Supporting Small Farmers in the Global Palm Oil Supply Chain

WAGS supports small independent farmers to improve crop yields, earn a fair wage, and create products with minimal negative social and environmental impacts[/pullquote]

Smallholders are an important part of the palm oil supply chain. Although many receive support from government schemes and/or local CPO mills, there are large numbers of independent smallholders that remain largely unsupported. As the palm oil industry works to become more sustainable, these independent smallholders can be left behind.

The Wild Asia Group Scheme (WAGS) aims to support small independent palm oil producers (i.e. farmers with less than 40 hectares that are not formally linked to a particular extension scheme or mill) to improve their farming practices and achieve compliance with internationally recognized standards.

What we do

WAGS assists small palm oil producers in a number of ways. We identify local partners that are willing to nurture small producer groups, helping to build bridges between the industry and smallholders. WAGS provides a centralized management system, local coordination, technical assistance and training, to support the producer groups on the path towards greater sustainability and certification.
Our current work focuses on small palm oil farmers, using the RSPO Standard for Independent Smallholders in Malaysia. As the scheme develops we hope to expand it to other commodities, both in Malaysia and beyond.

WAGS for Small Farmers

WAGS will provide the following services for small farmers:

  • It will identify potential partners to support local producer groups;
  • It will identify specific mills that want to support the scheme directly;
  • It will act as a not-for-profit arm to manage donor funds;
  • It will function as a Group Scheme for Independent Smallholders;
  • It will provide Certification Technical Support to enable compliance with RSPO or other standards;
  • It will provide the necessary baseline reviews and assessments to identify the pathway to certification;
  • It will monitor the progress and impacts of the Group Scheme to support effective learning and implementation, and inform future projects;
  • It will provide annual reporting and updates in a transparent manner and communicate objective indicators as measureables.

WAGS in Malaysia

In Malaysia, there are approximately 161,000 independent smallholders growing oil palm. These smallholders cultivate a combined area of around 600,000 hectares (12.8% of the country’s total palm oil production area). On average, Malaysian smallholders produce a far lower FFB yield than other producers (17 tonnes per hectare per year, as opposed to the current national average of 21 tonnes per hectare per year). Their small average farm size, lack of access to institutional, technical and financial support, and limited exposure to best practices, are the major factors impacting yields.

However innovative pilot schemes such as the KSGS are demonstrating that with the right support, independent smallholders can increase their outputs, improve their earnings, and contribute to Malaysia’s production of sustainable palm oil. In order to achieve this, issues relating to lack of capacity and institutional support, weak organization and other problems, first need to be addressed. The WAGS aims to bridge this capacity gap.

The KSGS has demonstrated that the model can work successfully in Malaysia. Effective replication and scaling up of the Scheme would be a significant national achievement, putting Malaysia at the fore front of global efforts to support the socio-economic development of palm oil smallholders. More importantly, WAGS provides farmers with the knowledge, skills, and confidence they need to enhance the productivity of their lands, improve their livelihoods, and ultimately shape their own destinies.

WAGS Highlights

  • 2012: Wild Asia signs a MOU with Solidaridad, an international NGO, to help develop projects in Asia to assist small farmers.
  • 2012: Wild Asia signs a MOU with the Malaysian Palm Oil Board to collaborate to support small farmers in Malaysia.
  • 2012: Wild Asia initiates direct support from MPOB’s Telupid Sustainable Palm Oil Cluster (SPOC) in Sabah. Preliminary field surveys are underway. 85 family farmers and 4,548 tonnes of FFB are projected for the pilot group.
  • 2012: KSGS formally RSPO certified. The group includes 21 family farmers now producing around 1,735 tonnes of FFB per annum. The scheme is supported by one full-time staff member. The scheme is being extended to include 4 long-houses with an additional 29 family farmers.
  • 2011: Wild Asia is commissioned by Cargill Malaysia to map and risk assess its palm oil supply base in Peninsular Malaysia, with an emphasis on smallholders.
  • 2010: WAGS pilot model, Keresa Smallholder Group Scheme (KSGS) initiated with support of Keresa Plantations and Mills and Solidaridad.

WAGS in Action

You can read about some of our work and progress here or download our latest white-paper on small farmers (see below).

Partner WAGS

Addressing the smallholder challenge will require participation from the entire sector, including governments, donors, civil society, corporations and communities. The WAGS model adopts a multi-stakeholder approach to help generate the incentives and support needed by small producers in the palm oil supply chain.

Partnerships between different stakeholders are vital in creating support networks, sharing knowledge and building capacity, and providing direct assistance to producer groups on the ground.

Current WAGS partners include organisations such as Keresa Plantations & Mill, Solidaridad and others that are working with WAGS to improve the lives of small producers and the sustainability of palm oil production. We thank you for your commitment and continued support.

We are also looking for additional partners to support this innovative work. If your company or organization is interested in working with WAGS to support small palm oil farmers, please contact our team for more information.

Comments

  1. says

    We are interested in your initiative “Supporting Small Farmers in the Palm Oil Supply Chain.”

    Our company Indochine Natural Sdn Bhd (www.indochinenatural.com) located in Penang uses palm oil in the production of our handmade natural soap, and as the first and only World Fair Trade Organisation (WFTO) certified company in Malaysia would love to be able to utilise this palm oil from small holders in the production of our products. But how? Are small lots of palm oil available (200 -300 Kg) at a sustainable and competitive price?

    • reza says

      Hi Mike. It will be interesting to see how small volumes could be purchased. Perhaps you could email me some details of what you use, volumes per month and what sort of prices you currently pay for. I can see if we can find a match. At some stage once the groups are more mature we could look into supplying direct from farm via manual mills (a dream thus far!).

  2. says

    Hi,

    Thanks for your reply. In response to your queries:

    (1) Volumes/month vary, but is in the vicinity of 300 Kg.

    (2) The Palm Oil prices varies, depending on the market, and the top end we pay is around RM 3.80/Kg. We are told that it comes from RSPO plantations, but for some reason the certification is not available.

    We also use crude Coconut Oil as well.

    It would be fantastic to match our WFTO status with these small sustainable farms. But if the source is too far from our production facility, the freight costs may kill it.

    Look forward to hearing from you.

    Kind regards,

    Mike