Kao, Apical and Asian Agri Launch ‘SMILE’ Program to Help Oil Palm Smallholders Improve Yields, Acquire Certifications, and Secure Premiums

October 15, 2020 - 03:31
Kao, Apical and Asian Agri Launch ‘SMILE’ Program to Help Oil Palm Smallholders Improve Yields, Acquire Certifications, and Secure Premiums

JAKARTA, INDONESIA - Media OutReach - 15 October 2020 - Three leading companiesin the palm oil industry -- KaoCorporation, Apical Group, and Asian Agri -- have launched a newsustainability initiative to help independent oil palm smallholders inIndonesia improve their yields, acquire international certification, andeventually secure sales premiums from selling certified palm oil.


Known as SMILE or the SMallholderInclusion for better Livelihood & Empowerment program,the collaboration is between downstream producer KaoCorporation, mid-stream processor, exporter and trader Apical Group, as well asupstream producer Asian Agri .


The 11-year initiativeseeks to continue to build a more sustainable palm oil value chain by workingwith independent smallholders. Independent smallholders contribute more than28% to Indonesia's overall palm oil market[1].


The collaboration recognizesthat independent smallholders are private business owners who are challenged toincrease their yield and productivity but may neither have the knowledge northe technical expertise to do so.


As the world's mostwidely used vegetable oil, palm oil has a wide range of uses, includingprocessed foods, cooking oil, biodiesel fuel, and as a raw material fordetergent manufacturing. Global production of palm oil stands at 75milliontons per year[2]andis expected to grow to 111.3 million tons by 2025[3].Thereis now a greater focus in Indonesia on improving palm oil productivity while minimizingthe need for the extensification of existing agricultural land. This not onlyhelps to safeguard food security, but serves to balance social, environmentaland economic needs.

Kao Corporation, ApicalGroup, and Asian Agri are implementing activities in accordance with theframework provided by the Roundtable on Sustainable Palm Oil (RSPO), andworking to ensure traceability as far as the oil palm plantation, in order tobuild an environmentally-friendly, socially-aware supply chain. While the palmoil industry has moved forward with national certification schemes such as IndonesianSustainable Palm Oil (ISPO) or multi-stakeholder led collaborations like the RSPO,certification for independent smallholders has only recently gained momentum.SMILE seeks to bridge the knowledge gap of independent smallholders bypartnering with them and leveraging on the success that companies such as AsianAgri have demonstrated with its long-time partnerships with smallholders.


SMILE will assemble ateam of experts with extensive experience in the areas of plantation managementand agronomy to work with 5,000 independent smallholders that manage approximately18,000 ha of plantations in the provinces of North Sumatra, Riau and Jambi. Throughcustomized seminars and workshops, the team will:

  • Educate farmers on how to improve their yields and sustainably managetheir farms, as well as on the importance of staying committed to sustainablepractices such as no-deforestation and zero-burning, noexploitation.
  • Provide support for RSPO Certification.
  • Provide training on how to implement robust safety measures across theirestates, and safety equipment (including safety helmets, gloves, and fireextinguishers).

This upscaling andprovision of equipment will be implemented from 2020 to 2030 with a view of helpingindependent smallholders secure RSPO certifications by 2030. Once certified,these smallholders will be eligible to receive certified palm oil premiumsaveraging 5% higher than non-certified palm oil. As part of RSPO requirementsas well as the companies' commitment to help the community collectively realizethe UN Sustainable Development Goals (SDGs), SMILE includes initiatives thatpromote greater inclusion and improved livelihoods via empowerment initiativesfor communities.

The goal to improve the livelihoods of the independent smallholderswill be through enhanced productivity with no-deforestation, no-peat land andno-exploitation. Throughout SMILE's implementation, the three companies willregularly engage various stakeholders such as NGOs, NPOs, and community leadersto ensure competent delivery of training, adequate allocation of equipment,timely provision of needs at the estate and community level, as well as optimizedcollaboration towards building a more sustainable and traceable supply chain.


[1]BPS (Central Bureau of Statistics for the Republic of Indonesia), 2018 (for CPOonly)

[3]International Institute for Sustainable Development, https://www.iisd.org/system/files/publications/ssi-global-market-report-palm-oil.pdf

About Kao

Kao createshigh-value-added products that enrich the lives of consumers around the world. Throughits portfolio of over 20 leading brands such as Attack, Bioré, Goldwell, Jergens, John Frieda, Kanebo, Laurier, Merries and Molton Brown, Kao is part of theeveryday lives of people in Asia, Oceania, North America and Europe.

Combined with itschemical division, which contributes to a wide range of industries, Kaogenerates about 1,500 billion yen in annual sales. Kao employs about 33,000people worldwide and has 130 years of history in innovation.


For more information,please visit the Kao Group website: https://www.kao.com/global/en/


The Kao Group ESG Initiatives

Recognizing itsresponsibility as an enterprise that provides products which people use on aregular basis in their daily lives, the Kao Group takes active steps to reducethe environmental footprint of its products throughout the entirety of theproduct lifecycle. The Kao Group has received evaluation from many externalorganizations such as "Dow Jones Sustainability World Index" (DJSIWorld), which selects companies with excellent sustainability performance,developed by S & P Dow Jones in the United States and Robeco SAM inSwitzerland. In April 2019, Kao launched the Kirei Lifestyle Plan, its ESGstrategy, which incorporates 19 key leadership actions. By integrating ESG intothe core of its company management, Kao will drive business growth and betterserve consumers and society through its enhanced products and services. Thisparticular project forms part of the Responsibly Sourced Raw Materials action,one of the Kirei Lifestyle Plan's 19 key leadership actions.


With regard to palm oilprocurement, which is the category of raw material procurement that has thelargest environmental footprint over the entire product lifecycle, Kao has developedthe Sustainable Palm Oil Procurement Guidelines. Besides demonstrating supportfor reducing forest destruction to zero, Kao is also promoting sustainableprocurement that takes ethical issues into account, and is implementingeffective traceability. Kao is a member of the Roundtable on Sustainable Palm Oil (RSPO)since 2007, and completed the acquisition of SCCS certification for Kao's all plantsin 2018. Kao is also one of directors of the Japan Network for Sustainable PalmOil (JaSPON), which was established in 2019.


In the SMILE program, Kaoplans to provide farmers with its functional agrochemical adjuvant*4,which helps to boost productivity while also reducing the burden on the environment,along with technical guidance on how to use the product effectively with Apicaland Asian Agri. Kao is also collaborating with NGOs and local NPOs to implementquestionnaire surveys and analysis regarding how effective the support beingprovided is in terms of boosting productivity and improving smallholders'working environment, and regarding any areas where further improvements couldbe made.

*4 Kaohas developed the Adjuvant series, a new type of vegetable oil based,high-wettability agrochemical spreader, which is designed to be particularlyeffective on highly waxy plants that droplets of agrochemicals tend to bounceoff when the agrochemicals are being applied; in this way, the agrochemicaladheres better to the plant surface and the agrochemical can be applied to thecrop more rapidly.


■Kao > Sustainability> Responsibly Sourced Raw Materials


■Kao launches new ESGStrategy "Kirei Lifestyle Plan" to support consumer lifestyle changes


About Apical

Apical Group is one ofthe largest exporters of palm oil in Indonesia, owning and controlling anextensive spectrum of the palm oil business value chain from sourcing to distribution.It also engages in the refining, processing and trading of palm oil for bothdomestic use and international export. Its operations are located in Indonesia,China and Spain, and include five refineries, three biodiesel plants, an oleochemical plant and a kernel crushing plant.


Apical's business isbuilt on a broad sourcing network in Indonesia with integrated refinery assetsat strategic locations. These are strengthened by efficient logistic channelssupported by Apical's own infrastructure to deliver to a wide range of clientsfrom international trade houses to local industrial buyers. With its uniquebusiness model, Apical has been able to control product quality and addresssustainability and food safety issues, while running highly efficientoperations at its world-class refineries and integrated storage and bulkingfacilities.


For more information,please visit the Apical website: https://www.apicalgroup.com/


Apical Group Sustainability

Since launching theApical Sustainability Policy 2014, Apical has made strides in itstransformation journey by adopting global standards and best practices withinits operations, subsidiaries and in partnership with suppliers.


Apical refineries havebeen certified by the International Sustainability and Carbon Certification(ISCC) since 2010. It has been a Roundtable on Sustainable Palm Oil (RSPO) membersince 2011. It achieved full traceability to mills in 2015 and has targetedfull traceability to plantations by 2020.


The Group promotes theprotection of high conservation value (HCV) and high carbon stock (HCS) areas,peatland and towards positive socio-economic development. It partnered withEarthworm Foundation, Proforest and Daemeter to integrate its supply chaintransformation, ensure responsible sourcing and continuous improvement in itssupply chain. Since 2017, Apical has been a partner of Tropical Forest Alliance2020 (TFA 2020), a global public-private partnership that brings togethergovernments, private sector, and civil society organizations to reducedeforestation associated with the sourcing of commodities such as palm oil,beef, soy, and pulp and paper.


Apical is committed tosustainable sourcing and operations as the fundamental core of its business todeliver high value products for today's global market demands.

About Asian Agri

Asian Agri is one ofIndonesia's largest palm oil producers. Found in 1979, the company today manages100,000 hectares of plantation land and employs over 25,000 people. A pioneerof the Indonesian government's Trans-National Government Migration (PIR-Trans) program,Asian Agri currently works with 30,000 Plasma Scheme smallholders in Riau andJambi who operate 60,000 hectares of palm oil plantations, and independentsmallholders who manage a total 41,000 hectares.


Implementing a strict "noburn" policy since 1994 and best practices in sustainable plantationmanagement, Asian Agri has helped its smallholder partners improveproductivity, yield and supply chain traceability, while assisting them obtaincertifications. The company's mills are technologically advanced and energyself-sufficient, minimizing greenhouse gas emissions.


Asian Agri (PT Inti IndosawitSubur) is a member of the Roundtable on Sustainable Palm Oil (RSPO) since 2006.More than 86% of its owned plantations in North Sumatra, Riau & Jambiprovinces and 100% of Plasma Scheme smallholder plantations in Riau & Jambiprovinces have been RSPO certified. All its owned plantations and those ownedby scheme smallholders ISCC (International Sustainability & CarbonCertification) certified since 2014. In 2019, the company also achieved 100%ISPO (Indonesian Sustainable Palm Oil) certification.


The company's operationsare ISO 14001 certified, while its Learning Institute and nursery researchcenter in Riau province, Indonesia are both ISO 9001 certified. Asian Agri'slaboratory at the Center for Research and Development in Tebing Tinggi is accreditedby the National Accreditation Committee under the ILAC Mutual RecognitionArrangement (ILAC MRA).


For more information,please visit the Asian Agri website: https://www.asianagri.com/en/