First Global Palm Oil Barometer By Solidaridad

The pivotal role of smallholders in the palm oil sector, currently contributing to around 30% of global production, is often overlooked in the sustainability agenda, as policies tend to focus on large industrial plantations. Smallholders play an increasingly central role in rural economic development and preserving biodiversity. Supply chain-wide smallholder inclusion is crucial for sustainable palm oil production.

The first global Palm Oil Barometer by Solidaridad and smallholder producer organizations in Asia, Africa and Latin-America, gives a new perspective on the largely negative public debate around palm oil in western countries. This controversial crop presents more issues and more opportunities than many people realise. Through the barometer, it becomes clear that market dynamics have led to unfavorable prices and incomes for oil palm smallholders. While they struggle, food and consumer goods manufacturers and retailers reap the profits in the supply chain.

The Palm Oil Barometer opens the floor to all stakeholders. How can we reach a fair value distribution if farmers’ voices are not heard? How do we ensure oil palm smallholders are included in the global market? This report sets the stage for a lively discussion that we hope contributes to feasible solutions that work for the smallholders who feed the world. 

According to the report, the Smallholders generated USD 17 billion of the palm oil industry’s USD 282 billion turnover in 2020, yet many did not earn enough to cover their families’ essential living costs. Despite this, many smallholders prefer growing oil palm to other crops, like rubber or coffee, because they earn a higher and more consistent income throughout the year. For many smallholder farmers growing oil palm gives them better prospects and alleviates poverty.

Fair Value Distribution is at the Heart of Sustainable Palm Oil Production

The report highlights that while smallholders struggle to make ends meet, at the other end of the chain food manufacturers, consumer goods companies and retail take 66 percent of the gross profits on palm oil in food, household, and body care products. The global palm oil buyers show little willingness to compensate small producers for operating sustainably, for example, by paying a fair price and investing in long-term trading relationships. A fairer value and risk distribution across the palm oil value chainenables smallholders to both produce sustainably and make an income that sustains their family’s livelihood.

Stop Boycotting and Start Investing in Good Palm Oil Production

The campaigns by NGOs and commercial brands call for a palm oil boycott to combat biodiversity loss. Many academics and conservation organizations agree that banning palm oil would simply shift the problem elsewhere, threatening other habitats and species

Oil palm is far more productive than any other vegetable oil crop. For example, on average, it’s five times more productive than soy. Replacing palm oil with alternatives would intensify the battle for scarce farmland Instead of boycotting palm oil, the industry should invest in sustainable palm oil production by smallholders. 

Key Recommendations Derived from the Report

Industry: (processors, traders, FMCG, retail)
A. Pay a fair price that covers the cost of sustainable production by smallholders
B. Make smallholder inclusion part of your sustainability criteria using a uniform matrix for reporting
C. Support continuous strengthening of national sustainability frameworks

Public policy makers: (in producing and consuming countries)
A. Provide adequate support for implementation of mandatory frameworks and national sustainability
standards to raise the floor
B. Ensure that measures to avoid imported deforestation, do not unintendedly exclude smallholders
C. Ensure smallholders inclusive policies
For all stakeholders: all actors have to take their shared responsibility: no actor can succeed on their own – cooperation is required to achieve smallholder inclusion in value chains.

The Barometer can be downloaded from given link