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

Transcription

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

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

3 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

4 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

5 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

6 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

7 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 s, where the group s 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 s shall be produced to RSPO certifiable standards

8 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

9 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.

10 II. Book & Claim 100% certified production Certificate registration Buyer? FFB sales volume registration Group Manager Buyer? Administrative flow Uncontrolled FFB Flow

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

12 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?

13 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

14 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

15 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.

16 Segregated (delivery at mill gate) 100% certified production Group Manager Mill FFB Chain of Custody system managed by Group Manager Segregated certified FFB flow

17 Segregated (purchase at group level) 100% certified production Group Manager Mill FFB Chain of Custody system managed by Mill FFB Chain of Custody system managed by Group Manager Segregated certified FFB flow

18 Segregated (with trader) 100% certified production Group Manager Trader Mill FFB Chain of Custody system managed by Trader FFB Chain of Custody system managed by Group Manager Segregated certified FFB flow

19 Assurance system - Verifies claims sold via GreenPalm and validity conversion rates - Verifies volumes sold physically by purchase and sales records - Verifies traceability system in place - Verifies volumes and origin of certified FFB from independent sources - Verifies tracebility system in place - Verifies (a sample) of sales records at independent suppliers CB Group Certificate registration CB Mill Group Manager FFB Chain of Custody system FB flow Mill -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

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

21 Mass Balance (delivery at mill gate) 100% certified production Non Non Non Group Manager Mill FFB Chain of Custody system managed by Group Manager Segregated certified FFB flow Non-certified FFB flow Mass balance FFB flow

22 Mass Balance (purchase at group level) 100% certified production Non Non Non Group Manager Mill FFB Chain of Custody system managed by Mill FFB Chain of Custody system managed by Group Manager Segregated certified FFB flow Non-certified FFB flow Mass balance FFB flow

23 Mass Balance (with trader) 100% certified production Non Non Non Non Non Non Group Manager Trader Mill FFB Chain of Custody system managed by Trader FFB Chain of Custody system managed by Group Manager Segregated certified FFB flow Non-certified FFB flow Mass balance FFB flow

24 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