Supply Chain

How BASF, Henkel Are Supporting Smallholders to Secure Supply of Sustainable Palm Oil

By Sustainable Brands | Published 8 years ago | About a 4 minute read

In recent years, palm oil has arguably become one of the world’s most ubiquitous and contentious raw materials in the consumer goods industry. When conventionally produced palm oil and palm kernel oil are used, there are significant economic, environmental and social impacts along the entire supply chain – from field to shelf. Small farms produce roughly 40 percent of the world’s palm and palm kernel oil; an important question for the oil-producing countries is how to increase the yields from the land already under cultivation. This is why chemical giants Henkel and BASF – both of which use palm oil in a variety of their cosmetic and home care products – are collaborating with the development organization Solidaridad to support a project in Indonesia and advocate for smallholders and local initiatives.

Trainings for roughly 5,500 farmers

Sustainable farming methods, efficient production and high occupational health and safety standards are some of the most important conditions for certified palm oil production. Smallholders can learn how to fulfill these requirements locally in dedicated training programs. Since 2015, Henkel has been supporting the 5-year-project in the Indonesian province of West Kalimantan. Earlier this year, BASF joined the effort as an additional industrial partner. The smallholder program was implemented by Solidaridad in cooperation with its partners, Australian NGO Good Return and Credit Union Keling Kumang (CUKK). Good Return coaches and supports the teachers who carry out the trainings on the ground and who will continue the farmer support program after the project ends. The teachers are employees of CUKK, the second-largest local credit organization in Indonesia.

Through the project, Solidaridad and its partners want to establish sustainable supply chains for palm and palm kernel oil that both effectively improve smallholders’ living conditions and are eligible for certification according to the criteria of the Roundtable on Sustainable Palm Oil (RSPO). Of the roughly 5,500 farmers that will be reached by the project, 1,600 will learn about the different aspects of good agricultural practice (GAP) in direct trainings that include measures for sustainable farming as well as for increasing crop yields. Furthermore, roughly 3,900 smallholders will be reached not only through a multiplier effect, but also via farmer field days and regular text messages on their mobile phones. The project spans an area of roughly 16,000 hectares.

Higher yields and increased income for smallholders

The productivity of small farms in the palm oil industry is estimated to be 40 percent lower than the average when compared with larger companies. Measures ranging from farmer trainings to sustainable farming methods are expected to increase palm fruit yields and increase smallholders’ revenue.

“We are delighted that Henkel and BASF are supporting this project in West Kalimantan,” said Marieke Leegwater, program manager for palm oil at Solidaridad. “We think that it is of great interest that companies using palm oil products take responsibility beyond just buying sustainable palm oil, and contribute to investing in more sustainable and inclusive palm oil supply chains on the ground. This project certainly contributes to building such inclusive and sustainable chains, as it is expected to make a significant contribution to improve the livelihoods of independent oil palm farmers in the province of West Kalimantan, one of the poorest regions in Indonesia.”

Common commitment to a sustainable palm oil industry

“We want to change the market to develop a sustainable palm oil industry. To do so, we also need solutions and projects that allow small farms to increase productivity on their plantations – and we are making an important contribution to that by supporting local partners and initiatives,” explained Thomas Müller-Kirschbaum, Corporate SVP in the Laundry & Home Care business unit and Deputy Chairman of Henkel’s Sustainability Council. “With BASF supporting this smallholder project as an additional industrial partner, we’re sending the signal that we are joining forces to make the palm oil market more sustainable.”

“BASF is one of the largest global manufacturers of ingredients for the cosmetics industry, as well as the home care industry, and one of the links in the palm oil supply chain from smallholders to end consumers. We believe that we can only find solutions for sustainable, certified palm oil products by working together to preserve the forests and improve the living conditions of the people in the farming areas,” said Jan-Peter Sander, SVP at BASF Personal Care Europe. “That’s why we are collaborating intensively with our customers and suppliers, and also want to involve more smallholders in the dialog. The project in West Kalimantan is an important step in this direction.”