Wilmar Spotlight: Smallholders, the Backbone of the Palm Oil Industry
Smallholders are the backbone of the palm oil industry, accounting for about 30% - 40% of global production. These dedicated farmers play a crucial role in rural development by creating jobs, boosting incomes, and lifting communities out of poverty. By adopting sustainable agricultural practices, smallholders can help reduce deforestation, enhance biodiversity conservation, and address social and labor concerns. Supporting smallholders through education, technology, and infrastructure investments is essential for creating a resilient and sustainable supply chain.
Economic Boost: Smallholders are a big deal in rural areas. They create jobs, increase incomes, and help lift communities out of poverty. In Malaysia, for example, smallholder efforts have helped slash poverty rates from 50% in the 1960s to just 5% today1.
Sustainability Champions: By going green, smallholders can help cut down on deforestation, protect biodiversity, and tackle social issues like child labour. Programmes that offer training, best practices, and certification are crucial for their sustainability journey. Despite facing challenges like limited resources, smallholders are essential for producing sustainable, conflict-free palm oil.
Collaborative Effort: Supporting smallholders is vital for a strong supply chain. Investments in education, technology and infrastructure help them boost productivity, reduce environmental impacts, and secure their livelihoods. Groups like the Roundtable on Sustainable Palm Oil (RSPO) and government initiatives provide the training and financial help smallholders need to get certified. Certification benefits smallholders by opening up access to premium markets, ensuring fair trade practices, and enhancing their sustainability credentials, which in turn leads to better income stability and long-term viability.
Global Impact: Smallholders manage about 40%2 of the world's oil palm planted area, producing 40% of the global palm oil supply. In countries like Indonesia and Malaysia, they play a huge role in the industry. By 2030, smallholders in Indonesia are expected to manage 60%3 of the country's oil palm plantations.
While smallholders only make up a small portion of Wilmar’s fresh fruit bunch supply base, we recognise their increasing contribution to the global palm oil supply chain. In 2022, 100% of our scheme smallholders and 31% of our independent smallholders were supported by our capacity building programmes.
Our scheme smallholder programmes focus on providing training and support for farmers to improve sustainability practices, increase yield per hectare and ultimately achieve certification under applicable national certifications schemes and the RSPO. Our independent smallholder programmes on the other hand are specific to each country and aim to address the unique challenges faced by farmers in their respective locations. While our programmes also help farmers achieve relevant certifications, this is not the main objective of our programmes.
Wilmar is committed to supporting smallholders worldwide. By investing in these programmes, Wilmar aims to boost productivity, secure livelihoods, and ensure a strong, sustainable supply chain for a more sustainable future.
1World Trade Organisation, 'EUROPEAN UNION AND CERTAIN MEMBER STATES – CERTAIN MEASURES CONCERNING PALM OIL AND OIL PALM CROP-BASED BIOFUELS', https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/600-1.pdf&Open=True
2Roundtable on Sustainable Palm Oil, 'Support Smallholders', https://rspo.org/as-an-organisation/support-smallholders/
3World Resources Institute, 'Smallholder Farmers Are Key to Making the Palm Oil Industry Sustainable', https://www.wri.org/insights/smallholder-farmers-are-key-making-palm-oil-industry-sustainable