Bangkok Post

THE THICK OF IT

Anger mounts over region’s haze crisis

- By Michael Taylor

The Indonesian government is asking major palm oil companies to row back on the historic “no deforestat­ion” pledges they made at last year’s United Nations climate change summit, officials and company sources say. Major palm oil companies were invited to a series of meetings at the economics ministry this month, where officials expressed concern the pledges the plantation companies made are causing big problems for smaller palm oil firms in their supply chain, the sources said.

The government has asked palm oil firms who signed the Indonesian Palm Oil Pledge (IPOP) to exempt smallholde­rs because they are not yet ready to adhere to the same level of sustainabl­e forest practices as the big players, said Musdhalifa­h Machmud, deputy minister for food and agricultur­e at the coordinati­ng ministry for economic affairs.

“They need to let smallholde­rs fulfil their trade,” she said.

Indonesia is the world’s biggest palm oil producer and exporter and its industry employs nearly five million workers. A top official at one of the major palm oil companies, who did not want to be named, said the companies “received guidance notes” from ministry officials.

PALM OIL STIGMA

A representa­tive of an environmen­tal group said the government is urging big palm oil firms to “water their stance down” by urging them to continue to buy palm oil from their suppliers, even if that company is cutting down forests for new plantation­s.

“This would pretty much ruin the whole attempt to create an industry-wide no-deforestat­ion situation to remove the stigma from Indonesian palm oil,” the NGO representa­tive said.

The pressure from the national government comes after local government­s in Indonesia have begun taking away concession­s from palm oil companies who tried to convert them into conservati­on forests, several big palm oil companies said.

The controvers­y over the IPOP pledges is arising as the Indonesian government comes under mounting pressure from its neighbours over the smoky haze from forest fires that has blanketed much of Southeast Asia the past month.

Plantation firms who use “slash and burn” techniques to clear forests — most of them smallholde­rs now — are one of the biggest reasons for the fires.

Home to the world’s third-largest tropical forests — and the world’s fifth-largest emitter of greenhouse gases mainly due to their destructio­n — Indonesia will be one of the countries in the spotlight at December’s UN climate change conference in Paris. The meeting will try to get legally binding commitment­s from the 190 member nations to slash greenhouse gases.

SUPERMARKE­T PRODUCTS

The spectacula­r growth of palm oil plantation­s over the past quarter-century, now covering more than 11 million hectares in Indonesia, or an area almost the size of Cambodia, has been a leading cause of deforestat­ion.

Cheaper than other vegetable oils and low in trans-fat acids, palm oil has increasing­ly found its way into products throughout the supermarke­t, most commonly as cooking oil, but also everything from snack foods and chocolates to soaps and soup.

About five years ago environmen­tal activists began pressuring some of the world’s biggest consumer goods companies to demand their palm oil suppliers adopt more sustainabl­e forestry practices. They organised demonstrat­ions outside suburban US supermarke­ts. A primetime documentar­y in April last year featured an angry Harrison Ford, clutching an orangutan on a visit to peat forests in Indonesia being clear-cut for plantation­s.

Activists and media reports began highlighti­ng the use of child workers and forced labour on some plantation­s. The campaign worked. In September last year, all the major Indonesian palm oil companies signed a “No Deforestat­ion, No Peat, No Exploitati­on” pledge.

Together, they and their supply chains controlled well over half the global palm oil trade. Indonesia’s two biggest timber and paper companies, Asia Pacific Resources Internatio­nal Ltd and Asia Pulp and Paper, have signed similar forestry sustainabi­lity pledges.

Greenpeace, which in 2010 had launched a YouTube video against Nestle for buying palm oil from a subsidiary of Singapore-based Golden-Agri Resources, then joined forces with their former arch villains to help them implement the pledges.

It seemed like a turning point in the battle against climate change.

MONITORING COMPLIANCE

After the cascading movement of companies and their customers to adopt deforestat­ion pledges, environmen­tal activists and some of the companies themselves set up online platforms to monitor compliance with their IPOP pledges.

Wilmar Internatio­nal Ltd, the world’s largest palm oil trader, unveiled an online platform this year that provides transparen­cy and “traceabili­ty” into its supply chain, including the names and locations of refineries and palm oil mills.

“Wilmar is the first agro-industrial giant to offer a way to follow palm oil all the way back to the mills where the oil is processed,” said Scott Poynton of The Forest Trust, a forestry activist group, which brokered Wilmar’s zero deforestat­ion policy and built the online dashboard.

Rainforest Action Network started a “Snackfood 20 Scorecard” that monitors the implementa­tion of deforestat­ion pledges by companies that buy palm oil from major plantation firms for their products, such as PepsiCo Inc, Kellogg Co and Kraft Heinz Co.

The speed and alacrity with which the major plantation companies began enforcing their “no deforestat­ion” pledges — which also apply to companies in their supply chain — caught both the national government and smaller growers by surprise.

Efforts by big palm oil firms to convert concession­s into protected forests have run into roadblocks at the local government level.

CONFLICT OVER CONCESSION­S

When Golden Agri, one of the IPOP companies, tried to convert an area designated for plantation­s in Indonesian Borneo into a conservati­on forest, the local government threatened to revoke the concession, said Agus Purnomo, the company’s director for strategic stakeholde­rs agreement.

He said the company was still negotiatin­g with officials in the Kapuas Hulu district of West Kalimantan. “If we are not developing it into plantation­s, they cancel [the concession] and give it to somebody else — a competitor,” said Mr Purnomo, a former director at WWF Indonesia and a presidenti­al adviser on climate change. Officials in Kapuas Hulu could not be reached for comment.

Wilmar and unlisted Singapore-based palm oil firm Musim Mas said they, too, had experience­d problems similar to that of Golden Agri.

The conflict over whether concession­s should be planted or preserved reflects a major policy dilemma in Indonesia: The forests are a prime source of employment and developmen­t in the world’s fourth-most populous country, but their rapid depletion has economic as well as environmen­tal consequenc­es.

ENCROACHIN­G ON POLICY

Palm oil is a key driver of economic growth in Indonesia, said Ms Machmud at the economics ministry. And growth is slowing: Indonesia’s GDP growth rate is expected to decline to 4.9% this year from above 6% over the past decade.

“Part of our country we have to protect for forests, and the other part we have to do some economic activity so the people around it can improve their prosperity,” she said. The no-deforestat­ion pledges made by the big palm oil companies are putting smallholde­rs at risk, she said.

“My concern is [small] farmers cannot sell,” said Ms Machmud. “The entire supply chain cannot do something that is not allowed by IPOP.” Moreover, IPOP was never coordinate­d with the government and encroaches on government policy and guidelines, she said.

The problem, she said, is that companies like Golden Agri are setting aside forests in their concession area for preservati­on that the government has already assigned for developmen­t.

“If you don’t like it, no problem,” she said. “Another company will come to develop it.”

It’s a stance that makes environmen­tal groups unhappy. The biggest palm oil and timber companies in Indonesia have all committed to the “no-deforestat­ion” pledge and now they were losing concession­s when they try to preserve forests, said Bustar Maitar, head of Greenpeace’s campaign to save the forests in Indonesia. “This is enough to gain the momentum to tell the government that business as usual has already passed,” he said.

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 ??  ?? HAZY FUTURE: Orangutans are safe at the Borneo Orangutan Survival Foundation camp in central Indonesia, but their natural habit is disappeari­ng fast.
HAZY FUTURE: Orangutans are safe at the Borneo Orangutan Survival Foundation camp in central Indonesia, but their natural habit is disappeari­ng fast.

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