Indonesia and Malaysia Team Up Against Palm Oil Critics

Arti Ekawati Jakarta Globe 7 Mar 10;

Indonesia and Malaysian palm oil producers have agreed to jointly tackle challenging environmental and labor issues which threaten to hinder the development of the industry in both countries.

Producers have lately come under attack on a number of fronts. Environmentalists complain the growth of palm oil plantations contributes to deforestation, threatens wildlife and increases greenhouse gas emissions, while there has also been criticism of the industry’s use of underage labor.

Late on Friday, Indonesia and Malaysian signed a memorandum of understanding in which they agreed to collaborate and improve communication between producers in both countries to counter the impact of critics of the industry and also to improve sustainability.

“Through collaboration, hopefully we can face the negative campaign [against the industry] and the accusations of environmental damage,” said Indonesia’s Agriculture Minister Suswono, after the signing ceremony.

The world’s top palm oil producers, Indonesia and Malaysia together account for about 85 percent of global output.

Suswono cited Unilever’s suspension last year of palm oil purchases from PT Smart, after a report from Greenpeace which claimed the company did not use sustainable production processes, as an example of the type of situation where the industry would benefit from enhanced cooperation.

“It’s not fair,” he said. “In the future, if there are any accusations, we will immediately form an independent team to inspect the case. So that we, palm oil producers, will have a stronger bargaining position than the buyer.”

As part of the coordination efforts, six palm oil industry associations from Indonesia and Malaysia on Friday signed a memorandum of collaboration that will, among other things, establish a steering committee to advise the Roundtable on Sustainable Palm Oil, an organization that issues certificates to palm oil producers that comply with certain environmental standards. A number of major palm oil buyers do not buy from companies that lack the certification.

Under the memorandum of collaboration, producers are also encouraged to develop sustainable plantation practices, including restoring land after it has been used for palm oil plantations.

Malaysian Plantation Industries and Commodities Minister Tan Sri Bernard Giluk Dompok said environmental issues were being increasingly used to attack the palm oil industrys.

“There is no reason for palm oil producers in the two countries to not to cooperate and discuss issues of common interest,” he said.

Dato’ Mamat Salleh, the Malaysian Palm Oil Association’s chief executive, said the industry would face increased environmental challenges in the future.

One hurdle for the water-intensive industry was the development of so-called water footprints, a measure used to show how much water is used in the production of palm oil, he said.

“There will be new environmental issues, which could make palm oil plantations become more controversial in the future,” Dato said. “We need fair scientific research so that we can also improve our plantations,” he said.

Indonesian Palm Oil Producers Association (Gapki) chairman Joefly J Bachroeny said the cooperation efforts were also aimed at helping Indonesian and Malaysian palm oil producers to improve sustainability.

RI, Malaysia promote new approach to CPO exports
Mustaqim Adamrah, The Jakarta Post 9 Mar 10;

Indonesia and Malaysia — the world’s two largest crude palm oil (CPO) producers — seek to jointly professionalize dispute management on environmental issues and public relations to counter EU negative campaigns.

Indonesian Palm Oil Board vice chairman Derom Bangun admitted that a memorandum of cooperation between the two countries’ producers just inked last Friday did not include a dispute settlement mechanism if CPO buyers unilaterally revoked contracts with their suppliers over environmental issues.

“No, there is no specific point [on a dispute settlement mechanism stipulated in the memorandum],” he told The Jakarta Post on Monday.

“[But] perhaps that will be in place later during the joint implementation of the memorandum. What was signed was only a cooperation framework,” he said.

The memorandum was signed by the Indonesian Palm Oil Producers Association (Gapki) and the Malaysian Palm Oil Association (MPOA).

The Indonesian Oil Palm Farmers Association (Apkasindo),the Sarawak Oil Palm Plantation Owners Association (SOPPOA),the Federal Land Development Authority (Felda) and the Association of Plantation Investors of Malaysia in Indonesia (APIMI) are also involved.

The memorandum is aimed at mitigating negative campaigns on palm oil, while setting up a task force on best sustainable development practices, Antara reported.

Agriculture Minister Suwono, who also attended the signing, said Indonesia and Malaysia, controlling 85 percent of the world’s output and could control global prices, as well as fight negative campaigning which claimed producers were clearing rainforests illegally.

Indonesia’s CPO production last year topped 20 million tons and is projected to reach 40 million tons in 2020. Suswono said cooperation was to help prevent repetition of unilateral revocation of supply contracts on the lines of the Netherlands-based consumer goods giant Unilever which had ended deals with Duta Palma and PT SMART.

In December, Unilever said in a statement that it had suspended all future purchases of palm oil worth up to US$33 million from SMART after obtaining photographic evidence of Sinar Mas clearing protected rainforests, including reserves for Indonesia‘s endangered orangutan population.

SMART, Indonesia ’s largest CPO producer, is a Sinar Mas Group subsidiary. Unilever was following up a report by the environmental NGO Greenpeace that had detailed serious allegations against the environmental practices of Sinar Mas.

Two months later, Unilever blacklisted Indonesian planter Duta Palma and told its dealers not to source palm oil from that company on concerns over rainforest destruction, Reuters reported.

Duta Palma corporate secretary Sasanti dismissed Unilever’s allegation that it had destroyed forests to produce CPO, Bisnis Indonesia daily reported in its Feb. 27 issue. For the time being, Derom, who is also the Indonesian Palm Oil Producers Association’s (Gapki) representative in the Malaysia-headquartered Roundtable on Sustainable Palm Oil (RSPO), said disputing parties could report to the RSPO by also providing clear evidence to help settle any case of unilateral revocation.