RSPO Annual Surveillance Assessment 02 and Scheme ... 6 PT MM RSPO... · Annual surveillance report _ PT Musim Mas and Scheme Smallholder Page 1 of 34 PT MUSIM MAS RIAU SUMATRA R

Report number: xxxxxxRSPOCUCRPT -xxxx-xx-xx

Annual surveillance report _ PT Musim Mas and Scheme Smallholder Page 1 of 34

PT MUSIM MAS

RIAU SUMATRA

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�Control Union Certifications is a member of the Control Union World Group - an international inspection and

certification body. CU performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, Eurepgap,

HACCP, BRC, GMP and GTP.

CU is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CU Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CU.

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RSPO Annual Surveillance Assessment 02 and Scheme Smallholder Assessment

Report

Control Union (Indonesia) Jl Kramat 3A,

Cilandak Timur Jakarta Selatan 12560

Phone: 062-21-7884 2016 �

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Control Union (Malaysia) S/B Persiaran Raja Muda Musa,

Off Jalan Sg Berith, Teluk Gadong, 41100, Klang,

Selangor. Malaysia. Phone 03-3377 1600 / 1700

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Report prepared by: Senniah Appalasamy (Lead assessor). Certification decision made by: Gerben Stegeman.�

This public summary has been prepared in accordance with RSPO requirements and the information included is the result of a full RSPO assessment of the Mills

and supply base as included in the scope of the certificate.�

Control Union Certifications. (Head office) Meeuwenlaan 4-6,

P.O. Box 161. 8000 AD Zwolle. The Netherlands.

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Phone: 0031 38436 0100



Contents Page No 1. Scope of the Certification Assessment. .................................................. 3

1.1 Company details .............................................................................. 3 1.2 Surveillance assessment detail ......................................................... 3 1.3 RSPO membership details ................................................................ 3 1.4 Location maps .............................................................................. 3 1.5 Mills and location addresses ............................................................. 8 1.6 Metric tonnages certified and projected outputs ................................ 8 1.7 Description of supply base ................................................................ 8

1.7.1 General description ........................................................... 8 1.7.2 Location of the supply base including .............................. 10

• Control Union code for the certificate .................. 10 • Location address ................................................. 10 • GPS reference ..................................................... 10

1.7.3 Statistics of supply base including ................................... 10 • Control Union code for the certificate .................. 10 • Area of oil palm ................................................... 10 • Mature area ......................................................... 10 • Estimated annual FFB production in tonnes ....... 10 • Planting years.......................................................10 • Replanting Cycle ................................................. 10

1.7.4 Percentage of planted areas of different ages ................. 11 1.7.5 Calculation of the number of production units included in

sample ............................................................................. 11 1.8 Progress of associated smallholders toward compliance ................ 11 1.9 Audit against the rules for Partial Certification ................................. 11

2. Assessment Process ............................................................................... 13

2.1 .... Certification body .............................................................................. 13 2.2 Qualifications of the audit team ........................................................ 13

2.2.1 Qualifications of the lead assessor .................................. 13 2.2.2 Qualifications of the audit team member ......................... 13 2.2.3 Timing: Not earlier than 9 months after the anniversary of the awarding of the certificate .......................................................... 14

2.3 Assessment methodology ................................................................ 14 2.3.1 General overview ............................................................. 14 2.3.2 Assessment agenda including ......................................... 15

• Assessment dates ............................................... 15 • Sites visited ......................................................... 15 • Main activities ...................................................... 15 • Total number of person days spent on site ......... 15

3. Assessment Findings .............................................................................. 16

3.1 Lead assessor’s summary and recommendation for certification .... 16 3.2 Summary of the findings by principle for the PT Musim Mas Mills

and estates ....................................................................................... 17 3.3 Summary of the findings by principle for the PT Musim Mas Scheme

Smallholders ..................................................................................... 23 3.4 Non conformity registers ................................................................... 31

4. Certified organisation’s acknowledgement of internal responsibility 32 4.1 Date of next annual assessment ....................................................... 32 4.2 Date to close major non-conformities ................................................ 32 4.3 Date to close minor non-conformities ................................................ 32 4.4 Formal sign-off of the assessment findings ....................................... 32

Abbreviation used in the report ............................................................... 33 �



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1. SCOPE OF THE CERTIFICATION ASSESSMENT.

1.1 Company details: Company name: PT Musim Mas Business address: Jl. K.L Yos Sudarso KM, 7,8 Tanjung Mulia,

Medan 20241, Republic of Indonesia. Group name if applicable: - Office telephone: 62 61 661 5511/62 61 6619866 Contact person: Dr Gan Lian Tiong. Mobile telephone: 62 61 811 632 831 Fax: 62 61 661 7386 – 662 4362/62 61 661 3060 e-mail: [email protected] Web site: www.musimmas.com

1.2 Surveillance assessment detail: Dates of the assessment: 22 – 27th November 2010 Assessment number (1 to4). 2

1.3 RSPO membership details: RSPO membership number: 1-0073-04-000-00 [ Old number: 032-04 (O)]. Child numbers for each certification unit:

D01 and D02

Certificate number: CUC809028RSPO-1.2009 Date of original certification: 6 January, 2009 Date of last assessment: 3-5th December 2009

1.4 Location maps. Map 1: Map showing the location of estates in Sumatera.



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Map 3: Location of PT. MM and neighbouring entities, Scheme Smallholders (KKPA) and Village Oil Palm Development Projects (Kas Desa)



Map 4 : Map of Scheme Smallholder Group KKPA Merbau Sakti & Kas Desa



Map 5 : Map of Scheme Smallholder Group KKPA Rawa Tengkuluk & Kas Desa



1.5 Location address of the mills. (These figures exclude any output product from non-certified suppliers).

Name of Mill Location address Pabrik Kelapa Sawit Batang Kulim (POM)

Desa Batang Kulim, Kecamatan Pangkalan Kuras, Kabupaten Pelalawan, Propinsi Riau, Indonesia

Pabrik Kelapa Sawit Pangkalan Lesung(POM)

Kelurahan Pangkalan Lesung, Kecamatan Pangkalan Lesung, Kabupaten Pelalawan, Propinsi Riau, Indonesia

1.6 Metric tonnages certified and projected outputs. (These figures exclude any output product from non-certified suppliers).

Name of mill Projected from last audit. (MT)

Actual production*. (MT)

Projected production for next 12 months** (MT)

CPO PK FFB CPO PK CPO PK PKO*** PKE*** Pabrik Kelapa Sawit Batang Kulim(POM)

74,752 17,558 279,200 67,449 14,921 75,268 17,613 - -

Pabrik Kelapa Sawit Pangkalan Lesung(POM)

68,707 16,489 239,172 54,704 13,191 77,042# 18,803 16,606 18,718

TOTAL 143,459 34,047 518,372 122,153 28,112 152,310 36,416 16,606 18,718 # CPO projection is high due to: Projection of FFB yield/ha in supply base estates to the POM has increased, area of supply base to POM is increased, KKPA scheme smallholders FFB that audited during ASA02 are added to POM production and there was a diversion of FFB from Estate 5 (15,000 mt) to Batang Kulim POM during the ASA01. During ASA02, all the FFB from Estate 5 is delivered back to Pangkalan Lesung POM. * Actual January – November 2010 + anticipated December 2010 ** Total Annual output including FFB from KKPA smallholders’ schemes+ Kas Desa + Estates (ASA2 production declared) *** PKO and PKE produced by KCP Plant at PKS P.Lesung. Total annual output PKO and PKE including

Certified PK from PKS Pangkalan Lesung + PKS Batang Kulim (Estate I, II, VI, KKPA Merbau Sakti and Kas Desa)

1.7 Description of supply base.

1.7.1 General description and scope of the assessment. The supply base is the 6 estates owned by PT. Musim Mas. These estates are known as Estates I, II, III, IV, V and VI. During this annual assessment, the associated KKPA scheme smallholders and Village Oil Palm Development Projects (Kas Desa) were assessed in accordance with the RSPO Scheme Smallholder Indonesia NI and included into the supply base. This is one of the continuous improvements committed by the company to bring the associated smallholders into the existing certificate and implemented during this assessment. The details of the supply base are listed in table 1.7.2, 1.7.3 and 1.7.4 below. 1.7.1.1 Inclusion of Scheme Smallholders (KKPA) and Village Oil Palm Development Project (Kas Desa) In this ASA2 of PT MM, the audit team has included the assessment of the KKPA and Kas Desa to incorporate with the PT MM ASA2. The certification unit remains the two palm oil mills, Batang Kulim and Pangkalan Lesung palm oil mills which were already certified on 6th January, 2009. The scope is extended to scheme smallholders to include the smallholders who are associated with these two mills. As per RSPO requirements, stakeholder announcement was posted on the RSPO website for 30 days prior to the assessment to give stakeholders opportunity to give feedback and comments. During the Pre-Assessment Audit of PT MM in December 2007, the CUC auditor visited the smallholders’ schemes and interviewed the Scheme Managers. In the Main Audit in June 2008, the auditors held stakeholders’ consultation including visiting and interviewing the KKPA smallholders. Similarly in the ASA1, visit to the KKPA smallholders was conducted. The audit team noted that a comprehensive programme to prepare the KKPA smallholders by PT MM was in place since the first audit. A very positive approach to assist the KKPA to come on board the certification through RSPO P&C training which covers all the principles, criteria and indicators was demonstrable. Training record shows that training of the scheme smallholders started in 2007 and has continued since then. There were several visits by stakeholders including the non-governmental organizations to the PT MM scheme smallholdings. A brainstorming on the implication of the RSPO draft P&C on scheme smallholders was held in the Head Office on 4th September, 2009. A gap analysis against compliance with the RSPO P&C for Scheme Smallholders was conducted from 22nd - 23rd June, 2010. This was followed by an internal RSPO audit on 19th August, 2010 by the internal RSPO audit team headed by Dr Gan Lian Tiong, Head of Sustainability of Musim



Mas Group to review the status of compliance with the requirements of the RSPO P&C. The internal audit includes physical inspection of group smallholdings, interview with smallholders’ group leaders, inspection of stores and documentation audit which is very similar to RSPO third party assessment. A review meeting to present the outcome of the preparation of the KKPA scheme smallholders to the Senior Management team from the Head Office was conducted on 18th October, 2010. The internal assessment report was available to the auditors during this assessment. All the non-compliance items identified during the internal audit were closed and evidence of closure of the non-compliance was found during this certification audit. The PT MM management team, through past experiences gathered since the first certification assessment and the first annual surveillance assessment under the guidance of the Head of Sustainability, had prepared the scheme smallholders with comparable standard to that of big plantations. Assessment based on the RSPO Sampling Guideline CUC conducted an assessment of PT MM KKPA scheme smallholders and Village Oil Palm Programme (Kas Desa) by incorporating together with the ASA2 because the certification units remain the same (Batang Kulim and Pangkalan Lesung palm oil mills). It is the commitment from PT MM to bring in their scheme smallholders into the existing certificate within 3 years after the first certification. The certification assessment was conducted against the National Interpretation for Scheme Smallholders, Republic of Indonesia, October 2009 version 1. PT MM scheme smallholders comprise of two cooperatives and four Kas Desa. The two certification units (Batang Kulim and Pangkalan Lesung palm oil mills) and its supply base had already received the RSPO certificate on 6th January, 2009. During this assessment, the scheme smallholders that supply FFB to the two already certified palm oil mills were included in the scope. A formal stakeholders’ notification for the PT MM KKPA smallholders were posted on the RSPO website for 30 days for public comment prior to the assessment as per the RSPO requirements. There were no complaints received during the field assessment. The audit team has taken note of the on-going Desa Kesuma smallholding development project which is still in progress and is being addressed in a proactive manner by PT MM that is acceptable by both parties with the Department of Forestry and a non-governmental organization, Scale Up as the mediators. Up to the time of writing this report, there were neither feedbacks nor comments received from the other external stakeholders.



1.7.2 Location address of the supply base

CU Code Name Location address.

GPS reference Longitude Latitude

P01 Estate I Desa Pesaguan, Kecamatan Pangkalan Lesung, Kabupaten Pelalawan, Propinsi Riau, Indonesia

102° 4’ 54,739” 0° 4’ 13,296”

P02 Estate II Desa Batang Kulim, Kecamatan Pangkalan Kuras, Kabupaten Pelalawan, Propinsi Riau, Indonesia

102° 1’ 53,566” 0° 4’ 37,290”

P03 Estate III Kelurahan Pangkalan Lesung, Kecamatan Pangkalan Lesung, Kabupaten Pelalawan, Propinsi Riau, Indonesia

102° 5’ 29,079” 0° 2’ 44,919”

P04 Estate IV Kelurahan Pangkalan Lesung, Kabupaten Pelalawan, Propinsi Riau, Indonesia

102° 5’ 28,348” 0° 5’ 59,312”

P05 Estate V Desa Tanjung Beringin, Kecamatan Pangkalan Kuras, Kabupaten Pelalawan, Propinsi Riau, Indonesia

102° 2’ 16,209” 0° 0’ 51,015”

P06 Estate VI Desa Talau, Kecamatan Pangkalan Kuras, Kabupaten Pelalawan, Propinsi Riau, Indonesia

101° 59’ 27,91” 0° 3’ 0,403”

P07 KKPA Merbau Sakti

Jl. Lintas Timur, Kelurahan Sorek Satu, Kecamatan Pangkalan Kuras, Kabupaten Pelalawan

1020 04’ 3.50” E

000 07’ 40.4004” N

P08 KKPA Rawa Tengkuluk

Jl. Lintas Timur, Kelurahan Pangkalan Lesung, Kecamatan Pangkalan Lesung, Kabupaten Pelalawan

1020 06’ 27.82” E

000 01’ 14.4264” S

P09 Kas Desa – Betung I Desa Betung, Kecamatan Pangkalan Kuras 1010 59’ 17.72” E 00 4’ 39.0144” N

P10 Kas Desa – Tanjung Beringin

Desa Tanjung beringin, Kecamatan Pangkalan Kuras

1020 2’ 26.30” E 00 1’ 57.6300” N

P11 Kas Desa - Talau Desa Talau, Kecamatan Pangkalan Kuras 1020 1’ 3.41” E 00 2’ 11.5908” N

P12 Kas Desa – Pangkalan Lesung

Kelurahan Pangkalan Lesung, Kecamatan Pangkalan Lesung

1020 07’ 14.23” E 00 02’ 12.8292” S

1.7.3 Statistics of the supply base.�CU Code Name Area of oil palm (ha)

on actual Oct’09 EstTonnes

FFB/yr (bdgt’10)

Planting years

Replanting Cycle

(years) Oil Palm Mature P01 Estate I 4,578 4,399 125,366 1993 to 2010 25 P02 Estate II 3,326 3,326 93,268 1991 to 2006 25 P03 Estate III 4,647 4,646 94,991 1996 to 2007 25 P04 Estate IV 4,546 4,546 134,289 1996 to 2006 25 P05 Estate V 3,729 3,729 60,121 1998 to 2004 25 P06 Estate VI 3,409 3,387 59,441 2002 to 2008 25 P07 KKPA Merbau Sakti 865 837 21,513 2000 to 2009 25 P08 KKPA Rawa Tengkuluk 802 802 18,055 2003 25 P09 Kas Desa – Betung I 5 5 76 2000 25 P10 Kas Desa – Tanjung

Beringin 5 5 120 2000 25

P11 Kas Desa - Talau 1 1 14 2000 25 P12 Kas Desa – Pangkalan

Lesung 5 - - 2010 25

TOTAL 25,918 25,683 607,254 Note :

• Increase of 18 ha in Estate I in 2010 due to additional areas compensated (‘ganti rugi’) • Reduction of 5 ha in Estate II in 2010 as area felled for use as Seed Garden Area.



1.7.4 Percentage of planted areas of different ages. CU Code Before 1990 1991 – 1995 1996-2000 2001 – 2005 2006 -2010 2011-2015 2016+

P01 - 68 % 20 % 7 % 5 % - - P02 - 69 % 23 % 7 % 1 % - - P03 - - 91 % 8 % 1 % - - P04 - - 99 % 0.5 % 0.5 % - - P05 - - 89 % 11 % - - - P06 - - - 96 % 4 % - - P07 - - 75% 22 % 3 % - - P08 - - - 100 % - - - P09 100 % P10 100 %� P11 100 %� P12 100%

1.7.5 Calculation of the number of production units (N) to sample for each mill. N = 0.8�y, where y is the number of units, with the result always to be rounded UP to the next whole integer. Where only a sample of the supply base is assessed, units not previously assessed, or assessed earlier in the certification programme, are to be preferred over those more recently assessed. How many mills? 2 (two) mills For each mill, how many units make up the production base? Name of POM Owned estates (Y) N = 0.8�Y Smallholders (Z) N = 0.8�Z Batang Kulim POM Estates I, II and VI 2 (Estate II

and Estate VI) Scheme Smallholder : - KKPA Merbau

Sakti - Kas Desa

22 smallholders

Pangkalan Lesung POM Estates III, IV and V 2 (Estate IV and Estate V)

Scheme Smallholder : - KKPA Rawa

Tengkuluk

22 smallholders

1.8 Progress of associated smallholders or outgrowers towards compliance with relevant standards - should be in accordance to the 3 year implementation plan. The KKPA Smallholders’ Schemes KKPA Merbau Sakti, KKPA Rawa Tengkuluk and Kas Desa (Village Development for Oil Palm project) were audited against the National Interpretation of RSPO Scheme Smallholders’ P&C for Republic of Indonesia on 26th and 27th November, 2010. The audit report for the KKPA audit has been incorporated with this annual assessment report because the certification unit remain the same (Batang kulim POM and Pangkalan Lesung POM). The smallholders are brought into the existing certificate within two year from the date of initial certification on 6th January 2009.

1.9 Rules for partial certification. 1.9.1 • Progress made from the last assessment

against the time-bound plan for certifying other units within the organisation.

PT Musim Mas met the time bound plan and was audited in June 2008 and certificate awarded in January 2009. During this assessment, the associated smallholders were assessed to ensure compliance with the requirements for certification of these associated smallholders.

1.9.2 • Any alteration made to the time-bound plan, for example, due to acquisitions/disposals, emergence/re-emergence of land disputes and/or labour conflicts must be reported.

No alteration.

1.9.3 • The company’s justifications for any revision are also to be reported; with the audit team’s considered opinion on the matter and recommendation for acceptance/rejection.

No revision.

1.9.4 • Where the structure of the holding company is changed during the course of the implementation of the time-bound plan,

No changes in the structure of the holding company.



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so as to alter the plan, the change in structure must be legal and registered with the relevant authorities. The documentation relating to such structural changes must be presented to the audit team for verification, if necessary.

1.9.5 • Where there is evidence that the time bound plan is not being adhered to, or the conditions justifying a time-bound plan have changed, the audit team must summarise this evidence here.

Time bound plan has been adhered.

1.9.6 • The audit team must be satisfied that the company has not opened new land without HCV assessment since first certified.

PT Musim Mas is adhering to the RSPO New Planting Procedures in its oil palm expansion in West Kalimantan. NPP documentation is in progress.

1.9.7 • New acquisitions by the company which have not replaced primary forests or HCV areas are required to comply with certification requirements within three years of the date of acquisition.

PT Musim Mas is adhering to the RSPO New Planting Procedures in its oil palm expansion in West Kalimantan. NPP documentation is in progress.

1.9.8 • New acquisitions which have evidently replaced primary forests or HCV areas will not be eligible for RSPO certification and will, by the rules of partial certification, render the entire company ineligible for certification.

n/a

1.9.9 • Where there is a dispute whether a primary forest or HCV has been replaced or lost, the company shall, at its own cost, provide RSPO with expert opinion.

No disputes noted.

1.9.10 • The organisation is a member of RSPO Invoice and evidence of payment.

RSPO membership number 1-0073-04-000-00 ( Old number: 032-04 (O). Invoice No: 0455-10/SPE dated 22-9-2010.

1.9.11 • There are no significant land conflicts.

For ALL land disputes. Location maps, area involved. People involved. Contact details. Timetable of events and a summary as to the actions taken by all parties.

There was no land conflicts noted.

1.9.12 • No labour disputes that are not being resolved through an agreed process.

Summary of any labour disputes. People involved. Timetable of events and summary as to the action taken by all parties.

There were no labour disputes that are not being resolved through an agreed process. ASA2: During the ASA2, internal and external stakeholders were interviewed and it is confirm that no labour disputes in any of the PT MM operations.

1.9.13 • No evidence of non-compliance with law in any of the non-certified holdings.

Indonesia: A list of the following: Ijin Prinsip, Ijin Lokasi, Ijin Usaha Perkebunan, Cadastral, HGU.

PT Musim Mas is a stand alone company. The list of licences and certificates is available and were made available for inspection to the auditors during the Annual Surveillance Assessment 2: Document verification was carried out and it is confirmed that all the legal requirements are fulfilled and related documents seen. PT Musim Mas is adhering to the RSPO New Planting Procedures in its oil palm expansion in West Kalimantan. NPP documentation is in progress.



�2. ASSESSMENT PROCESS.

2.1 Certification Body.

Control Union Certifications is a member of the Control Union World Group - an international inspection and certification body. CU performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, Eurepgap, HACCP, BRC, GMP and GTP. CU is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CU Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CU.

2.2 Qualifications of the audit team. 2.2.1 Qualifications of the lead assessor: Senniah Appalasamy

REQUIREMENT QUALIFICATIONS Compliance A minimum of post high school (post secondary school) training in either agriculture/forestry, environmental science or social sciences;

Post graduate qualification in human resource management with more than 10 years working experience in plantation.

Yes

At least 5 years professional experience in area of work relevant to the assessment (e.g., palm oil management; agriculture/forestry; ecology; social science);

More than 10 years working experience in plantation. Involved in RSPO auditing since April 2009. Fully trained in similar agriculture certification programmes such as RSPO SCCS, Global Gap, ISCC and GMP.

Yes

Training in the practical application of the RSPO criteria, and RSPO certification systems;

Involved in RSPO assessment since April 2009. Member of CUC RSPO audit team. Involved in audits conducted in Malaysia and Indonesia.

Yes

Successfully completion of an ISO 9000:19011 lead assessors course;

Completed ISO 9001:2008 lead auditor course in September 2009.

Yes

A supervised period of training in practical assessmenting against the RSPO criteria or similar sustainability standards, with a minimum of 15 days assessment experience and at least 3 assessments at different organisations.

Member of CUC RSPO audit team since April 2009. Involved in audits conducted in Malaysia and Indonesia since April 2009 in 8 different companies in Malaysia and Indonesia.

Yes

2.2.2 Qualifications of the audit team member. RSPO REQUIREMENT ASSESSOR QUALIFICATIONS Compliance

Fluent in main local languages and English.

Senniah Appalasamy Able to understand local language and English.

Yes�

Muhammad Haris Able to understand local language and English.

Yes�

Haerudin Able to understand local language and English.

Yes

Edy Susanto Able to understand local language and English.

Yes

Field working experience in the palm oil sector, or a demonstrable equivalent.

Senniah Appalasamy Working experience in palm oil plantation. Involved in RSPO audits since April 2009.

Yes�

Haerudin FSC, Global Gap and Organic farming auditing experience.

Yes�

Muhammad Haris Working experience in palm oil plantation.

Yes

Good agricultural practices (GAP), integrated pest management (IPM), pesticide and fertilizer use.


Yes�


Yes�


Yes�



Health and Safety assessment on the farm and in processing facilities. (For example OHSAS 18001 or occupational. Health and safety assurance system).


Yes�


Yes�

Workers welfare issues and social assessment experience. (For example with SA8000 or related social or ethical accountability codes).


Yes�


Yes�


Yes�

Environmental and ecological assessment. (For example experience with organic agriculture, ISO 14001 or environmental management systems).


Yes�


Yes�

Economic issues.


Yes�


Yes�

Local interviewer to assist in the Scheme Smallholder Assessment.

Edy Susanto Able to understand local language and English. Holding basic degree and with research experience.

Yes

2.2.3 Timing: Not earlier than 9 months

after the anniversary of the awarding of the certificate.

22nd-25th Novemeber 2010 for PT Musim Mas estates and POM. Scheme Smallholders assessment on 26 -27th November 2010. Approximately one month before the anniversary of the certificate. (Certification Date: 6th Jan 2008)

2.3 Assessment methodology. 2.3.1 General overview. The assessment was carried out in conformity with the procedures as laid down in the CUC RSPO Procedure Manual and the program manual for the assessor and certifier. During the assessment the qualified CUC assessors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. For each estate and small holder identified to be included in the sample for this audit, the original main assessment checklist was used, which includes any updates from previous annual surveillance audits. Workers and local communities were interviewed and evidence sought to confirm ongoing compliance to include: • Chemical stores. Storage. MSDS leaflets. Herbicide mixing areas. PPE. Ventilation. Security. • Field inspections. Herbicide application programmes. Harvesting sites and efficiency. Fertilising operations.

SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.

• Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labour. First aid. Awareness.

• Re-planting sites. Zero burn. • HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation. • Riparian zones. Width. Current and future management. Non maintenance regimes. • Water management. Water courses. Water monitoring. • Road maintenance. Run off. • Social amenities. Social Impact Assessments. • Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures. • Work shops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management. • Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste

disposal. • Documentation review.



Palm Oil mill audits include: • Mill and workshop inspections. Documentation. Worker interviews. • Mill. SOP’s. Safe working environment. Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass

balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage. • OSH. Training. Management structure. First aiders. • Full document review. Completion of the checklist. Review and documentation of evidence. All aspects of

RSPO P&C’s applicable. • Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts.

Verification. Verification of implementation was done through field observations, workshop and chemical store inspections, worker and community interviews and mill inspections as summarised above.

2.3.2 Assessment Agenda

Date Time Audit Programme By 22nd Nov (Mon) - Travelling by auditors PT MM 23rd Nov (Tue) 0800 -1040 Opening Meeting:

1. Estates Presentation (15 mins) 2. Mill Presentation (15 mins) 3. Humas Presentation (15 mins) 4. HCV Presentation (15 mins) 5. KKPA North Present. (20 mins) 6. KKPA South Present. (20 mins) CUC Presentation (10 mins)

GM PC Humas RSPO Asst. SEM North SEM South CUC

1040- 1300 Audit Batang Kulim POM • Mill and workshop inspections. Worker

interviews. • Mills. SOP’s. Safe working environment.

Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage.

• OSH. Training. Management structure. First aiders.

• Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts.

CUC

Audit Estates Field and Facility inspection (North)

CUC

1300 - 1400 Lunch 1400 - 1700 Audit P. Lesung POM (South) CUC

Audit Estates Field and Facility inspection (South)

CUC

Audit Estates Practices (South) CUC 24th Nov (Wed) 0800 - 1300 Audit Estates Practices (North) CUC

Documentation Audit* CUC 1300 -1400 Lunch 1400 - 1700 Documentation Audit* CUC

25th Nov (Thu) 0800 - 1300 Smallholder interview KKPA Merbau Sakti CUC 0800-1300 Audit KKPA KKPA Merbau Sakti CUC 1300 - 1400 Lunch 1400 - 1700 Audit Documentation KKPA Merbau Sakti CUC

26th Nov (Fri) 0800 - 1300 Smallholder interview KKPA Rawa Tengkuluk

CUC

Audit KKPA KKPA Rawa Tengkuluk CUC 1300 - 1400 Lunch 1400 - 1700 Audit Documents KKPA Rawa Tengkuluk CUC 1700 - 1800 Closing Meeting ASA2 and KKPA CUC

27th Nov (Sat) - Travel to Pekan Baru -

�Number of assessors participating: 4 Number of days spent for the assessment on site:5 Total number of person days used for the assessment on site:20



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�3. ASSESSMENT FINDINGS.

3.1 Lead assessor’s summary and recommendation for certification:

The mills and supply base estates as detailed 1.5 and 1.7.2 above respectively and all the Scheme smallholders were visited and the assessment team carried out field, office, facilities, store and document assessments of compliance for all the RSPO principles and criteria. During this assessment, the associated scheme smallholders were audited to include the supply base into the existing certificate of PT Musim Mas. Common systems were identified and specific evidence was recorded for individual estate and mill. The scheme smallholders implemented RSPO P&C applicable to scheme smallholders. Stakeholder consultation involved internal and external stakeholders. Notification to the stakeholders were made by posting the stakeholder letter on the RSPO website for 30 days prior to the assessment. Interviews with Estate Managers, Mill Manager, and Scheme Managers, smallholder’s leaders, committee and members of scheme smallholders took place in both formal and informal environments and worker interviews were conducted in all estates and in the mill. Subsequent to the stakeholders’ interview, the surrounding communities and cultural leaders were visited so as to capture more feedback from the stakeholders. There were no complaints received during the field assessment. The audit team has taken note of the on-going Desa Kesuma smallholding development project which is still in progress and is being addressed in a proactive manner by PT MM that is acceptable by both parties with the Department of Forestry and a non-governmental organization, Scale Up as the mediators. Up to the time of writing this report, there were neither feedbacks nor comments received from the other external stakeholders. The audit team found that PT MM operations continuously comply with all the requirement of RSPO P&C. The CUC audit team also found that PT MM is not only complying with the RSPO P&C but has made several improvements in implementing the principles and criteria. Examples are methane capture, enhancement in riparian buffer areas and improvement in social responsibilities. The audit team also noted that a comprehensive programme to prepare the KKPA smallholders by PT MM was in place since 2007. A very positive approach to assist the KKPA to come on board the certification through RSPO P&C training which covers all the principles, criteria and indicators was demonstrated. Training record shows that training of the scheme smallholders started in 2007 and has continued since then. Internal audits were conducted by PT Musim Mas and the scheme smallholders audited during this assessment demonstrated compliance to National Interpretation of RSPO Principles & Criteria for Indonesian Oil Palm Scheme Smallholders version 01 October 2009. It is also concluded that PT MM scheme smallholders’ operation is in compliance with the required RSPO P&C approved for the National Interpretation of the Scheme Smallholders for Republic of Indonesia October 2009 version 1. �Therefore the recommendation of the lead assessor that:

• A certificate of compliance is maintained and to include the scheme smallholders supply base into the existing PT MM certificate.

Signed:

�Name: Senniah Appalasamy Date: 27th November 2010

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3.2 Summary of the findings by principle for the PT Musim Mas Mills and estates. • Over the 5 year period of the life of the certificate, there will be 4 annual surveillance assessments and a sample of

the criterion will be summarised each year. • Identified Non-Conformities and noteworthy Positive and Negative Observations.

3.2.1 Principle 1 Records of information request from internal and external stakeholders are kept and updated regularly in stakeholder consultation book. Estate and POM provide all information that are classified as non-confidential to stakeholders on CSR, HCV and Environmental practices, Social practices and legal issues relevant to RSPO P&C. Information are available in local language which can be understood easily and stakeholders invited to meeting and participate in certain decision making.

1.1 Records are maintained with complete details of who came, what information requested, what information given, who attended and acknowledge by the requester. Records of Information Requests available and updated regularly at all the POM and Estates audited. On 1/9/10 the Policy MM-POD/01.01/6.3.0 was revised by the Processing Department to include the document retention period for the SCCS (Supply Chain Certification System) document for 5 years. There is document list of SCCS is attached in the POD (Policy Document).

1.2 All the documents on land title, permits, RKL/RPL, SIA, OSH and continuous improvement are publicly available for stakeholders. Documents maintained as per policy. Check list document on compliance to RSPO P&C includes a list of 22 documents that are available. Al the RSPO requirements are covered.

3.2.2 Principle 2 All the relevant legal documents are available as per main assessment. During this assessment it is noted that the “Izin Gangguan” (Hinder Ordinance) has been renewed and extended until 13/7/2015. Permit to use the tube well renewed until 20/8/2012 Initial Amdal revised to incorporate Amdal and UKL/UPL into one document. Approval document No. 660/BLH/2010/1239 was checked and verified. (upaya pengelolan Lingungan/Upaya Pemanatauan Lingungan). New operations included are CDM project (biogas), aeroflow, decanter solid dryer, new scheme smallholder (village development programme) at Pangkalan Lesung at 5Ha. All the documents sited were in compliance with the local regulations. Summary of permits and licences checked. Changes monitored by Head office and inform the operating units. The changes are monitored through Strategy and Planning Department and assisted by the HUMAS and Permit and Legal officers to monitor any changes. Documents maintained as per main audit. Training was conducted on 24/6/2010 for the PT MM Sumatra region to ensure that all documented system and information on written legal requirement are informed to the operating units and comply with the requirements. Attended by 57 personnel from all the operating units. Latest changes in the minimum wage under the UPSM (upah minimum sectoral Provinsi)- Provincial Minimum wage has been revised as per “Peraturan Gubernur Riau No. 4 Tahun 2010” to Rp 1,122,000 for the year 2010. It was implemented at all the operating units and information given to all the workers. All relevant HGU is checked and found to be as per main assessment. Boundary stones re-inspected during annual surveillance assessment. It visibly maintained. Inspection carried out quarterly by the survey department in the present of estate manager and quarterly report documented. No changes in HGU noticed since the last audit. No disputes sighted during this audit. Interview with internal stakeholders, local communities and village communities surrounding the operating units was conducted. No disputes were highlighted. There was one goodwill payment made to a local community who have encroached HCV area in the estate land in Estate VI which was already compensated earlier to the rightful owner. Evidence showed that is has been carried out with the free prior and informed consent of the parties involve. Documents with photograph evidence are available and verified during document audit. The internal SOP remains the same. Complaint and grievances book is updated. Related memo and letters to explain further the details is available in the internal memo file.



3.2.3 Principle 3 PT Musim Mas demonstrated commitment to long-term economic and financial viability through various implementations of good agriculture practices and standard operating procedure.

3.1 Documented working plan available in the Master verifier for Economic Policy, 3rd revision 3/2/2010. It is a 10 year business plan document. For the POM this includes CPO Production, Palm Kernel Production, financial projection, strategies to achieve the above targets and flow chart of management structure up to 2019. All the operating units have similar policy as above and it is also includes the KKPA scheme smallholders projection. Based on the 10 year projection annual budget is prepared for the yearly production, expenses and income. Continuous improvement expenses to address RSPO principle 8 are captured through capital expenditure account report and Sustainability expenses reporting. No replanting programme yet. There is work ongoing to set up the seed garden to anticipate the future replanting programme.

3.2.4 Principle 4 SOP has been developed for all activities for estates, mill, social, environments and HCV. SOP from receiving FFB up to Dispatch is available and updated. SOP is available and updated. Last update on 15/10/2010 again for the Mineral fertiliser application for oil palm to revised the application method. For the Palm Oil Mill SOP from receiving FFB up to Dispatch is available and updated. The update review register is available in the back of each of documents. There are 32 SOPs, these were regularly reviewed and where necessary revised as per present operational requirement. Ex: MM-SOP/03.01/2.2.0 related to include the FFB receiving from other operating units. This includes the UTZ certified traceability system registration procedure. Operational performance monitored through monthly management reports, internal audit, finance audit, sustainability department audit, Head of Estate department, General manager visit, Regional General Manager visit, Planting Advisor visit, Senior Associate director visit, quarterly operational review etc to ensure the operations is according to the SOP and budgeted plan. For the POM monthly KPI report, quarterly review, visit by the production controller, Chief operation, Deputy production director, and production director, internal and external audit. Soil maps available for all the estates and no changes in the structure. All estates planted legume cover crops to manage slope area. Only circle and selective spraying to maintain good ground cover. Terrace and silt pit constructed to assist in soil conservation on slopes and road side. Road maintenance programme is reviewed yearly includes grading, stoning, compacting, road side drain maintenance, culvert installation and maintainance. Machineries available are grader, compactor, excavator; back hoe and dump truck. Actual realization of the road maintenance programme from each estate is updated on the map once the work is completed. For the peat area monitoring of water management level done each month. Recording and reporting by assistant of each division. The records equipped with map of sample measuring points. Water maintained at 60 cm with the construction of weirs. There are six rivers Pelintai, Pantan, Sinduan, Bengkarai, Pemahang and Air Hitam. Area where previously planted oil palms removed to incorporate biodiversity enhancement plan and restore the riparian along the river was planted with jungle trees. Total of 16635 jungle trees planted in 2010 (upto October 2010). Restoration of Riparian zone along the river riparian has been given high attention with planting of jungle trees such as Alstonia scholaris,�Samanea saman,�Switenia macrophylla,�Aquilaria microcarpa,�Shorea sp. Earlier planted trees has grown about 3-4 metre and biodiversity enhancement is taking place along this river green belt area. 50 metre riparian zone is maintained without any chemical maintenance. MOU with the Forestry department of Pelalawan District is signed to get assistance from the forestry department. It is also signed by the district and village Heads. Monthly POM effluent BOD is analysed at SUCOFINDO laboratory. Latest result dated 18/10/10 shows that the BOD is 70.5 mg/L below the permitted level of 5000mg/L. Monitoring of water usage per tonne FFB is done on daily basis, summary documented end of the month. Ex: In October 2010, average water usage per tonne FFB is 0.86. IPM includes planting of beneficial plants such as Cassia cobanensis, tunera subulata on going all the time. Nursery is maintained to increase the beneficial plants in the field. Main and field road side are planted with these beneficial plants to control leaf eating pest. Number of barn owl boxes has been increase to 722 boxes in PT MM to ensure the density is 1/30ha at all the operating estates. IPM Monitoring and census carried out monthly basis for leaf eating caterpillar setora nittens



and sethotosea asigna, barn owl census, termite census and rat census. Apart from normal routine maintenance of the barn owl boxes, monitoring of the owl population is carried out on monthly basis. Census record shows no serious attack. Monitoring of a.i per tonne FFB or per hectare is available. Ex: in October 2010, Isopropilamina glifosate is 0.00000159 a.i/LD/tonne FFB. OSH policy is as per main assessment. Implementation includes OSH training, medical check up, daily safety briefing, Hazard and risk analysis of work place, implementation of PPE usage and inspection, safety committee, safety meeting, internal safety audit. There is a safety officer available on site. Safety officer goes to the fields to ensure implementation. Other than Safety officer, each operating units have their own safety committee Headed by the manager. OSH meeting is conducted quarterly and attended by the representatives from the management and workers. Records are maintained for each discussion and meeting. All the employees covered by insurance. Jamsostek insurance coverage for all workers. i.e. number DD 001041000 for the POM and number DD 000529. For the estate, workers handling agrochemicals are going through medical check up. For those working in the POM such as at kernel station, boiler, lab, water treatment, engine room, kernel crushing plant (PKL POM) are going for yearly medical check up by the in house doctor. The doctor on site in PT Musim Mas is a qualified to carry out the medical check up and has been issued with the approval letter to conduct medical check up by the Health Department, Pelalawan. Risk analysis available and updated every month internally. Each work has its own assessment of risk. Training is carried out to train the workers accordingly to handle the risk and create safety awareness. Ex: Last assessment dated 10/11/10. For the estate separate risk assessment carried out based on work and work place. Safety training records available as per programme. New training programme for 2010 identifying training needs according to category of workers which includes all the safe working procedures and implementation. Procedure to handle emergency is in place. Interview with workers in the field and mill reveal that they are aware of emergency procedures and use of ERP. Emergency assembly area available at all operating units. Siren installed at high risk area such as store, workshop and centralised dining hall at bachelor mass. First aid kit location map on the mill is available. Field supervisors/mandors provided with first aid kit to assist in the field. First aider available in field and mills. They understand basic first aid procedures and know how to seek further medical assistance. Monthly summary of accidents are kept when there is an accident occur with details such as person involve, date, type of accident, place and person reporting. Report sends to the district health department on half yearly basis. Investigation conducted to analyse the cause of the accident and develop plan to avoid in the future. It is noted that for the year 2009, PT Musim Mas Estates (1/1/07 – 31/12/09) and PKL POM was awarded Zero Accident Award by the Pelalawan district officer for achieving 1,026,956 hours of Zero Accident (1/1/01 – 31/12/09). Latest training programme for 2010 developed by the training department. Training identified based on “Training need analysis” and carried out by the Training manager. Verbal interview carried out with staff and Manager to gather input on training need and Training Programme is developed. Training programme discussed and approved by top management. Each employee is having individual training records. updated each time once trainingis provided. Morning safety and safe working briefing is given on daily basis. Contractor’s contracts is checked and verified which include all the requirement and experience required for each contract. They are also included in the operating units training programme to ensure they are trained accordingly

4.2 The procedure is similar as per main audit. Annual leaf sampling and analysis done by PT MM Research and Department. In 2010 soil sampling was carried out and analysis conducted. Based on the result, fertilizer recommendation is developed and sends to the operating units. Fertilizer application is based on the recommendation from the agronomist. Application of fertiliser program, land application of POME, solid decanter application, boiler ash is maintained. Application based on recommendation by the research centre. At estate V and estate VI boiler



ash is used to raise the pH of the peat areas are being continued. 4.6 The chemical used similar to last assessment. Chemical register is checked. Approved list

available in file MM-OSH/02.01/1.6. Records available for daily usage with details of date, field, ha, type of chemical, amount used, number of workers involve in application, supervisor in charge and completed hectare. Justification is available in the chemical register records. All the chemical stores inspected during the field visit. Stores are secured and there is a person in charge of issuing of chemicals. He has attended training on chemical handling and understands the safe operating procedures. Sprayers and supervisor are trained on safe training procedures. Chemicals separated based on class, spill containers available. Training is given to the sprayers and daily briefing on daily basis. Agrochemical containers are triple rinsed and punched at the bottom and collected at the schedule waste storage. The waste materials collected and send to licensed waste collector PT Wira Budi Gautama. Last collected on 19/11/2010 by PT Wira Budi Gautama. During this assessment it is noted that there is no use of chemicals type 1A and 1B. Paraquat usage is on reducing trend. PT Musim Mas is voluntarily phasing out (eliminating) paraquat usage by 31 December 2010. Records of health examination for worker applying agrochemicals available in file MM-OSH/02.01/1.6. It is conducted on monthly basis. i.e. medical check up for employee “Atina” checked and verified. Workers interview, record verification and interview with the qualified doctor on site confirm that pregnant and breast feeding workers are re assigned to non chemical works.

3.2.5 Principle 5 The HCV report was carried out by Aksenta on Sept 2007. Verification report dated 11 June 2008. 3 consultants took part in the HCV study. HCV identified in all estates. Recently on 11 – 31 August 2010, Ms. Jenice Lee Ser Huay and Frans A Prasetyo from Eidgenossische Technische Hochschule (ETH), Zurich (Switzerland Institute of Technology, Zurich) reviewed the management and monitoring plan of HCV habitats. HCV monitoring identifies rare species and the monitoring report includes methodology, tools used, sampling technique and the analysis result and summary. Peer review is carried out at Head Office level Dr. Gan review the report in attendance with Head of HUMAS and Head of Estate Department. External Peer Review was conducted by Ms. Jenice Lee of ETH Zurich on 29/10/09. Signages are maintained and some strategic location has been erected with new signages to create awareness. Patrolling by the security personnel carried regularly to ensure the HCV area protected. Signages are well maintained. HCV environment is taken care by Ibu Dian Novita and assisted by a RSPO team from each operating units; Social or Public relation(HUMAS) is taken care by T.Kanna and overall sustainability department Headed by Dr. Gan Lian Tiong who is based at Head Office and visit all the operating units to monitor the status. Pollution sources identified and documented such as used oil, filter, battery etc. Record of all schedule waste is reviewed. The schedule waste collection is centralised at Estate II and Estate III. Documented records of receiving and disposing through authorised waste collector are available. SOP is followed strictly and proper waste management system is implemented and monitored regularly. Through waste collection and stored at the designated schedule waste are. Disposed through licensed and authorised dealer from Medan PT Wira Budi Gautama. The period of contract with this collector is from 3 Sep – 31 December 2010. Contract No.: 001/PT.MM/XI/2010. As per the last assessment disposal of chemical containers at estate level and POM is monitored and kept in well secured store with incoming and out going stock record. Disposed through licensed and authorised dealer from Medan (PT Wira Budi Gautama). Waste management and monitoring record available at all the estates and POM. The period of contract is from 3 Sep – 31 December 2010. Contract No.: 001/PT.MM/XI/2010. Mills have the records for monitoring effluent and analysis report which are within the local regulation standard. BOD below 5000mg/L. The company continue to use biodiesel (palm methyl Esther) to reduce fossil fuel usage. At PLM development of biogas plant to capture methane and use for power generation in in progress already. Stakeholder consultation conducted on 22 Dec 2009 at PLM. Renewable energy use and its efficiency analysis is documented. Records of monitoring of fossil fuels use for operational reason and its efficiency analysis



available by monthly. Efficiency is included per tonne FFB. BKM: As for October 2010 the efficiency is 1.32 Ltr/per Tonnage.PLM: 0.71 Ltr/per Tonnage. Latest emission report received from BARISTAND. Monitored on every six month period through RKL/RPL. Latest BOD (as at 6 Oct 2010) is 70.5 for BKM. Bio Flow has been changed to Aero Flow system since 2009.

5.1 Initial Amdal revised to incorporate Amdal and UKL/UPL into one document. Approval document No. 660/BLH/2010/1239 was checked and verified dated 18/11/2010. (upaya pengelolan Lingungan/Upaya Pemanatauan Lingungan). New operations included are CDM project (biogas), aeroflow, decanter solid dryer, new scheme smallholder (village development programme) at Pangkalan Lesung at 5Ha. All the documents sited were in compliance with the local regulations. Report (Laporan) RKL/RPL from first semester of 2010 (January-June) is available. Latest RKL and RPL dated July 2010 and delivered to Agriculture Dept and Environmental dept. on 18th August 2010 for the 1st semester (Jan – June 2010) is checked and verified. It is applicable for the whole HGU in PT MM.

5.5 Not applicable. No replanting yet. Household waste goes for land fill. During field visit no open burning seen in the operating units. Zero burning policy is implemented throughout the company. Policy No.MM-POD/02.06/2.0 (Policy Perkebunan 2:Persiapan Lahan dan Penanaman-1 dated 15/8/2001). External training on fire fighting carried out. Fire extinguishers are located at strategic places. Siren and Fire Engines are available during fire emergency.

3.2.6 Principle 6 For the new creche EIA has been carried out before the project. KKPA scheme smallholders are able to know the prising through the notice board placed at the weighbridge. Since the scheme is already in operation for few years, the scheme smallholders know the procedure to find out the prices. Details in file MM-OPI/03.02/13.0. Monthly meeting with KKPA representative to socialise all the latest progress of the operations. Maximum of 4% incentive is still given based on the quality. The records are available on monthly basis for each KKPA. Stakeholder list updated regularly. Incoming communication/aspiration recorded on Stakeholder Consultation log book. Follow Up action by company adhere to existing procedure. At the operating unit Pak T. Kanna is handling all the Public Relation matter. Interview with village community revealed that he keeps very close relationship with stakeholders and surrounding community. All incoming complaints well recorded by public relation department, e.g. log book of complaint records, negotiation process. For the 2010, the minimum wage from local government was raised to Rp.1.122.000. All the workers are getting more that the minimum wage set by the government. Contributions to the local community development are made through HUMAS. Total fund of Rp 144.319.000 (USD 16,215) has been contributed to the local community for the period of July –Nov 2010 in the form of cash, materials and etc. Evidence: Thank you letter from Pangkalan Kulas Police Station for the donation of 1 unit of Stabilizer on the 21 August 2010. All the related documents are filed in : MM-CSR/02.06/1.0

6.4 Procedures for the identification, calculation and compensation for the loss of legal or customary rights of the land, with the involvement of local community representatives and relevant agencies are available. There was one goodwill payment made by the company to one of the surrounding community. This land was already compensated earlier and it is confirmed by the first owner. The local government officer was involved in the procedure of settlement. Records of negotiations processes and the details of goodwill payment is documented.

6.6 Workers interview confirmed that they are aware of freedom of association. Individual workers union meetings conducted monthly and combined meeting held every three months once. Records are available. Latest meeting held on 22 Oct 2010. 15 people attended the meeting. 3 issues were discussed

6.10 Latest FFB price for the period of 24- 30 Nov 2010 is available. The incentive 4% is based on the FFB quality is paid to the KKPA scheme smallholders. KKPA Rawa Tengkuluk record for the above period reviewed. The FFB price is informed to the smallholders by Medan office. The small holders are aware on the process. This was confirmed by interview. The MoU between PT MM and KKPA Merbau Sakti reviewed 2004. Contract agreement between PT MM and developer for building new houses is also available. Latest payment for the month of October has been paid on 5 Nov 2010 to KKPA Merbau Sakti and KKPA Rawa Tengkuluk. The payments are made during monthly meetings.

3.2.7 Principle 7 Not applicable this time due to no new planting during ASA2 7.1 Not applicable this time due no new planting during ASA2



7.3 Not applicable this time due no new planting during ASA2 7.7 Not applicable this time due no new planting during ASA2

3.2.8 Principle 8 Clear continuous improvement has been noticed in social aspects, environmental aspects, pollution reduction, waste management and plantation management with best practices. During the audit, relevant monitoring records, management records and plans were inspected which included continual improvement during last audit. The plan has been reviewed for 2010 with inclusion of development and contribution to local community development. Plan for 2010 is in file MM-RPT/02.03/5.0 has identified. The improvement plan has been revised for all the operating units.

8.1 SEIA assessment reviewed for the setting up of the laboratory at the Batang Kulim POM. Review dated October 2010. Increase of IPM activities such as planting of beneficial plants (cassia) is continuously practised with nursery developed as a supply base for IPM enhancement and planted along the roads. Barn owl boxes have increased. New boxes have been erected. No rat baiting is carried out is the evidence of good IPM control for rat damage. There is no pest damage such as bagworm incidents. Development on Aero flow system to improve the POME BOD level to reach below 100mg/L before land application. The project developed on 3/11/2008 and approved on 4/3/2009. New aero flow system fixed in BKM POM. During ASA2 mill visit confirmed the implementation and analysis result checked. Based on the analysis result, before aero flow system, BOD level are able to reduce below 100mg/L. At Estates improvement has been made by increasing biodiesel use. Improvement Plan for 2010 is in file MM-RPT/02.03/5.0 has identified improve domestic waste management with providing rubbish bin and ensure domestic waste is collected regularly, proper domestic waste dump site management, proper drainage at housing area to ensure no spillage from drains at housing area, planning to segregate organic and inorganic waste at housing. Schedule waste (used oil) has been reduced due to purchase of new vehicles for internal transport whereby the maintenance is reduced due to very minimum breakdown. 31 new lorries have been purchased to improve the transport system. Old trucks have been put as standby units only. Chemical containers are reused for mixing chemicals which is transported to spraying area. 200litre empty containers used as rubbish collection bin, fertilizer bas reused for loose fruit collection, reducing paper usage by recycling the paper for reprinting, printing cartridge refilled and reused, tyres are used for decoration purpose. Socialisation to encourage employees to recycle domestic waste and segregate organic and inorganic waste is in planning. CDM project is ongoing in stages and expected to be completed by 2011.

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�3.2.9 Criterion to be summarised for each annual surveillance audit.

Criterion year 1 year 2 year 3 year 4 1.1 x x X x 1.2 x x X x 2.1 X 2.2 X 2.3 X 3.1 x x 4.1 x 4.2 x 4.3 X 4.4 x 4.5 x 4.6 x 4.7 X 4.8: x 5.1 x 5.2 X 5.3 x 5.4 X 5.5 x 5.6 x 6.1 X 6.2 x 6.3 X 6.4 x 6.5 x 6.6 x 6.7 X 6.8 x 6.9 X

6.10 x 6.11 x X 7.1 x 7.2 x 7.3 x 7.4 X 7.5 x 7.6 x 7.7 x 8.1 x x X �

3.3 Summary of the findings by principle for the PT Musim Mas Scheme Smallholders Principle 1: Commitment to Transparency Criterion 1.1 Scheme Manager provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation on decision making. The PT MM Scheme Manager and the KKPA Manager have all the necessary information on environmental, social and legal issues and publicly available to stakeholders on request. Financial documents are categorised as confidential. Four Stakeholders from China Food National Authority visited KKPA Rawa Tengkuluk on 6th November 2010 to request for information on Scheme Smallholders’ operations and structure. The relevant information was given by the Scheme Manager. On 13th November 2010, 7 stakeholders from WWF, Johnson and Johnson, Neste Oil and Carfour visited KKPA Merbau Sakti to find out information on the KKPA’s operation.



Criterion 1.2: Management documents are publicly available except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. Information and responses provided covers documents that are publicly available and in accordance with current laws and regulations such as evidence of legal ownership of the land, land-use rights (certificate), SEIA document (AMDAL). These documents are available at the smallholder’s organisation. Smallholder’s organisation has documents of organisational and social activities. Scheme Managers have shared and explained to smallholders and/or their cooperatives on the legal ownership, land use rights and SEIA. Following documents were checked during the assessment:

• Cooperative registration No. 040925200002 dated 12 Sept 2006. Expiry on 25 June 2011. (KKPA Merbau Sakti) ; RT No. 040925200006 date: 8/8/2006 Exp: 28/8/2011

• Surat Izin Usaha Perdagangan (SIUP) Kecil No. 034/04-09/SIUP/VI/2001 dated 23/6/2001 : Rawa Tengkulu SIUP No. 080/04-09/SIUP/VIII/2001 dated 25/8/2001

• Izin operational/Izin Peruntukan Bidang Usaha No. 180/HK/2006/262 ; • Rawa tengkulu No. 180/HK/2006/245 dated 22/6/2006 • Copy of the land title contains details of the lot number, village, name of the owner, date of birth, survey

letter (no. 03/Batang Kulim/2004, map. (sample document checked: No. 05.16.66.45.1.00065, owner: Hassan, dated 29/11/2004)

• Akta pendirian Koperasi No;24/BH/KDK/I/VI/2001 date 18/6/2001 ; RT No. 30/BH/KDK/I/VIII/2001 date 15/8/2001

• AMDAL , RKL, RPL No. 660/Bapedalda/2006 dated July 2006 • SEIA by consultant from Aksenta dated: September 2007 available at smallholder. • Organisational structure available for both KKPA. • Social activities are organised among smallholders and surrounding communities.

Both KKPAs are holding a copy of the AMDAL which covers two mills, estates and KKPA. Copies of RKL/RPL are also available at KKPA office. PT MM develops the management plan for the KKPA smallholders with annual budget and 10 years projection. Complaint and grievances procedure and records are kept in KKPA and by the Scheme Manager. Land was developed in year 2001. Scheme smallholder development took place in 2001. The land belongs to the smallholders. The Work Agreement Contract “Surat Perjanjian Kerjasama” between KKPA and PT MM dated 11/7/2001 signed by the leader of KKPA Pak Amir Syaripuddin, Pak Syarifuddin, A. Gafur and by the Director of PT MM. Witness by Village Head, district officer, Cooperative Department, Department of Agriculture, and Bupati (Provincial Government) for 710ha. Revised agreement dated 20/3/2004 with an addition of 276ha. it is also signed by all the 7 Kelompok Tani (KT – Farmers’ Group). Principle 2: Compliance with applicable laws and regulations. Criterion 2.1: There is compliance with all applicable local, national and ratified international laws and regulations. Scheme Managers provide evidence of a mechanism to ensure that scheme smallholders are in compliance with relevant legal requirements and it is implemented including

• Legally/contractually obligated provisions of lands, • Plantings. • Training

Legally the KKPA smallholders have all the relevant legal documents as per in 1.2 above. Document audit and interviews with the Scheme Manager, KKPA Head and members of smallholders confirm compliance with applicable law. If there are any changes in laws, the Government Cooperative Department from Pelalawan will inform the KKPA Scheme Manager who will then carry out meetings with the members of the scheme to ensure that they comply. Summary of permits and licenses checked. Changes monitored by Head office and inform the operating units. The changes are monitored through Strategy and Planning Department, assisted by the HUMAS and Permit and Legal officers.



Documented system and information on written legal requirement are given to the Head of the KKPA by the Scheme Manager. There are 67 legal requirements which are related to the smallholder cooperative. Documented system available. Copies of the applicable legislation relating to KKPA operation, planting, training, land provision, environmental, Safety and Health are available. Criterion 2.2: The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights. Smallholders are able to show legal ownership of the land or land-use rights. Maps are available at the KKPA office and the Heads of the scheme understand the content of the map developed by PT MM survey department. KKPA Head keeps copy of the land title and individual members of the KKPA able to show Copy of the land title. Boundary stones are maintained visually and monitored by the Scheme Manager and assistant. Between the members’ holdings, boundaries are demarcated to ensure every member operates within their boundary. Scheme Manager and the HUMAS reached an agreement that for the new member to join the KKPA that they must agree to join as members of the KKPA. The Head of the KKPA will investigation to ensure that the land belongs to the member. The HUMAS, Survey department and Scheme Manager will also investigate to ensure that the land is free from any claim. No disputes noted or highlighted during the interview with smallholders and surrounding communities. Criterion 2.3 Use of land for oil palm does not diminish the legal or customary rights of other users without their free, prior and informed consent. Interview with the members of the KKPA scheme and traditional leaders revealed that the KKPA land is not customary land. Principle 3: Commitment to long-term economic and financial viability. Criterion 3.1: There is an implemented management plan that aims to achieve long-term economic and financial viability. Annual budget for the KKPA is developed by the Scheme Manager and 10 years projection on business plan which is similar to the estates is available. Working plan contains FFB Production, costing for operational activities, financial projection, strategies to achieve the above targets. Smallholder’s organisation is involved in the calculation of debts and repayments, relevant agreement with bank, loan mechanism, saving towards future replanting and saving for Corporate Social Responsibility (CSR) activities such donation to mosque as part of community development project. Scheme smallholders receive training services from Scheme Managers in relation to the management of plantation to optimize continuous productivity, technical support, training and advice on best practices. Principle 4: Use of appropriate best practices by Scheme Manager. Criterion 4.1 Operating procedures are appropriately documented and consistently implemented and monitored. GAP from the Agriculture Department is given to the KKPA by the government. The Scheme Manager prepares another GAP which covers land preparation, planting, field maintenance, IPM, harvesting technique, fertilizer application technique, agrochemical handling etc. The Scheme Manager assisted by the Senior Assistant and field assistant to ensure the implementation. These executives are full time employees of PT Musim Mas whose role is to carry out daily inspection and monitoring and providing guidance to the smallholders. Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield.



Fertilizer recommendation through annual foliar sampling by PT Musim Mas. The process is similar to PT Musim Mas estates. KKPA Head manages the distribution of the fertilizer as per recommendation. Recommendation and application records are maintained by the KKPA Head and assisted by the Scheme Manager with details of area, quantity applied, type and date of application. This is also monitored through daily issuing records with this detail. Records of the productivity available at all the scheme office since year 2005. The yields are on increasing trend. The yield trend is very much similar to PT Musim Mas estates due to the implementation of the best practices shared by PT Musim Mas. No application of EFB. Criterion 4.3 Practices minimise and control erosion and degradation of soils. Maps are developed by the PT MM survey department with indication of soil type, terrain, roads, culverts, drains and boundary. Soil is mainly clay mineral. The area is flat and no terracing required. There is no replanting in near future. Cover crop mucuna was established during initial planting. There is no peat land. Road side drain construction assisted by the Scheme Manager to ensure rain water goes to the drain and no water log on the road. Criterion 4.4 Practices maintain the quality and availability of surface and ground water. Training programme includes training on soil and water conservation and training was conducted by the Scheme Manager. Last training conducted in October 2010. Interview with the members of the KKPA smallholder understand the concept of soil and water conservation. There are no natural water courses. But as a prevention to avoid any future erosion, smallholders carry out only circle and selective spraying. Soft grass is maintained. Some of the members of the scheme maintain their block by grass cutting. Similar best practices as per PT Musim Mas estates are practised at the scheme such as frond staking. Recommendation and application records maintained by the KKPA Head and Scheme Manager with details of area, quantity applied, type and date of application. This is also monitored through daily issuing records with this detail. Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate integrated Pest Management (IPM) techniques. Documented plan is available for monitoring and control of pest and diseases which includes training. Training on pest census provided by the Scheme Managers to representatives of the scheme smallholders. Beneficial plants planted are cassia cobanensis and tunera subulata. Barn owl boxes provided by the Scheme Manager to the scheme smallholders. There are 11 barn owl boxes available at the moment. KKPA scheme members are able to explain the IPM and pest control measures including census of leaf eating pest (nettle caterpillar). They are also aware of the benefit of barn owl and it was implemented. Beneficial plants are planted and evidence noted during inspection of the smallholders block. Criterion 4.6 Agrochemicals are used in such a way that does not endanger health or the environment. There is no prophylactic use, and where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented. Agrochemicals are registered and approved by the Department of Agriculture. There is no type 1A and 1B agrochemicals used. Records show that pesticides are not used; Only herbicides are used for the targeted weeds with appropriate dosage as per the label recommendation. Quantity used, method and time of application is advised and monitored by the Scheme Manager. PPE is implemented and given by the Scheme Manager to all the smallholders. The PPE is returned to the



store each day once spraying is completed. No pesticides are used. Agrochemicals are stored at the estate store and stock records maintained by the KKPA Head. Empty containers are kept at the estate schedule waste store and disposed through the authorised dealers who are collecting the schedule waste from the estates and mills. No toxicity cases among pesticide operators occurred. Training given by the Scheme Manager and records are available at the scheme office and estate office. Training for agrochemical handling and spraying conducted in September 2010. Records of agrochemical supplied to the members of the scheme is maintained with full details of the agrochemical request, type, name of the smallholder, block number, quantity supplied and date. Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. OSH guidelines are developed and prepared by the Scheme Managers. The entire KKPA schemes have this document which covers safe operating procedure, training, PPE implementation, awareness posters and signages. Complete training records checked and verified at the scheme office. Interview with the members of the scheme confirmed that they have attended trainings and able to explain the safe working procedures. Emergency Response Plan and procedures was explained to the Smallholders by the Scheme Managers and the smallholders able to explain the emergency procedures. No accidents reported. OSH meeting are held with the scheme members on monthly basis and records are available. PPE available to all the smallholders and stock kept at the scheme office. Fire extinguisher is available at the office and store. First aid box is available at the KKPA office. Criterion 4.8 All staff, workers, smallholders and contractors are appropriately trained. Training Programme is identified to suit the smallholders need and conducted regularly by PT Musim Mas. Training includes OSH, IPM, best agriculture practices, administration and store management. Trainings are conducted by the PT Musim Mas Training Manager, Scheme Manager and internal doctor. Training is documented and kept at the scheme office. Principle 5: Environmental responsibility and conservation of natural resources and biodiversity. Criterion 5.1 Aspects of plantation and mill management that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. AMDAL (SEIA) covers PT Musim Mas as well as the smallholders. SEIA is incorporated with the estate documents and prepared separate section for the scheme smallholders. Initial SIA conducted by consultants from Aksenta. Recently SIA was conducted by the external consultant form ETA of Zurich (Switzerland Institute of Technology). The KKPA Head and Scheme Managers briefed the members on the SEIA. The KKPA Head provided with a copy of the AMDAL and SIA. Beside AMDAL document, internal environmental impact assessment is conducted by RSPO team through consultation with the smallholders. Copy of the documented assessment is kept at the scheme office and implementation is monitored by the KKPA Head with the assistance from the Scheme Manager. Criterion 5.2 The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations. Smallholders aware of protected flora and fauna. Photos are available at the notice board at the scheme office to create awareness. During the monthly meeting with the members, the Scheme Manager conducts briefing on protected flora and fauna. There are no specific protected flora and fauna identified within smallholder’s land. The KKPA scheme surrounded by either other plantation or other farmers with various crop. No protected species. Again during the monitoring by the internal HCV staff, there was no presence of any



endangered, rare or threatened species recorded. PT Musim Mas HCV assessment includes a section on KKPA smallholder. No HCV within the smallholder’s land. Latest revision of HCV assessment by the internal RSPO team. Copy available at the scheme office. The key members (KKPA Head, Assistant Head, Secretary and Treasurer) of the scheme understand the content of the HCV report and important of this assessment. Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Agrochemical Waste Management plan developed by the Scheme Manager with the participation of the KKPA Head and his team. Copy is given to the Head of the scheme. During the interview, the smallholders were able to explain the correct method of disposing empty containers. The correct method was explained to the members of the scheme by the KKPA Head and Scheme Manager. Agrochemical containers are collected by the Scheme Manager and stored at the estate’s schedule waste store. Disposal through authorised waste collectors arranged by PT Musim Mas. Documentation audit and interview with the KKPA Heads and members of the scheme revealed that there are no complaints related to disposal of hazardous chemical and containers. Again interview with local community revealed that there are no complaints. Criterion 5.4 Efficiency of energy use and use of renewable energy is maximised. Guidance to improve the efficiency of energy use given by the Scheme Manager to the scheme member during the monthly meeting. Most of the work by smallholders is carried out manually and none mechanised except for the FFB transport. Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice. PT Musim Mas zero burning policy is extended to the scheme smallholder and applicable for them. Interview with the members of the scheme understand the policy. No replanting in near future but the understanding and awareness of zero burning technique during replanting is already disseminated to the scheme members. Emergency response procedure is available and briefed to all members by the KKPA Head and Scheme Managers. Awareness and understanding is noted during interview with smallholders. No forest fire reported. Fire extinguisher available within the scheme office and accessible to the members in the scheme office. Fire fighting training conducted by the Scheme Managers. Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Identification of pollution is conducted by the Scheme Manager with the participation of the KKPA Heads. Copy of the identification is available at the KKPA scheme office. Pollutants are dust emission and noise. The emission in the smallholders operation is mainly from the noise during FFB transportation by the truck. The drivers are advised and briefed to drive slowly when passing by the roads at the villages. Dust emission is identified during the drought season. PT Musim Mas assist to reduce the dust by carry out water spraying to reduce dust. Principle 6: Responsible consideration of employees and of individuals and communities affected by scheme smallholders. Criterion 6.1 Aspects of plantation and mill management that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Initial Social impact assessment by Aksenta and recently conducted by an external stakeholder from ETH of Zurich (Switzerland Institute of Technology). Copy of the SIA is available at the KKPA office and members are aware of the assessment. Smallholder’s RKL/RPL incorporated with the estate RKL/RPL page 32 which covers a section for the smallholder’s activities, management and monitoring records. This report is sent to the



government department and a copy is kept at the KKPA office. Positive and negative information from the AMDAL is documented and a management plan is developed to address any negative impacts. Half yearly, monitoring report is incorporated with the estate RKL/RPL. Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties. Communication and correspondence with local community is recorded. Consultation is also through monthly gathering and social activities. Monthly meeting is conducted and attended by all the, KKPA Head and his team, Leaders of the scheme smallholders group, Scheme Manager and the Senior Manager of PT Musim Mas. Minutes of the meeting conducted in October 2010 was checked. Records of request for assistance from the local communities are available. KKPA scheme is contributing monthly cash payment to the nearby mosque as part of response to the aspiration of the local communities. The Head of the KKPA scheme is responsible for communication and consultation with the stakeholders. 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. Complaint Procedure is similar to the estate and complaint book and suggestion box available. The members of the smallholders understand the procedure. Flow chart of the procedure is posted on the notice board to create and ensure awareness among the members. Previously complaints are raised verbally and settled on the spot. Now system in place to records any grievances and action taken in the complaint book. KKPA Head and his committee will address the issue through negotiation and discussion. If no solution is found, then the case is discussed with the PT Musim Mas management and in the present of elected moderator (who is also a member of the scheme). If there is no solution is found the final solution will be through legal proceeding. No disputes noted during the assessment. Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stake holders to express their views through their own representative institutions. This scheme was developed on the smallholders own land. Negotiation process was not necessary because there are no disputes on land acquisition and ownership. Criterion 6.5 Wage and conditions for employees and for employees of contractors always meet at least legal or minimum industry standards and are sufficient to meet basic needs of personnel and to provide some discretionary income. No full time workers and contractors hired. Field work and harvesting is carried out by the smallholders themselves. Criterion 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. No full time workers. The PT Musim Mas policy on freedom to join and form workers union is extended to KKPA scheme. Criterion 6.7 Child labour is not used. Children are not exposed to hazardous working conditions. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. No child labour noted during the fields inspection. It is also highlighted by the smallholders that education is the priority for their children and they prefer them to go for sport activities during school holidays. Criterion 6.8 The employer shall not engage in or support discrimination based on race, caste, national



origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age. Not applicable because no full time or migrant workers are engaged by the smallholders. Amongst the scheme members, equal opportunity policy is similar to PT Musim Mas. All the scheme members are treated equally. Interview with scheme members confirmed that they are treated equally and no any kind of discrimination. Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied. PT Musim Mas Prevention of Sexual Harassment policy is extended to the KKPA schemes and the information is briefed to the members by the Scheme Manager and the KKPA Heads. There are no female employees in the KKPA office. Office work carried out by the male members. Criterion 6.10 Scheme Managers deal fairly and transparently with smallholders and other local businesses. Inspection of the documents revealed that there are no repetitions of complaints on PT Musim Mas. No complaints noted during the assessment. FFB Pricing is through the committee comprised by government Agriculture Department (Dinas Perkebunan), smallholder cooperative representatives and palm oil producers. Flow chart of the FFB pricing is available at the KKPA office. The weekly FFB pricing is posted on the notice board at the KKPA office and this information is available to all the scheme members. Beside this fixed FFB price, PT Musim Mas is paying quality incentive (maximum of 4%) to the smallholders if FFB quality targets are achieved. FFB pricing, calculation of the payment and summary of the payment by PT Musim Mas is posted on the notice board and available to all the scheme members. Interview with the scheme members revealed that it is very transparent and easy to understand. Smallholder’s contract is only with the PT Musim Mas and it is documented. No other outside contractors. No contractors hired. Road maintenance is carried out by PT Musim Mas and the contract with PT Musim Mas is available. Contract payments are through agreed deduction during the monthly payment before 7th of each month. Payment to individual group leaders is paid by the KKPA Head. Scheme members confirm that they are paid promptly. Bank credit payment is available and checked during the assessment. The KKPA Head holds the details of the credit payments made by the individual smallholders. Monthly records are available and agreement is signed between to partied involve in the road maintenance and transport works. During the field visit it is noted that the road are maintained well and the condition is as good as the PT Musim Mas estate with standard size and side drains. No replanting in near future but PT Musim Mas highlighted that the company will assist the KKPA members to develop the replanting programme. KKPA members are carrying out monthly saving for the future replanting. Criterion 6.11 Scheme Manager contribute to local sustainable development wherever appropriate. Scheme smallholders are having in-house fund which is used for the surrounding local community development such as contribution to mosque and social activities.

Principle 7: Responsible development of new plantings. There is no development of new planting. This principle is Not Applicable. Principle 8: Commitment to continuous improvement in key areas of activity. Criterion 8.1 Scheme Managers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations. The continuous improvement plan includes training enhancement to the members of the scheme on best agriculture practices. The Scheme Manager developed improvement plan based on the social and environmental impacts which includes improvement of the office, store and contribution to local community. Continuous improvement plan is incorporated in the annual budget. I.e. Road improvement by grading, compacting, stoning, collection drainage improvement, culvert improvement. Elimination of Paraquat usage will be applicable to KKPA scheme and eliminated by 31 December 2010.



Implementation of this action plan will be verified during the next annual assessment.

3.4 Non conformity register – Not applicable for this assessment. This section gives an over view of new or revised non-conformities raised during this assessment and of action taken to close out non-conformities raised during the previous assessments.

• If a minor-non-conformity raised at the last audit, is not closed out, then this will be raised to Major status and the company given 60 days to close this out.

• The NC number is comprised of 2 parts to include the year in which the NC is raised as well as a sequential number.

During this annual assessment and this assessment there are no non compliance.

�Annual assessment date: 22 – 27th November 2010 Number settled: nil Number outstanding: nil

NON CONFORMITY REPORT NC number: nil Client name: nil Date raised: nil Major or Minor: nil Raised by: nil Aspect of standard: nil Evidence of non-conformity: nil Proposed corrective action / improvement action by company. nil Timeline for conformance: - Review of corrective /improvement action: nil



4. Certified organisation’s acknowledgement of internal responsibility

4.1 Date of next annual assessment:

December 2011

4.2 Date to close major non-conformities.

nil

4.3 Date to close minor non-conformities.

nil

4.4 Formal sign off of assessment findings. Acknowledgement of internal responsibility by the client. I the undersigned, being the legal representative of the inspected company, agree with the contents of this report and accept the liability in execution of the instructions given in the report. Name: Dr Gan Lian Tiong Position: Head of Sustainability, Signature:

Date: 15th December, 2010

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Abbreviations used in the report��AMDAL Analisis Mengenai DAmpak Lingkungan (Analysis on Environmental Impact) ASA Annual Surveillance Assessment/Audit BOD Biological Oxygen Demand BPN Badan Pertanahan Nasional (National Land Body) BRC British Retail Consortium BSS PT. Berkat Sawit Sejati CHRA Chemical Health Risk Assessment CoC Chain of Custody CPO Crude Palm Oil CSR Corporate Social Responsibility CU Control Union DPPL Dokumen Pengelolaan dan Pemantauan Lingkungan (Environmental Management and

Observation Document) EFB Empty Fruit Bunch EUREPGAP Euro-Retailer Produce Good Agricultural Practices FFB Fresh Fruit Bunch FSC Forest Stewardship Council FPIC Free Prior Informed Consent FSC FM Forest Stewardship Council Forest Management GGL Green Gold Label GMP Good Manufacturing Practice GTP Good Trading Practice GOTS Global Organic Textile Standard GPS Global Positioning System HACCP Hazard Analysis and Critical Control Point HCV High Conservation Value HCVF High Conservation Value Forest HGU Hak Guna Usaha (Land Right) HUMAS Hubungan Masyarakat (Public Relation) IPM Integrated Pest Management Jamsostek Jaminan Sosial Tenaga Kerja (Social Insurance for Employees) KKPA Smallholder Cooperative Association MSDS Material Safety Data Sheet NC Non Conformity OE Organic Exchange OER Oil Extraction Rate OSH Occupational Safety and Health OSHAS Occupational Safety and Health Assessment Scheme P&C Principle and Criteria PEFC Programme for the Endorsement of Forest Certification PK Palm Kernel PKB Perjanjian Kerja Bersama (Collective Agreement) PKS Pabrik Kelapa Sawit (Palm Oil Mill) POD Policy Document POM Palm Oil Mill POME Palm Oil Mill Effluent PPE Personal Protective Equipment PT Perseroan Terbatas (Limited Company) PT MM PT Musim Mas R&D Research and Development RKL Rencana Pengelolaan Lingkungan Hidup (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan Hidup (Environmental Monitoring Plan)�RSPO Roundtable on Sustainable Palm Oil RSPO NI Roundtable on Sustainable Palm Oil National Interpretation RTE Rare Threaten and Endangered SA8000 Social Accountability 8000 SIA Social Impact Assessment SN Soreh North SOP Standard Operating Procedure



SS Soreh South UKL Upaya Pengelolaan Lingkungan Hidup (Environmental Management Effort) UPL Upaya Pemantauan Lingkungan Hidup (Environmental Monitoring Effort) WHO World Health Organizations �