JOHOR BAHRU, 12 October 2022: Kulim (Malaysia) Berhad (KULIM) announced today that it has entered into a two-year purchase agreement of Certified Fresh Fruit Bunch (FFB) with Wild Asia and Eng Lee Heng Trading that will bolster the company’s production of traceable and sustainable palm oil that meets the stringent standards of the Roundtable on Sustainable Palm Oil (RSPO).
With the assistance of Wild Asia, KULIM was able to create a new model for working with FFB dealers. This new purchase agreement ensures there is a fair benefit share of RSPO premiums, allowing dealers to empower more smallholders. By working with Wild Asia under the Wild Asia Groups Scheme (WAGS), smallholders are supported to meet the global RSPO certification standard. WAGS is a programme developed by Wild Asia to provide technical and management support for smallholders to have their production to be independently certified, allowing them to participate in the global sustainable palm oil value chain.
“This is a milestone for not only KULIM but for progressing sustainable palm oil production from Malaysia. We have now shown that dealers and mills can have the confidence to go beyond business-as-usual and create not just an opportunity for enhancing the bottom line, but a way to do good in the community. The inclusion of smallholders in a traceable and certified chain is just the start, and we hope to find more ways to make a difference to smallholder livelihood”, said Dr Reza Azmi, Executive Director of Wild Asia.
On top of enhancing physical traceability from the estate to mill for KULIM’s Identity Preserved (IP) palm oil production, this agreement is a testament of the company’s ongoing smallholder inclusion programme to encourage more smallholders to attain RSPO certification. KULIM has been providing advisory and technical support for its 21 FFB outgrowers (including dealers, small estates and smallholders) and three of them had been RSPO-certified thus far. Furthermore, KULIM rewards its RSPO-certified smallholders with an additional premium to encourage more participation from smallholders. KULIM has set a target for all of its FFB outgrowers to attain RSPO certification.
“As a founding member of RSPO, KULIM continues its effort to share its experience and knowledge whilst encouraging more smallholders to attain RSPO certification to uplift the industry and nation towards a more sustainable future. I am very optimistic that this pilot project will be able to demonstrate to more smallholders the value of being RSPO compliant that is not only better for the environment, but also on how it can increase their revenue and profitability,” said Mohd Faris Adli Shukery, Managing Director of KULIM.
The purchase agreement is expected to increase the production of IP palm oil at KULIM’s Sindora Mill in Kluang, Johor and contribute positively to the company’s revenue and profitability. It also marks another significant milestone in KULIM’s ongoing transformation programme to become a leading agribusiness company. After a stellar performance in 2021 that saw the Group’s profit before tax and zakat of RM433.8 million, KULIM is focused on strengthening the turnaround of the company through continuing mechanisation and digitalisation at its oil palm plantations to overcome the acute labour shortage, and enhanced sustainability practices resulting from its ongoing commitment to continuously strengthen its ESG platform.