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Malaysia's oil palm smallholders have the opportunity to generate higher incomes by increasing exports of their products through the Malaysian Sustainable Palm Oil (MSPO) and Roundtable on Sustainable Palm Oil (RSPO) certification programs.
Both certifications enable small planters to sell higher-quality palm oil products while also practicing sustainable planting methods that have a positive impact on the environment. Since 2020, it has been mandatory for all Malaysian-produced palm oil products to receive the MSPO certification, which is the national sustainable palm oil standard.
The RSPO, established in 2004, is an international certification used by the palm oil industry to promote sustainable growth and production practices but compliance with this standard is voluntary.
However, in Malaysia RSPO certification adoption is still very low among smallholders, according to RSPO chief executive officer Joseph D' Cruz. (Malaysia has about 250,000 registered smallholders and another 215,000 independent smallholders, according to the Malaysian Palm Oil Board [MPOB].)
"While big and mid-cap plantation companies have adopted RSPO standards, challenges still persist when it comes to onboarding smallholders due to structural issues such as costs, skill and legal requirements which remain a barrier to meeting certification standards," he told Bernama in an email interview recently.
He said currently 23 grower companies and just six smallholder groups across Malaysia are RSPO certified.
"Our efforts and transformation drive must continue as change and improvement are a necessity for all of us. While sustainability is a shared responsibility, it requires individual change – if we are to cross the finish line together and make an impact, we are duty-bound to take on a greater level of ownership and accept that there is always room for improvement.
"Which is why we will be building stronger partnerships with national schemes, producers, smallholders, processors and buyers to increase the demand for sustainable palm products," he said.
D'Cruz added that MSPO certification has proven to be beneficial for oil palm smallholders as it has "laid the bedrock for farmers to adopt higher universal standards like RSPO".
"RSPO certification allows smallholders to earn additional revenue through RSPO credit sales, contribute to sustainable palm oil production and align with global sustainability standards.
"These benefits not only support the economic well-being of smallholders but also contribute to environmental conservation and the social welfare of local communities," he said.
Oil palm smallholders operate small-scale plantations with planted areas of less than 50 ha.
Under the RSPO certification, smallholders can grow oil palm independently as part of an independent smallholder group or as part of a smallholder scheme.
Better Yield
Smallholder Abd Rahman Mohd Noor, 69, who has been operating a 30-ha oil palm smallholding in Lahad Datu, Sabah for the last 30 years, said he embarked on sustainable planting practices after receiving the MSPO certification last year through the group certification process with the help of Sawit Kinabalu Sdn Bhd, one of Sabah's biggest palm oil companies.
He said he started supplying his palm oil products to Sawit Kinabalu as soon as he secured the MSPO certification.
The RSPO standard is a relatively new thing for many smallholders like him, he said, adding that he is ready to apply for the certification through a group if given the opportunity to market his products to the global market.
Abd Rahman said when he first started cultivating oil palm in 1989, he had no experience whatsoever and no one to guide him as well.
"I faced many challenges then. I could only think of sustainable planting methods 10 years after I opened my smallholding.
"Today I'm getting good yields, thanks to the MSPO certification which I and other smallholders Azdee, received through the group certification process with the help of Sawit Kinabalu," he said, adding if given incentives, they are ready to comply with all the necessary standards to meet the requirements for the RSPO certification.
The cost of getting the RSPO certification for smallholder groups ranges from RM25,000 to RM40,000 per group, including membership and auditing fees. The cost also varies depending on the group size.
Strategic Collaboration
Sawit Kinabalu Group Sustainability general manager Nazlan Mohamad said besides helping smallholders to obtain MSPO and RSPO certifications, the company also buys fresh fruit bunches from them for processing purposes.
"They are paid premium incentives for their supplies if they possess RSPO certification," he said, adding that many smallholders with only MSPO certification have expressed their wish to upgrade to the RSPO standard.
"Our company is endeavoring to support them to pursue the RSPO certification by this year."
According to MPOB, Sabah's total oil palm planted area stood at 1,508,060 ha as of December last year. As of June, 95.6 per cent or 1.44 million ha were MSPO certified (source: Malaysian Palm Oil Certification Council or MPOCC) and at least 26 percent or 425,882 ha were RSPO certified (source: RSPO).
Sabah hopes to achieve its 100 per cent RSPO-certified goal for its oil palm plantations by 2025.
WWF-Malaysia Sustainable Agriculture senior manager Max Donysius said attaining the MSPO certification is an essential step toward the RSPO certification which most large companies have the resources to get.
"However, compared to big corporations, many mid-sized palm oil growers and smallholders face difficulties (in endeavoring to) comply with RSPO standards due to the cost involved to achieve full certification," he said.
In view of this, WWF-Malaysia has set up a dedicated sustainable palm oil team (SPOT) to provide technical support to growers located in Sabah to form growers’ groups and subsequently guide them to undergo the group certification process to obtain MSPO and RSPO certifications.
"SPOT aims to support and assist 15,000 ha or 450,150 mid-sized growers and smallholders in the Tabin landscape to be RSPO-certified," he told the media recently.
Donysius, who is also a SPOT team lead, said with the RSPO certification, smallholders are allowed to receive an immediate 40 per cent premium through selling RSPO credit before being fully accredited, and subsequently to a full premium price for their products upon completing all its milestones.
WHY SUSTAINABLE PALM OIL?
Malaysia accounts for 32 per cent of the palm oil produced globally and earned RM137.89 billion from its palm oil exports last year.
The oil palm industry has always been linked to deforestation and dwindling wildlife habitats.
In view of this, "the MSPO and RSPO certifications play a crucial role in addressing deforestation in the palm oil supply chain, protecting wildlife populations, conserving forest resources and ecosystem services, and positioning the (oil palm plantation) organization as progressive and responsible," said Donysius.
"RSPO certification is beneficial for oil palm growers as it improves their management practices, enabling them to produce better quality fresh fruit bunches and increase their yields and gain access to (global) markets," he said.
RSPO Smallholder Program manager Nur Nazifah Ahmad Rosland said to become RSPO certified, organizations are required to demonstrate compliance with the applicable RSPO standards.
She said RSPO currently has three certification standards, namely 2018 RSPO Principles and Criteria, 2019 RSPO Independent Smallholder Standard and 2020 RSPO Supply Chain Certification Standard.
"There are systems in place to ensure that RSPO-certified members abide by the standards, which include third-party certification, a system of accreditation for certification bodies, an open and transparent grievance mechanism, supply chain certification to end-users, and traceability provided via the PalmTrace system," she told Bernama in an email interview.
"Our certification levels remain one of the strictest across other voluntary agriculture sustainability standards and are subject to review every five years to ensure that they remain relevant."
Smallholders
Nur Nazifah also said that in order to get more smallholder groups to obtain RSPO certification, RSPO has engaged with key palm oil stakeholders, as well as local government authorities, to promote a Jurisdictional Approach (JA) to RSPO certification.
"The JA involves the certification of palm oil production at the jurisdictional level, which uses a particular model of jurisdictional landscape development," she said. (JA is an important way to increase certification among smallholders while improving their livelihoods and conserving important forest areas for biodiversity and environmental protection).
She said there is a need to support more smallholders, whose smallholdings comprise about 40 per cent of the total oil palm planted area in Malaysia, to embrace good agricultural practices and produce sustainable palm oil.
"Certification also helps them to gain access to new markets. However, smallholders cannot be certified individually but need to be organized in groups led by a manager to ensure compliance of all group members with the growers' standards," she said.
Nur Nazifah also said RSPO has increasingly focused on mechanisms to support smallholders through a variety of approaches such as the RSPO Independent Smallholder Standard which aims to circumvent the barriers through a phased approach towards compliance, and the RSPO Smallholder Support Fund which allocates 10 per cent of the income generated by the trade of certified sustainable palm oil to help smallholders around the world to get RSPO certification without incurring any cost.
"The RSPO Smallholder Engagement Platform is also available to connect smallholders with potential project partners as well as provide additional financial and non-financial resources and support to smallholders around the world," she added.
Source: www.nst.com.my