Prosympac’s investment subsidiary, PT Prosympac Agro Lestari (PT PAL), is its investment arm of all its palm oil investment in Jambi. Through PT PAL, Prosympac has the vision is to become an international recognized company that enables sustainable use of renewable natural resources, and has a business model that shares benefits to all stakeholders involved, including smallholder farmers. Currently PT PAL is building an independent palm oil mill with 45 ton/hr capacity in Sungai Gelam, Muaro Jambi district, Jambi province, of which will be operational in December 2016. Prosympac’s growth plan (2015-2019) in Jambi province is to develop 4 (four) mills, sourcing from up to 12,000 smallholders with an estimated area of 100,000 hectares of independent smallholders plantations.
In Indonesia, the business case of an independent mill is straight forward: get your supply to support full capacity of the mill through minimum engagement with your suppliers and provides incentives mostly only in price. This practise sometimes also neglecting the aspects of legality of the supply. However for Prosympac sees beyond this standard business case and seek to support the sustainability of the smallholders production through organization development, trainings and certification that at the end will provide better income and livelihood for the smallholders. This will also support legality and traceability of the smallholders supply. In order to ensure a steady and high quality stream of supply, collaboration with smallholders is crucial for the success of the operations and Prosympac’s objective of sourcing sustainable palm oil. As such Prosympac recognizes the need to invest in their capacity and in building good and fair relationship with the smallholders. And as currently this business model has not been developed and tested yet and Prosympac is on progress requesting NGO and donor partners to co-fund the development and implementation of the model.
The purpose of the proposed project is to develop and implement a model of sustainable palm oil production system for the 3,000 smallholders that will supply the first mill build by PT PAL in Sungai Gelam, preparing them for certification
- Development of a fair partnership agreement and collaboration with the smallholders to ensure the business case of the smallholders of increased productivity and better livelihood in moving towards sustainable production of palm oil, achieving it and maintaining it while supplying to PT PAL mill.
- Development of incentives and disincentives mechanism on traceability and in ensuring no-deforestation to be agreed between the mill and the smallholders, as well as a platform for monitoring and reporting compliance, i.e. protection of HCV and HCS areas, ensuring legality, no-peatland, no-fire, etc.
- Development of the smallholders organization through trainings, such as good management for cooperatiives and internal control system (ICS), preparing them in moving towards certifications, such as the RSPO, ISPO and ISCC.
- Development of the smallholders capacity in order to operate sustainably through trainings: good agricultural practices, HCV, health and safety, disaster and fire management, pest and weed control
- Close collaboration with other partners, especially with the local government, maximizing positive impact of the collaboration. Additionally Prosympac will partner with local NGO in capturing and documenting the learning gathered from this project. Prosympac will also be supported Setara Jambi, as a local partner supporting the company as the main implementer of the project.