KUALA LUMPUR (Sept 15): Smallholder oil palm farmer’s inclusion in sustainability criteria is critical as their contribution to palm oil production is expected to grow, said international civil society organization Solidaridad.

Smallholders, despite producing only 2% of certified sustainable palm oil on the market, still contribute 30% of the world’s supply, according to the first global Palm Oil Barometer by Solidaridad.

“More than three million smallholders and their families produce roughly 30% of the world’s palm oil. In Indonesia alone there are around 16 million workers in the palm oil sector, of whom the majority is employed by smallholders.

“The contribution of smallholders in the overall supply of palm oil is only expected to increase, as industrial scale companies are forced to limit expansion due to zero-deforestation commitments.

“Governments and businesses must make smallholder inclusion part of their sustainability criteria,” said Shatadru Chattopadhayay, managing director of Solidaridad Asia.

He added that smallholder interests are often overlooked in the value chain, adding calls for discrimination against the crop in the name of preserving biodiversity would only further hurt the farmers.

“Instead of boycotting palm oil, the industry should invest in sustainable palm oil production by smallholders. Supply chain-wide smallholder inclusion is crucial for sustainable palm oil production,” said Shatadru.

The report further noted that smallholders generated US$17 billion of the palm oil industry’s US$282 billion turnover in 2020.

“While smallholders struggle to make ends meet, at the other end of the chain, food manufacturers, consumer goods companies and retail take 66% of the gross profits on palm oil in food, household and body care products,” according to the barometer.

As such Solidaridad called for a fairer value and risk distribution across the palm oil value chain that would enable farmers to both produce sustainably and make an income that sustains their family’s livelihood.