Msia-Indonesia Planters Meet To Discuss Deforestation Charges

Written by Lim Shie-Lynn and sourced from http://www.nasdaq.com/

KUALA LUMPUR -(Dow Jones)- Palm oil producers and government officials from Malaysia and Indonesia will meet May 3 to discuss the latest round of attacks by Greenpeace and other environmental organizations that have blamed producers for destroying rainforests and biodiversity, an industry executive said Wednesday.

The meeting, to be held in Kuching, Sarawak will discuss issues that affect the palm oil industry, including planting oil palms on peat soil, a practice that environmental groups say will increase greenhouse gas (GHG) emissions as peatland hold significant amounts of carbon.

Indonesia's Sinar Mas came under fire recently after Greenpeace charged the company with failing to follow sustainable plantation practices required by the Roundtable on Sustainable Palm Oil (RSPO), a multi-stakeholder group formed to promote ethical plantation practices including the preservation of rain forests and biodiversity.

The report said Sinar Mas, the parent company of the Jakarta-listed PT Sinar Mas Agro Resources and Technology Tbk and the Singapore-listed Golden Agri-Resources, was widely involved in clearing rainforests and draining peatland for developing oil palm plantations. The campaign forced global food giants such as Nestle NV and Unilever Plc to stop sourcing palm oil from Sinar Mas, despite the company being a member of the RSPO, an industry-sponsored certification body.

Sinar Mas has re-iterated its commitment to sustainable practices and appointed Control Union Certification and the BSI Group to carry out independent audits. It has also suspended a plantation manager who the company said was responsible for questionable practices.

But Greenpeace is demanding that even trading companies such as Cargill Inc boycott Sinar Mas' palm oil, amid concerns that its produce is indirectly reaching end consumers through third parties, making the boycott by Unilever and Nestle meaningless. Cargill has said it would wait for the results of the external audit before taking a view.

"It is important for us to strategise and improve communication ... to be well-positioned when the industry meets to address this issue at the RSPO level," said Mamat Salleh, chief executive of the Malaysian Palm Oil Association (MPOA).

He said the upcoming meeting will be a follow-up from a collaboration agreement signed between the MPOA, the Indonesian Palm Oil Association (or GAPKI) and other plantation organizations in early March.

The meeting has generated much speculation amid talk that some palm oil producers, particularly those in Indonesia, may be planning to set up an alternative certification body, as they felt the RSPO hasn't been able to serve their cause. Some industry executives have even said the meeting will be the precursor to setting up the alternative certification body.

Most major plantation companies in Malaysia are members of the RSPO while only some Indonesian companies have joined the body. Indonesia and Malaysia currently account for about 85% of the global palm oil supply. "The key issue in the upcoming meet is to discuss ways to address environmental and other equally compelling concerns. Producers are keen on a win-win solution at the RSPO level before opting to setup of a separate certification body," Mamat said.

Growers had threatened to walk out of the RSPO annual meeting last November and quit the organization if it agreed with demands by Europe and Greenpeace to include additional conditions such as GHG emissions to the already stringent certification process.

Many growers say they are burdened with too many RSPO requirements while those with certified oils feel the demand for "green" palm oil was sluggish as buyers weren't willing to pay a premium for RSPO-certified sustainable palm oil.

3 Responses to Msia-Indonesia Planters Meet To Discuss Deforestation Charges

  1. A good move! Hopefully they will find some good solutions to save our palm oil industry.

    Palm Oil Supporter

  2. Found a Dow Jones article titled "Indonesia’s PT Smart: Greenpeace Deforestation Charges Unfounded" on 10th Aug 2010 by Lim Shie-Lynn.

    Indonesian palm oil company PT Sinar Mas Agro Resources & Technology (Smart), on Tuesday, said that a third-party audit of its estates shows it wasn’t responsible for cutting down forest and destroying orangutan habitat for palm cultivation, refuting allegations by environmental group Greenpeace.

    Greenpeace started issuing reports late 2009 alleging that the firm was involved in illegal rainforest clearing and draining of peatland for palm oil production.

    Global food giants Nestle NV and Unilever PLC suspended palm oil sourcing from PT Smart in response to Greenpeace’s efforts, despite the company being a member of the Roundtable on Sustainable Palm Oil, an industry-sponsored certification body.

    Both companies have said that they would resume purchases if the Indonesian producer were cleared of the environmental group's charges.

    An independent verification report showed that the Greenpeace claims were exaggerated and "was wrong in much of its campaign," Daud Dharsono, president director at PT Smart said.

    "The allegations made were unfounded and PT Smart is not responsible for deforestation and destruction of orangutan habitat as had been claimed."

    Control Union Certification and the BSI Group found that less than 2% of PT Smart's concession areas were planted on peatland exceeding three meters in depth and they "could not find evidence" of burning.

    PT Smart engaged the two firms, both recognized by the RSPO as independent auditors, to review Greenpeace's allegations.

    But in a statement late Tuesday Greenpeace said the company continued to break sustainability policies made earlier.

    "We've repeatedly shown that Sinar Mas says one thing and does another. They destroy peatland and call it water management. They clear rainforests and say that they're developing degraded land. Instead of acting on our findings, which conclusively prove Sinar Mas destroys rainforests and peatlands, they are trying to greenwash their image," said Bustar Maitar, Southeast Asia Forest Team Leader for Greenpeace.

    "The Sinar Mas spin is a poor attempt at brand protection that does nothing to challenge Greenpeace's findings," he added.

    According to Greenpeace, Indonesia has one of the fastest rates of forest destruction on the planet, with palm oil and pulp and paper plantations being major culprits.

    Unilever, which uses palm oil in products ranging from soap to ice-cream has said it would review its boycott on PT Smart if independent auditors provide proof that Sinar Mas is following sustainable practices.

    Unilever stopped sourcing palm from PT Smart since mid-December 2009. It had also stopped buying palm oil from another Indonesian producer, Duta Palma.

    The firm, which purchases 47,000 tons of palm oil from PT Smart annually, said in a statement that "while the verification reports represent a good start, they are not sufficient in themselves for us to resume business with PT Smart. We want our suppliers to really work with us towards attaining 100% sustainable palm oil by 2015."

    A company spokesperson at Nestle didn't respond to comments on PT Smart's verification reports.

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