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Traceability

FFB Traceability

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:

  • Identifying our suppliers

    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. Our third-party suppliers are located in the provinces of North Sumatra, Riau and Jambi, mostly situated within 50 kilometers from our mills. The freshness of the FFB and the logistics cost can be optimized by procuring from the close proximity.

  • Engagement and verification

    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.

    Asian Agri engaged Meo Carbon Solution from Germany and SNV from The Netherlands as traceability consultants to assist with the supply chain traceability project. Commencing in October 2018, Asian Agri began supply chain traceability projects in North Sumatra and Riau. These projects complement the first traceability verification programs for our independent smallholders’ partner in Jambi Province which began in 2016 and were done in collaboration with IDH and Yayasan Setara Jambi.

Supply Chain Map
Palm Kernel Traceability

In addition to PK from our own mills, we also purchase PK from third parties for our KCP’s feedstock. Similar to our third-party FFB suppliers, our PK is sourced from third party mills near our KCPs and mills. Our suppliers source from either own estates or third party plantations. Out of our total number of third party supplier mills, 6.3% source only from their own plantations, 33.3% source from both their own plantations and from third party plantation, while 60.4% source only from third party plantations.

In terms of volume of PK supplied to our KCP, 36.2% is sourced from third party supplier mills’ own plantations while 63.8% is sourced from third party plantations. These figures are as of December 2023.

As of December 2023, we have been able to trace 83.3% of our PK sources to plantations.

Traceability Journey

2019

Asian Agri and Meo Carbon Solutions – SNV publish joint statement, assuring Asian Agri’s 100% FFB traceability to plantations

2018

Engaged with Meo Carbon Solutions and SNV to generate accurate and up-to-date FFB Traceability information in North Sumatra and Riau to provide third party-level assurance of our 100% FFB traceability to plantation.

2017

Achieved 100% FFB Traceability to plantation with the full implementation of robust sourcing frameworks across all managed estates and smallholder partners.

2016

Engaged with IDH and Yayasan Setara Jambi on Independent Smallholders’ FFB Traceability in Jambi.

2014

— Commitment to achieve FFB Traceability to plantation
— Direct FFB suppliers listing

Traceability Measures

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:

Outgrowers
Individual / company who owns plantation >25 ha
Smallholders
Individual who owns plantation >25 ha.
These smallholders are supplying to our mills through different channels:

  • Direct
  • Group e.g. cooperative / gapoktan / association
  • Agents

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.