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Unilever to increase sustainable palm oil production in Indonesia

Global consumer goods firm Unilever has struck a deal with a government-owned palm oil plantation firm in Indonesia to help accelerate the production of...

Laura Mullan
|Jan 26|magazine6 min read

Global consumer goods firm Unilever has struck a deal with a government-owned palm oil plantation firm in Indonesia to help accelerate the production of sustainable palm oil in the country. 

The deal with PT Perkebunan Nusantara (PTPN), will see the pair work together to support local mills and farmers in producing palm oil in a way that doesn't cause deforestation, development on peat, or exploits people and communities.

The move comes as part of Unilever’s Sustainable Palm Oil Sourcing company that aims to drive transformational change in the palm oil supply chain. 

Palm oil is a common ingredient in many food products and home and personal care items. 

Unilever uses about 1 million tonnes of crude oil per year and estimates that it impacts about r 8% of global palm oil production, making it the largest user of physically certified palm oil in the consumer goods industry. 

As a result, Unilever is hoping to make its use of palm oil more sustainable. 

Through the partnership, PTPN will give Unilever access to its mill and its supplying farmer based. 

Meanwhile, Unilever will help mills and farmers gain a sustainability certification by offering resources, funding and technical expertise. 

In the long-term, the memorandum of understanding hopes to accelerate production standards in accordance with No Deforestation No Peat No Exploitation (NDNP) policies.

“Unilever’s ambition is to make sustainable palm oil mainstream,” said Unilever chief supply chain officer Marc Engel. “We have been working really hard to make this a reality and we have been evolving our approach over the years. We are involved in various partnerships to help smallholder farmers improve their yields while protecting the environment and local communities.

“The memorandum of understanding with PTPN is the first time we can apply the produce-protect model at scale – our partnership will have a positive impact in Indonesia from an environmental, social and economic perspective, which makes it unique to the industry.”

Erwan Pelawi, operating manager of PTPN III Holding Company, added: “Palm oil from smallholders also enters our supply chain through PTPN Group’s palm oil mills. Therefore, being able to source from certified smallholder farmers gives us the ability to produce quality and sustainable palm oil products.

“The memorandum of understanding with Unilever is expected to improve the quality of how smallholder farmers manage palm oil cultivation and will also accelerate the process of sustainable palm oil certification, which will, in turn, provide better benefits for the welfare of oil palm farmers in Indonesia.”