RSPO in Thailand –Challenges for Prosperity of Smallholders
Transcript of RSPO in Thailand –Challenges for Prosperity of Smallholders
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RSPO in Thailand – Challenges
for Prosperity of Smallholders
Prakarn Virakul
Chairman of Thai RSPO National
Interpretation Working Group
September 9, 2011
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AGENDA
� Oil Palm Situation in Thailand
� Challenges of Smallholder Production
� Benefits of Smallholder Production
� RSPO in Thailand
� Opportunities of Smallholder Certification
� Challenges of Smallholder Certification
� Tools for Promoting Sustainable Palm Oil
� Conclusions
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� Thailand is the third biggest producer in the world
– Production of 1.3 million t CPO in 2010
� Importance of smallholders
– >70% of the area planted with palm oil is managed by
Oil Palm Situation in Thailand
– >70% of the area planted with palm oil is managed by
smallholders
– 98% of all growers and more than 120.000 smallholdings
� Domestic market
– Only 10% of yearly production exported (avg. last 10
years)
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Oil Palm Situation in Thailand
� Rising importance of biodiesel
– 20% to 30% of CPO used for biodiesel (avg. last 5 years)
� Market for FFB is sellers market
– overcapacity in oil palm crushing mills– overcapacity in oil palm crushing mills
� Productivity Challenges
– FFB yield per hectare 16 – 17 t (avg. last 10 years)
– OER of 16% - 17% (avg. last 10 years)
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Productivity Challenge
2009 Mid-term
potential
FFB yield (t/ha) 16 18.5
OER (%) 17 20
CPO Production (t) 1,387,604 1,887,788
Revenue (USD)* 963,333,565 1,310,582,587
Potential to increase CPO production by 36%---->
* Based on Ø CPO price 2009 of USD 694.-
Lost annual revenue of USD 347,250,000.----->
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Challenges of Smallholder Production
� Limited knowledge
– Nutrient requirements, fertilizer application, soil fertility
� Limited professional farm management
– Record keeping, clear procedures, training and – Record keeping, clear procedures, training and improvement, managing labor and transportation
� Limited financing
– Insufficient fertilization, low quality seedlings
� Lack of incentives for quality
– Sellers market, no quality pricing and little incentive to harvest ripe FFB
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Benefits of Smallholder Production
� Economic development and prosperity
– Net profit 3,121 THB/rai/year *
� Diverse agricultural landscape
– Farmers grow a variety of crops – rubber, palm, fruits ..– Farmers grow a variety of crops – rubber, palm, fruits ..
� No clearing of large areas of natural vegetation
– Remaining forest and natural vegetation legally protected
– Conversion from agricultural area or unused land
� Part of local community
– Community driven oil palm development
* Office of Agricultural Economics, June 2009
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RSPO in Thailand
� Little Export of Palm oil…
� BUT: Export of Food and Chemical Products containing palm oil
� Multi-National companies operating in Thailand� Multi-National companies operating in Thailand
� Biodiesel Production of Multi-National Corporations
Increasing Demand for Certified Palm Oil in Thailand ---->
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RSPO in Thailand
In harmony Social Economic viable
RSPO Framework
In harmony with nature
Social responsible
Economic viable
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RSPO in Thailand
In harmony Social Increase Quality
Elements of Thai RSPO
In harmony with nature
Social responsible
Increase productivity
Quality assurance
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1
DevelopingTHAI RSPO
Field test
Thai NIWGVoluntary Team
Public consultation onDraft Thai RSPO 3
Nation Prosperity
Prosperity of palm oil
industry and stakeholders
Increase volume of export Field test
Draft Thai RSPO
Submission to RSPO
Final Thai RSPO
Increasing productivity and produce quality
2
PracticingTHAI RSPO
of export
Conserving environmentSocial responsible to people, community and
farm workers
Market access of certified RSPO palm oil
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Opportunities of Smallholder Certification
� Access to the market in the long term
– Markets are changing and farmers need to adapt
� Improved knowledge and farming practices
– Capacity building measures are part of the standard– Capacity building measures are part of the standard
� Better organization and management
– Smallholders need to form groups to join RSPO
– Sophisticated group management requirements
� Improved environmental and ecological conditions
� Avoid conflict and maintain harmony in the communities
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Certification of Plantations With Mills
RSPO P&C
RSPO Certification SystemRSPO Supply Chain Certification
UTZ CERTIFIED
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Certification by Including Scheme Smallholders
RSPO P&C
RSPO Certification SystemRSPO Supply Chain Certification
P&C for Scheme SHUTZ CERTIFIED
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Certification of Independent Smallholders
P&C for Independent SH
Group Certification Standard
RSPO Certification System
RSPO Supply Chain Certifacation
RSPO P&C
UTZ CERTIFIED
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Stand-alone mills
Thai Oil Palm Production Chain (Upstream)
Independent smallholders
Smallholder groups
Mini estates
Mills with
plantationsMiddle-men /
collection centers
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Challenges of Smallholder Certification
� Spot market for FFB
– weak relationship between farmers and mills
� Fragmented production area� Fragmented production area
� High number of middlemen / collection centers
� Smallholders act independently – few formal groups
� Challenge for setting up group certification
– Group formation takes a long time
– RSPO Group Certification Requirements are very
demanding
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Challenges for Smallholder Certification
� Lack of price incentives for certification
– Insufficient premium price
– No market access for certified FFB exists until now
� High cost for audit and compliance
– Management requirements
– Group formation
– Annual auditing cost and member fees
� No command from mills on farmers
� Lack of support for smallholders
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Tools for promoting sustainable palm oil
� National Good Agricultural Practices (GAP) for Oil
Palm (MoAC/ACFS)
� FFB Quality Grading Standard (MoAC/ACFS)� FFB Quality Grading Standard (MoAC/ACFS)
� Good Manufacturing Practices (GMP) for Collection
Center (MoAC/ACFS)
� Thai RSPO for Mills and Plantations (To be
approved)
� Thai RSPO for Smallholders under Group
Certification (To be approved)
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Tools for promoting sustainable palm oil
� RSPO Palm Oil Supply Chain Manual (MASCI)
� Operational Procedures for Thai RSPO (MASCI)
� Oil Palm Farm Management (OAE-GIZ)� Oil Palm Farm Management (OAE-GIZ)
� Fertilizer Management (OAE-GIZ)
� Occupational Health & Safety (OAE-GIZ)
� RSPO Practical Guidelines for Smallholders (OAE-
GIZ)
� More to come…
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Conclusions
� Oil palm in Thailand support the local economy and well
being of the communities and the Thai economy as a
whole
� Huge potential to increase productivity and thereby the � Huge potential to increase productivity and thereby the
prosperity of smallholders
� Certification poses a big challenge to smallholders and
SMEs in the Thai palm oil industry
� RSPO needs further adjustments to incorporate
independent smallholders
Further support is needed – Need to pass the torch! ---->
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Thank you for your attention!
Prakarn Virakul
Chairman of Thai RSPO National
Interpretation Working Group
E-mail address: [email protected]
Telephone: (66)85 115 8188