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FEATURE STORY

The World Bank Group reengages palm oil sector

April 3, 2011


STORY HIGHLIGHTS
  • The World Bank Group has adopted a new framework and strategy based on stakeholder consultations to engage in the global palm oil sector
  • With the new framework the World Bank Group has lifted suspension on new investments in palm oil since September 2009
  • Future engagements seeks to reduce poverty in a way that preserves the environment for future generations and respects the rights of vulnerable communities

Jakarta, April 03, 2011 – Over six million rural poor worldwide rely on palm oil for a job to earn a living.  Hundreds of millions more rely on affordable palm oil as a basic food. Small farmers dominate production and continue to enter the industry in increasing numbers.  With these conditions, the palm oil sector can play an important role to economic development and poverty reduction. By engaging it, the World Bank can make a positive contribution.

The World Bank Group has adopted the World Bank Group Framework and IFC Strategy to guide future engagement in the global palm oil sector. The new framework and strategy were developed following consultations with a wide range of stakeholders including environmental and social NGOs, farmers, indigenous communities, private sector companies, and governments. 

To develop the new engagement approach, the World Bank Group had suspended its new investments in the palm oil sector since September 2009 to review lessons learned and to consult with stakeholders.  With the adoption of the new Framework and Strategy on April 3, 2011, it is now lifting that suspension.

“Throughout the consultations,” said Rachel Kyte, IFC Vice President for Business Advisory Services, “stakeholders look to the World Bank Group to support a new model for financing in the sector to benefit the poor and protect the environment.  This is what we have committed to do.”

Stakeholder consultations, held around the world over the last year, focused on a range of social and environmental issues facing the palm oil sector and the role the World Bank Group could play to address them. The consultations found that stakeholders see a strong role for the World Bank Group to support small farmers and to help reduce poverty, also to promote a more sustainable palm oil sector by helping to protect forests, biodiversity and vulnerable communities.

“Even though the World Bank is a small player in the palm oil sector,” said Inger Andersen, World Bank Vice President for Sustainable Development, “we can make a contribution to strengthening the sector’s sustainability.  Our focus on supporting small farmers and improving productivity can help poor rural communities benefit while also helping the environment.”

The greatest risk facing smallholder farmers is that they will be shut out of a growing market that is rapidly moving towards certified, sustainable palm oil.  More and more major buyers and users of palm oil are committing to 100% sustainable sourcing.

Under the new framework the World Bank Group will work with smallholders helping them meet certification requirements by strengthening small farmer producer organizations establishing group certification schemes, and investing in larger producers with affiliated smallholder suppliers. 

The moratorium has allowed the World Bank Group to assess all the issues in the palm oil sector with inputs from stakeholders through an open, transparent and participatory process. Our renewed engagement in the sector seeks to reduce poverty in a way that preserves the environment for future generations and respects the rights of vulnerable communities.

 


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