2024年棕櫚油行業(yè)晴雨表

PALMOILBAROMETER2024ConsultationPaperLEGALCOMPLIANCEProcurementforProsperityPAGEPAGE4IntroductionOverthelastdecadethere’sbeenmuchheateddebateandsubstantialpositiveactiontakeninresponsetodeforestationinthenameofpalmoilproduction.Whiletheareaoflandbeingclearedtoplantoilpalmisthankfullyinglobaldecline,anotherequallyseriousissueremains.Between3and7millionoilpalmsmallholdersareresponsibleforaround25-30percentofthetotalpalmoilsupply1.Mostsmallholderoilpalmgrowerslivetheirlivesmonthtomonth,notknowingwhetherthepriceoftheircropswillbehitbyanotherfloodorfluctuation,potentiallydevastatingtheirlandandincome.Thedemandstoproducemoresustainablycontinuetopileupwhilethepricesthatbuyersarewillingtopayremainfirmlyoutofsmallholders’control.Inshort,thepalmoilindustryisachallengingplacetobeafarmer.Theyarevulnerableforclimatechangerelatedextremeweatherevents,andhavetodealwithmoresustainabilityrequirements.date,thewidersectorhasavoidedthebigquestionsaroundpoorvaluedistribution,precariousincomeandpricevolatilitythatdisproportionatelyimpactsmall-scaleproducers,andyetholdthekeytotheirprosperity.Inthispaperwelookathowfocusingonthefourdimensionsofinclusivity;ownership,voice,riskandreward,hasthepotentialtoturnthetideonunequalvaluedistributionandsupportbothfarmerlivelihoodsandmoresustainableproduction.FloodedpalmoilmillandplantationsinHonduras.?SolidaridadPAYINGTHEPRICEFORSUSTAINABILITYAswithallcrops,thereisgrowingrecognitionthatoilpalmmustbegrownsustainablyifwearetocontinuetomeetdemandandfacetoday’sclimatecrisis.Farmersareworkingonthefrontline,facingworseningextremeweatherconditions.Theyneedmoresupportonmultiplelevelstodealwiththedevastationthatcomeswithanincreasinglywarmplanet.However,it’sgrowers,ofallsizes,whopaythepriceforsustainableoilpalmfarmingwhilebuyersandretailerspocketthemajorityofthevaluecreatedinthesupplychainforthemselves.Thishastochange.Thecostofproductionand,inparticular,moresustainableproductionmustbemoreequallydistributedthroughoutthesupplychain.InthefirsteditionofthePalmOilBarometer,2publishedin2022,wewrote:minimizeriskandtakeadvantageofopportunities,thekeypointistoacknowledgesmallholderfarmers’interestsandagendasettingasthepointofdeparture,ratherthanimplementingpre-conceivedideas”.In2024thisisstilltrue.Inthissecondeditionwecontinuetocontributetothediscussionbyunpackingmoreaboutvaluedistributionandpurchasingpractices,andtostimulatethedebate.ThecentralquestioninthesecondPalmOilBarometeristhus:Inagloballyoperatingsectorthatdependsonmarketmechanisms,howcanweestablishasystemthattrulyincludesandsupportsgrowersandsmallholderfarmerstoproduceinamoresustainableway?Inthefirstchapterofthispaperweexplainthecurrentsituationandgrowingchallengesthatsmallholdersface.Inthesecondchapterwepresentourrecommendationsonhowresponsibleprocurementpracticescanofferrealsolutionstotheseglobalissues.IntheseondedionofthePamOlBaomee,obepubshedlae224early225,wewlnludetheecontinentaldeepdivesreflectingthestateofthepalmoilindustryinAfrica,Latin-AmericaandAsia,alongwithaglobaloverviewofsustainabilityissuesinthesector.Theproductionisguidedandsupportedbyvarioussmallholderrepresentativeorganisationsandexperts.Thesedraftversionsofchaptersoneandtwowillbeenrichedwiththefeedbackcollectedfromournetworkduringtheconsultationphase.hopethesecondPalmOilBarometerwillhelptodrivetheagendaforwardandbringusclosertolivingincomesforsmallholderfarmersgrowingoilpalm.Palmoilfarmer,Ghana.?ChikisStudios/Solidaridad1“TheseagingbutataForfarmers,thistransitioncanbeamake-or-breakmoment.”LeslyVera,SolidaridadPeru6PAGEPAGE9DEFININGSMALLHOLDERSINTHEOILPALMVALUECHAINIt’snoteasytodefineanoilpalmsmallholder.Thesefarmerscontributetothepalmoilsupplychaininavarietyofways,withsignificantdifferencesbothbetweenandwithincountries.Theyfollowawiderangeoflandusestrategiesandmodelsofsocialorganization.Commonly,familiesoperateasindependentunitsandpursuetheirownlivelihoodstrategieswithacombinationofdifferentproductionactivitiestogeneratehouseholdincome.3Atypicaloilpalmplotisbelowfivehectares,despitethefactthatthethresholdforsmallholderfarmersissetat25hectaresinIndonesiaandat40hectaresinMalaysia.4learnmoreaboutthespecificcircumstancesfacingoilpalmsmallholdersintheseregions,pleaserefertoourcontinentaldeepdivechaptersbepublishedinthefinalpalmoilbarometer).Smallholderfarmersaccountforanestimated27percentofthetotalcultivatedlandareaandbetween25and30percentofglobalproduction.5Largeplantationsoftenintegratesmallholderplotsthroughoutgrowerschemesorrentalagreements.Theseso-calledschemesmallholdersarespecializedinoilpalmfarmingandrelyontheplantationcompanyforimprovedplantingstock,fertilizationandtraining.Whenwetalkaboutsmallholdersweusuallyrefertoindependentsmallholderswhohavefreedomtochoosehowtheyoperatetheirland.Thevastmajorityofindependentsmallholdersrelyondiversifiedagriculturalproductiontomakealiving,wherethelinkagesbetweenforest,farmandlandsupporthumanwell-beingandarangeofecosystemservices.6Thesesmallholdersaredevelopingtheiroperationsindependentlyfromthelargeplantations.Theyorganizethemselvesinfarmergroups,cooperativesandassociationstocollectandselltheirfreshfruitbunches(FFB)tothemillthatoffersthebestprice.Ortheydependonintermediariesforsellingtheirproduceaswellasforaccesstoinputsandcredit.SMALLHOLDERDEFINITIONSMALLHOLDERDEFINITIONThetermoilpalmsmallholdersorfarmersoftenlacksaprecisedefinition,butinpracticetendstorefertodifferencesinsizeandlevelofrelianceonfamilylabor.Thefarmprovidesthemajorityofincometothefamily,andinturnthefamilyprovidesthemajorityoflaborontheirfarm.7ThisalignswiththeRSPO’sdefinition:“Smallholdersarethosemanagingpalmoilplantationsof50hectaresorless.Theycanoperateeitherindependentlyorincollaborationwithcompanies”.Inthisdefinition,theRSPOdistinguishestwotypesofsmallholders:schemesmallholdersandindependentsmallholders.Schemesmallholders:donothaveenforceabledecision-makingpoweronhowtheyoperatetheirlandandtheirproductionpractices,and/orfreedomtochoosehowtheyusetheirland,thetypesofcropstoplant,andhowtomanagethem.Independentsmallholders:allothersmallholdersnotclassifiedasschemesmallholders.Theyhavethefreedomtochoosehowtheyuseandmanagetheirlandincludingthetypesofcropstoplant.Manysmallholdersareattractedtogrowingoilpalmforitsgreateryieldandpotentiallyhigherprices,aswellasthefactthatitcanbeharvestedyear-round,providingasteadycashflow.Comparedtoothercommoditieslikecocoa,coffeeortea,oilpalmisseenasaprofitablecropandpriceisrarelythesubjectofpublicdebate.Thisislikelylinkedtothefactthatpalmoilisgenerallymoreprofitablecomparedtoothercropsandthat,inmostcases,smallholdershavelargerplotsthantheirpeersinothercrops.However,theyfaceconstantchangesinafast-movingmarket.Theirincomesremainprecarious,reliantonfactorsthatareoutoftheircontrol.Atthesametimefoodmanufacturersandconsumergoods(FMCG)companiesandretailersmanagetoconsistentlygenerateprofitsonproductswhichincludepalmoil.SMALLHOLDERINCLUSIVITYItistimetolookatbuildingpalmoilvaluechainsthroughaninclusivelens.Interestingthingshavebeenwrittenonthetopicofsmallholderinclusivity.Onedevelopedmodel8suggestsassessingfourdimensionsofinclusion;Ownership:dealswiththequestionofwhoownswhatpartofthebusiness,andassetssuchaslandandprocessingfacilities.Voice:theabilityofmarginalizedactorstoinfluencekeybusinessdecisions,includingtheirweightindecision-making,arrangementsforreviewandgrievance,andmechanismsfordealingwithasymmetriesininformationaccess.Risk:includingcommercial(production,supplyandmarket)risks,butalsowiderriskssuchaspoliticalandreputationalones.Reward:thesharingofeconomiccostsandbenefits,includingpricesettingandfinancearrangements.Lookingatthesedimensionsallowsforaclearerperspectiveoninclusivenessandabetterunderstandingoftheactualconditionsunderwhichsmallholdersareincludedinbusinesspractices.9Manycompaniesthinktheyaresmallholderinclusivewhentheysourcefromsmallholders.Butthatisonlythestart.deliveronallfouraspectsofinclusiveagribusiness10,wemustbeawareoftheinterlinkages.Forinstance,ownershipcaninfluencevoice,andvoiceinprice-settingcruciallyaffectsreward.Ownershipinfluencesrisk,asajointlyownedbusinessalsoinvolvessharingofbusinessrisks.Intermsofthepalmoilsector,wecanhighlightinterlinkedelementslikeincomeandvaluedistribution,corporatetransparencyorparticipationinmulti-stakeholderinitiatives.Inthispaper,wetakethefouraspectsofinclusionandtheirinterlinkagesasguidelinesforprocurementpractices.Smallholderfarmersgetsupportindigitaladministration.?ChikisStudios,Ghana.RSPOANDSMALLHOLDERINCLUSIVITYManyplayersrefertotheRoundtableonSustainablePalmOil(RSPO)forsustainabilityandsmallholderinclusivityinthepalmoilvaluechain.WhileRSPOisanimportanttooltodriveimprovementsinthepalmoilvaluechainsuchaslaborstandardsandtherecognitionofrightsofindigenouscommunities,itdoesnothaveagoodtrackrecordwithrespecttotheinclusivityofsmallholders.decadessinceitsfoundation,independentsmallholdersnowmakeup1.5-2percentofRSPOcertifiedvolume.In2024,thisrepresentsaround50,000smallholders11andaround130,000hectaresofRSPOcertifiedland(2.5%ofallRSPOcertifiedland).NewdatafromtheRSPOsuggeststherehasbeenaremarkablegrowthinnumbersofcertifiedsmallholdersinrecentyears,howeverthisstillrepresentsonlyafewpercentofallglobalsmallholders12.InsteadthepushforsegregatedRSPOcertifiedmaterialpushessmallholdersoutofRSPOcertifiedvaluechains,asthecostsofsmallholdercertificationarerelativelyhighcomparedtothebenefits.So,wecansay,theuptakeandincreaseofRSPOcertifiedmaterialdoesnotnecessarilydrivemoreinclusivevaluechains,orimprovedIndependentsmallholderfarmingpractices.PAGE10PAGE10\h本報(bào)告來(lái)源于三個(gè)皮匠報(bào)告站（）,由用戶Id:879887下載,文檔Id:619018,下載日期:2025-03-25FARMERPROSPERITYISAHOUSEOFCARDSLEGALCOMPLIANCESMALLHOLDERPRECARITYTheamountasmallholderearnsisreliantonanumberofexternalconditions.Theirincomesituationiscomparabletoahouseofcardsillustration).Thepriceofsmallholders’FFBisanimportantfactorinjusthowprecarioustheirpositionis.Farmerincomeisinfluencedbyarangeoffactorsincluding:Theimplementationofapricingmechanismformulathat’softenprescribedbylocalornationalgovernments.Theworldmarketprice,astheFFB-pricereceivedbysmallholdersoftenreliesonglobalprices.Thepricefarmerspayforinputslikefertilizerandpesticidesalsodependonglobalmarketprices.Whetherthefarmeroragentissellingtointermediariesordirectlytothemill.ThestateandavailabilityoflocalinfrastructureandtransportlogisticsThenumberandcapacityofmillsthatcanbereachedbeforetheFFBstartstodeteriorate.Thereliabilityandfairnessofweighingscalesandqualitycontrolprocedures.TheobjectiveassessmentofFFBgradingbythemillandhowtransparentitisaboutitsgradingsystem.TheOilExtractionRatewhichinturnreliesonthequalityoftheFFB.arecurrentlyseeingthreekeydevelopmentsthatmakethetopicofsmallholderinclusivityparticularlyrelevant:increasingvulnerabilityforclimatechangerelatedextremeweathereventsincreasingpricevolatilityincreasingsustainabilityrequirementsCLIMATECHANGEVULNERABILITYseeincreasinglyregularextremeweathereventsduetoclimatechange,suchasfloodingandextendedperiodsofdroughts.Sucheventscausecoststoriseforfarminputsandfurtherpricevolatility.Smallholdersoftenlackaccesstotheknowledgeandcapitaltoovercometheseproblems.13INCREASINGPRICEVOLATILITYInthepastfouryearswehaveseenpalmoilpricesswingbetween576USdollarsinMay2020and1,776USdollarsinMarch2022anddownbelow1,000USdollarsin2023and2024.14FIGURE1PALMOILANDPALMKERNELOILPRICES2006-2024(US$/m)2500 2000 1500 1000 2006200720082009201020112012201320142015201620172018201920202021202220232024500 2006200720082009201020112012201320142015201620172018201920202021202220232024

PalmkerneloilPALMOIL11FIGURE2COMPARATIVEVOLATILITYOFREALAGRIPRICEINDEXES11FIGURE2COMPARATIVEVOLATILITYOFREALAGRIPRICEINDEXESRealPriceIndex(2010=100)140 120100806040 2016-20192020-2023RawMaterials Beverages Otherfood Veg.oils&meals GrainsSource:Cárcamo-Díaz,R.(2024,3July),Globalfoodmarkets:Implicationsforinternationaltradeandcompetitionandconsumerpolicies,FifteenthMeetingoftheUNCTADResearchPartnershipPlatform,online:/system/files/non-official-document/ccpb_IGRRPP2024_presentation_Carcamo_en.pdfSource:IndexMundi(2024),PalmoilMonthlyPrice-USDollarsperMetricTon-January2006-August2024,online:https://\h/commodities/?commodity=palm-oil&months=240IndexMundi(2024),PalmKernelOilMonthlyPrice-USDollarsperMetricTon-January2006-August2024,online:https://\h/commodities/?commodity=palm-kernel-oil&months=240AccordingtoUNCTAD,between2020and2023,thepricevolatilityforvegetableoilsandmeals(whichincludespalmoil)hassignificantlyincreasedcomparedtothe2016-2019period.15Thismeansthatforfarmerstheirincomehasbecomemoreunpredictable.INSIGHTSONACHIEVINGALIVINGINCOMEINAHIGH-PRICEMARKETUGANDAAlexAmanya:“Basedonwhatweseeinourprojects,itisclearthatwithoilpalmgrowing,aUgandanoilpalmfarmercanreachalivingincome.Still,toactuallymakealivingincome,highandstablepricesareanecessity.Increasingtheproductivityofsmallholderfarmersfromcurrently14tonnes/haofFFBclosetothe21tonnes/hathatbigestatesareproducingcanalsoguaranteealivingincomeforsmallholderfarmers.TheoilpalmsectorinUgandaisstillyoung.needconstantmonitoringofthecostoflivingtoensuretheprevailingpricesmatchalivingincome”.GHANAPaaKwesiForson:“Itisclearthatwiththecurrentlowyieldsandsmallfarmsizes,theaverageoilpalmfarmercannotreachalivingincome.Since2023,FFBcollectorsandmillsinGhanaarenowmandatedtopayatleastthemonthlyminimumpricesetbytheindustryandendorsedbytheGovernmentofGhana.Priceshavebeengoodandcompetitiveoverthelastcoupleofyears.Evenwiththeseminimumprices,itwillbedifficultforsmallholderstomakealivingincomewiththeiraveragefarmsizeoftwohectaresandlowyields.Farmersthereforecanincreasetheiryieldsandconsideradditionalincomeraisingactivitiestosecurealivingincome.”P(pán)ERULeslyVera:“Take,forexample,oneofourfarmersintheAmazoníaConnectprojectinPeru.Withjust15hectaresofoilpalm,thisfarmerearnedin2023morethandoublethelivingincomeintheAmazon,faroutperformingthosecultivatingcocoa,coffee,orothercrops.Butthere’sacatch:fertilizers,vitaltomaintainingthesehighyields,nowconsumeupto40%oftotalproductioncosts.Thisburdenhassurgedoverthelastfiveyearsduetonationalpoliticalinstability,increasingexchangeratesandfertilizerprices,andslashingprofits.Evenmorecritical–over40%ofoilpalmplantationsintheregionarebetween25and30yearsold.Theseagingtreesurgentlyneedreplantingtomaintainproductivity,butthatcomesataprice:severalyearsofreducedyieldsandincome.Forfarmers,thistransitioncanbeamake-or-breakmoment.Thisiswhyinnovationisnotjustanopportunity,butanecessity.Throughtargetedtechnologylikefertigation,wecanslashinputcosts,boostyields,andsmooththereplantingprocess–allowingfarmerstonotonlysurvivethesechallengesbutthrive.”COLOMBIAMariaGoretti:“Weassessedlivingincomedatafrom2021fromtworegions:TibuinthedepartmentofNortedeSantander,andtheNorthZoneofthedepartmentofMagdalena.Thesamplesizewas39smallholderoilpalmproducingfamilies.Theaverageproducerwithninehectaresofoilpalmgeneratedanetincomeof1,797eurosperhectarein2021.Thisresultedinatotalannualincomeof16,243euros.Withthe2021livingincomebenchmarkforareferencefamilyoffivemembersat7,465eurosperitisclearthatwiththepricesthisyearthesefarmerscanmakealivingincomefromoilpalmgrowing”.1213FIGURE313FIGURE3CSPOPRODUCTIONANDUPTAKEINPREMIUMMARKETS(2022)100%80%60%40%20%0%RSPOPhysicalCSPOOtherSchemesRSPOCreditsConventionalRSPO CSPOProductionSales(fromMilll)CSPO CSPORefining/ ConsumptionProcessingSource:RSPO(2024),ImpactUpdate2023,online:/wp-content/uploads/Impact-Update-2023_.pdfOverthelasttwodecades,theindustry,governmentsandcivilsocietyhavemadeseriouseffortstocontributetomoresustainableoilpalmproduction.Thisislargelyduetopublicpressureandmountingevidenceofthedangersofunsustainableoilpalmexpansionandproductionpractices.Voluntarycertificationsystems,suchasRSPOandAPSColombiahavebeensetupandcorporateactorshavemadecommitmentsregardingimplementationandalsosetcommitmentstoinitiativessuchasthe‘NoDeforestation,NoPeatandNoExploitation’(NDPE)commitment,pioneeredbythepalmoilindustry.Suchinitiativesseektoensurethatoilpalmusedinglobalmarketsisnotassociatedwithnegativeenvironmentalandhumanrightsimpacts.Theseeffortshavebeencomplementedinrecentyearsbygovernmentmeasuresinproducingcountries(theISPOandMSPOschemes)andnewregulationinconsumingcountries,specificallytheEuropeanUnion’sDeforestationRegulation(EUDR)andCorporateSustainabilityDueDiligenceDirective(CSDDD).However,whiletheseeffortsarenoteworthy,theyhavesomeseriousdrawbacksasregardsoilpalmsmallholders.CertificationsandNDPEcommitmentsareeasierforlargerplantationstoachieve,thankstoaccesstosubstantialfinancialresources.Thesesameinitiativesaremorecomplexforsmallholderstocomplywith.Inabsenceofcompliance,theiraccesstoprofitablemarketsisblocked.LikewisetheEUDR,withitsstringenttraceabilityrequirements,risksexcludingmanycompliantsmallholdersfromEuropeansupplychains,becausetheydonothavethemeanstoprovetheircompliance.Inthiscontext,theeffortstopushforsustainabilityhavebecomeabarriertotradeoraburdenforsmallholders.Introducingcompliancewithsustainabilityrequirementsinoilpalmlandscapesoftenrequiresinvestmentandtraining,andevenwhentherequirementsaremet,thereisnoguaranteethatsustainablesmallholderswillbenefitfinanciallyfromthisarrangement.AprimeexampleofthisistheRSPOcertificationsystem(seealsoparagraph1.3).InsufficientpremiumpaymentsforphysicalRSPOandIndependentSmallholderCreditsNotallRSPO-certifiedvolumesaresoldassuch,whetheritisregularCSPOorIndependentSmallholder-CSPO.16100%21%21%25%16%16%16%15%15%15%49%48%45%PAGEPAGE14FIGURE4AVERAGECREDITPRICESPERTONCERTIFIEDPALMOILPRODUCTUS$/20,00 250,0015,00 200,00150,0010,00 100,005,00 50,000,00 0,00CSPO:CertifiedSustainablePalmOilCSPKO:CertifiedSustainablePalmKernelOilISCSPO:IndependentSmallholderCertifiedSustainablePalmOilISCSPKO:IndependentSmallholderCertifiedSustainablePalmKernelOilSource:RSPO(2024),“Markettrends”,online:/as-an-organisation/rspo-credits/market-trends/,viewedinMay2024.OwncalculationsbasedonRSPOdata.Figure3showsglobalCSPOproductionin2022versustheactualsalesofthesecertifiedvolumes.RSPOexplains:“ofthe15.4millionmetrictonnes(MT)inCSPOsupply(Figure49percentwassoldasRSPOPhysical(MassBalance,SegregatedorIdentityPreserved)and15percentasRSPOCredits,totalling9.7millionup8.1percentfrom2021.Salesunderotherschemesfellto16percentfrom19percent,withconventionalsteadyat21percent.Downstream,supplychaininefficienciesFIGURE4AVERAGECREDITPRICESPERTONCERTIFIEDPALMOILPRODUCTUS$/20,00 250,0015,00 200,00150,0010,00 100,005,00 50,000,00 0,00CSPO:CertifiedSustainablePalmOilCSPKO:CertifiedSustainablePalmKernelOilISCSPO:IndependentSmallholderCertifiedSustainablePalmOilISCSPKO:IndependentSmallholderCertifiedSustainablePalmKernelOilSource:RSPO(2024),“Markettrends”,online:/as-an-organisation/rspo-credits/market-trends/,viewedinMay2024.OwncalculationsbasedonRSPOdata.SalesofIndependentSmallholderCreditsPopricePKOpriceRSPOcertifiedsmallholderscanselltheircertifiedvolumephysicallyorviaso-calledIndependentSmallholderCredits.Thecreditsystemwassetuptoensurethatindependentsmallholderswhoarenotinproximityofacertifiedmill,arestillabletoselltoaccessarewardforcertification.ThistradecanbedoneviathePalmtraceplatform.However,recentlythemarketpricesforcreditshavebeensteadilydecreasing.ThelatestpricescanbeseenviatheRSPOcreditmarketplace.18Seefigure4foranoverview.PopricePKOprice20202021202220232024Furthermore,evensmallholdersinthesupplybaseofRSPOcertifiedmills,whocanselltheircertifiedvolumephysicallysegregated,arenotwellrewarded.Deetalfoundin2023that:“certificationdidnotleadtonewagreementsonprices,uptakeorgrading.”19Onetradertoldus:“Ifourbuyersdon’twanttopaytheRSPOpremium,wedonotpaythepremiumtofarmers”.20202021202220232024Insummary,thismeanswhenasmallholderfarmerhasgonethroughtheRSPOcertificationprocessandfullyintegratedtheprinciplesandcriteriainitswork,thereisnoguaranteethattheywillreceiveapremiumforit.20Thesameappliesforlargergrowers:thosewhohaveimplementedsustainabilitymeasuresonlaborandhumanrightsandenvironmentalimpactsarefrequentlyunabletorecuperatetheassociatedcostsfromthemarket.TheSolidaridadMexicoteamnotedthatfarmersexpressedtheirfrustrationthat,evenaftergoingthroughallthecertificationprocesses,andafteryearsofmaintainingtheircertification,theyreceivedminimalfinancialrewardforit.Itisimportanttonotethatnotpayingforcertificationisn’tjustanRSPOissue.ThesituationissimilarwhenitcomestobuyerspayingapricethatatleastcoverscostsforcompliancewithISPOorMSPOcertifiedpalmoil.21EcosystempaymentsandmarketsdonotyetworkforsmallholdersTheoilpalmsectorisasignificantcontributortoglobalgreenhousegas(GHG)emissions.Themajorsourcesofemissionsare:deforestationpeatlanddegradationfertilizerandpesticideuseandpostharvestactivitiessuchasprocessingofoilpalmfruitandtransportation.Specifictooilpalmproductionisthepalmoilmilleffluent(POME)thatcanemitlargeamountsofmethane(CH4),whichhasmuchstrongerGHGwarmingpotentialthanCO?.Whilehugestepshavebeenmadeinpastdecade,thereisstillalongwaytogoindecreasingGHGemissions,regeneratingforestsandpeatlandsandswitchingtolesspollutingproductionmethods.22Moreandmorecompaniesinthesupplychainareawareofthisandhavesettargetsonscope3emissions,someofthemalreadyapprovedbytheSBTI.23hearfrommanycompaniesthattheyareinterestedinreducingtheiremissions,forexamplebycarboninsettinginlandscapeprojects.24Butmajorproducersandbuyershavenotyetturnedtheirfreshcommitmentsintoactionplans.Insettingupemissionreductionplans,itisessentialthatcompaniestakeintoaccountthepositionofoilpalmsmallholders.ThereareseveraleffectiveoptionsfordownstreamactorstominimizetheGHGimpactofoilpalmproductionwhilecreatingpositiveeconomicconditionsforsmallholderfarmersandthesmallandmediumprocessingindustry.Thisincludessustainableland-usepracticesandagroforestry.ProfessorMajaSlingerlandofWageningenUniversity&ResearchSustainPalmProgramadds:“l(fā)andsavingapproachescanalsoplayanimportantroleinGHGemissionreduction,forexample,byusingintercroppingandlivestockgrazinginexistingoilpalmplantations.byaddingvaluetooilpalmbiomassbymakingwoodorsugarfromend-of-lifeoilpalmtrunks.Inthisway,weremovetheneedtousemorelandforwoodorsugarproduction,whilegeneratingadditionalincome.Furthermore,replacingoilpalmonpeatbypaludiculturewithmarketableproductsandcarboncreditswouldlargelyreduceGHGemissionsfrompeatlandandprovideadditionalfarmersincome.”25SmallholderfarmershaveincreasinglymoreoptionstoreducetheirGHGemissionsandsequestercarbon,whichopensthedoortoreceivinganincomefortheirecosystemservicesonglobalcarbonmarkets.Solidaridadidentifiedaselectionofpromisingclimatesmartagriculturalpracticesfortheoilpalmsectorinaninternal2021study.foundthatimplementinganyoneofthefollowing’triplewin’practicessimultaneouslyresultsinhigherproductivity,betterclimateadaptationandGHGmitigation:gooddrainagewatertablemanagementreducedorminimumtillagecropresiduemanagement(mulching)useofcovercropsorganicfertilizerapplicationconductinglandassessmentstoidentifysuitableplantingareasrecyclingbiomasswasteInthecoffeeandcocoasectorsSolidaridadhaseffectivelyimplementedpaymentforcarbonsequestrationsystems.26However,inthepalmoilsectorthisconceptisstillverynew.Solidaridad’spilotprojectwithUganda’sMinistryofAgriculture,AnimalIndustryandFisheries(MAAIF)isworkingtowardssuchasystem.27Itaimstofacilitatefarmers’participationininternationalcarbonmarkets,oaccountoilpalm’slonglifecycle,theprojectpromotestheimportanceofadoptingresilience-buildingstrategies,includingtheimplementationofclimatemitigationandclimateadaptationinterventions.Similarly,SolidaridadandIDH’sNISCOPS(NationalInitiativesforSustainableandClimate-SmartOilPalmSmallholders)IIprojectpositionscarbonfinancinginpalmoilasapossiblepaymentforecosystemservice(PES)thatcouldgenerateadditionalincomeandincentiveforsmallholderfarmers.28AnotherapproachcurrentlybeingexploredbySolidaridadanditspartnersisbiochar,wherebyorganicwasteistreatedandstoredinthesoilasameansofremovingcarbondioxidefromtheatmosphere.29Applyingbiochartosoilcanincreaseitswaterandnutrientholdingcapacity,actingasacarbonspongeforrainandanalternativetochemicalfertilizers.Governmentsandcompaniesshouldrewardfarmersforsequesteringcarboninthesoilwithbiochar.CHAPTER1SUMMARYAlivingincomeforoilpalmsmallholdersisessentialPricevolatilityinthepalmoilsectorishighandshowsnosignofstabilizing.30Climatechangerelatedextremeweatherconditionsfrequentlyimpactfarmersandwillonlygetworse.31Thismeansthatfarmerscanmakealivingincomeinoneperiod,andstruggletomakeendsmeetinanother.Currently,thepalmoilsectorfacesgrowingsustainabilitydemands,butrespondingtorequirementsoftenleadstotheexclusionofsmallholderfarmersfromthemostprofitablemarkets.contributetoamoreresilientsector,ensurefarmerlivelihoods,implementexistingvoluntarystandardsandprepareforupcomingregulation,wemusttakefarmerrealitiesintoaccount.Thismeanslookingatthevaluechainthroughaninclusivelens.Dosmallholderfarmershaveownership,cantheirvoicebeheard,aretheyabletocontrolriskandaretheysufficientlyrewardedthroughthepaymentoffairprices?Inthenextchapterwewilllookathowprocurementpracticescanrespondtotheseneeds.16Palmoilfarmer,Indonesia.?Solidaridad18182“DuringmustbebutsmallholderinclusionandrewardPalmoiltrader,inaninterviewwithSolidaridad.PAGEPAGE24INTRODUCTIONInthefirstPalmOilBarometer,weidentifiedthatthereisenoughvalueintheoilpalmsectorforallactorstomakeaprofit.However,valueadditioninthesupplychaindoesnotmakeitswaytofarmers.Whilesmallholdersareinaprecariouspositionandoftenstruggletomakeendsmeet,atth