required changes for smallholder certificates & ffb … - ffb supply chain system.pdf ·...

Required changes for smallholder certificates & FFB supply chain system Jan Willem Molenaar – Aidenvironment June 2012

Index • Background • Methodology • Unit of Certification • Smallholder certificates • FFB Chain of Custody

Background

Missing links (2011 by Marcus Colchester) • Rules and documentation to ensure the traceability of fresh

fruit bunches • Calculation rules to allow certificate trade of Sustainable Fresh

Fruit Bunches

Current situation

• Smallholders are allowed to sell certified FFB according to Mass Balance and Seggregated System

• Group Manager is responsible to assure traceability of FFB at all times to the mill

• Group Manager is responsible for dealing with sub-contractors / intermediaries until the mill

Main obstacles

I. Groups of smallholders are not recognized as Unit of Certification

II. Smallholders have no option to use Book & Claim system

III. No clear rules on how FFB trade between Groups of Smallholders and certified mills should be organized

Methodology

• Input collected in stakeholder workshops before RT9 • First draft of recommendations (external consultant) • Consultation • Final draft of recommendations (external consultant) • Decision by Smallholder Working Group is required

I. Unit of Certification – Proposed changes Propose to add in the Certification Systems, article

4.2.3, the following Unit of Certification: Group of independent smallholders:

• The unit of certification must include all managed land (or estates) of formal group members, where the group members shall have contracts or agreements with the Group Manager to comply with the relevant RSPO Standards

• All the FFB from all managed land (or estates) of formal group members shall be produced to RSPO certifiable standards

I. Unit of Certification – next steps

• Certification System review will be revised after P&C review SHWG formulates clear input Certification System review

• Nonetheless, until that moment Groups can already be certified against the: • Group certification document & Independent

smallholder standard (or NIs) Start certification processes

II. Smallholders Certificates – proposed changes

Introduce Smallholder Certificates • CPO, PKO, PKE certificates to be traded via GreenPalm system; via open

trades and off-market deals with regular updates on prices of trades + (optional: levy for recuperation smallholder certification costs)

Set conversion rates for FFB into CPO, PKO and PKE • CPO: based on national or local (e.g. provincial) reference figures. If the

group manager can demonstrate with proof a higher OER of the Group (and the CB can verify this), this OER can be used as basis to converse FFB into CPO certificates.

• PKO and PKE: a standard PK rate of 6% of FFB, of which 45% is PKO volume and 55% PKE volume.

Mitigate risks on overselling and double selling • Group Manager keeps records of sales volume of certificates and

certified FFB and this is controlled by EB. If volume of claims sold surpasses actual certified production than Groups are required to buy back volumes.

II. Book & Claim

member

member

member

member

member

Group Manager

FFB sales volume registration

Uncontrolled FFB Flow

Administrative flow

Buyer ?

Buyer ?

Certificate registration

100% certified production

II. Smallholders Certificates – Next steps

Certificate trade system: • Approve Smallholder Book & Claim concept & proposed

changes in Group Certification Documents • Sent it for information/approval to RSPO Standing

Committee Standards and Certification and Trade and Traceability (by email)

• Drive it forward to EB approval mid July • Continue to work on Communication options

III. FFB Chain of Custody – Issues

a) How to assure traceability between group and mill? b) How to avoid that CPO mills overstate incoming certified FFB

volumes from independent sources? c) How to deal with FFB traders? d) Should Mass Balance system be allowed?

III.a) FFB traceability – Proposed changes Responsibilities Group Manager: • Registers sales records • Tracking and tracing certified FFB from origin up to the stage in

which ownership of the RSPO certified FFB is transferred to the contractual counterpart (Mill or Trader)

• Ensures that sub-contractors (transporters) comply with the Chain of Custody Requirements until ownership of the RSPO certified FFB is transferred to the contractual counterpart (Mill or Trader)

Responsibilities CB Group: • Verifies group’s sales records of FFB and Certificates and the

traceability system

III.a) FFB traceability – Proposed changes Responsibilities of the CPO Mill: - Registers volumes and origin of incoming certified FFB from

independent sources - Ensures traceability from the moment it received ownership

of the RSPO certified FFB (Trader or Group) - Ensures sub-contractors (transporters) to comply with the

Chain of Custody Requirements from the moment ownership of the RSPO certified FFB is transferred to the contractual counterpart (Trader or Group).

Responsibility CB Group : • Verifies purchase records and traceability system

III.b) Overstate incoming certified FFB volumes – proposed changes • The CB of the CPO mill verifies sales records of independent suppliers

(or a sample) • If a CB finds the mill has overclaimed certified FFB sales from

independent parties, the CB needs to raise a major Non-Compliance and recommendation of immediate suspension

III.c) FFB Traders – proposed changes • FFB traders need to become supply chain certified when they are

involved in the trade of certified FFB.

Segregated (delivery at mill gate)

member

member

member

member

member

Group Manager

Segregated certified FFB flow

FFB Chain of Custody system managed by Group Manager


Mill

Segregated (purchase at group level)

member

member

member

member

member

Group Manager




FFB Chain of Custody system managed by Mill

Mill

Segregated (with trader)

member

member

member

member

member

Group Manager




FFB Chain of Custody system managed by Trader

Trader Mill

Assurance system

member

member

member

member

member

Group Manager

FB flow

FFB Chain of Custody system

Certificate registration

CB Group

-Registers production volumes (ICS) -Registers claims sold via GreenPalm -Registers certified FFB sales volumes -Assures traceability of certified FFB until next owner

-Registers volumes and origin of incoming certified FFB from independent sources -Assures traceability from previous owner

Mill

- Verifies claims sold via GreenPalm and validity conversion rates - Verifies volumes sold physically by purchase and sales records - Verifies traceability system in place

CB Mill

- Verifies volumes and origin of certified FFB from independent sources - Verifies tracebility system in place - Verifies (a sample) of sales records at independent suppliers

III.d) Should FFB Mass balance trade be allowed - outcome • Groups of Independent smallholders produce 100% certified FFB

and each member sells 100% certified FFB. • The Group Manager (e.g. cooperative management, NGO, trader,

external consultant) is responsible for registering, tracking and tracing FFB trades.

• Additionally, the group manager may organize the FFB marketing of the group. Depending on the group manager, it may also organize FFB marketing of non-group members.

• Consequently, the Group Manager should be allowed to aggregate FFB from certified and uncertified sources and to transport and sell the FFB under the Mass Balance to avoid unnecessary segregation costs (just like any other chain actor such as a trader or CPO mill). No changes foreseen in current system as FFB trade under Mass

Balance is already allowed

Mass Balance (delivery at mill gate)

member

member

member

member

member

Group Manager




Non- member

Non- member

Non- member

Mass balance FFB flow

Non-certified FFB flow

Mill

Mass Balance (purchase at group level)

member

member

member

member

member

Group Manager




Non- member

Non- member

Non- member


Non-certified FFB flow FFB Chain of Custody system managed by Mill

Mill

Mass Balance (with trader)

member

member

member

member

member

Group Manager



Mill


Non- member

Non- member

Non- member


Non-certified FFB flow

Trader

FFB Chain of Custody system managed by Trader

Non- member

Non- member

Non- member

FFB Chain of Custody – next steps • Standard for Group Certification & Accreditation and

Certification Requirements for Group Certification: • Proposed textual changes are send to the Standing Committee for

Standards and Certification for approval and integration • Proposed revised texts are send to EB for approval

• Supply Chain Certification Standard & Supply Chain Certification Systems • SHWG gives input for next revision of SCCS documents • Until next revision: proposed changes are reformulated in an

addendum or interpretation document and send to the Standing Committee Trade and Traceability for approval