Dr. Yotsawin Kukeawkasem

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Smallholders: Smallholders: Smallholders: Smallholders: Smallholders: Smallholders: Smallholders: Smallholders: Partnership FarmingPartnership FarmingPartnership FarmingPartnership FarmingPartnership FarmingPartnership FarmingPartnership FarmingPartnership Farming

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Project on Sustainable Palm Oil Production in Thailand,

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

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22-24 November, 2011

The 9th Annual Roundtable Meeting on Sustainable Palm Oil

The extent of oil palm cultivation in 43 oil palm producing countries

Palm Oil (2011/F)*

Million ton

48.97

Production under

smallholder (%)**

33

SHs average ton oil

per Ha** (average)

2.51

(3.74)

Palm oil from SHs

Million ton

16.16

2

Source: FAO (2007). Cited by World bank (2010)

* Oil World (vol.54, 2011); ** World Bank (2010); *** Sawit Watch(2011)

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Million ton

No. of SHs: Million (calculated)

A: 1.0 ha / farmer 6.438

B: 1.5 ha / farmer 4.292

C: 2.0 ha / farmer 3.219

How many smallholders are RSPO certified?

25,000 farmers*** (0.77%)

Smallholders ???

Is smallholder a bottle neck in ensuring sustainable palm oil?

•Government?•Civil Society?•Private Business?

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INDEPENDENT SMALLHOLDERS & STAKEHOLDERS

Challenges of the TH Palm Oil Industry

“Market Failure”Loss of 0.4 billion USD / year*

Poor

agri. practices & management

Lack of

Agricultural

Harvesting of

unripe fruit

bunchPoor ramp

management: water

spray and sand mixture

4

Ministry of Agri. (DoAE, DoA, ACFS)

Academic Institutions

Provincial Govt.Office

Agr. InputsSupplier/company

Asso. of Palm Oil mills/refinery

National Palm Oil Board

* Own calculation

Smallholder Palm Oil Crushing MillsHarvest team Ramp (middleman)

Low quality control of FFB

purchasing

Agricultural

knowledge &

inputs: fertilizer,

credit, etc.

Low quality seedlings Low OER (ineficient) of

crushing mill

6

Stakeholder Pros Cons

Government - Legal authority

- Manpower covering all

areas

- Officials

- Centralized policy

- Multipurpose duty

- Limited resource

- Outdated information and knowledge

Civil society -Specific purpose

- closed-up & In dept work

- Limited (spatial & time & thematic areas)

- Lack of manpower and resource

Pros and Cons of stakeholders linking with smallholders

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- closed-up & In dept work

- Follow up

- Lack of manpower and resource

Business - Market access

- Advanced knowledge &

Technology

-- long term business

- Focus mainly on economic aspect

- Specific supply base

Creating win-win Opportunities for Smallholder

Economic Aspect

CHALLENGES Opportunity & approach Partner

1. High cost of

agri. inputs

• Seedling: direct purchase

• Fertilizer (group purchase)

• partner mills

• farmer groups

2. Yield gap • Farm management and

practices

• Certified seedlings

• oil palm experts

(uni., state, mill)

• mills

3. Poor FFB • improve % OER (pricing • mill

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3. Poor FFB

quality

• improve % OER (pricing

mechanism based on quality)

• FFB standard

• mill

• farmer group

• Government

IMPACT • 10 – 15% fertilizer cost reduction

• Yield increased 3 ton/ha

• 0.1 THB/kg FFB

ECONOMICVALUE ADDED

Average farm size of 7 ha

: ~ 3,000 usd / year to smallholder;

: 1-2 % OER increased for mill

Creating win-win Opportunities for Smallholder (cont.)

Social & Environmental Aspect

CHALLENGES Opportunity & approach Partner

4. Working

condition

• occupational health and

safety

• Health coverage program

• Syngenta

• Mahidol University

• Public Health Min.

5. Transparent

payment & price

• minimum wage

• free market (labor & FFB)

• government

• private, farmers

6. Ethnics & • local wisdom and values • local administrative

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6. Ethnics &

cultural values

• local wisdom and values

(bottom up planning)

• local administrative

offices & community

7. Land conflict • land distribution & titling

• community agreement

• Land department

• community

8. Monoculture • diversified agricultural

activities (2.3% palm area)

• government

• farmers

9. High

Conservation

Values

• Clear & good management

of protected areas

• Freedom of local beliefs &

practices

• Thai authority

• Thai’s constitution

& ways of life

IMPACT • Human security

• Clear land use & conservation areas

Stakeholders’ role in coping with key challenges

Challenges Approaches Government

Civil Society

Private

Yield gap •Training & monitoring: oil palm experts

• Certified seedlings

?X

X?

XX

Production cost • Farm best practice management

• Group purchase of agricultural inputs

• Credit and agri. inputs access

??X

XX-

XXX

Quality (FB) • Quality- based price premium

• FFB standard

?X

-?

X?

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• FFB standard X ? ?

Pricing Mechanism • Competitive market X - X

Labour • Free labour market X - X

Ethnics & culture • Decentralized and local wisdom ? X -

Land • Land distribution & titling to

smallholder

X ? -

Monoculture • Diversified crops/activities ? ? X

Environ. & cultural values trespassing

• Control & monitor

• local wisdom &

X ? -

Note: X is Necessary; ? is Important; - is less relevant

Creating Opportunities for Smallholder with Innovative partnership Farming

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Is the RSPO certificationattractive enough to

independent smallholders?

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Thank you very much

E- mail:yotsawin.kukeawkasem@giz.de