Engaging businesses for a more sustainable rubber supply chain

Rubber is one of the world's most widely used materials by the automotive industry, primarily tyre manufacturers, accounted as the largest global consumer of natural rubber, absorbing more than 70% of the annual rubber global production. In Indonesia, the second-largest rubber producer globally, around 90% of rubber plantation areas are cultivated by independent smallholders and directly linked with the welfare of over 2,5 million households. However, to these smallholders, low yield caused by a combination of unsustainable practices and ageing trees remained one of the main issues preventing them from improving their livelihoods. Existing unsustainable practices also increased the burden on nature and the environment.

Sustainability is a major concern for the rubber industry and manufacturing, as consumers and companies that buy rubber grow more discerning about rubber's environmental and social impacts. Through the formation of the Global Platform for Sustainable Natural Rubber (GPNSR), commitments are made by rubber industries, companies and multiple stakeholders for sustainable rubber sourcing and processing practices, aiming to improve the socio-economic and environmental aspects of the natural rubber chain.

Implementing responsible sourcing from smallholders in the supply chains

In collaboration with Proforest, SNV Indonesia supports PT Aneka Bumi Pratama (ABP) in implementing the Responsible Sourcing from Smallholders (RSS) approach to improve its rubber supply chain. ABP, specializing in crumb rubber processing, has two factories located in Palembang and Jambi, Indonesia, and is the subsidiary of ITOCHU, a member of GPSNR.

As part of the platform, the company is committed to ensuring that its supplies meet the principles of No Deforestation, No Peat, No Exploitation (NDPE). Using RSS as a framework, ABP engages and works collaboratively with smallholders on continuous improvement, emphasizing the need to consider the control of core environmental and social sustainability issues with support to address smallholders' needs to improve their livelihoods. This approach will enable ABP to ensure that its supplies come from smallholders applying sustainable practices, thus fulfilling its NDPE commitment.

Risk management and mitigation

One of the key elements in responsible sourcing implementation is risk management. This means that companies must be aware of the ever-existing possibility of unresponsible practices along their supply chain. On ABP's supply bases in Jambi and South Sumatera, the risk mitigation efforts were focused on land legality, deforestation and peat, waste management and pollution reduction, and capacity improvement for smallholder groups and institutions.

SNV assisted ABP in addressing potential risks on its supply chain by identifying and providing support in mitigating sustainability risks or impacts. SNV and Proforest supported smallholders acquiring land ownership by providing necessary information on the administrative requirements and procedures and engaging and acquiring commitment of support from the village government. We also supported ABP to guarantee a no-deforestation rubber supply by conducting geotagging activity on smallholder plots. Identification of various organizations working on human-wildlife conflict mitigation is also conducted where ABP can collaborate to address potential risks in the area.

To improve awareness of waste management and pollution reduction, SNV and ABP staff counselled smallholders on the harmful effects of poor handling of waste and pollutants. SNV provided smallholders with practical knowledge on recommended coagulants, manual weeding, and the proper application of herbicide when needed.

Smallholder groups or institutions are among the main strategies for encouraging wider adoption of BMP practices. The group allows smallholders to ensure collective action, including quality control, provision of inputs and farm facilities, and organizing business units for additional income. With SNV support and counsel, smallholders in ABP's supply base in South Sumatera have agreed to form a farmer group registered with the district authorities.

The way forward

The RSS framework ensured that companies like ABP possessed a good structure to engage with smallholders, identify and provide capacity development needs, and formulate effective responses to address issues and risks along their supply chain. Reflecting on the current achievements and the prospect of reaching out to more smallholders, SNV and Proforest advised ABP to establish Rubber Smallholders Hubs (RSH) in Jambi and South Sumatera, which will serve as training centres and procurement points (pricing and reward system) for further implementation.

Private sector engagement is an important factor in creating a sustainable and inclusive rubber supply chain. A lasting adaptation of the new practices is ensured when the company receives quality rubber produced in sustainable and responsible practices from smallholders and provides corresponding support, incentives, and benefits to farmers.