The project will focus on the palm oil sector, a major contributor to Indonesia’s economy and rural employment, and a crucial source of livelihood for an estimated five million smallholder farmers who SPVO - Annex I Project Proposal – 2024/2025 version January 2025 Page 3 of 25 produce Fresh Fruit Bunches (FFBs). Specifically, the project will concentrate on RSPO-certified sus-tainable palm oil, which offers a pathway to transforming the sector toward greater sustainability and fairness. Palm oil is alsodeeply embedded inthe Dutch economy, found in nearly half of all food, personal care, and cleaning products—from pizza and pastries to make-up and soap. Globally, over 80 million tons of palm oil are produced each year, with 8–9% passing through the portof Rotterdam. The Netherlands is Europe’s largest importer of palm oil, and a frontrunner in the trade of RSPO-certified volumes—nearly 90% of palm oil entering Dutch ports is RSPO certified. While palm oil sustains millions of livelihoods, the sector faces persistent challenges related to sus-tainability, equity, and governance. Alternatives to palm oil are limited, making sustainable produc-tion the most viable and impactful solution. Indonesia, which produces 58–60% of the world’s palm oil, is centralto this effort. The majority of certified palmoil imported to Europe originates from Indo-nesia, with Sumatra serving as a key production hub and a center of governance for the palm oil in-dustry. Given Indonesia’s role as the leading producer and the Netherlands' influence as a major consumer and trader, the project will strategically operate in both North Sumatra and Southeast Sulawesi, as well as at the international level with RSPO. A central focus of the project will be to explore fairer pricingmodels for certified FFB in collaboration with smallholder farmers,farmer cooperatives, mills, and middlemen. The aim is to strengthen com-panies’ due diligence and increase transparency in price-setting, ensure smallholders are fairly com-pensated, andultimately reduce the living income gap. Our focus aligns with SPVO's 2025 Whitepa-per, titled Responsible Procurement and Supplier Engagement for Social Sustainability, which identi-fies fair pricing as a keyelement of responsible procurement. By addressing a root cause of low and unstable incomes, fair pricing interventions are also expected to have positive knock-on effects on reducing child labour, improving progress toward living wages, and enabling more decent working conditions across the value chain. These field-level insights will be used to strengthen RSPO’s frame-work on fair pricing and living income, helping to embed these principles more firmly within sustaina-bility standards. The project will work closely with AS Watson Benelux, supporting the company in adapting its sourc-ing practices to directly contribute to smallholder living incomes. As a key actor in the Dutch retail sector, AS Watson is well positioned to become a frontrunner on responsible procurement practices, setting an example for other companies and helping to influence broader market practices. Finally, the project will be gender-responsive throughout, which means responding to the gender ine-quality between men and women in palm oil production, paying particular attentionto more inclusive roles, balancing power and benefits, and promoting women's rights and leadership.