills who supply them. These mills generally get their FFB (Fresh Fruit Bunches – fruits of the oil palm tree from which crude palm oil is extracted) from dealers, plantations or growers. However, plantation data is obtained later as the ART plan progresses. This allows for expedient transformation to be carried out, instead of being bogged down with unmanageable amounts of data that may have very little impact on transformation efforts.

Based on a desktop analysis, certain mills are prioritised for visits. This process of using spatial and non-spatial data is known as the Mill Prioritisation Process (MPP). The prioritised sample size deters the need to visit every mill. These visits are part of the Deep Level Engagement with the mills, which results in customised recommendations and actions to help them improve practices.

Field visits are an important part of getting to know people and issues on the ground. Photo courtesy of Florian Wiesner.
Building the necessary trust

The idea behind these visits isn’t to audit the mill. Rather, they are an essential part of building the trust necessary to communicate their buyer’s sustainability efforts and finding a solution together. It is acknowledged that in today’s increasingly complex world, no one person or group holds the answers to all the complicated problems the human race faces. Thus, collaboration becomes ever more important.

Based on several field visits in a particular area, anonymised reports are generated representing issues that may be prevalent in a refinery’s supply shed. Via Broad Level Engagements, discussions then begin with other mills in the area, which may not have been visited. The basis behind these discussions is to socialise the reports and empower mills to act as key transformational nodes within the supply chain. Essentially, this would allow mills to take ownership of their own supply chain’s transformation, thereby leading to a longer-lasting and more effective change in practices.

Encouraging conversation between mills and suppliers

Using prevalent issues found in that landscape, the Broad Level Engagement acts as a platform to communicate these findings and develop solutions. This is done via tool kits, training materials and knowledge-sharing sessions.

The emphasis here is not to be accusatory and judgemental. Rather, it is to raise awareness and encourage a conversation among mills and FFB (Fresh Fruit Bunch) suppliers. Such a platform fosters collaboration and information sharing, because some suppliers may have already developed solutions to the findings.

It is acknowledged that TFT doesn’t possess all the answers and therefore doesn’t claim to be an expert in all matters. However, TFT’s expertise lies primarily in breaking down the barriers that distance us from one another, thereby impeding innovation and growth. The resulting open channels of communication are also a key component of transformation.

The ART plan is an attempt to solve issues in their entirety – from initial communication with the company to the engagements and transformation efforts with their suppliers. Of paramount importance to transformation efforts is the practicality of solutions. This practicality is borne from an understanding that deforestation and exploitation are complex issues that are intertwined with the livelihoods of people.

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Areas of work:
Healthy Forests

Palm oil

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