In­done­sia, Europe Clash Over Palm Oil Prac­tices

In­done­sia be­lieves its ISPO stan­dard for the palm oil in­dus­try, if en­forced, could help cut back on en­vi­ron­men­tal de­struc­tion. Mean­while, the Euro­pean Union makes its own de­mands.

Indonesia Expat - - FRONT PAGE - By Sharon Ham­bali

Most of the world is mov­ing for­ward to pri­or­i­tize en­vi­ron­men­tal sus­tain­abil­ity. A re­cent res­o­lu­tion made by the Euro­pean Par­lia­ment in early April, re­gard­ing sus­tain­able palm oil, may have prompted fur­ther dis­cus­sions among in­dus­try stake­hold­ers.

See­ing eye-to- eye with Europe’s ac­cu­sa­tions about the de­struc­tive na­ture of the palm oil in­dus­try at large, Aziz Hi­dayat, head of the In­done­sian Sus­tain­able Palm Oil Com­mis­sion (ISPO), is now driven to build a bet­ter palm oil in­dus­try in the ar­chi­pel­ago.

One way is to make sure all palm oil pro­duc­ers in the na­tion are cer­ti­fied by the ISPO – no easy task. De­spite in­her­ent chal­lenges, the cer­ti­fi­ca­tion aims to cre­ate more sus­tain­able palm oil in­dus­try prac­tices in In­done­sia and re­duce green­house gas emis­sions from the coun­try as a whole.

Cur­rently, the to­tal area used for palm oil plan­ta­tions in In­done­sia is ap­prox­i­mately 11.3 mil­lion hectares. So far, only 1.4 mil­lion hectares have met ISPO stan­dards. Ac­cord­ing to Gen­eral Di­rec­tor of the Min­istry of Agri­cul­ture Bam­bang MM, there are at least 1,600 palm oil busi­nesses in the ar­chi­pel­ago. Of that num­ber,

535 com­pa­nies have sub­mit­ted au­dit re­ports for cer­ti­fi­ca­tion and only 226 com­pa­nies have ac­tu­ally been cer­ti­fied by the ISPO. Of the 535 com­pa­nies that have thrown their hats into the ring, the cer­ti­fi­ca­tion body put 11 of them on the wait­ing list, as they have not yet met ISPO’s stan­dards. An ISPO cer­ti­fi­ca­tion re­quires com­pa­nies to have an En­vi­ron­men­tal Im­pact Anal­y­sis per­mit and a Cer­tifi­cate Let­ter for Cul­ti­va­tion (STDB).

On April 11, 2017, 319 palm oil farm­ers in the Pe­lalawan dis­trict of

Riau re­ceived ISPO cer­ti­fi­ca­tions. In­ter­est­ingly, Riau is the first prov­ince to have its palm oil farm­ers cer­ti­fied by the ISPO. This is likely the re­sult of it rou­tinely be­ing one of the main sources of In­done­sia’s an­nual haze cri­sis caused by ir­re­spon­si­ble palm oil com­pa­nies. The farm­ers were trained by the Sus­tain­able Palm Oil Ini­tia­tive (SPOI) in part­ner­ship with United Na­tions for Devel­op­ment Pro­gramme (UNDP).

Not lim­ited to train­ing, the UNDP and SPOI also helped farm­ers with cer­ti­fi­ca­tions for land and other le­gal mat­ters. Di­rec­tor of Pro­cess­ing and Mar­ket­ing of Es­tate Crops at the Min­istry of Agri­cul­ture – and Sec­re­tary of the ISPO Com­mis­sion – Dedi Dju­naedi tar­gets 70 per­cent of palm oil prod­ucts in In­done­sia to be ISPO-cer­ti­fied by 2020.

Hi­dayat said that the ISPO cer­ti­fi­ca­tion is aligned with the global need to en­cour­age plan­ta­tions to com­ply with gov­ern­ment reg­u­la­tions. The­o­ret­i­cally, it would also in­cen­tivize small­holder farm­ers and en­trepreneurs to take ac­tions that would protect the en­vi­ron­ment, even if only for the sake of re­main­ing com­pet­i­tive.

“What needs to be done now is [we need] to im­prove ISPO ac­cept­abil­ity in­ter­na­tion­ally, be­cause our stan­dard aligns with global needs,” ex­plained Hi­dayat.

That said, the Euro­pean Par­lia­ment does not ac­knowl­edge the ar­chi­pel­ago’s ISPO stan­dard. Its res­o­lu­tion aims to grad­u­ally re­duce the use and dis­tri­bu­tion of veg­etable oil by 2020. The veg­etable oil busi­ness is seen as one of the main causes of de­for­esta­tion around the world, and Europe is call­ing for a sin­gle cer­ti­fi­ca­tion scheme for all palm oil prod­ucts that en­ter the Euro­pean Union (EU).

As the largest and most prom­i­nent palm oil pro­duc­ers in the world, In­done­sia and Malaysia op­pose the res­o­lu­tion and see it as a dis­crim­i­na­tory item. The big­gest im­porter of In­done­sian palm oil at the mo­ment is In­dia with an av­er­age of 5.7 mil­lion tonnes of palm oil per year. Mean­while, last year coun­tries in the EU noted a 3 per­cent de­mand in­crease from 2015. In 2016, 4.4 mil­lion tonnes of palm oil were im­ported by the EU.

Chair­man of In­done­sian Palm Oil As­so­ci­a­tion Joko Supriy­ono claimed that the palm oil res­o­lu­tion made by the Euro­pean Par­lia­ment is tainted with busi­ness and po­lit­i­cal is­sues. Ac­cord­ing to him, any stan­dards made by the In­done­sian gov­ern­ment will most likely be re­jected.

“ISPO is a manda­tory stan­dard that was im­ple­mented by the In­done­sian gov­ern­ment. Even if we fully im­ple­ment ISPO 100 per­cent, Europe still might not ac­knowl­edge that. They have their own stan­dard. It is non­sense to say sus­tain­abil­ity is the is­sue here. Ev­i­dently, we have ISPO and they don’t want it,” said Supriy­ono in an in­ter­view with DetikFi­nance.

Although not yet im­ple­mented, the res­o­lu­tion clearly out­raged some par­ties. In­done­sia’s Min­is­ter of Agri­cul­ture Andi Am­ran Su­laiman has yet to eval­u­ate the trad­ing part­ner­ship with Europe, par­tic­u­larly with re­gard to palm oil and biodiesel seg­ments.

Ac­cord­ing to Su­laiman, In­done­sia is cur­rently con­vert­ing 3.2 mil­lion tonnes of palm oil to B-20 biodiesel. Mean­while, Europe de­mands 7 mil­lion tonnes of palm oil. Su­laiman urged com­pa­nies not to ex­port In­done­sian palm oil to the con­ti­nent, say­ing that the palm oil is bet­ter to be used as bio­fuel. “We still have B-30 which re­quires at least 13 mil­lion tonnes of palm oil. That means we will re­duce ex­ports in palm oil and use it for biodiesel,” said the min­is­ter.

Of­fer­ing a calmer so­lu­tion, Ex­ec­u­tive Di­rec­tor of the In­done­sian Veg­etable Oil Re­fin­ers As­so­ci­a­tion Sa­hat Si­naga sug­gested us­ing the sit­u­a­tion as mo­men­tum to im­prove the lo­cal palm oil in­dus­try. He added that aside from im­prov­ing plan­ta­tion prac­tices, In­done­sia should also im­prove its do­mes­tic mar­ket. Ac­cord­ing to him, In­done­sia may want to con­sider broad­en­ing its mar­kets in Asia and Africa. “Do not be too fo­cused on the Euro­pean mar­ket,” sug­gested Si­naga.

The res­o­lu­tion was ap­proved by 640 Euro­pean Par­lia­ment mem­bers, with 18 mem­bers re­ject­ing it and 28 ab­stain­ing from the vote. The fu­ture of the palm oil in­dus­try in In­done­sia has yet to be seen. How­ever, it can be as­sured that with ISPO cer­ti­fi­ca­tion, In­done­sian palm oil in­dus­tries are be­com­ing more trans­par­ent and, with any luck, friend­lier to the en­vi­ron­ment.

As Bam­bang said him­self, “With the cer­ti­fi­ca­tion, min­istries are obliged to su­per­vise plan­ta­tion in­dus­tries on ev­ery­thing from prepa­ra­tions and pest con­trol to the Crude Palm Oil process it­self. The ISPO cer­ti­fi­ca­tion shows the world that palm oil prod­ucts can be en­vi­ron­men­tally friendly.”

“Chair­man of In­done­sian Palm Oil As­so­ci­a­tion Joko Supriy­ono claimed that the palm oil res­o­lu­tion made by the Euro­pean Par­lia­ment is tainted with busi­ness and po­lit­i­cal is­sues. Ac­cord­ing to him, any stan­dards made by the In­done­sian gov­ern­ment will most likely be re­jected.”

Im­age via Sime Darby Plan­ta­tion

Im­age via PT. Kalirejo Les­tari

Joko Supriy­ono

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