Hindoli Smallholders Public Summary Report 290610

PUBLIC SUMMARY REPORT

RSPO CERTIFICATION ASSESSMENT

PT HINDOLI
SCHEME SMALLHOLDERS
South Sumatra Indonesia

Report Author
Charlie Ross – Revised June 2010
[email protected]
Tel: +61 417609026

BSi Group Singapore Pte Ltd (Co. Reg. 1995 02096‐N) BSi Management Systems Malaysia Sdn Bhd (Co.Reg. 804473 A)
3 Lim Teck Kim Road #10‐02 Suite 19.05 Level 19 Wisma Goldhill
Singapore Technologies Building 65, Jalan Raja Chulan
SINGAPORE 088934 50200 Kuala Lumpur
Tel +65 6270 0777 MALAYSIA
Fax +65 6270 2777 Tel +03 2032 2252 (Hunting Line)
www.bsi‐asia.com Fax +03 2032 2253
Soon Leong Chia: [email protected] Teo Chin Siong: [email protected]

ii
TABLE of CONTENTS Page No

SUMMARY ..................................................................................................................................................................................... 1
LIST OF ABBREVIATIONS USED ....................................................................................................................................................... 1

1.0 SCOPE OF CERTIFICATION ASSESSMENT ............................................................................................................. 1–5
1.1 National Interpretation Used ................................................................................................................................ 1
1.2 Certification Scope ................................................................................................................................................ 1
1.3 Location and Maps ................................................................................................................................................ 1
1.4 Description of Supply Base .................................................................................................................................... 1
1.5 Date of Plantings and Cycle ................................................................................................................................... 4
1.6 Other Certifications Held ...................................................................................................................................... 4
1.7 Organisational Information/ Contact Person ........................................................................................................ 4
1.8 Time Bound Plan for Other Management Units ................................................................................................... 4
1.9 Area of Palms ........................................................................................................................................................ 5
1.10 Approximate Tonnages Certified .......................................................................................................................... 5
1.11 Date Certificate Issued and Scope of Certificate ................................................................................................... 5

2.0 ASSESSMENT PROCESS ..................................................................................................................................... 5 – 7
2.1 Certification Body ................................................................................................................................................. 5
2.2 Assessment Methodology, Programme, Site Visits ............................................................................................... 6
2.3 Qualifications of Lead Assessor and Assessment Team ........................................................................................ 6
2.4 Stakeholder Consultation and List of Stakeholders Contacted ............................................................................. 7
2.5 Date of Next Surveillance Visit .............................................................................................................................. 7

3.0 ASSESSMENT FINDINGS .................................................................................................................................... 7–17
3.1 Summary of Findings ............................................................................................................................................. 7
3.2 Detailed Identified Nonconformities,
Corrective Actions and Auditor Conclusions ................................................................................................. 15
3.3 Noteworthy Positive Components ...................................................................................................................... 17
3.4 Issues Raised by Stakeholder and Findings
with Respect to Each Issue ............................................................................................................................ 17
3.5 Acknowledgement of Internal Responsibility ..................................................................................................... 17
3.6 Formal Sign‐off of Assessment Findings ............................................................................................................. 17

LIST of TABLES
1 GPS Locations of Mills ....................................................................................................................................................... 1
2 FFB Production (tonnes) ................................................................................................................................................... 4
3 Age Profile of Palms .......................................................................................................................................................... 4
4 Time Bound Plan for Certification ..................................................................................................................................... 5
5 Smallholder Areas of Palms .............................................................................................................................................. 5
6 Production Tonnages ........................................................................................................................................................ 5

LIST of FIGURES
1 Location Map PT Hindoli ................................................................................................................................................... 2
2 Location Map Estates, Mills and Smallholders.................................................................................................................. 3
3 Annual Average FFB Yields (tonnes/ha) of Hindoli Estates and Smallholder Oil Palm .................................................... 17

LIST of PLATES
1 Well Maintained Groundcover ......................................................................................................................................... 9
2 PPE Available at KUD Pesticide Stores ............................................................................................................................ 10
3 Typical Smallholder Family Group .................................................................................................................................. 13
4 Well Maintained Smallholder Access Road ..................................................................................................................... 14
5 Crèche Built by Bersama Makmur KUD .......................................................................................................................... 14
6 Pesticide Store at Mukti Jaya with Adequate Spill Containment .................................................................................... 15
7 Pesticide Store at Barokah Jaya Showing Containers Allocated to Farmer Groups ........................................................ 16
8 Sumber Jaya Lestari KUD Administration Office ............................................................................................................. 17

LIST of APPENDICES
A PT Hindoli RSPO Certificate Details
B Certification Assessment Program
C List of Stakeholders Contacted

Public Summary Report – RSPO Certification Assessment – PT Hindoli Smallholders Page 1
SUMMARY 1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used
BSi has conducted an assessment of PT Hindoli (Hindoli)
Smallholder operations comprising fourteen The Certification Assessment was conducted against the
Cooperatives that manage 17,594 ha of oil palm on National Interpretation For Scheme Smallholders,
behalf of 8,797 smallholder members. BSi concludes Republic of Indonesia : October 2009, Version 1.
that Hindoli Smallholder operations comply with the
requirements of RSPO Principles & Criteria : November
2007 and the National Interpretation For Scheme 1.2 Certification Scope
Smallholders Republic of Indonesia : October 2009, The scope of the certification assessment is the Scheme
Version 1. Smallholders that supply FFB to two (2) Hindoli Palm Oil
As PT Hindoli Mills and Supply Bases had already Mills.
received RSPO Certification, the Assessment Team was
not aware of the requirement to carry out an additional 1.3 Location and Maps
formal Stakeholder Notification for the Hindoli
Smallholders. The Initial Certification Assessment of the The PT Hindoli Smallholders and Mills are located in Musi
PT Hindoli Smallholders was carried out between 05 and Banyuasin District of South Sumatra Province, Indonesia
12 November 2009, at which time three nonconformities (Figures 1 and 2). The GPS locations of the Mills are
were raised against Major Compliance Indicators. A shown in Table 1.
follow‐up visit was made 05 February 2010 to check
progress with implementation of corrective actions and Table 1: GPS Locations of Mills
the three Nonconformities were closed out. The Public
Summary Report was submitted to RSPO Secretariat who MILL LONGITUDE LATITUDE
advised BSi that it was necessary to post a Stakeholder
Notification on the RSPO website because the Sungai Lilin E 104° 7’ 41∙67” S 2° 36’ 46”
assessment represented a significant change to the Tanjung Dalam E 103° 56’ 38∙4” S 2° 32’ 58∙56”
Hindoli supply base. BSi prepared a Stakeholder
Notification letter that was posted on the RSPO, CTP and
BSi websites in April 2010.
1.4 Description of Supply Base
The BSi Assessment Team considered it superfluous to
carry out another assessment, therefore the Public
The supply base is the FFB from the PT Hindoli
Summary Report was held in abeyance to allow the 30
Smallholder Scheme that was developed as a condition
day Notification Period to pass and allow stakeholders to
of Hindoli project approval. The scheme comprises
respond. During this 30 day period, no stakeholder
fourteen (14) Village Cooperatives (KUDs), whose
responses were received and those stakeholders
smallholder members total 8,797 and have 17,594 ha
contacted did not raise any new issues. The fact that the
planted to oil palm. The smallholder scheme originated
Assessment was carried out prior to the Stakeholder
from a government transmigration project (PIR‐Trans
Notification in no way changes the Assessment findings.
Scheme) that was set up in the early 1980s for growing
BSi recommends that Hindoli Smallholders be approved soybean. The soybean scheme comprising smallholders
as producers of RSPO certified sustainable palm oil. failed. In 1991, a local company PT Hindoli, received
government approval for development of an oil palm
project comprising inti (company estates), plasma
ABBREVIATIONS USED (smallholders) and a mill. The PIR‐Trans Scheme has
AMDAL Environmental Impact Assessment Report 8,500 smallholder members, each with 2 ha blocks. In
BPN Badan Pertanahan Nasional (National Land addition, Hindoli developed oil palm on 297 blocks (each
Agency) 2 ha) under a KKPA Scheme. These KKPA blocks are
CAR Corrective Action Request managed by six (6) of the KUDs.
CPO Crude Palm Oil Hindoli employed a team of extension workers to train
EFB Empty Fruit Bunch the smallholders. Cargill acquired Hindoli in May 1995
FFB Fresh Fruit Bunch and continued to support the smallholders by employing
HCV High Conservation Value a full‐time team of Farmer Development Assistants. The
KKPA Koperasi Kredit Primer Anggota (Cooperative Farmer Development Assistants reside in the villages at
Credit Scheme) the same location as the Smallholders.
KUD Koperasi Unit Desa (Village Cooperative Unit)
LTA Lost Time Accident Hindoli Farmer Development Assistants have carried out
PK Palm Kernel awareness training on RSPO requirements at each of the
RKL Environmental Management Plan 14 Cooperatives. In addition the Hindoli Program
RPL Environmental Monitoring Plan Assurance Team assisted with the implementation of
SOP Standard Operating Procedure documentation and environmental and social
UPL Upaya Pemantauan Lingkungan (Environmental improvement programs.
Monitoring Effort)
Prepared by BSi Group Singapore Pte Ltd for PT HINDOLI
Figure 1: Location Map PT Hindoli
Figure 2: Location Map Estates, Mills and Smallholders
1.6 Other Certifications Held
The FFB production from the 8,797 smallholders is listed
in Table 2 for the period 25 February 2009 to 24
Hindoli has implemented an integrated Environmental
February 2010.
and Quality Management System for the Mills and

Estates and was awarded ISO 9001 and ISO 14001
Table 2: FFB Production (Tonnes)
Certification on 28 July 2008.

Tanjung The Ministry of Environment has awarded Hindoli the
Sg Lilin Total
KUD Dalam Blue Standard under the “PROPER” programme in June
Mill 2009/2010
Mill 2008.
Karya Makmur 3,665 31,942 35,607 In 2003 the President of Indonesia awarded one of the
Suka Rejeki 41,826 31 41,857 Hindoli smallholder cooperatives the “Best Plasma in
Tunas Mekar Inti 36,564 – 36,564 Indonesia”.
Mukti Jaya 95,447 1,985 97,432
Bersama Makmur 16,112 – 16,112 Both Hindoli Mills were awarded the Cargill President’s
Jaya Usaha Mandiri 18,816 19 18,835 Gold Award for Safety Excellence in 2006, 2007 and 2008
(for Mill employees and Contractors).
Mandiri Jaya Makmur 17,224 – 17,224
Sumber Sari 22,967 17 22,984 In 2007 the Labour Ministry awarded Sungai Lilin Mill the
Sumber Tani Mandiri 20,791 – 20,791 “Zero Accidents Award” for achieving 5,000,000 hours
Tani Mandiri Jaya 8,101 – 8,101 LTA free (for Mill employees and Contractors).
Sumber Barokah – 20,838 20,838 On 25 February 2009 the RSPO approved the Initial
Barokah Jaya – 15,640 15,640 Certification of the FFB production from three company
Sumber Jaya Lestari – 23,250 23,250 estates that is processed at the Sungai Lilin Mill and
Tri Bakti Sentosa – 39,504 39,504 Tanjung Dalam Mill.
TOTAL 414,739 1.7 Organisational Information / Contact Person

PT Hindoli is owned and managed by CTP Holdings Pte
Ltd, a subsidiary of Cargill, the global food company.
1.5 Date of Plantings and Cycle Cargill is a member of RSPO and has been involved in the
Roundtable process from inception.
The smallholder oil palm was planted in the early 1990s
and the palms are mature and in the first cycle. The age The company contact details are as follows:
profile of the palms is shown in Table 3. PT Hindoli
Jl Palembang – Jambi

Desa Teluk Kemang
Table 3: Age Profile of Palms Kekamantan Sungai Lilin

MUBA Sumatera Selatan
AGE (years) PLANTED AREA (ha) PALEMBANG 30755 INDONESIA
21–30 0 Contact Person: Mrs Yunita Widiastuti
11–20 16,984 Program Assurance Manager
4–10 610 Phone: +62 21 52896408
0–3 0 Fax: +62 21 52896407
Email: [email protected]
Palms were planted at four locations known as
Smallholders Rayon A, B, C and D that are shown on
Figure 2. At each of the four locations, the oil palm has 1.8 Time Bound Plan for Other Management Units
been planted in contiguous blocks of land known as
Rayons or Divisions. The location of each Division is CTP Holdings Pte Ltd owns and operates two plantation
shown on Figure 2 as the following: A1‐A7; B1‐B6; C1– locations in Indonesia (Hindoli and Harapan Sawit
C5; and D1–D6. The smallholders are organised in Lestari). CTP Holdings Pte Ltd previously owned three
fourteen (14) farmer cooperatives of varying numbers of plantation locations in Papua New Guinea (Higaturu Oil
members, ranging from the smallest Tani Mandiri Jaya Palms, Milne Bay Estates and Poliamba), but on 20
(190 members) to the largest Mukti Jaya (1,924 February 2010 it announced the sale of these 3
members). Details of the KUD member numbers and properties to New Britain Palm Oil Limited. CTP had
area of oil palm, together with the Divisions, are shown committed considerable resources to RSPO
in Table 5 Page 5. implementation at the 3 PNG properties and BSi carried
out Initial RSPO Certification Assessments during the
Within each KUD, the members are organised in Farmer second half of 2009. CTP Holdings Pte Ltd Time Bound
Groups, each comprising approximately 30 farmers. Plan (Table 4) has been adjusted to reflect the sale of the
Each Farmer Group elects a Farmer Group Leader who is PNG properties.
the point for coordination and communication with the
KUD Management Team.
Table 4: Time Bound Plan for Certification 1.10 Approximate Tonnages Certified

Plantation The actual production tonnages for the period 25
Location Target Date
Company February 2009 to 24 February 2010 and the projected
S. Sumatra, Certified tonnages for the period 25 February 2010 to 24 February
PT Hindoli 2011 from Company Estates and Smallholders are listed
Indonesia 25/02/2009
PT Harapan W. Kalimantan, in Table 6.
31/12/2010
Sawit Lestari Indonesia
Table 6: Production Tonnages

The Indonesian NGO Sawit Watch advised BSi of claims Actual Projected
Mill CPO/PK Estimate at
made by the NGO WALHI of land tenure issues at the 25/02/09 – 25/02/10 –
Tonnages Certification
two CTP Holdings Pte Ltd operations in Indonesia, PT 24/02/10 24/02/11
Hindoli and PT Harapan Sawit Lestari and the adjacent CPO
new development PT Indo Sawit Kekal. A BSi RSPO Sungai Lilin
Social Assessor visited the properties and investigated Company 31,544 33,644 36,025
the claims during October 2009 and met with WALHI, Smallholders – 60,842 54,322
South Sumatra. BSi concluded from the investigations TOTAL 31,544 94,486 90,347
that the land claims were either being addressed in a Tanjung Dalam
process acceptable to both parties or were not Company 19,800 20,408 21,321
substantiated and do not affect the issue of a Certificate Smallholders – 28,168 23,880
for the Hindoli Smallholders. TOTAL 19,800 48,576 45,201
In view of the remoteness of the plantation locations PK
and the different cultural and environmental settings of Sungai Lilin
the properties, BSi considers the Time Bound Plan to be Company 7,519 7,158 7,665
challenging but achievable. The Assessment Team Smallholders – 15,273 12,315
considers that the Time Bound Plan conforms to the TOTAL 7,519 22,431 19,980
RSPO requirements for partial certification. Tanjung Dalam
Company 4,603 4,342 4,536
Smallholders – 7,081 5,459
TOTAL 4,603 11,423 9,995
1.9 Area of Palms

Areas of land planted to palms are detailed in Table 5.
1.11 Date Certificate Issued and Scope of Certificate
Table 5: Smallholder Areas of Palms
The scope of the Certificate includes the production
from the company owned and managed estates and the
Division/ Number Area scheme smallholders processed at the Sungai Lilin and
KUD
Locations of Blocks (ha) Tanjung Dalam Palm Oil Mills. BSi issued Certificate No:
Karya Makmur A1, A5 798 1,596 SPO 537874 to PT Hindoli on 25 February 2009 for the
production from the Sungai Lilin and Tanjung Dalam
Suka Rejeki B1, B5 956 1,912 Mills. Certificate details are included as Appendix A.
Tunas Mekar Inti B2,B3,B6 960 1,920
Mukti Jaya B4, C1–C5 1,924 3,848 2.0 ASSESSMENT PROCESS
Bersama Makmur D1 367 734 2.1 Certification Body
Jaya Usaha Mandiri D2 425 850
BSi Group Singapore Pte Ltd
Mandiri Jaya Makmur D3 429 858 3 Lim Teck Kim Road #10‐02
Sumber Sari D4 467 934 Singapore Technologies Building
SOMGAPORE 088934
Sumber Tani Mandiri D5 434 868 Product Manager: Mr Soon Leong Chia
Tani Mandiri Jaya D6 190 380 Phone: +65 6270 0777 Ext 115
Fax: +65 6270 2777
Sumber Barokah A2 411 822 Email: [email protected]
Barokah Jaya A4 305 610
BSi is a leading global provider of management systems
Sumber Jaya Lestari A3 423 846 assessment and certification, with more than 60,000
Tri Bakti Sentosa A6, A7 708 1,416 certified locations and clients in over 100 countries. BSi
Standards is the UK’s National Standards Body. BSi
TOTAL 8,797 17,594 Group Singapore Pte Ltd provides independent, third‐
party certification of management systems. BSi has a
Regional Office in Singapore and an Office in Kuala
Lumpur.
2.2 Assessment Programme The assessment was based on random samples and
therefore nonconformities may exist which have not
BSi carried out a Trial Audit of a sample of five (5) of the been identified.
smallholder cooperatives in September 2009 and
Mr Soon Leong Chia, BSi Product Manager RSPO, has
checked field conditions at a sample of smallholders.
reviewed this report for conformance with BSi
The findings of this Trial Audit were reported in a plenary
Procedures and the RSPO Certification System
session at RT6.
requirements.
The BSi audit team carried out an Initial Certification
Assessment of the scheme smallholders between 05 and 2.3 Qualifications of Lead Assessor and
12 November 2009. The Assessment Program is Assessment Team
included as Appendix B.
BSi Group Singapore holds copies of educational
The sampling strategy was developed from a qualifications, certificates and audit logs for each of the
consideration of the RSPO sample size formula, the audit team members. BSi has evaluated the
geographical location of the KUDs and the numbers of qualifications and experience of each audit team
smallholder members. From the total of 14 KUDs, the member and has registered the following designations
RSPO formula requires a minimum sample size of 3. for conducting RSPO Assessments:
However, when considered in relation to each Mill and
Charlie Ross – Lead Assessor
its supply base, 9 KUDs supply the majority of their FFB
B.App.Sc. M.Sc (Env.Studies)
to Sungai Lilin Mill and the RSPO sampling formula o
Lead Auditor EMS RABQSA Cert N 14370
requires assessment of 2 units. Similarly, 5 KUDs supply
Iman Nawireja – Social Assessor
the majority of their FFB to Tanjung Dalam Mill and the
B.Ag.Sc. M.Sc. (Comm)
RSPO sampling formula requires assessment of 2 units.
Dian Ekowati – Interviewer/Assistant
However, Hindoli requested assessment of 5 KUDs and
B.Ag.Sc.
the BSi Team agreed because this would provide greater
coverage and confidence in the results. The BSi Team
Charlie Ross is an independent environmental auditor
selected The largest KUD (Mukti Jaya with 1,924
who has extensive fieldwork experience in conducting
members) and four small KUDs so as to give a wide
environmental and social assessments of oil palm
geographic spread (Bersama Makmur and Mandiri Jaya
projects over the past 18 years in Indonesia, Malaysia,
Makmur to the north‐west and Sumber Jaya Lestari and
Nigeria, Papua New Guinea and Solomon Islands. He has
Barokah Jaya to the south of the mills). Thus, 3 KUDs
participated in fieldwork for HCV assessments since
were assessed for Sungai Lilin Mill and 2 KUDs for
2004. He has completed lead auditor training in ISO
Tanjung Dalam Mill.
9001 Quality Management Systems, lead auditor training
The RSPO sample size formula also was applied to each in OSHAS 18001 Occupational Health and Safety
of the selected KUDs to estimate the number of Assurance Systems, auditor training in Environmental
smallholder blocks to inspect. The numbers of individual Management, SA8000 Social Accountability and RSPO
blocks inspected were: Mukti Jaya (35); Barokah Jaya P&C. He has been involved in the RSPO process since
(14), Sumber Jaya Lestari (16); Bersama Makmur (15) RT1 and has conducted Certification audits of oil palm
and Mandiri Jaya Makmur (17). This gave a total of 97 plantation companies against the RSPO P&C in
blocks, compared with the estimated sample size of 75 Indonesia, Malaysia and PNG.
when the sampling formula is applied to the total
number of smallholders (8,797). The BSi Team selected Iman Nawireja graduated with a Bachelor of Agricultural
the smallholder blocks so that at least two different Science from the University of Bogor in 1997 and a
Farmer Groups were assessed for each KUD. Masters Degree in Communications from the University
of Indonesia in 2002. Iman is a Lecturer in social
The Program included assessments of five (5) of the statistics at the University of Bogor and has more than
KUDs against all of the applicable RPSO indicators and 10 years experience in conducting social impact
the sample numbers of smallholders described above assessments of agriculture, mining and forestry projects.
from each of the five KUDs. He has assisted with field studies on the effect of
The methodology for collection of objective evidence resource development projects on farmer and
included physical inspections of the KUD facilities, community incomes, health status and household
interview of KUD staff and workers and review of division of labour. He has completed Lead Auditor
documentation. training in ISO 14001 Environmental Management
Systems. He has assisted in conducting environmental
A total of 97 individual smallholder blocks were and social assessments of 8 oil palm projects during the
inspected and the owners interviewed at each block. past 7 years. He has assisted with conducting audits of
The block inspections were arranged to align with the oil palm plantation companies against the RSPO P&C in
harvesting schedule, in order to observe the tasks being Indonesia and in Malaysia.
carried out and to interview the block owners and
harvesters. Checklists and questionnaires were used to Dian Ekowati holds a BSc in Agriculture from Bogor
guide the collection of information. Agricultural University and is fluent in Bahasa Indonesia
and English. Ms Ekowati assisted with interviews of
smallholder workers.
2.4 Stakeholder Consultation and a List of Criterion 1.1: Oil palm growers and millers provide

Stakeholders Contacted adequate information to other stakeholders on
environmental, social and legal issues relevant to RSPO
Stakeholder consultation involved internal and external
Criteria, in appropriate languages & forms to allow for
stakeholders. Stakeholders were notified by placing a
effective participation in decision making.
copy of the Stakeholder Notification letter on the RSPO,
CTP and BSi websites. In addition, stakeholders were The KUDs’ policy is to make information available to
contacted directly by email or telephone to arrange stakeholders on request for issues relevant to RSPO
meetings. Criteria. I February 2009, the KUDs developed filing
systems for incoming and outgoing correspondence and
Stakeholders were interviewed at their premises where
have maintained records since that time. Examination of
practical or else at a location suitable to both parties.
records showed there have been no requests for
Smallholders were interviewed at their oil palm blocks at
environmental or legal information. An example related
the same time as the field inspections. Field inspections
to social issues is Mukti Jaya received a request on 13
were scheduled to coincide with harvesting operations
July 2009 from Sriwijaya University for provision of
and workers engaged by Smallholders were interviewed
farmer income data for use by a student for his thesis.
at that time. Village representatives were interviewed in
The file showed that Mukti Jaya replied promptly to the
the village. PT Hindoli staff, comprising Senior
student who collected the data on 14 August 2009 when
Managers and Farmer Development Assistants
he visited the KUD.
(smallholder extension officers) were interviewed at the

Tanjung Dalam and Sungai Lilin Mills. Hindoli staff were
Criterion 1.2: Management documents are publicly
not present at any of the meetings with Smallholders or
available, except where this is prevented by commercial
external stakeholders.
confidentiality or where disclosure of information
A list of stakeholders contacted during the Assessment is would result in negative environmental or social
included as Appendix C. outcomes.
Inspection of records confirmed each of the KUDs holds
2.5 Date of Next Surveillance Visit copies of land certificates issued to individual
smallholder members.
The annual surveillance visit is planned to be carried out
within twelve months of RSPO approval of the Initial Each of the 5 KUDs inspected holds a copy of PT Hindoli
Certification. AMDAL prepared in 2005 that covers the operations of
the two mills, the company estates and the
Smallholders. Hindoli forwards RKL/RPL monitoring
3.0 ASSESSMENT FINDINGS reports six‐monthly to Government and a copy of the
January‐June 2009 report was available at each KUD. A
3.1 Summary of Findings copy also is available at each KUD of the endorsement of
the Cooperative by the District‐Department of
During the Initial Certification Assessment, three (3)
Nonconformities were assigned against Major Cooperatives No. 0102/BH/VI/III dated 4 August 2005.
Compliance Indicators and ten (10) Observation 01 – refer section 3.2 Page 16 for details
Observations/Opportunities for improvement were
identified. Details of the Nonconformities are given in The KUDs maintain information on file related to
Section 3.2 (Page 14). organisational and social activities. For example,
Bersama Makmur has records on the expenditure on
Hindoli prepared a Corrective Action Plan for addressing social activities in response to requests for donations,
the identified Nonconformities which BSi reviewed and such as by the Independence Day Celebration District
accepted. Sub‐committee 8 June 2009.

BSi carried out a follow‐up visit to the Smallholders on Criterion 2.1: There is compliance with all applicable
05 February 2010. The review of the three Major local, national and ratified international laws and
Nonconformities assigned during the Initial Certification regulations.
Assessment found the corrective actions were effective
and the nonconformities were closed out. Each of the KUDs is required to conduct an internal audit
each year of its operation and to prepare an Annual
BSi has conducted an assessment of the Hindoli Report to its members. For example the most recent
Smallholder operations comprising a sample of five of Barokah Jaya Annual Report was 31st December 2008.
the 14 KUDs and 97 individual smallholders that supply The Annual Audit Report and records indicate that KUD
FFB to the 2 Hindoli mills. BSi concludes that the Hindoli activities are consistent with the smallholder scheme
Scheme Smallholder operations comply with the requirements. Copies of Internal Audit Annual Reports
requirements of RSPO Principles & Criteria: 2007 and the were available at each of the 5 KUDs.
National Interpretation For Scheme Smallholders, Interviews of individual smallholders confirmed that they
Republic of Indonesia : October 2009, Version 1. were aware of their agreement with the KUD and PT
Hindoli that requires them to supply all of their FFB to
BSi recommends approval of Hindoli Smallholders as Hindoli. Review of records held at the KUDs confirmed
producers of RSPO Certified Sustainable Palm Oil.
payments for FFB were in accordance with the breakdown by month and village. The KUDs maintain up

agreements. to date records of the repayment of bank loans as well
Observation 02 – refer section 3.2 Page 16 for details as savings towards the cost of future replanting.

Each of the KUDs appeared well managed and has
Hindoli has supplied each of the KUDs with a list and
responsibility for coordinating FFB harvesting. Each KUD
copies of applicable legislation relating to Co‐operative
manages contractors for the collection and transport of
operation, land tenure, environmental, pesticides,
the FFB to the mills as well as managing contracts for
labour and OHS. Inspections of KUD and Smallholder
maintenance of roads.
operations, review of records and interviews of KUD
Observation 03 – refer section 3.2 Page 16 for details
staff, Smallholders and workers indicated compliance

with applicable regulations.
Criterion 4.1: Operating procedures are appropriately

documented and consistently implemented and
Criterion 2.2: The right to use the land can be
monitored.
demonstrated and is not legitimately contested by local
communities with demonstrable rights. Hindoli has prepared SOPs for Smallholders that are
based on the Best Management Practices that are
The Hindoli smallholder scheme was developed on land
implemented at Hindoli estates. The SOPs cover all of
that was previously a transmigration scheme. Each of
the tasks for growing oil palm such as land preparation,
the Transmigrants interviewed stated that he held a
planting, upkeep (including the storage, handling and
copy of the Hak Milik (Land Ownership) Certificate.
application of pesticides) and harvesting. The SOPs
When requested, individual smallholders were able to
describe tasks, equipment, safety precautions and
produce a copy of their land certificate, eg block no 067
wearing of PPE, and are used as training material for the
issued by BPN Musi Banyuasin number AJ696089 on 20th
smallholders, with the aim of implementing the same
of October 1997. In addition, the KUDs hold copies of
practices as the Hindoli estates.
the Land Certificates on behalf of the members.

Hindoli records and those of the KUDs show there have The Smallholder Farmer Group Managers as well as the
been no disputes over the Smallholder land. Interviews Hindoli Farmer Development Assistants inspect field
of Smallholders also confirmed there were no land conditions to check implementation of the SOPs.
disputes.
Criterion 4.2: Practices maintain soil fertility at, or
Criterion 2.3: Use of the land for oil palm does not where possible improve soil fertility, to a level that
diminish the legal rights of other users without their ensures optimal and sustained yield.
free, prior and informed consent.
Hindoli Technical Services Department carries out annual
The majority of the smallholders (8,500) scheme is foliar sampling and inspection of the smallholder palms
located on a former transmigration scheme that the for identification of nutritional deficiency symptoms.
National Government set up in the early 1980s. In Hindoli records the data on the database “Oil Palm
addition there are 297 smallholders on KKPA scheme Monitoring Programme”. Hindoli uses the leaf sampling
located at 6 of the KUDs. There are government roads results to determine the annual fertiliser programme for
through the smallholder oil palm blocks and the public the Smallholders. Each of the KUDs manages the
has unrestricted access through area. distribution of fertiliser to individual farmers who then
apply it to the palms. The KUDs have records that show
Criterion 3.1: There is an implemented management fertiliser was applied to each smallholder block in March
plan that aims to achieve long‐term economic and and October 2009.
financial viability.
The KUDs have records of the crop harvested from
Hindoli has established a Farmer Development individual blocks, which is the basis for payments to the
Department that provides training and technical support owners. The KUDs have information on crop yields for
to the KUDs and individual farmers. Hindoli employs six more than 5 years. The KUDs maintain up to date
full‐time Farmer Development Assistants to provide records of crop production for each Farmer Group and
extension services to the KUDs and farmers. The Farmer the monthly results are displayed graphically against the
Development Assistants reside in the village associated budget at each of the KUDs. The annual average yields
with each of the KUDs and have daily involvement with of the smallholder FFB are similar to the Hindoli Estates.
the Smallholders. Hindoli holds weekly Coordination
The smallholders previously have not applied EFB to the
Meetings at the Sungai Lilin Office attended by Farmer
palms because of the transport cost. Hindoli is carrying
Development Assistants and the Head of each KUD. This
out a trial application of EFB at Bersama Makmur KUD on
provides a forum for discussion of production, technical
18 smallholder blocks.
and any other issues of concern to the smallholders.

Each of the KUDs has an annual budget that includes Criterion 4.3: Practices minimise and control erosion
crop forecast for one year and work plans for each and degradation of soils.
department that are detailed in the KUDs’ Annual
The topography of the majority of smallholder areas is
Reports. In addition, the Hindoli Farmer Development
flat to gently rolling and terracing has not been
Department has assisted each of the KUDs to prepare
necessary at any of the planted land. There are small
crop forecasts for the years 2009‐2012, with a
areas where plantings were made on palm platforms. Hindoli has carried out training in IPM for each of the
There is no peat nor fragile or problematic soil at any of KUDs, who have commenced the planting of the
the smallholder planted land. There is no low‐lying land beneficial plants Turnera subulata and Cassia cobanensis
requiring drainage. along roadsides. Interviews of smallholders confirmed
they had received IPM awareness training and they had
Criterion 4.4: Practices maintain the quality and a basic understanding of the role of beneficial plants.
availability of surface and groundwater
Criterion 4.6: Agrochemicals are used in a way that
Hindoli Farmer Development Assistants have been
does not endanger health or the environment. There is
conducting training on soil conservation for
no prophylactic use of pesticides, except in specific
smallholders. Inspection of documents confirmed the
situations identified in national Best Practice
KUDs are maintaining records of training. For example,
guidelines. Where agrochemicals are used that are
Mukti Jaya carried out training for all 14 of its Farmer
categorised as World Health Organisation Type 1A or
Groups in October 2009. Records include the signature
1B, or are listed by the Stockholm or Rotterdam
of the trainer and trainees.
Conventions, growers are actively seeing to identify
There are a number of small streams of width 1‐2 metres alternatives and this is documented.
that originate within or adjacent to the smallholder
Hindoli has worked with the KUDs to develop a system
areas. Inspection of a sample of these small streams
for controlling the storage, handling and use of
showed that they do not flow during the dry season.
pesticides. Inspection of KUD pesticide stores showed
Although there is no legal requirement to establish a
that the Smallholders use only two types of herbicides
riparian buffer strip along ephemeral streams <1 metre
and a “wetting agent”. Both of the herbicides
wide, inspection showed that a strip of natural
“glyphosate” and “metsulphuron‐methyl” are registered
vegetation had been retained and the banks generally
and approved by the Department of Agriculture ‐
were well vegetated for protection against erosion.
reference "Pestisida Pertanian Dan Kehutanan"
Inspection of field conditions showed that groundcover (Pesticides for Use in Agriculture and Forestry) – Centre
vegetation generally was well maintained for minimising for Permit and Investment General Secretariat,
soil erosion (Plate 1). Agriculture Department, 2007. The smallholders do not
use any WHO Type 1A or Type 1B pesticides.
The smallholders have commenced the “T‐Box”
placement of pruned fronds to provide additional Hindoli Technical Services Department has developed
protection against soil erosion at the small number of the Smallholder herbicide application program in
locations with sloping topography. consultation with the KUDs. The program is based on
Observation 04 – refer section 3.2 Page 16 for details the Hindoli Estate practices and involves circle and path
spraying, with the frequency depending on field
conditions. Selective weeding is carried out to control
problematic weeds at individual blocks when necessary.
Hindoli Technical Services Department and the
Smallholder Development Assistants conduct training of
Smallholders and KUD employees in the safe handling
and application of herbicides. Inspection of field
conditions, interviews of Smallholders and observation
of spraying showed herbicides were being used
appropriately and safety precautions were being
observed.
The KUDs have purchased PPE (an apron, safety
spectacles, an N95 particulate respirator and rubber
gloves) that are worn by the pesticides storeman for

measuring and issuing herbicides. The KUDs have
Plate 1: Well Maintained Groundcover recently implemented a system that requires sprayers to
wear PPE when they are issued with herbicide and
knapsack spray equipment. Inspection of the KUD
Criterion 4.5: Pests, diseases, weeds and invasive pesticide stores (Plate 2) showed that adequate PPE was
introduced species are effectively managed using available for use by herbicide operators. The herbicide
appropriate integrated Pest Management (IPM) spray equipment, PPE and herbicides are issued daily
techniques. and are returned to the KUD herbicide store at the
completion of spraying. The herbicides, spray
Hindoli Technical Services Department carries out
equipment and PPE are locked in the secure herbicide
investigation and monitoring of any pest problems that
store.
are reported by smallholders. The last reported problem

was a minor outbreak of nettle caterpillar in late 2007,
but chemical treatment was not necessary.
Criterion 4.7: An occupational health and safety plan is
documented, effectively communicated and
implemented.
Hindoli has provided copies of the PPE Poster to each
KUD that in turn has distributed a copy to each field
office. The PPE Poster shows pictorially the PPE required
to be worn for each field task, which is an appropriate
and effective method for communicating the safety
requirements to Smallholders. Additional “task‐specific”
detailed information on safe work practices is described
in the SOPs (Refer to Criterion 4.1). Hindoli Farmer
Development Assistants have conducted training in safe
work practices and the use PPE for all field tasks at each
of the KUDs and records of this training have been kept
Plate 2: PPE Available at KUD Pesticide Store since early 2009. Observation of field tasks and
interview of individual farmers and workers confirmed
understanding of safety precautions for harvesting and
During 2009, each of the KUDs built a new pesticide other tasks such as herbicide spraying and fertiliser
store. Prior to the implementation of RSPO application. Interview of smallholders confirmed
requirements, the KUDs purchased pesticides and issued knowledge of the emergency action that should be taken
20 litre containers of glyphosate directly to Farmer in relation to an accident, such as during harvesting or
Groups, who then made issues to individual farmers. In transport of FFB.
October 2009, the KUDs changed to a system of
Centralised Pesticide Stores and making issues of small The KUDs have commenced in 2009 a file for recording
quantities of herbicides (1∙5 to 2∙5 litres of glyphosate) accidents involving staff and contractors. The records at
directly to individual farmers. Inspection of KUD stores the KUDs showed there has been no accident during the
confirmed that the new stores were secure, had year. Each of the KUDs has included safety as a topic at
appropriate safety signage, ventilation and segregation the monthly coordination meeting. For example
of chemicals, but spill containment was adequate only at Bersama Makmur discussed “road safety of motorbikes”
Bersama Makmur. The centralised pesticide store at the 21 March 2009 meeting. This safety topic is
provides greater control over issues of herbicides to appropriate for Smallholders as motorbikes are the main
individual smallholders as well as disposal of empty transport used by block owners and workers. The safety
containers. training included maintaining the registration and
Nonconformity CR01 – refer section 3.2 Page 15 for details roadworthiness of motorbikes, wearing of helmets and
road safety rules. As noted above for Criterion 4.6, each
Interview of KUD managers and review of records of the KUDs has available appropriate PPE for use by
indicated that there had not been any case of pesticide smallholders when carrying out spraying of their blocks.
operator toxicity. Individual smallholders and transport contractors are
Each of the KUDs maintains records of sprayer training responsible for providing PPE for use by their workers
conducted by Hindoli. For example, Hindoli Technical during harvesting and transport of FFB.
Services Department carried out training at Karya Observation 07 – refer section 3.2 Page 16 for details
Makmur for 26 persons on 13 April 2009. Records
confirmed the training included the topics of safety, use Criterion 4.8: All staff, workers, smallholders and
of PPE, field application of herbicide and disposal of used contractors are appropriately trained.
containers. Hindoli has prepared an annual schedule for training of
Inspection of documents showed that the KUDs had the KUDs and smallholders. The training is delivered by
recently (October 2009) implemented an appropriate the Hindoli Farmer Development Assistants and includes
system for recording the quantities of herbicides topics such as financial management, health and safety
supplied to smallholders. For example, at Sumber Jaya and field practices. The training in field practices is
Lestari, the central pesticide store maintains a separate based on the Best Practices implemented at the Hindoli
file for each of the 18 Farmer Groups. Records showed Estates.
that the individual smallholders have signed the Request In 2009 each of the KUDs commenced keeping records
Form that includes details of the type and quantity of of training down to Farmer Group level. Inspection of
herbicide issued, the name of the smallholder, the block records showed for example, that Hindoli conducted
number and date of issue. The pesticide storekeeper training on RSPO Requirements at Karya Makmur on 23
maintains a monthly stock take of chemicals. Inspection June 2009 for 35 persons.
of the pesticide stores confirmed the stock take was
consistent with the balance of herbicide held for each Criterion 5.1: Aspects of plantation and mill
Farmer Group. management, including replanting, that have
Observation 06 – refer section 3.2 Page 16 for details environmental impacts are identified and plans to
mitigate the negative impacts and promote the positive
ones are made, implemented and monitored to local name and Latin name of each of the protected
demonstrate continuous improvement. species. Hindoli has distributed copies of the protected
fauna poster to each KUD and inspection confirmed
Hindoli has provided each of the KUDs with a copy of the
these were prominently displayed on noticeboards.
AMDAL that was revised in 2004 for the construction of
an additional processing line at Sungai Lilin Mill and a Each of the KUDs has nominated a staff member who is
new mill at Tanjung Dalam Estate. The scope of the responsible for HCV awareness. For example Bersama
AMDAL includes the two mills, the company owned Makmur has appointed the Head of Section 4 as
estates and the smallholder scheme. The KUDs have responsible for conducting awareness on protected
posted a message on the noticeboards to make fauna. Hindoli Program Assurance Department has
smallholders aware of the AMDAL. carried out HCV awareness training for staff at each of
the KUDs on protecting fauna and riparian buffer zones.
The AMDAL public consultation process was held in The KUDs in conjunction with the Hindoli Farmer
March 2004 and included meetings at three local villages Development Assistants have conducted HCV awareness
and with smallholders. The AMDAL preparation and for smallholder farmers. When interviewed, the
consultation process was consistent with Government majority of farmers were able to list at least 3 of the
guidelines. The AMDAL for the expanded scope of protected species of fauna that occur within or adjacent
Hindoli was approved on 14 May 2005 Number to the palms.
285/KPTS/BAPEDALDA/2005. Observation 08 – refer section 3.2 Page 17 for details
Hindoli has provided each of the KUDs with a copy of the
2005 AMDAL and bi‐annual reports to Government on Criterion 5.3: Waste is reduced recycled, re‐used and
AMDAL monitoring. The most recent RKL & RPL report disposed of in an environmentally and socially
was January‐June 2009. responsible manner.
Hindoli Farmer Development Department has identified
Criterion 5.2: The status of rare, threatened or all waste and pollution sources generated by
endangered species and high conservation value smallholders and have prepared SOP (015/SOP/
habitats if any, that exist in the plantation or that could st
Plasma/1/2009) for waste management, issued 1
be affected by plantation or mill management, shall be January 2009. The SOP lists the types of wastes
identified and their conservation taken into account in generated at the KUD and smallholders and methods of
management plans and operations. treatment and disposal. Hindoli Farmer Development
The Hindoli Smallholder scheme was developed on land Department will collect the empty pesticide containers
that previously was a failed Transmigration Scheme. All stored by the KUDs and transport them to the Sungai
of the land was cleared during the original development Lilin Mill Hazardous Waste Store for removal by a
of the Transmigration Project. The majority of the licenced contractor. The KUDs have communicated the
Smallholders are located adjacent to the Hindoli Estates waste management requirement verbally to Farmer
and the HCV Assessment conducted by Hindoli included Groups, in particular that empty herbicide containers
the adjacent Smallholders. must be returned to the KUD.
Within the company owned estates, all of the land has Hindoli has built hazardous waste stores at each estate
been cleared, except for riparian buffer zones along the and mill and holds a Licence for the storage of hazardous
main rivers. The vegetation within the river buffer zones waste, issued by Ministry for Environment, Jakarta, 15
has previously been heavily logged and consists of August 2005 Licence No IZIN KEPMEN.175. Hazardous
secondary regrowth. The University of Bogor Ecologist wastes are removed by a licenced contractor PT Nirmala
o
who conducted the HCV assessment assigned HCV4 to Tipar Sesama – Licence N 612 of 2007. Records of the
the riparian buffer zones. The land adjacent to the Hazardous Waste Manifests for Mills and Estates are
Hindoli Estates is a mixture of smallholder oil palm, oil held on file.
palm estates owned by other companies, subsistence
During the November 2009 site inspection, the
agriculture, small‐scale rubber and secondary regrowth.
Assessment Team found that the system of requiring the
The assessment did not identify HCVs at areas adjacent
smallholders to return empty pesticide containers to the
to the estates.
KUD was not effective. Empty 20 litre pesticide
During the HCV assessment, 2 species of mammals, 23 containers were being used for other purposes, such as
species of birds and 1 reptile were recorded within and storing fuel.
near the riparian buffer zones at the Hindoli Estates. Nonconformity CR02 – refer section 3.2 Page 15 for details
Eight of the bird species are protected under Indonesian
Law. Fieldwork observations did not record the Review of records at each of the KUDs and interview of
presence of any endangered, rare or threatened species village heads did not identify any complaint related to
of fauna as listed by the International Union for disposal of hazardous materials.
Conservation and Nature within or adjacent to the
estates. Criterion 5.4: Efficiency of energy use and use of
renewable energy is maximised.
The University of Bogor Consultant Ecologist
recommended that Hindoli conduct HCV awareness to The majority of smallholders use wheelbarrows for
the KUDs and Smallholders. Hindoli has produced a carrying FFB to the roadside platform and only a few use
poster of protected fauna that includes a photograph, buffalo‐drawn carts. The KUDs manage the transport of
FFB from smallholder blocks to the mill. The KUDs positive ones are made, implemented and monitored,
coordinate FFB harvesting to maximise loading for to demonstrate continuous improvement.
transport of fruit to the mill. This results in optimisation
Inspection of documents confirmed each of the KUDs
of efficiency of energy use for FFB transport.
holds a copy of the revised AMDAL that Hindoli prepared

in 2004 for the expanded scope of the project. The
Criterion 5.5: Use of fire for waste disposal and for
AMDAL preparation included consultation with local
preparing land for replanting is avoided except in
communities in March 2004. Hindoli has supplemented
specific situation, as identified in the ASEAN guidelines
the AMDAL information on positive and negative social
or other regional best practice.
impacts with information from a survey carried out by
Hindoli has implemented a Zero Burn Policy since the Hindoli Estate Department in April 2008 of stakeholders
start of the smallholder development. Replanting has in surrounding communities involving a total of 510
not been carried out and is not scheduled to start until respondents. The results were reported in the January‐
2016. Hindoli and the KUDs have made a commitment June 2009 RKL & RPL Report and a copy was available at
to adhere to the Zero Burn Policy during future replant. the KUDs. Hindoli carried out a follow‐up survey in
August 2009 but at the time of this Assessment, the
Interview of farmers confirmed their understanding of
results had not yet been analysed.
the emergency action required in the event of fire
outbreak. The farmers were very much aware that fire
could destroy their oil palm and stated this had not
Social impacts and issues at local communities are
happened.
monitored and managed through weekly meetings
Inspection during the assessment confirmed each of the between KUD representatives and Hindoli Farmer
KUDs held adequate fire‐fighting equipment at the Development Department. When social issues arise they
offices and stores and that the equipment was in are discussed in this forum. Hindoli has worked with the
serviceable condition. The KUDs have commenced a KUDs to compile a Social Aspects and Impacts Register
training program to conduct awareness of zero burning from the AMDAL, the results of the stakeholder survey
during future replanting to all farmers. For example, and the issues raised at Farmer Development
training records showed that Mandiri Jaya Makmur Department meetings with smallholders. Each of the
carried out awareness for 23 farmers on 25 August 2009 KUDs holds a copy of the RKL/RPL report to government.
and for 24 farmers on 02 September 2009.
Criterion 6.2: There are open and transparent methods
Criterion 5.6: Plans to reduce pollution and emissions, for communication and consultation between growers
including greenhouse gases are developed, and/or millers, local communities and other affected or
implemented and monitored. interested parties.
In May 2009, Hindoli assisted the KUDs to identify Inspection of documents confirmed that each of the
environmental aspects and impacts and sources of KUDs maintains files with records of correspondence.
pollution. The majority of correspondence from local communities
Observation 09 – refer section 3.2 Page 17 for details was for requests for donations for assistance to schools
and places of worship. The documents show that
Dust from roads due to FFB transportation was identified
requests generally were replied within two weeks, which
as the main pollutant emitted from smallholder
is considered reasonable. Records were available of
operations. The dust emissions have an adverse effect
formal meetings between the KUDs and Village Heads.
on communities at locations where the road through the
For example, Bersama Makmur has a record of the
village is not sealed.
meeting with the heads of Srimulyo, Sinar Harapan and
The local government has a program for sealing roads at Banjar Jaya Villages held on 26 May 2009 to discuss road
some settlements to reduce dust. At Sumber Jaya works.
Lestari sealing of the road is budgeted for 2010.
The KUDs hold coordination meetings with the Farmer
However at Bersama Makmur and at Karya Makmur
Group Leaders as well as an Annual Meeting of
there is no local government program to seal roads or to
Members. Records were available of the Coordination
control dust at settlements.
Meetings, for example Karya Makmur holds two
The KUDs have prepared an emission reduction plan for meetings per year, with the most recent 30 May 2009
transport that involves installing speed bumps across with 10 Farmer Group Leaders. The records of Annual
roads passing through settlements and conducting Meetings include the meeting minutes and a list of
awareness for drivers to reduce speed. For example, on attendees. For example, Mandiri Jaya Makmur held the
18 July 2009 Barokah Jaya conducted awareness for 24 Annual Meeting on 25 March 2009 attended by 76
drivers to maintain trucks, no overloading or speeding. Members.

The KUDs hold records of requests for assistance from
Criterion 6.1: Aspects of plantation and mill
local communities for development projects and the
management, including replanting, that have social
KUD responses. For example Bersama Jaya met with the
impacts are identified in a participatory way and plans
heads of 6 villages on 10 June 2009 to discuss the
to mitigate the negative impacts and promote the
proposal to subscribe for government electricity supply.
The villages nominated the KUD to act on their behalf
and to make the approach to the government. The Interview of staff confirmed they had received a copy of
Chairman of each KUD is responsible for communication their appointment letter. The annual salaries of staff are
and consultation with stakeholders. detailed in each KUD annual report.

Criterion 6.3: There is a mutually agreed and
documented system for dealing with complaints and
grievances, which is implemented and accepted by all
parties.
Smallholder’s complaints are raised verbally through the
KUD coordination meetings. The KUDs have commenced
implementing a system for recording complaints and
suggestions from members and stakeholders, such as
contract workers engaged by smallholders and KUD
contractors. Upon receipt and registration of a
complaint, the KUD Manager and staff will attempt to
resolve the issue through discussion and negotiation. If
this process is not successful, the matter will be referred
to a KUD Management Meeting for discussion and
negotiation. For example Mandiri Jaya Makmur received
a complaint on 01 September 2009 from Farmer Group Plate 3: Typical Smallholder Family Group
No 16 to help with a meeting to resolve a case of
incorrect payments made to farmers. The KUD
investigated the case and held a Management Meeting Criterion 6.6: The employer respects the right of all
on 21 October 2009 to discuss the findings. The Farmer personnel to form and join trade unions of their choice
Group Leader was terminated and was given 3 months and to bargain collectively. Where the right to freedom
to repay the money that he misappropriated from the of association and collective bargaining are restricted
farmers. Examples such as the one described above under law, the employer facilitates parallel means of
show that the complaints system in operation at the independent and free association and bargaining for all
KUDs is effective for resolving disputes and is such personnel.
transparent to the members.
The KUDs do not have a formal policy on freedom of

association but stated employees were free to join a
Criterion 6.4: Any negotiations concerning
union if they wish. Interview of staff confirmed they are
compensation for loss of legal or customary rights are
free to join a union. Hindoli has requested the Provincial
dealt with through a documented system that enables
Labour Department to meet with KUD staff and socialise
indigenous peoples, local communities and other
information on unions. KUD farmers and harvesters
stakeholders to express their views through their own
indicated they have no interest in joining a labour union.
representative institutions.
Interviews of workers indicated that they are able to
The Hindoli Smallholder Scheme was developed on a negotiate the piece rate with the block owner and they
former Transmigration area. The Smallholders do not were free to refuse work if agreement was not reached.
restrict local peoples’ access through the area.
Criterion 6.7: Children are not employed or exploited.
Criterion 6.5: Pay and conditions for employees and for Work by children is acceptable on family farms, under
employees of contractors always meet at least legal or adult supervision and when not interfering with
industry minimum standards and are sufficient to education programmes. Children are not exposed to
provide decent living wages. hazardous working conditions.
The labour for upkeep and harvesting of smallholder oil The Javanese Transmigrants value education very highly
palm blocks is mainly supplied by family groups (Plate 3) and schooling is the highest priority for their children.
as well as by casual contract labour. Interviews of No child or under‐age worker was observed at any of the
workers found there are small groups who specialise in smallholder oil palm blocks during the site inspections.
harvesting and they travel daily to the various Farmer
Groups for work. All fieldworkers interviewed confirmed Criterion 6.8: Any form of discrimination based on race,
they received agreed wages, with the majority on a piece caste, national origin, religion, disability, gender, sexual
rate that was related to the age of the palms. The casual orientation, union membership, political affiliation or
contract workers stated they can each harvest 2 tonnes age is prohibited.
of FFB per day for 8 hours work, and their pay is double
All of the KUDs and farmers are transmigrants who
the minimum Provincial wage. Proof of payment of
appear to have integrated well with local communities.
wages was obtained from interviews of workers,
Interviews found the workforce are a mixture of
Smallholders and observation of transactions for
transmigrants and local people. There are inter‐
payment of workers.
marriages between transmigrants and local people and
The KUDs have prepared individual employment interviews did not identify any cases of discrimination.
contracts for staff, setting out terms and conditions.
th th
Criterion 6.9: A Policy to prevent sexual harassment Smallholders are paid between the 5 and 10 of each
and all other forms of violence against women and to month. The payments are processed by Hindoli and
protect their reproductive rights is developed and transferred directly to the Farmer Group bank accounts.
applied. Bank Officers visit the KUDs monthly and distribute cash
to Farmer Group Leaders who then distribute cash to
Each of the KUDs employs 3‐5 female staff (permanent
individual farmers at the village. The KUDs hold copies
salaried employees) for clerical and administrative
of payments to Group Leaders, and inspection of records
duties. The KUDs have prepared and implemented a
and interviews of farmers confirmed payments are made
formal policy on prevention of sexual harassment.
on time.
Interviews of female staff confirmed that sexual
harassment was not an issue. Female staff stated they The KUDs hold print‐outs detailing the deductions of all
are able to take 1.5 months paid maternity leave before credit payments made by individual farmers. The
and 1.5 months after childbirth. Review of records for majority of farmers have repaid their bank loans. For
the 5 KUDs involved in this Assessment confirmed example, Bersama Makmur and Sumber Jaya Lestari
Bersama Makmur approved maternity leave for one have repaid 100% whereas at Mandiri Jaya Makmur 415
female staff member on 2 February 2009. farmers have 1.5 yrs remaining to repay their bank loans
for the original oil palm development.
Criterion 6.10: Growers and mills deal fairly and
Each KUD has a replanting plan and farmers have been
transparently with smallholders and other local
accumulating savings for the cost of replanting which is
businesses.
due to commence in 2016. Each of the KUD’s saving
Inspection of the KUD complaint registers did not find plans is at varying stages. For example Barokah Jaya
repetition of complaints related to pricing of FFB farmers have saved 13%; Bersama Makmur 40% and
between Hindoli and the KUD. The Smallholders FFB Sumber Jaya Lestari 70% of the total replanting cost.
price is set twice monthly by a Committee consisting of
Government, Palm Oil Producers and Smallholder Criterion 6.11: Growers and millers contribute to local
Cooperative Representatives. The process for setting sustainable development wherever appropriate.
FFB prices is documented as a flow chart and KUD
Public infrastructure and services such as schools and
representatives participate in the team for determining
health centres are relatively well developed at the
prices, which meets with Hindoli twice monthly. Each of
transmigration area. The KUDs have contributed to local
the KUDs displays a copy of the current FFB price on its
communities, mainly in the form of donations for places
noticeboard, together with the Government price for
of worship and assistance to schools. In addition, where
comparison. Hindoli pays a premium to smallholders for
possible some of the KUDs have funded significant
achievement of FFB quality.
community projects. For example, Bersama Makmur has
Inspection of documents confirmed the KUDs hold donated land and built a Crèche for the local village
copies of contracts with each of their business partners, (Plate 5).
including Hindoli Mills, fertiliser supplier, road
maintenance and transport contractors. It is notable
that the KUDs manage the contracts for FFB transport
and for road maintenance. There also are a small
number of farmers who own trucks and transport their
FFB to the mill. In such cases, there is no formal
contract, but an agreed price for transport. Inspections
during the site visit showed that roads were being
maintained and there was good access to smallholder
blocks (Plate 4).

Plate 5: Crèche Built by Bersama Makmur KUD
Principle 7 – There is no new Development at the
Hindoli Smallholder Scheme – Principle 7 is not
applicable.

Plate 4: Well Maintained Smallholder Access Road
Criterion 8.1: Growers and millers regularly monitor
and review their activities and develop and implement
action plans that allow demonstrable continuous
improvement in key operations.
Hindoli has assisted the KUDs to identify the main
environmental and social impacts of their activities.
Examples of improvements that had been identified
include: replanting savings plan; control of dust at roads
through villages; centralised pesticide store; and
donations to local villages. However, at the time of the
Assessment, an Improvement Action Plan had not been
developed.
Nonconformity CR03 – refer section 3.2 below for details
Plate 6: Pesticide Store at Mukti Jaya with Adequate
Spill Containment
3.2 Detailed Identified Nonconformities, Corrective
CR02 Indicator 5.3.3 – Smallholders can explain and
Actions and Auditor Conclusions
show that point 2 (Disposal of used pesticide
containers) has been implemented
Three (3) Nonconformities were assigned to Major
Compliance Indicators. Hindoli has prepared, in Interview of smallholders and Inspection of KUD records
consultation with the KUDs, a Corrective Action Plan for showed that used pesticide containers were not being
addressing the identified Nonconformities. BSi has returned to the KUD Pesticide Store or disposed in
reviewed and accepted the Corrective Action Plan. accordance with the instruction labels as stated by the
manufacturer.
BSi Assessors made a follow‐up site visit to each of the
five KUDs on 05 February 2010 to check progress with Corrective Action
implementation of corrective actions. The findings are
detailed below. • To regularly conduct pesticide safety and safe
disposal of pesticide containers training to all KUDs,
Smallholder Groups and Individual farmers to
CR01 Indicator 4.6.4 – Evidence of pesticides storage increase their awareness.
and disposal of their containers in accordance with • To develop a centralisation system of pesticide
existing regulations. storage by designating each smallholder group with
Spill containment has been constructed for storage of a specific pesticide container. This will enable better
pesticides at each of the KUDs. The spill containment distribution to all groups and control of the used
was found to be adequate at Bersama Makmur for the pesticide containers. To follow the same system as
quantity of pesticides held. However, spill containment that implemented at Rayon A, KUD Barokah Jaya.
was too small for the quantity of pesticides stored at • To prepare a guideline table that covers: Type of
Mukti Jaya, Mandiri Jaya Makmur, Sumber Jaya Lestari weed, Type of Herbicide, Frequency of spraying,
and Barokah Jaya KUDs. Dosage/Ha, Total chemical usage for a year.
• To improve the administration records of pesticides
Corrective Action issued by KUD to the Smallholder Group/Individual
farmers and also records of used pesticide
The KUDs implemented the following Corrective Action containers that are returned to the KUD.
Plan: • To encourage individual farmers to take used
• Hindoli to advise and give recommendation to each pesticide containers that they purchase for their
KUD for adequate dimensions of spill containment rubber and agriculture plots to the KUD. The KUD
of KUD pesticide stores. will then send all used pesticide containers once a
• To make sure the volume of spill containment of month to Hindoli. Hindoli will send these containers
KUD stores is adequate for the total volume of to the licensed hazardous waste contractor,
pesticide stored. together with all Hindoli’s hazardous waste, every
90 days.
BSi Assessors made a follow‐up visit on 05 February 2010
and inspected each of the KUD pesticide stores. BSi Assessors inspected the KUD pesticide stores and
Inspection confirmed that spill containment at each of records during the follow‐up visit on 05 February 2010.
the pesticide stores had been expanded to cater for the The KUDs had implemented a system for controlling the
quantity of pesticide stored (Plate 6). quantity of herbicide issued to each of the Farmer
The Nonconformity CR01 was closed out. Groups. This involved allocating a 20 Litre container of
glyphosate to each Farmer Group and making issues of
small quantities (1.5 – 2.5 litres) to individual farmers in
clearly labelled 5 litre containers. This system provides
good control of the quantity of herbicide issued to
individual farmers and the empty herbicide containers • Reduction of dust due to transport of FFB through

are retained in the Pesticide Store (Plate 7). villages by construction of speed humps,
installation of speed signs and awareness training
Inspection of the requests for issue of herbicides and the for truck drivers;
stock card for a sample of Farmer Groups confirmed that • Centralisation of Pesticide Stores and control of
these matched the physical quantity of herbicide held at issues of chemicals and empty containers; and
the pesticide store. This showed that record keeping • Reduce soil erosion within oil palm blocks through
was accurate and the storeman was maintaining up‐to‐ improved implementation of T‐Box stacking of
date records of the stock balance. The KUDs also held pruned fronds.
copies of the receipt for collection of empty containers
The Assessment Team concluded that the identified
by Hindoli. For example, Hindoli collected 9 empty
Improvement Action Plan was appropriate for the
containers from Mukti Jaya C4 Pesticide Store on 25
smallholder operations and that the target dates set for
January 2010. Inspection confirmed the empty
implementation were realistic and achievable. Progress
containers had been triple rinsed and the storeman
on implementation of the Improvement Action Plan will
stated the rinsate was used for spray mix.
be checked at the annual surveillance visit.
The Nonconformity CR02 was closed out.
The Nonconformity CR03 was closed out.

Observations/Opportunities for Improvement
Ten (10) Observations/Opportunities for Improvement

were identified:
01 (1.2.2) The following legal documents should be
available at the KUDs: (1) Ministry of Agriculture
o
Decision N 256/Kpts/KB.320/4/90 about
Implementation of Oil Palm PIR‐Trans Plan (SKP3:
Rencana Pelaksanaan PIR‐Trans Kelapa Sawit) dated
11 April 1990; (2) Ministry of Transmigration decision
o
N KEP.86/MEN/1991 dated 29 July 1991, Ijin

Pelaksanaan Transmigrasi (IPT).
Plate 7: Pesticide Store at Barokah Jaya Showing Containers Inspection of documents during the 05 February 2010
Allocated to Farmer Groups follow‐up visit confirmed each of the KUDs had been
provided with a copy of these documents.
02 (2.1.2) PT Hindoli has not provided all of the KUDs
CR03 Indicator 8.1.1 ‐ Scheme manager, together with with an up to date list of applicable laws and
smallholders, prepares action plans for continuous regulations that is updated annually.
improvement, based on consideration of the main
Inspection of documents during the 05 February 2010
social and environmental impacts and opportunities for
follow‐up visit confirmed each of the KUDs had been
improvement
provided with a copy of an up to date list of laws as well
Hindoli has identified impacts of oil palm operations in as a copy of each regulation.
the AMDAL and has prepared Management Plans for the
impacts, location of implementation and timing. The 03 (3.1.1) The KUDs work plans could be improved by
Management Plans have not yet been developed into including information on production costs in the
Action Plans with nominated person responsible and 3year business plan.
target implementation date. 04 (4.4.2) T‐box stacking of pruned fronds had not
been implemented consistently at smallholder blocks
Corrective Action on sloping land.
• To develop a detailed action plan to address 05 (4.6.2) For a small percentage of the blocks
identified impacts of oil palm operation, with inspected, incorrect chemical was being applied for
nominated person responsible, locations of the field conditions. Improved awareness is required
implementation and target date. in relation to “selective weeding”.
• To conduct regular meetings and inspections to
follow up on status of progress for all the action 06 (4.6.7) Records are available showing the total
plans. quantity of pesticide issued to Farmer Groups. The
recording of issues made to individual farmers
BSi Assessors inspected the KUD documents during the commenced only in October 2009 and follow‐up is
follow‐up visit on 05 February 2010. Each of the KUDs required to ensure consistency.
has prepared an Improvement Action Plan with
responsibilities and timing for implementation. The 07 (4.7.2) More awareness is required on the use of
three main issues that were identified for the KUDs to appropriate PPE for harvesting, for example, wearing
address were the following: of footwear.
08 (5.2.3) PT Hindoli has provided information to the 3.4 Issues Raised by Stakeholders and Findings with
KUDs on protected species and the identification of Respect to Each Issue
HCV habitats that is based on the HCV assessment at
Tanjung Dalam and Sungai Tungkal Estates and Stakeholders interviewed had positive comments about
adjacent areas. This assessment should be Hindoli Smallholders.
supplemented by compiling information on fauna
sightings at smallholder blocks. Smallholders
09 (5.6.1) Hindoli has assisted KUDs to identify • The farmers interviewed stated they are very
environmental aspects and impacts of their happy with the Hindoli partnership program that
operations (May 2009). An improvement would be has made their oil palm successful and
to include this recent information in the RKL/RPL profitable.
Report. • Most farmers have built brick houses and some
have purchased trucks for transporting FFB to
10 (6.1.3 ) KUDs have deployed a questionnaire to the mills.
obtain feedback from smallholder members.
Although this survey provides important feedback on Local Communities
KUD Members’ issues, the AMDAL requires
additional information from the interview of • The smallholdings provide employment for many
informal leaders and village officials at local workers in addition to the block owners for
communities. harvesting, FFB loading and transport.
• There is a relatively low crime rate in the area.
• The KUDs make contributions, such as donations
3.3 Noteworthy Positive Components
to help build a new mosque and for school
¾ Hindoli provides consistent support to smallholders activities.
through its Farmer Development Department that • The KUDs maintain the roads in good condition.
consults regularly and conducts training and
technical assistance.
¾ The Hindoli Smallholders are very successful and 3.5 Acknowledgement of Internal Responsibility
their FFB yields are comparable to those achieved at PT Hindoli acknowledges and confirms acceptance of the
the adjacent Hindoli Estates (Figure 3). Assessment Report contents, including assessment
findings. PT Hindoli accepts the responsibility for
implementing the corrective actions and addressing the
opportunities for improvement detailed in the
Assessment Report.
3.6 Formal Sign‐off of Assessment Findings
Signed for on behalf of
PT Hindoli

Figure 3: Annual Average FFB Yields (tonnes/ha) of Hindoli
Estates and Smallholder oil palm.
¾ Each KUD has built an Office for Administration and
separate Central Stores for Pesticides, Fertiliser and
Equipment Supplies to Farmers (Plate 8).

Signed for on behalf of
BSi Group Singapore Pte Ltd

....................................................................
Mr Charlie Ross
Lead Auditor

Date: 28/05/2010
Plate 8: Sumber Jaya Lestari KUD Administration Office

Appendix “A”

PT Hindoli RSPO Certificate Details

Public Summary Report – RSPO Certification Assessment – PT Hindoli Smallholders CERTIFICATE DETAILS

PT Hindoli Certificate Number : SPO 537874
Po Box 1071 Certificate Issue Date: 25 February 2009
Palembang 30755 Sumatera Selatan
INDONESIA

Website: www.Cargill.com

Standards: RSPO Principles & Criteria : 2007; Indonesian National Interpretation : 2008; National
Interpretation for Scheme Smallholders Republic of Indonesia : October 2009, Version 1.

CERTIFICATE DETAILS FOR PRODUCTION – PERIOD 25/02/2009 TO 24/02/2010

Sungai Lilin Palm Oil Mill and Supply Base
Location Sg Lilin, Muba , Sumatera Selatan. INDONESIA
Address PT Hindoli, PO Box 1071, Palembang 30755, Sumatera Selatan, INDONESIA
GPS E 104° 7’ 41∙67” S 2° 36’ 46”
CPO Tonnage Total Production 94,486
PK Tonnage Total Production 22,431
Company Estate FFB Tonnage Sg Tungkal 77,800, Sg Pelepah 65,995
Smallholders FFB Tonnage 281,513

Tanjung Dalam Palm Oil Mill and Supply Base
Location Tanjung Dalam, Muba, Sumatera Selatan, INDONESIA
Address PT Hindoli, PO Box 1071, Palembang 30755, Sumatera Selatan, INDONESIA
GPS E 103° 56’ 38∙4” S 2° 32’ 58∙56”
CPO Tonnage Total Production 48,576
PK Tonnage Total Production 11,423
Company Estate FFB Tonnages Tanjung Dalam/Sri Gunung 87,193
Smallholders FFB Tonnage 133,226


Appendix “B”

Certification Assessment Program

Public Summary Report – RSPO Certification Assessment – PT Hindoli Smallholders CERTIFICATION ASSESSMENT PROGRAM

CERTIFICATION ASSESSMENT PROGRAM

DATE TIME ACTIVITY CR IN DE
Thursday 1400 Opening Meeting √ √ √

November 05 Finalise fieldwork schedule to KUDs √ √ √
PT Hindoli Document Review ‐ Hindoli Farmer Development Department √ √ √
Friday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √

November 06
Barokah Jaya KUD Documentation
PM √ √ √
Inspect storage facilities
Saturday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √

November 07
Bersama KUD Documentation
Makmur PM √ √ √
Sunday
Analyse Data collected to date
November 08
Monday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √
November 09
Sumber Jaya KUD Documentation
Lestari PM √ √ √
Tuesday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √

November 10
Mukti Jaya KUD Documentation
PM √ √ √
Wednesday Smallholder Blocks /Physical Inspection /Interviews Mukti Jaya
November 11 AM √ √ √
Smallholder Blocks /Physical Inspection /Interviews Mandiri Jaya Makmur
Mukti Jaya /
Mandiri Jaya KUD Documentation ‐ Mandiri Jaya Makmur
PM √ √ √
Makmur Inspect storage facilities ‐ Mandiri Jaya Makmur
Thursday
AM Closing Meeting √ √ √
November 12

Appendix “C”

List of Stakeholders Contacted

Public Summary Report – RSPO Certification Assessment – PT Hindoli Smallholders LIST OF STAKEHOLDERS CONTACTED

LIST OF STAKEHOLDERS CONTACTED

Smallholders Local Communities
97 Smallholders Berlian Makmur Village
14 Smallholder Cooperatives Linggosari Village
26 Workers engaged by Smallholders
Government Departments NGOs
District Labour Office WALHI, South Sumatra
District Cooperative Office WWF, Indonesia
District Environment Office
PT Hindoli Staff
General Manager
Snr Plasma Operations Manager
Plasma Manager
Farmer Development Assistants (5)
Technical Services Department Manager
Sg Lilin Mill Manager
Tanjung Dalam Mill Manager
Program Assurance Manager


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SUMMARY 1.0 SCOPE OF CERTIFICATION ASSESSMENT

TOTAL 414,739 1.7 Organisational Information / Contact Person

Table 4: Time Bound Plan for Certification 1.10 Approximate Tonnages Certified

2.4 Stakeholder Consultation and a List of Criterion 1.1: Oil palm growers and millers provide

payments for FFB were in accordance with the breakdown by month and village. The KUDs maintain up

individual farmers and the empty herbicide containers • Reduction of dust due to transport of FFB through

Ten (10) Observations/Opportunities for Improvement

DATE TIME ACTIVITY CR IN DE

Thursday 1400 Opening Meeting √ √ √

Friday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √

Saturday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √

Tuesday AM Smallholder Blocks /Physical Inspection /Interviews √ √ √

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