Asian Agri is committed to FFB traceability. Traceability is the first step towards building a fully sustainable supply chain. Our mills are supplied by our own estates, plasma scheme smallholders and third party suppliers. Identifying supply from third party suppliers in Indonesia is challenging because of the complexity of the supply chain, comprising layers of dealers that operate between estate owners / farmers and the mills.
To address such issues, we have developed a systematic strategy that will assist us in identifying all of our FFB supply sources:
FFB supply from our own estates and scheme smallholders are traceable and mapped. Our supply comes from 100,000 ha of our own estates production and 60,000 ha of scheme smallholders. For third party suppliers, we took the first step by listing our direct suppliers and this was completed in 2014.
We believe the next step to further identifying independent smallholders is through engagement and verification. We are communicating our sourcing policy as it relates to the legality of their land, crops, and protection of conservation areas. Suppliers who have been identified are expected to submit their data and sign a statement of compliance with our sourcing policy. We then use the data to map out the location of their estate and overlay this on the provincial spatial plan for verification.
The following charts show our progress to date towards our goal of 100% FFB traceability to all of our mills. We will continue to update this as the above strategy is implemented.
We believe the FFB traceability initiative should have positive impact for our third party suppliers and that the best course is to adopt multi-stakeholder collaboration to find pragmatic and mutually-beneficial solutions.
View our SUPPLY CHAIN MAP
Our focus is to obtain FFB traceability data of all of our suppliers by 2016. We are using the volumetric approach to give a true reflection of actual percentage of oil that is traceable.
Currently our suppliers consist of two different categories:
We obtain the data from these smallholders through the support of our direct suppliers and our partners. Traceability lays the groundwork for us to identify the smallholders that we can engage for transformation process.
Due to Asian Agri’s commitment to sustainable sourcing for all of our buyers, we strictly prohibit any sources of illegal fresh fruit bunches (FFBs) from our suppliers. We have placed notification stating this commitment in every mill. The suppliers are properly informed of the company’s regulations, commitments and the consequences if illegal FFB sources are discovered. They are required to sign statement of warranty letter stating that their FFBs and their lands meet to our standards and regulations.
Thus, we have a CSV smallholders program which encourages independent smallholders to be trained the same way as our plasma smallholders. In order to become CSV smallholders, they are required to form a farmers group and have all of their legal documents of their lands. Once it is approved, they will be trained and developed on best management practices in oil palm industries. By doing so, not only we can establish a sustainability transformation among our suppliers but also they can be traceable.