Written by Yusman Bin Haruna, MPOCC

One of the world's primary sources of oils and fats has historically been palm oil (Kushairi et al., 2018). Due to its high output per hectare and minimal land use requirements, the oil palm crop is recognised as being extremely productive when compared to other competitive crops (Rival and Levang, 2014; Morley, 2015). In addition to playing a significant part in ensuring global food security, palm oil is well renowned for its versatility and has been employed in a variety of industries, including the non-food industry.

Malaysia has taken the initiative to offer the MSPO certification as a guarantee to the world that palm oil is handled responsibly in response to the anti-oil palm movement that has widely spread throughout the world.

Smallholders

Farms with less than 100 acres are considered smallholders (40.46ha). More than 200,000 people work in Malaysia's smallholder oil palm industry, which accounts for 40% of total output and provides the country with 18 million tonnes of palm oil annually. There are two types of smallholders: organised smallholders (such as those that fall under FELDA, FELCRA, or RISDA, government organisations that support oil palm and rubber smallholders through resettlement and crop conversion plans or other aid) and independent smallholders.

The former receive support from their umbrella organisations in terms of technical, processing, and financial aid, while independent smallholders can access assistance through TUNAS, an assistance centre run by the Malaysian Palm Oil Board (MPOB). Independent smallholders make up 0.86 million hectares (15.0 per cent) of total planted oil palm and comprise 228,702 farmers as of December 2021, with the largest number of independent smallholders in Johor. (Serina Rahman, 2020).

Sabah is fourth in terms of the number of independent smallholders behind Johor, Perak, and Sarawak.

MSPO and Sustainability Certification

Various palm oil certification standards are now in use in Malaysia. However, MSPO, RSPO, and International Sustainability and Carbon Certification are the most widely used standards (ISCC). RSPO is a global certification programme for oil palm that was established in 2004 and has participants from every stage in the supply chain for oil palm.

In 2010, ISCC was established primarily for the certification of palm oil used as a feedstock for biofuels. In addition, Indonesia launched their certification programme in 2011 called the Indonesian Sustainable Palm Oil (ISPO) to accredit the country's palm oil business.

The Malaysian Sustainable Palm Oil (MSPO) Certification Scheme is the national scheme in Malaysia for oil palm plantations, independent and organised smallholdings, and palm oil processing facilities to be certified against the requirements of the MSPO Standards. 

MSPO was initially established by MPOB in 2010; MPOB is the designated Standards-Writing Organization (SWO) chosen by SIRIM Bhd, the national standards development organisation, to develop the standards. Before the establishment of MSPO, MPOB began putting its MPOB Codes of Practice (CoP) into effect to advise the industry on the best ways to manage the whole supply chain for palm oil.

The Department of Standard Malaysia (DSM), which is the National Standards Body and the National Accreditation Body, is responsible for overseeing the standards development process through which MPOB created the MSPO standards with input from key oil palm sector stakeholders.

The MSPO certification programme was introduced in 2013 as a national initiative for Malaysia to formally certify the country's palm oil industry. Since that time, MSPO adoption has been voluntary up until the government declared it to be mandatory in 2017. Companies having RSPO certification were initially required to earn MSPO certification by 31 December 2018, while those without RSPO certification were allowed an extension until 30 June 2019. Smallholders who are independent and organised have until December 31, 2019, to obtain MSPO. The implementation of MSPO certification for all categories will be made mandatory by 31 December 2019 under the most recent revision to the timetable. (Parthiban Kannan et al., 2021)

The Malaysian Palm Oil Certification Council (MPOCC), an independent non-profit organisation, was established in 2014 as the scheme owner to administer and run the MSPO certification scheme in Malaysia.

Concept of Sustainable Palm Oil Clusters (SPOC)

In Malaysia, 863,361 acres of oil palm were owned independently by 228,702 smallholders as of December 2021. Anyone who owns oil palm land that is less than 40.46 hectares, individually or collectively, is considered to have an independent smallholding. With a range of ages and management styles, these smallholders are scattered all over the country and independently manage their oil palm lands. The average land holding of independent oil palm smallholders in Sabah is 2.5 ha.

If smallholders had to be certified individually in this situation, certification fees might be expensive (AgroEco and Grolink, 2008). To offer independent smallholders extension services on oil palm, MPOB launched extension services known as Tunjuk Ajar dan Nasihat Sawit (TUNAS) in 2002.

The current ratio of TUNAS extension agents to smallholders is 1 extension agent for every 1500 smallholders, which makes it difficult to deliver extension services to all smallholders, particularly for MSPO certification, which is required by the end of 2019. Establishing SPOC around the nation to arrange smallholders within a small group of between 1000 and 2000 smallholders for each group is one of the methods used by MPOB to prepare smallholders for MSPO certification.

This grouping enables them to be certified together under a single certificate. One TUNAS officer will oversee each SPOC as the Group Manager (GM), making sure that each member complies with the requirement. One head of TUNAS officer who serves as the Internal Control System (ICS) officer for every four to five SPOCs will be responsible for overseeing and establishing the general control system for each SPOC. (Parthiban Kannan et al., 2021)

Certification Process for Independent smallholders

The process of certification starts when the GM identifies the list of smallholders and invites them to join the MSPO briefing and training. Once the GM receives the smallholders' approval to join the SPOC, more farm visits are scheduled to determine the level of good agricultural practice (GAP) there.

They are given time to put any suggestions for improving their current GAP into practice. With the assistance of other organisations like the Department of Occupational Safety and Health, the Environment Protection Department, the Department of Wildlife and National Parks, and others, various training and extension activities would be conducted at the same time to introduce smallholders to the MSPO's principles, criterion, and indicators.

Basic records such as land title, MPOB license, yield statistics, an MSPO consent letter, and others would be created into individual files for each smallholder. The GM would build a database with comprehensive data on all smallholders who are prepared to receive certification for each SPOC.

An internal audit would be carried out to assess the level of preparedness more thoroughly before inviting an external certification body (CB) to carry out the auditing process. The phase 1 audit would be conducted on SPOC to determine its preparedness before moving on to the phase 2 audit. The SPOC members would be selected at random and based on the risk factor. The CB would conduct the audit by the requirements in the MSPO part 2 standard for independent smallholders.

Following completion, the CB would go through several processes before awarding the MSPO certificate to the SPOC, which is valid for five years. After then, a surveillance audit would be done annually, followed by a recertification audit after five years. The GM would continue all the procedures to include new smallholders in the clusters in advance of the annual surveillance audit. (Parthiban Kannan et al., 2021)