Business

Continuing to Nourish the World

Cargill's strong focus on achieving and maintaining a more sustainable future
Since the dawn of the first agricultural revolution - the prehistoric transition period where humanity progressed from hunting and gathering to settled agriculture - began circa 10,000 BC, societies have been concerned with the issues surrounding agriculture and food, including production techniques, commerce, and even ethics. The latter, especially, has become important over the past few decades, as more and more people have become increasingly sensitive towards the effect that human industry has had on the planet, leading to a strong global movement that is concerned with environmental protection and restoration.

In particular, global issues - including poverty and starvation, which are intrinsically linked - has made the matter of sustainable community food systems a key question to be solved. The modern food production and supply chain sees sustainability - which is concerned with the collaborative network that integrates sustainable food production, processing, distribution, and consumption and waste management - as a fundamental issue with which no compromise is possible nor desirable.

As one of the oldest and largest agricultural multinational conglomerates in the world, Cargill Inc views these issues as part and parcel of its business operations, both from the perspective of its products, as well from its suppliers and workers along the entire production chain. InvestKL Corporation spoke to the local branch of the conglomerate about its policies towards fostering food sustainability, food safety, and food security. In this first of a three-part series of articles, Cargill expounded on how it tackled the issue of food sustainability.

To be the best
"Cargill's purpose is to be the leader in nourishing the world in a safe, responsible and sustainable way," said Cargill Director of Corporate Affairs Chandramohan-Dharmapalan Nair. "Our 150,000 employees are working to bring that purpose to life every day, in their work and in their communities."

He added that Cargill's position within the global food system provides both the opportunity and the responsibility to create lasting change. "We are focusing on areas where we believe our size and market presence can help make a significant impact: land use, climate change, water resources, farmer livelihoods, food security and nutrition. We aim to be the most trusted source of sustainable products and services for our customers."

Nair said that earning that trust meant working to deliver economic, social and environmental benefits across Cargill's value chains. "As we work to be the most trusted partner in agriculture, food, and nutrition, we feel that sustainable supply chains are critical to our success. Sustainability enables us to create value for customers, build competitive advantage and innovate for the future," he said, adding that Cargill drives scalable solutions to nourish the world and protect the planet by embracing its global size and market presence.

Fight against deforestation and irresponsible partners with unsustainable policies Nair explained that in 2014, Cargill made a commitment towards halving deforestation from its agricultural supply chains by 2020 and eliminating by 2030. "Our work on deforestation directly impacts farmers' livelihoods - which is why Cargill has been thoughtful about our approach and timeline. As one of our sustainability focus areas, we aim to reduce greenhouse gas emissions in our operations and supply chains, and we partner with farmers to adapt practices to a changing climate."

He said that globally, Cargill was working towards a 100% transparent, traceable, and sustainable palm supply chain by 2020. "Our updated policy on sustainable palm oil in July 2014 includes no deforestation of high conservation value (HCV) lands or high carbon stock (HCS) areas; no development on peat; no exploitation of rights of indigenous peoples and local communities; and inclusion of smallholder farmers. We will work to ensure that all palm oil and palm products that Cargill produces, trades or processes are in line with these commitments."

"We are constantly sharing reports on our policies, actions and progress on sustainability in our corporate website to demonstrate our commitment to transparency and accountability," he said.
Navigating change in the Malaysian palm oil supply chain
Nair revealed that with regards to the palm oil business in Malaysia, Cargill was involved in the downstream sector. "We own and operate three palm oil refineries located in Port Klang, West Port, and Kuantan, producing various value added palm-based packaged palm products and specialty oils and fats. In 2014, we expanded the capabilities of the West Port refinery to process other vegetable oils namely soya bean, sunflower, corn and canola oil," he said, adding that all Cargill's facilities were RSPO-certified [Roundtable of Sustainable Palm Oil], with most of its products exported to customers in over 70 countries worldwide. "All our crude palm oil and crude palm kernel oil feedstock for processing at the refineries are purchased domestically from third-party suppliers, as we do not own any oil palm plantations in Malaysia," Nair explained. "This makes our palm oil origination even more complex and challenging, involving many players in the supply chain: from small to large growers, oil palm fruit dealers, and the upstream processing industry, such as mills and palm kernel crushers."

He remarked that Cargill also implemented an aggressive roadmap aligned to its global policy, to advance traceability, supplier engagement, smallholder programmes and partnerships /collaborations to meet its sustainability goals. "There is much to accomplish in this timeframe," Nair said, referring Cargill's goal of meet its palm oil sustainability target in Malaysia by 2020.

"We have been working with partners and suppliers to influence change and drive positive improvements to achieve a sustainable palm oil sector. We believe that supplier engagement is one of the key components of our palm oil sustainability execution plan. This entails engaging third-party suppliers to make sure they are fully aware of Cargill's own policies and standards for responsible palm oil production practices."
Training and awareness programmes
Nair said that together with its partner The Forest Trust's (TFT), Cargill has undertaken an assessment of high-priority mills and its oil palm fruit supply base in Peninsular Malaysia, in order to understand their sustainability practices and gaps, as well as to advocate good practices. "Additionally, we organised three palm oil Sustainability Workshops in Peninsular Malaysia in 2016, with participation from our direct and indirect suppliers. This was to communicate a broad array of palm oil sustainability topics covering the environment, the social, and the economic aspects of the industry, to guide these stakeholders into embracing good practices towards sustainable palm oil production."

He said that although the industry had made good progress in increasing knowledge and capability to prevent deforestation in palm oil supply chains, there is increasing concern for labour and human rights issues. "During our engagement with our suppliers in the workshops, we have renewed our focus on migrant labour and human rights, sharing and discussing on various areas, such as ethical recruitments, employment contracts, forced/bonded labour, wages, and safety and health."
Strengthening the smallholders
Nair emphasised that independent smallholders were pivotal to the palm oil industry in Malaysia, seeing as how they account for 16% of the nation's total oil palm planted area in 2016. "We are working on initiatives with partners to support the sustainability of independent smallholders, who are involved indirectly in Cargill's palm oil supply chain in Malaysia. To date, Cargill has in partnership with Wild Asia helped 175 independent oil palm smallholder farmers in Perak receive RSPO certification under the Wild Asia Group Scheme (WAGS)," he said, adding that fifty of these farmers were from indigenous communities in Perak.

The WAGS programme was initiated by Cargill in 2013 in collaboration with the Solidaridad Network, an international development organisation with almost five decades experience in improving the sustainability of global supply chains. "This collaboration with Solidaridad - which was undertaken until December 2015, was to promote the production of certified sustainable palm oil (CSPO) in Malaysia," he said. "It involves a full set of independent entities across the supply chain - from independent oil palm smallholders, to FFB [Fresh Fruit Bunches] dealers, and even the mills and refiners. The programme provides smallholders and dealers with technical assistance, better access to technology, and the necessary expertise to help them adopt responsible and efficient farming practices to improve their crop yields and obtain the RSPO certification."

Nair maintained that the certification underscored Cargill's commitment towards supporting the inclusion of independent oil palm smallholders in order to build a transparent, traceable and sustainable palm oil supply chain in Malaysia. "Our plan is to further develop a critical mass of smallholders, and create a long-term, self-sustaining group scheme, which will be able to provide an uninterrupted growing supply of RSPO-certified sustainable palm oil to meet the global demand."

He added that although Cargill continues to make progress, it recognised that its approach must adapt to respond to meet the complex challenges facing the food and agriculture industry. "There are limits to the progress we can make as one company. However, if all the stakeholders and each part of the supply chain work together, we can transform and create a sustainable palm oil industry in Malaysia, to supply the world's palm oil needs and protect the planet," he concluded.
Source: InvestKL