* Palm output seen at 22-23 mln tonnes in 2011-official
* Forest ban will will not impact palm output in 2011-2012 (Adds details, comment)
Reuters AlertNet 9 Nov 10;
JAKARTA, Nov 9 (Reuters) - Indonesia's proposed ban on forest clearing is unlikely to impact palm oil production in the short term as growth from new plantings in previous years remain in the pipeline, a government official said on Tuesday.
Palm oil output in the world's No.1 producer could rise to 22-23 million tonnes in 2011 versus a projected 21 million tonnes this year, said Mukti Sarjono, acting director general of plantations with the Agriculture Ministry.
""Palm oil production will still be good next year and in 2012 because the growth in output will come from planting in previous years," Sarjono told reporters at the sidelines of the Roundtable on Sustainable Palm Oil in Jakarta.
"But the ban may impact production in 2014 and 2015."
Norway this year signed a $1 billion climate deal with Indonesia, which involves a two-year ban on forest clearing from next year and encourages palm oil companies to turn to degraded land to expand.[ID:nJAK540924]
Increasing scrutiny by green groups and consumers in Europe have slowed oil palm expansion in Indonesia to about 250,000 hectares per annum from a peak of 400,000 hectares at the height of the commodity rally in 2007-2008. (Reporting by Fitri Wulandari; Editng by Niluksi Koswanage)
Asian buyers, emissions in focus at green palm oil meet
* WHAT: World's largest green palm oil meeting
* WHEN: Nov 8-11
* Looks to persuade India, China to start buying
* Tight financing a sore point for some planters
Niluksi Koswanage and Michael Taylor Reuters AlertNet 8 Nov 10;
JAKARTA/LONDON, Nov 8 (Reuters) - Buoyed by growing green palm oil production, an industry body will use a meeting this week in Jakarta to persuade top vegetable oil consumers India and China to start buying.
The Roundtable on Sustainable Palm Oil (RSPO), which created voluntary standards that include pledges to preserve forests, has certified more than seven percent of 45 million tonnes in global annual output in over two years.
But RSPO's efforts risk being overshadowed by squabbles among its stakeholders -- planters, buyers, lenders and green groups -- over adding carbon emission targets to the green standards and tighter financing.
"What we hope to get, is that there is still a movement forward," said Jan Kees Vis, global director of sustainable sourcing for consumer goods giant Unilever .
"We need to get the Indian and the Chinese market involved, which is difficult to do. Both markets have only recently opened up to retail," added Vis, who is also the chairman of the RSPO.
Vis is one of many industry watchers warning that European demand for green palm oil may not be enough to keep up the momentum and China as well as India, which soak up 40 percent of global output, must get on to the bandwagon.
Indian traders have asked the government to cut its tax on eco-friendly palm oil imports to boost demand and the RSPO will probably brainstorm with a trade delegation from China at the meeting to consider similar steps.
WALKING AWAY
Lingering issues such as calculations about greenhouse gas emitted by plantations and stricter financing rules remain unresolved, which may see the group lose some momentum.
While planters and green groups agree estate expansion at the expense of forests and processing palm oil emits climate-warming carbon dioxide, they are divided on how to interpret the CO2 data and set standards.
"Last year, if we had passed a members' resolution to adopt greenhouse gas principles, a large part of the plantation community would have walked away," said Ian McIntosh, president of the British unit of Swedish oils processor AAK .
Environmentalists say the standards should be implemented now to shore up RSPO's credibility but officials say figuring out how to set the calculations for CO2 emissions from palm oil firms' operations remains a work in progress.
Even established RSPO standards are a problem. Some standards and their adoption as a covenant for financing will further slow the industry's growth, planters say.
Kuala Lumpur-listed Genting Plantations said a new RSPO policy that required community feedback prior to opening up new lands would disrupt its operations and it plans to support a bid to postpone the policy at the four-day meeting.
The Indonesian Palm Oil Producers' Association (GAPKI) will also question the World Bank at the gathering over what it calls a discriminatory plan by the body's global financing arm to supply credit only to RSPO-certified planters.
But the World Bank is following in the footsteps of lenders such as Standard Chartered and Rabobank [RABN.UL], who say adopting the standard helps to assess clients.
"As awareness of the environmental impacts of the industry has increased, financing has, indeed, tightened," said Yulanda Chung, head of sustainable business with Standard Chartered.
HSBC's Climate Change Fund this year stopped investing in Singapore's Golden Agri after environmental group Greenpeace accused the firm's Indonesian unit, SMART TBK , of destroying forests.
Greenpeace's social media campaign against SMART, which also set off a consumer backlash, environment audits and a grievance panel against the planter set up by the RSPO, still rankles some in the industry.
Other palm oil firms such as Kulim , which has certified estates in Papua New Guinea and southern Malaysia, reckon adopting standards could spur expansion.
"If becoming green differentiates us from our rivals in getting financing and winning clients over, we are all for it. It all boils down to good, old-fashioned business investment," said Kulim Chief Operating Officer Zulkifli Ibrahim.
(Additional reporting by Fitri Wulandari in Jakarta; Editing by Himani Sarkar)
Factbox: Palm oil meet also eyes farmers, CO2 schemes
Reuters 7 Nov 10;
JAKARTA (Reuters) - An industry body that promotes eco-friendly palm oil says encouraging small farmers to preserve forests and protect wildlife is the next step in dispelling the industry's negative image.
The Roundtable on Sustainable Palm Oil (RSPO) meets in Jakarta this week to deliberate on the on-going development of a certification system for smallholders who contribute more than a third of the world's total annual output of 45 million tonnes.
Indonesia, which has huge tracts of tropical forests but a rapid deforestation rate, is under international pressure to slow deforestation and the destruction of peatlands that release planet-warming greenhouse gases when cleared or burned.
A group of environmentalists, planters and buyers from over 40 countries will discuss other issues, including U.S. President Barack Obama's visit to Indonesia in the same week, when he is expected to provide forest and climate aid.
Here are some key issues to be discussed at the meeting:
GETTING SMALLHOLDERS INVOLVED
The high costs of auditing plantation operations meant only the largest, cash-rich palm oil firms were able to afford the process of certification when the scheme started in 2008.
Many of these private firms and state agencies in Indonesia and Malaysia found it made business sense to bear the costs of auditing the farmers who supply to their mills as consumer and NGO scrutiny of the industry grows.
For independent smallholders, unattached to a government scheme or a company, the RSPO is studying plans to set up a fund to assist with the costs of environmental and social assessment.
The RSPO has embarked on trial audits using a standard devised for smallholders and the meeting this week will see the first RSPO certificate awarded to a smallholder group in Indonesia.
CARBON CREDIT SCHEMES
Norway's $1-billion climate aid to Indonesia includes an investment in a forest carbon offset programme that rewards the world's largest palm oil producer for preserving forests and a proposed ban on forest clearing, which may slow the industry's expansion.
During President Obama's trip to Indonesia this week, he could announce how $700 million allocated to Indonesia by a U.S. foreign aid agency can be used to fund climate change and forest conservation programmes.
Palm oil firms, who say the industry has long been vilified for felling forests and draining peatlands that pump huge amounts of planet-warming carbon dioxide, are divided on the impact of these carbon schemes.
Even with the moratorium on forest clearing, there is ample degraded land in Indonesia to expand into, Singapore-listed Wilmar said in an interview last month.
U.S. agribusiness giant Cargill said the carbon credit schemes would limit the areas available for expansion but it would help planters determine their development plans. The firm also said it may invest in a carbon scheme.
RIVAL GREEN PALM OIL STANDARDS
Stung by the successful green campaign against Indonesian planters like SMART TBK, the government plans to introduce its own version of green certificates for palm oil producers.
But planters and financiers worry the Indonesian Sustainable Palm Oil (ISPO) assessment may confuse the industry although an RSPO official, on the condition of anonymity, said the scheme could work if it was based on getting RSPO assessment first.
Non-governmental organizations say it will be important to see how plantations were assessed under the ISPO and whether other stakeholders like local communities and green groups are involved in the process.
It is not clear if the assessment will be mandatory or voluntary, like the RSPO or the Malaysian Palm Oil Board's code of practice.
(Reporting by Niluksi Koswanage; Editing by Himani Sarkar)
