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Palm oil is the world’s most traded vegetable oil and the industry employs millions of people in the developing world. Palm oil production has also resulted in significant controversy due to its potential effects on the environment, as well as various social challenges. The challenges faced by smallholder farmers—those controlling 50 hectares or less of cultivated land—are especially acute. Corporations in the palm oil supply chain can play a crucial role in improving smallholder livelihoods, given the resources and expertise they bring. These efforts can both impact smallholder livelihoods and also benefit companies through greater yields and improved quality—a significant opportunity to create shared value for the private sector.

Top Takeaways

  1. The major factors that affect smallholder development include agronomy, supply chain, and enabling environment issues.
  2. Strategic opportunities for the private sector include creating new incentive structures, working with financial institutions to develop appropriately-designed financial products, and incorporating productivity improvements.
  3. Collaboration across sectors is a critical component of many existing efforts.
We view ourselves as long term investors in these countries. Profitable palm oil production starts only after about seven years being planted, and we know we need to be aware of this timeline that the farmers face.

Gert Vandersmissen