Presented by Agus Purnomo (Senior Advisor, Golden Agri Resources) at "A nature-positive trade for sustainable agriculture supply chains and inclusive development", Jakarta, Indonesia, on 26 - 27 Sep 2023

1. Asia Regional Stakeholders Consultation
A Nature Positive Trade for Sustainable Agriculture, Supply Chains and Development
Jakarta, 26 September 2023
By Agus Purnomo

2. 2
• Actions on Value Chains
1. Know your suppliers: who (subject of value chains), where (geo-location)
and details about their plantation (size in hectares and number of trees)
2. Build routes of a) fruits transport from plantations to palm oil mills and b)
palm oil from mills to refineries, to establish a chain of custody
3. Develop internal traceability system to allocate information from sources
to product outputs
4. Deploy traceability application, such as block-chain, to develop trust
5. Pilot testing traceability of supply chains involving all stakeholders
6. Create value for producers (also traders, buyers and consumers), specially
if it has required segregated process from the clean and clear plantation.
Sustainable Trade and Value Chains in Agriculture

3. Sustainable Trade and Value Chains in Agriculture
• Challenges on Value Chains
1. There are more than 2,500,000 individuals of small palm oil farmers. The
clean and clear (certified) small farmers is only 1 (one) percent. Because of
that, small farmers will be excluded from supply chain to Europe.
2. Unlike timber, coffee or cacao, processing palm fruit bunches into food and
industrial goods involve complicated processes. The fruit bunches changed
forms into liquid-gas-solid, back and forth, at mills and refineries, also they
travel in long distances. A sophisticated traceability system is needed.
3. Segregated method improve traceability quality and can be done relatively
quickly. However, it is very expensive from having to allocate dedicated
trucks, storage tanks, processing batches at mills and refineries. Segregated
process is technically possible but cost wise it is unaffordable.
3

4. 4
Sustainable Trade and Value Chains in Agriculture
• Contributions from private sector
1. GAR has collected independent smallholder’s data since 2017, as an effort
to know it’s suppliers better. A total of 150,000 farmers data is collected.
This data is GAR’s contribution to external traceability solution.
2. GAR analyzed the internal traceability challenges and is developing a system
of traceability that will enable GAR to ensure traceability of processed
products per invoice and batches of processing's in mills and refineries.
3. Several big palm oil companies are helping the smallholders within their
supply chain to upgrade their Good Agriculture Practices, helped them in
replanting (PSR program) and obtained sustainability certifications. Several
international and local NGOs are also supporting smallholders to get
sustainability certifications.

5. Supply chain challenges - 1. Smallholder specific challenges
5
34 certificate, + 10,500 smallholders;
21,000 ha
117,044 scheme smallholders;
17,818 Independent Small Holders

6. Palm Supply Chain Process Flow
6
ESTATES MILL REFINERY BUYER
• Branded products
• Bulk Products
Weighbridge

7. Palm Supply Chain Process Flow (Internal + External)
7
ESTATES MILL
REFINERY BUYER
• Branded products
• Bulk Products
GAR
ESTATES
GAR MILL
GAR REFINERY
EXTERNAL FFB:
THIRD-PARTY
SMALLHOLDER
EXTERNAL CPO:
THIRD-PARTY
MILL Weighbridge

8. Complexity of palm oil traceability
8
ESTATES MILLS REFINERY
BULKING FINAL PRODUCTS
• Branded products
• Bulk Products
90 25
Backward
Tracing for
each batch
estates mills
1
batch
9
batches
72
batches Sales Order
1 Sample Sale of RBDPKOL Product
Materials are continuously commingled - making traceability complex and challenging
Batch 1
Ratio of materials used
0.293 0.310 0.020 0.273 0.024 0.080
1 2 3 4 5 6
Source
Materials used to produce
one batch comes from
multiple sources, used in
small quantities resulting in
many unfinished sources
With many unfinished sources, this increases the risk of losing
the ’deforestation free’ status for the whole batch
Current Method Sample Sales from a Refinery (Oct. 2020)
FINAL PRODUCTS
Bulk Products
641 Batches
26Products
from
Branded Products
9,748 Batches
179Products
from

9. 13
Sustainable Trade and Value Chains in Agriculture
• Key enablers to move forward
1. Increasing the percentage of ‘clean and clear’ smallholder from 1 (one)
percent to 50% or 1.3 millions smallholder farmer will ensure that those
smallholder can access the premium price markets (currently only EU), and
this will require leadership and real actions from public sector.
2. Realistic road map with clear milestones to bring smallholder to a ‘clean
and clear’ status from 1% to 50% need to be negotiated and agreed
between producing countries and consuming nations.
3. Joint mapping to delineate no-deforestation agriculture areas between
producing countries and consuming nations is important to reduce
unnecessary due diligence. Monitoring the possibility of conversion of
remaining forest to create new plantation can be done by public sector as
part of law enforcement, and by concerned stakeholders.

10. 14
Sustainable Trade and Value Chains in Agriculture
• Immediate future challenges
1. Respect to Human Rights, decent living wage and other social issues, will
soon be discussed as the new requirements for progressive consumers.
2. Land grab, land tenure conflicts, unfair wages / land compensation, union-
busting and use of coercive means will be among frequent allegations
raised in the media or directed to several big agriculture companies.
3. Until the public sector can address issues of the rights of indigenous people
and solve land tenure conflicts in the simplified and expedient way, such
issues will continue to make headlines.
4. The no-deforestation criteria will be adopted by markets in North America,
China, India, and advanced Asian countries. Managing the EUDR unrealistic
definitions through the newly established Joint Task Force of EUDR is
critical, before such regulation turns into a huge utopian enigma.

11. 15
Thank you