As an appreciation for the implementation of sustainable practices, in early September 2014, Asian Agri distributed premiums of US$ 220,000 from the sale of Sustainable Palm Oil in 2013 to more than 20,000 Plasma smallholders in Riau and Jambi who had obtained Sustainable Palm Oil Certificates.
Asian Agri’s PT Inti Indosawit Subur (IIS) has been a member of the nonprofit organization - Roundtable on Sustainable Palm Oil (RSPO) since 2006, and it has applied the principles and criteria of the RSPO as its commitment to the implementation of sustainable practices in its operations.
All the subsidiaries of PT IIS are targeted to receive RSPO certification by 2018, as per information disclosed by the company.
Its strong commitment in the implementation of sustainable practices is not just notes on paper. This commitment is not only implemented by the company alone, but it is also implemented by its smallholder farmers. These smallholder farmers which comprise 43 cooperatives with a membership of more than 21 thousand farmers in Riau and Jambi, have also gained RSPO certification.
Sustainable practices have become a culture in all Asian Agri’s operations, as well as in the smallholder farmers who partners with the company. To appreciate this commitment by the smallholder farmers, the company gave premium sharing to all its smallholder farmers in an event hosted by the Ministry of Commerce in early September 2014.
The premium shared by Asian Agri among the 43 cooperatives consist of more than 20,000 smallholders and represent an area of more than 40,000 hectares in Riau and Jambi provinces.
General Manager Asian Agri, Freddy Widjaya hopes that the shared premiums can be fully utilized for the benefit of smallholders, such as improving infrastructure, increasing production capacity, and enhancing their general welfare.
Vice Minister of Commerce Krisnamurthi said, "Asian Agri has been assisting smallholders to obtain Certificates of Sustainable Palm Oil since 2011. As international markets, particularly in Europe, place a lot of emphasis and attention on sustainable palm oil, the certification ensures market acceptance of palm oil produced by Plasma smallholders. The premium is an additional incentive for them.”
The premium sharing of the sales activities of sustainable palm oil is part of the company's efforts in implementing the principles of sustainability in the palm oil industry in Indonesia, which would benefit, not only the business by ensuring a market for oil products, but also the farmers. "Asian Agri is committed to sharing this premium, the amount of which will be in line with sustainable palm oil market conditions and successful premium earned," said Freddy to InfoSAWIT recently in Jakarta.
From the volume of sustainable palm oil produced by smallholders that was about 150 thousand tons, 25% is absorbed by the market commanding a premium that varies between US$ 1-20 / ton. From the total premium earned, the company then set aside a portion for the cost of certification, audit costs and other operational costs. "After that, we distribute to farmers, through the KUD (cooperatives)," added Freddy.
Asian Agri’s partnership with smallholders commenced in 1987, and now covers an area of 60,000 acres and supports more than 29,000 farmer families. Through this partnership, the smallholder farmers get benefits such as technical assistance and trainings, fertilizers, as well as access to loan funds.
Translated from an article published in INFO SAWIT Magazine October Volume.