SUSTAINABLE PALM OIL INSIGHT.pub

Transcription

Towards Sustainable Palm Oil
NOVEMBER 2010
A worker collects oil palm fruits at the state-owned palm oil plantation in Luwu, Indonesia's South Sulawesi province - REUTERS/Yusuf Ahmad
TABLE OF CONTENTS (Click the headlines below for the full story)
WORLD BANK ARM READY TO BACK PALM OIL IF BAN GOES
RSPO ASKS PALM OIL BUYERS TO PLAN GREEN PALM DEMAND
GREEN PALM OIL BODY TO SET PLANTER ON ECO-FRIENDLY
PATH
GREEN GROUPS MUST NOT HIJACK RSPO - PLANTER
MALAYSIA'S IOI SAYS PALM PRICES TO STAY STRONG
MALAYSIA REPLANTS MORE PALM TO BOOST YIELDS
RAINS MAY CUT MALAYSIAN PALM OUTPUT, BOOST PRICES
EUROPE BUYERS MUST WIDEN GREEN PALM OIL SCOPE-WWF
INDONESIA TO LAUNCH GREEN PALM OIL STANDARDS IN 2011
CARGILL MULLS SCHEME AIMED AT SAVING INDONESIA FORESTS
LAND CONFLICTS WITH PALM FIRMS RISE IN INDONESIA
ASIAN BUYERS, EMISSIONS IN FOCUS AT GREEN PALM OIL
MEET
GREEN PALM OIL OUTPUT MUST RISE 5-FOLD BY 2015-AAK
GREENER PALM OIL NEEDS MORE ASIA SUPPORT-UNILEVER
TABLE-GREEN PALM OIL MORE THAN DOUBLES TO 3.3 MLN
TONNES
OIL PALM EXPANSION TO SLOW IN INDONESIA-DBS BANK
PALM OIL MEET ALSO EYES FARMERS, CO2 SCHEMES
NORWAY SAYS MORE AID NEEDED TO SAVE INDONESIAN
FOREST
DUTCH BUYERS TO IMPORT ONLY GREEN PALM OIL BY 2015
OBAMA TO TARGET FOREST, CLIMATE AID IN INDONESIA TRIP
MALAYSIA'S KULIM 2010 PROFIT TO GROW ON PALM
INDIA URGED TO CUT IMPORT DUTY ON GREEN PALM OIL
PALM OIL FIRM WANTS INDUSTRY TO POSTPONE PROPOSED
PLANTING NORMS
REUTERS SUMMIT-WILMAR SAYS NO MAJOR IMPACT FROM
MORATORIUM
INDONESIAN FIRM EYES FIRST GREEN PALM PRODUCT SALE
SUSTAINABLE PALM OIL BODY CENSURES INDONESIA'S PT
SMART
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November 2010
WORLD BANK ARM READY TO BACK PALM OIL IF BAN
GOES
By Niluksi Koswanage
JAKARTA, Nov 10 (Reuters) - The World Bank's private sector lender will focus more on palm oil firms pursuing green
standards if a suspension on financing the sector is lifted
by its president, an official said on Wednesday.
The International Finance Corp (IFC) stopped financing the
industry in 2009 after social and environmental complaints
by smallholders and local communities in Indonesia,
prompted a internal review of its lending practices.
The IFC has since taken inputs from nearly 3,000 stakeholders to create a new strategy of engagement with the
$30 billion palm oil industry that will be forwarded to
World Bank President Robert Zoellick by the first quarter of
2011 for approval.
Part of the new strategy involves supporting the Roundtable on Sustainable Palm Oil (RSPO) -- a grouping of planters, green groups and consumers that formulated green
standards for the industry, said IFC's Director of Global
Manufacturing, Agribusiness and Services Atul Mehta.
Rains in northern mainland Malaysia have led to floods
and planters are concerned the northeast monsoon season in the third quarter of this year will bring heavier than
normal showers to key palm oil growing areas in the
south.
The rains could further boost Malaysian palm oil futures ,
which have hit successive two-year highs in the past few
weeks on a weaker dollar, giving support to competing
soyoil and other commodities.
"An expectation of 5-10 percent is very plausible once the
northeast monsoon sweeps across peninsula Malaysia
and it's a valid concern for the planters," M.R Chandran,
an independent analyst and former head of the Malaysian
Palm Oil Association, told Reuters.
Prolonged exposure to rains will raise the moisture content in palm fruit bunches and hurt yield quality, forcing
oil palm estates to sell to millers and refiners at a discount. Also, floods will make it difficult to harvest the
fruits, creating a supply shortage as trucks find it difficult
to transport the commodity to processing plants.
"On our performance standards, we already encourage our
clients to also aspire to internationally recognised certification very much along the lines of what the RSPO is promoting," Mehta told Reuters in an interview.
"That is something we are proposing for companies that
are primary producers of palm oil," he said, speaking on
the sidelines of the RSPO meeting in Jakarta.
Formulating new methods of assessing the palm oil industry' social and environment impacts and favouring investments in firms that depend on small farmers for supply
also feature in the new strategy, Mehta said.
Although IFC's involvement in the sector is small, having
invested $132 million in palm oil projects in Asia, central
America, Ukraine and West Africa, the new guideliness
may help more potential clients become more eco-friendly,
Atul said.
"There is increasing interest in operating this business sustainably, so we have had a lot of clients come to see what is
our timetable and what is our approach and how we might
help them take their business on a sustainable path," he
said.
If palm oil clients violate commitments to keep forests
standing and engage with local communities, the IFC will
work with them to ensure they meet standards. Exiting investments will only be a last resort.
"If we reach a point which we don't think they have the
commitment or they don't meet it, we can invoke contractual requirements to exit," Mehta said.
REUTERS/Bazuki Muhammad
RAINS MAY CUT MALAYSIAN PALM OUTPUT, BOOST
PRICES
JAKARTA, Nov 10 (Reuters) - Malaysia's palm oil production may fall 5 to 10 percent each month for November and
December as heavy rains curb yields and floods make
transportation of the vegetable oil difficult, three planters
said on Wednesday.
Still, another Malaysian palm oil producer said the decline would not be as substantial as previous years as
good fertiliser application, thanks to higher returns, will
preserve some yields.
"I would say about less than a 10 percent drop in production in November and December," said the official, who
declined to be identified as he is not authorised to speak
to the media.
(Continued on page 3)
2
November 2010
The planters were speaking on the sidelines of the Roundtable on Sustainable Palm Oil meeting in Jakarta where
palm oil firms, consumers and green groups are assessing
the industry's eco-credentials.
LA NINA AND CHINA?
The brewing La Nina weather condition, which emerges
right after El Nino's dry spell and brings more rains to
Southeast Asia, has revived memories of widespread floods
that inundated oil palm estates in Malaysia.
In 2007, the La Nina event brought floods to Malaysia and
parts of Indonesia, disrupting harvests and lifting palm oil
by 10 percent in December and January.
The price spike prompted Chinese buyers to scramble for
cargoes, pushing the market to a record 4,486 ringgit
($1,448) in March 2008. Malaysian palm oil prices stood at
3,371 ringgit by 0835 GMT on Wednesday.
"For the past two years, Malaysia has avoided heavy rains
and floods, but this time we may not be so lucky," said another Malaysian planter, who also declined to be identified.
"The ISPO will put together all related regulations. Violations related to forestry will be punished according to forestry law and so forth," he said.
BOOST GREEN PALM OIL OUTPUT?
ISPO is expected to boost the number of palm oil firms that
get sustainable certification as the current process by
RSPO has been progressing slowly, said Rosediana Suharto, executive chairman of the Indonesian Palm Oil Commission.
"There are some palm oil firms that have not yet received
RSPO certification for two years," Suharto said. "The government plans to cut greenhouse gas emission and it will
be too long if we wait for it (RSPO certification)."
Indonesian President Susilo Bambang Yudhoyono has
pledged to cut emissions by 26 percent from business as
usual levels by 2020 or by 41 percent by 2020 if given sufficient international support. At present, only five Indonesian palm oil firms have RSPO certification, while 26 firms
are under assessment, said Suharto.
Traders in Malaysia said there could be a rush for cargoes
by some Asian buyers.
Indonesian firms with RSPO certification will still have to
meet ISPO standards, but the government will relax the
requirements, Suharto said.
"We may see some panic buying again but the prices are
not going to hit 4,000 ringgit and above because China
has bought quite a bit of soybeans for crushing," said a
regional vegetable oil trader in Malaysia. "There could be
demand destruction at 3,500 ringgit and 3,600 ringgit."
PT Astra Agro Lestari Tbk , Indonesia's largest listed plantation firm, is one of producers that have asked for ISPO
certification once it is in place, she said.
INDONESIA TO LAUNCH GREEN PALM OIL STANDARDS
IN 2011
By Fitri Wulandari
JAKARTA, Nov 9 (Reuters) - Indonesia will introduce mandatory green standards for palm oil producers next year to
help boost output of the vegetable oil and safeguard the
environment, officials said on Tuesday.
The agriculture ministry in April said it planned to issue
Indonesian Sustainable Palm Oil (ISPO) certification to
cover the entire operations of planters amid pressure from
green groups to halt deforestation that speeds up global
warming.
The government will make it mandatory for plantation
firms and smallholders to apply for ISPO certification starting from January 2011, said Mukti Sarjono, acting director
general of plantations for the agriculture ministry.
"ISPO will focus on the company's compliance with the
laws. Also, it will show that companies are concerned
about sustainable palm oil," Sarjono told reporters on the
sidelines of the Roundtable on Sustainable Palm Oil
(RSPO) meeting.
Sarjono gave no details on how companies can obtain certification or which agencies would be appointed to grant it.
The RSPO, grouping planters, green groups and consumers, is the only other major group to have set up green
standards for the whole industry.
But unlike RSPO, which does not impose sanctions on
members which violate its voluntary standards, those
found to be breaking ISPO rules will be punished by law,
Sarjono said.
An aerial view shows a palm oil plantation in Indonesia's Jambi province. Indonesia
may propose palm oil plantations be eligible to earn carbon credit under a U.N.backed scheme aimed at preserving forests, a forestry ministry official said.
- REUTERS/Beawiharta
3
November 2010
Astra Agro is not a member of RSPO. Indonesia also plans
to register ISPO certification with the World Trade Organisation, a move which will help settle disputes in palm oil
trade, Suharto said.
Planters said some of the communities' claims on the land
were unfounded. Such conflicts have stalled planters'
plans to expand and can potentially delay foreign investment, they say.
"Registering the certification will give a legal framework. If
palm oil buyers suddenly stop buying the oil, we can bring
it to the WTO," she said.
"Some firms will not get top marks for engaging with local
communities, but sometimes it's hard to operate when
suddenly a claim comes in from someone who has not even
been in the areas," said a Malaysian planter with land in
Indonesia, who declined to be identified.
Palm oil buyers including Burger King Holdings , Nestle
and Unilever , have stopped buying from Indonesia's PT
SMART Tbk because of environmental concerns.
LAND CONFLICTS WITH PALM FIRMS RISE IN
INDONESIA
JAKARTA, Nov 9 (Reuters) - Conflicts between Indonesian
communities and palm oil firms over land use have more
than quadrupled to 660 cases in the past six years as the
industry aggressively expands, a social activist said on
Tuesday.
These incidents may grow so long as Indonesia, the No.1
palm oil producer, uses a law to promote the industry's
expansion, said Norman Jiwan of the social nongovermental organisation SawitWatch that tracks the
cases.
Jiwan said the Plantation Act, made law in 2004, has not
helped poor Indonesian farmers and local communities,
forced off their land by authorities and companies wanting
to develop palm oil production.
PREVIEW-ASIAN BUYERS, EMISSIONS IN FOCUS AT
GREEN PALM OIL MEET
By Niluksi Koswanage and Michael Taylor
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 .
Land ownership is an emotive issue in the Southeast Asian
country where 40 percent of a population of 220 million
depends on agriculture and where land is a farmer's only
social security.
"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.
"In some of the cases, the people don't want oil palms to
enter their lands but they get bulldozed over by the company," Jiwan told Reuters at the sidelines of the Roundtable on Sustainable Palm Oil (RSPO) in Jakarta.
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.
"Once the land belongs to the palm oil company, it is the
locals who become the criminals. Under the Plantation Act,
a palm oil company can call private or state security to prevent the locals from accessing and taking back the land
that belonged to them in the first place."
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.
PROTESTS
WALKING AWAY
Jiwan said in the past three months, more than 100 Indonesians were arrested for what was described as criminal
behaviour against planters during protests over forced land
acquisition, unfavourable compensation and other issues.
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.
The RSPO, which groups planters, NGOs and consumers
and formulates standards for the industry that include
commitments to preserve forests and engage constructively with local communities, may provide a means of
breaking the impasse.
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.
The industry-driven body has now included a new policy
that requires planters to get community feedback prior to
opening up new lands, a measure that planters do not favour as it disrupts long-term operational plans.
"The planters are always asking for a period of adjustment
but they need to realise the impact of their actions on forests and communities is very immediate," Jiwan said.
"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 .
4
November 2010
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 fourday 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 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.
JAKARTA, Nov 8 (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, Singaporelisted 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) assesment 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 organisations 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.
5
November 2010
TABLE-GREEN PALM OIL MORE THAN DOUBLES TO 3.3
MLN TONNES
JAKARTA, Nov 8 (Reuters) - Green palm oil processing capacity has more than doubled to 3.3 million tonnes from
March as scrutiny by green groups spurs buyers to take up
more and planters to commit to environment standards.
That represents more than seven percent of total annual
global production of 45 million tonnes certified by the
Roundtable on Sustainable Palm Oil (RSPO) -- an industry
body of buyers, green groups and planters. So far, 22 of 85
growers have certified some of their processing capacity
under the RSPO with commitments to source palm oil from
estates that do not fell forests, harm wildlife or exploit local communities to expand.
RSPO officials said demand for the eco-friendly palm oil
picked up after green group WWF named European buyers
who had shunned the pricey product in a move that derailed efforts to preserve rainforests and erased much of
green palm oil's premium to $3-5 per tonne as supplies
piled up.
JAKARTA, Nov 8 (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.
MALAYSIA
Mills
certified
Crude palm oil
(tonnes)
United Plantations
6
200,456
Sime Darby
Kulim
15
3
522,394
88,914
Wilmar International
7
283,458
IOI Corp
Kuala Lumpur Kepong Berhad
5
5
319,539
211,978
Carotino
1
30,300
Felda
2
102,884
Keresa Plantations Malaysia
TOTAL
1
45
33,874
1,793,797
Sime Darby
Wilmar
1
2
33,609
108,904
PT Musim Mas Indonesia
2
143,459
London Sumatra Indonesia Tbk
SIPEF
Cargill
4
2
4
169,480
78,158
186,892
Bakrie Sumatera Tbk
PT Agrowiratama Indonesia
PT Berkat Sawit Sejati Indonesia
1
1
1
36,438
46,635
54,166
1
37,430
1
2
99,109
29,577
1
23
63,000
1,086,857
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.
New Britain Palm Oil
5
277,524
SIPEF
TOTAL
2
7
95,010
372,534
Even with the moratorium on forest clearing, there is ample degraded land in Indonesia to expand into, Singaporelisted Wilmar said in an interview last month.
INDONESIA
PT Perkebunan Nusantara III
Indones
PT Sukajadi Sawit Mekar
Indonesia
PT Inti Indosawit Subur Indonesia
PT First Mujur Plantation &
Industry
TOTAL
PAPUA NEW GUINEA
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.
6
November 2010
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.
The Roundtable meets in Jakarta next week to discuss how
far the palm oil industry has travelled on the eco-friendly
path as well as look at ways of getting buyers to take up
growing green palm oil output.
RIVAL GREEN PALM OIL STANDARDS
The Netherlands has been a focal point for Greenpeace and
Friends of the Earth to wage campaigns against palm oil as
the country takes up 2 million, or 4 percent, of global output, making it one of Europe's biggest buyers.
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) assesment 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 organisations 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.
DUTCH BUYERS TO IMPORT ONLY GREEN PALM OIL BY
2015
The Dutch Taskforce accounts for most of the demand.
These levels represent about two-thirds of palm oil processing capacity in top producers Indonesia and Malaysia
that passed green standards set by the Roundtable.
uch of the Dutch palm oil imports are processed and reexported to the rest of Europe with close to half a million
tonnes used domestically, data from Hamburg-based oilseed researchers Oil World show.
The Dutch Taskforce's move comes as Indian traders ask
their government to cut its tax on green palm oil imports by
one to two percent in a bid to boost consumption in the
world's largest palm oil buyer.
OBAMA TO TARGET FOREST, CLIMATE AID IN
INDONESIA TRIP
By Sunanda Creagh and David Fogarty
JAKARTA/SINGAPORE, Nov 3 (Reuters) - When U.S. President Barack Obama flies over the vast Indonesian archipelago next week, he will see first hand the size of two of the
nation's greatest and most threatened resources: its forests
and seas.
Both are widely expected to be at the heart of efforts to
boost ties between the United States and Indonesia and to
step up the fight against climate change, officials and
sources say. Indonesia has some of the world's most complex and diverse forests but also one of the highest deforestation rates.
REUTERS/Yusuf Ahmad
Saving them from illegal logging and unsustainable clearing for agriculture and mining could help Indonesia meet
its goals to cut greenhouse emissions -- the third highest
globally according to the World Bank when taking into account deforestation and land use.
KUALA LUMPUR, Nov 6 (Reuters) - Dutch vegetable oil
suppliers have pledged to order only eco-friendly palm oil
cargoes by 2015 as consumers and green groups continue
to scrutinise the sector, an industry official said.
It would also help the United States in its aims to fight climate change, and help Indonesia become a source of
tradeable forest carbon offsets that would help polluting
U.S industries meet future targets to cut emissions.
Dubbed the Dutch Taskforce on Sustainable Palm Oil, the
initiative will get local firms to pledge to buy palm oil from
estates that do not clear forests or peatlands in Southeast
Asia to expand, said Frans Claassen, an official with the
taskforce.
The reasoning is simple. Forests, particularly tropical rainforests, soak up huge amounts of planet-warming carbon
dioxide, acting as a brake on climate change. Clearing and
burning forests accelerates the pace of global warming.
"Over the next few years, we will work very hard to ensure
that all palm oil used...will be sustainable," said Claassen,
a director with the Dutch Product Board of Margarine, Fats
and Oils (MVO) that spearheaded the initiative.
"In other words, (this refers to palm oil purchased) in accordance with one of the trading systems approved by the
RSPO," Claassen added, referring to the Roundtable of
Sustainable Palm Oil that formulates green standards for
the industry.
During his trip, Obama could announce how some of the
$700 million allocated to Indonesia by the Millennium
Challenge Corporation can be used to fund climate change
and forest conservation programmes, a source said.
The MCC is a U.S. foreign aid agency set up under the Bush
administration.
7
November 2010
"It will be quite substantial. It's safe to say it will be north
of $100 million on an annual basis," said the industry
source. That comes on the heels of Norway's $1 billion climate deal with Indonesia announced earlier this year.
"The U.S. doesn't want to compete directly with the Norwegians but they do want similar big headline news."
UNDER PRESSURE
The visit could also reveal details about implementing a
four-year programme worth between $35 million and $40
million on fighting deforestation, reducing loss of biodiversity and improving land use management. The scheme was
announced earlier this year.
Details may also emerge on a further $20 million pledged
for marine conservation, a source said, while steps to promote clean-energy development could also be announced.
USAID, the overseas aid agency, is working on a proposal
to fund a programme named the "Indonesian Forestry and
Climate Support Project" to run until 2014 and the presidential visit could generate details on the project's implementation as well.
Among the project's aims are halving the rate of forest
degradation and loss from conversion, illegal logging,
over-harvesting and fires for at least 6 million hectares (15
million acres) in targeted areas.
It also plans to boost training, funds for forest management, development of low-carbon growth plans in at least
8 districts and steps to improve management of highconservation value forests that also include large areas of
orangutan habitat.
Indonesia needs cash to save its dwindling forests and sees
a natural role as a major player in a future carbon market
trading forestry carbon credits. The country is also under
intense international pressure to fight deforestation and
the burning of its forests that regularly smothers its
neighbours in smoky haze.
SEEING GREEN IN REDD
The United States could eventually become a major buyer
of forest carbon offsets under a U.N.-backed scheme called
reducing emissions from deforestation and degradation
(REDD).
REDD aims to reward developing nations for protecting,
restoring and sustainably managing rainforests. Projects
that set aside large areas of forest for decades would earn
tradeable credits for the CO2 locked away by the trees -- a
trade potentially worth billions of dollars a year.
The U.S has an interest in protecting Indonesia's forests
not just because of the valuable role they play sucking
greenhouse gases out of the air, but also as a key part of a
potential future forest offsets trading industry, observers
say.
"They are trying to find a way to protect their future offsets
but they have also seen how important Indonesian forests
are for the global climate crisis," said Jakarta-based
Greenpeace forest campaigner Bustar Maitar.
"Indonesian forests are as important as forests in the Amazon and the Congo."
The climate bill passed last year by the U.S. House of Representatives allowed imports of REDD credits but the legislation has been since been shelved.
Undeterred, the United States, Norway, Japan and dozens
of other countries created a REDD partnership worth about
$4 billion earlier this year aimed building up REDD pilot
projects and national institutions in developing nations
over the short term.
Indonesia's seas are also a key resource, its coral reefs
some of the richest in the world and vital for fisheries but
also under threat from overfishing and warming seas.
U.S. cash is also likely to help the Coral Triangle that
stretches from the Solomon Islands northeast of Australia
to Bali, Borneo and the Philippines.
MALAYSIA'S KULIM 2010 PROFIT TO GROW ON PALM
By Saumyadeb Chakrabarty and Niluksi Koswanage
KUALA LUMPUR, Nov 2 (Reuters) - Malaysian planter Kulim expects profits for FY 2010 to be "much higher" than
last year's 146 million ringgit ($47.17 million), driven by its
expansion into Papua New Guinea (PNG) and a rally in
palm oil prices.
Profits ending Dec. 31 would also benefit from the sale of
an oleochemical plant to Singapore's Wilmar for $140 million, Kulim's Chief Operating Officer Zulkifli Ibrahim told
Reuters in an interview on Tuesday.
"We expect strong growth in 2010 earnings due to high
average selling price of crude palm, the one-time income
from the sale of the oleochemical business and strong
growth at the food division," Zulkifli said.
Kulim derives about 60 percent of its profits from its plantations business in Malaysia as well as PNG, where it operates via London-listed unit New Britain Palm Oil (NBPOL).
The rest comes from its food business via QSR Brands ,
which licenses fast food chains including KFC .
Analysts expect a profit of 251 million ringgit for 2010, according to Thomson Reuters I/B/E/S.
Zulkifli said the firm, with a market value of about $1 billion, would maintain its current dividend payout of around
30 percent.
The firm's average selling prices for crude palm oil for 2010
and 2011 may hover around 2,700-2,800 ringgit per tonne
on weather concerns, Zulkifli said.
Benchmark Malaysian prices just crossed the 3,100 ringgit
level on Tuesday.
EYEING ECO-FRIENDLY ACQUISITIONS
Kulim is eyeing acquisitions in Malaysia to add on to its
existing 38,000 hectares and the offers have been coming
in, Zulkifli said.
Malaysia planters now expand through buying established
estates rather than developing greenfield areas as land has
run out. "If the new estates offered to us can fit with the
principles of the RSPO we are interested," Zulkifli said,
refering to the Roundtable on Sustainable Palm Oil -- an
industry body that sets standards for producing ecofriendly palm oil.
8
November 2010
"We are staying away from peatlands, high conservation
value areas and high gradient areas," he said.
The firm's unit NBPOL bought 25,000 hectares of oil palm
estates in PNG for $175 million from agribusiness giant
Cargill , bringing total holdings to over 113,000 hectares
this year.
Kulim and NBPOL oil palm estates have been certified under RSPO standards except for the new aquisitions from
Cargill.
Kulim shares were up 2.4 percent at 0742 GMT, outperforming the broader market
SLOWER EXPANSION
Greater scrutiny of the way oil palm estates are developed
in top producer Indonesia and strict rules have slowed expansion from a peak rate of 600,000 hectares annually
during the commodity boom of 2007-2008.
"In 2010, this expansion was between 200,000 and
250,000 hectares. It could slow down further but current
high prices will ensure that in 2011, expansion will be at
least 250,000 hectares," Mistry said.
A problem also lies in the availability of suitable land for
planting and bank credit, Mistry said. Eventually, slower
palm expansion will lead to lower production and bullish
vegetable oil prices, he said.
INDIA URGED TO CUT IMPORT DUTY ON GREEN PALM
OIL
KUALA LUMPUR, Nov 1 (Reuters) - A vegetable oils industry body has asked the Indian government to cut its tax on
eco-friendly imports of the commodity by one to two percent in a bid to boost consumption, a top trader said on
Monday.
India, the world's largest vegetable oil buyer, appears to be
heeding a call for large consumers to become more environmentally friendly and buy palm oil from estates committed to protecting forests in Southeast Asia.
Dorab Mistry, head of vegetable oils trading arm of Godrej
International and a leading analyst, said the firm's parent
spearheaded the Hindustan Unilever coalition of refiners
and traders that put the proposal to the government.
"Palm oil prices will eventually come down and when that
happens, the duties will have to start rising. We propose
there should always be a 1-2 percent discounted duty on
green palm oil," Mistry told Reuters in an interview.
"The duties will come into play, it's a matter of time. When
it does, this mechanism will help, " Mistry said ahead of a
meeting of the Roundtable on Sustainable Palm Oil
(RSPO) in Jakarta next week.
Price-sensitive India usually buys palm oil from Indonesia
and Malaysia as well as soyoil from Argentina and Brazil to
feed its rapidly growing population.
India has kept to a zero import tax for crude palm oil as
world prices are high and does not differentiate between
certified and non-certified palm oil.
PALM OIL FIRM WANTS INDUSTRY TO POSTPONE
PROPOSED PLANTING NORMS
By Fong Min Hun
KUALA LUMPUR, Nov 1 (Reuters) - Malaysia's Genting
Plantations wants an industry body tasked with setting
environment standards to postpone a proposed new planting policy that it says may disrupt long-term operational
plans.
The Roundtable on Sustainable Palm Oil -- a group of
planters, consumers and non-governmental organisations
-- has included a new policy that requires planters to get
community feedback prior to opening up new lands.
Dubbed the New Planting Procedure (NPP), the policy also
requires planters to address all grievances prior to commencing operations in a new area, a move that may slow
expansion especially in top palm oil producer Indonesia.
Genting Plantation's sustainability vice president Chew Jit
Seng told Reuters in an interview the planter will support
an effort to postpone the policy, initially proposed by
NGOs, at an RSPO conference in Jakarta on Nov. 8.
"The Malaysians and Indonesians (growers) are proposing
for NPP to be postponed because we need to consult with
locals and actually do a field trial to see how it would really
work on the ground," he said.
Chew said the RSPO's NPP is a groundbreaking rule but it
needs to be implemented over a period of time, which
could otherwise disrupt growers' operations when demand
for palm oil has been on the rise.
The RSPO assesses the environmental and social impact of
oil palm estates and those which meet its standards can
sell certificates to consumers for every tonne of green
palm, under the GreenPalm trading system.
Mistry said the proposed discount would offset the cost of
buying green palm certificates, which stands at about $7$8 per tonne. Benchmark Malaysian palm oil hit a 27month high of 3,095 ringgit ($1,001) on Monday.
But the GreenPalm system does not encourage separate
supply chains for green palm oil and not so environmentally friendly palm oil, green groups say.
"Segregation of green palm oil is very expensive and does
not have any meaning," Mistry said. "What matters is how
palm plantations are developed and managed.
REUTERS/Yusuf Ahmad
9
November 2010
ECONOMIC SENSE FOR GREEN PALM?
None of Genting Plantation's operations are presently
RSPO-certified but planter will be seeking certification
starting next year.
"The companies have the support and commitment of their
respective managements and boards on how they will address each of the RSPO grievance panel's concerns," the
statement said on Thursday.
Growers in general recognise the importance of sustainability, but say any plans have to make economic sense
before being implemented on a large scale, Chew said.
Genting Plantations will lobby for more stringent regulations on consumers buying green palm oil. At present,
there is a lack of demand, which led to much smaller premiums for eco-friendly palm oil than expected.
The RSPO has also asked Golden Agri to submit a membership application ahead of its annual meeting that starts
on Nov. 8.
The premium enjoyed by sustainable palm oil over regular
supplies has dropped to around $6.50 per tonne from an
earlier promise of a $50 premium, Chew said.
SMART runs the Indonesia palm oil operations of Golden
Agri, which is controlled by the Widjaja family, whose business empire Sinar Mas has interests in pulp and paper,
finance and property.
Towards that end, he said Genting and other growers
would like to see more rigorous stipulations on buyers to
purchase more sustainable palm oil.
"Of the 3.2 million metric tonnes of sustainable palm oil
that has been produced so far, there has been uptake of
only about 30 percent," Chew said. Stricter regulation on
the deadline for sustainable palm oil users to comply with
usage criteria would bolster demand and improve yield, he
said.
GREEN PALM OIL BODY TO SET PLANTER ON
ECO-FRIENDLY PATH
Golden Agri has engaged an NGO to help it prepare over
430,000 hectares of oil palms and 40 mills across Indonesia as of June this year for certification audit, the statement
said.
SMART officials involved in the RSPO including the firm's
President Director Daud Dharsono will step down from any
roles until March 2011 -- a move seen as putting to rest
concerns the firm will influence the RSPO's decisions.
"The RSPO is becoming a more credible intermediary between producers and buyers," said James Ratnam, a plantations analyst with Malaysia's TA Investment Bank.
NGOs say the RSPO has become ineffectual as it works as a
greenwash for planters who make up the bulk of the membership and palm oil firms contend the industry body has
been hijacked by green groups -- charges the RSPO has
denied.
KUALA LUMPUR, Nov 1 (Reuters) - An industry body promoting green palm oil has approved plans by a key Indonesian planter last week to resolve concerns of environmental
destruction that may prompt some customers to resume
supply ties.
The Roundtable on Sustainable Palm Oil (RSPO) -- a
grouping of consumers, green groups and planters -- set
up a grievance panel against a member, PT SMART , after
an environment audit gave the firm a mixed scorecard.
The results showed SMART, one of Indonesia's biggest
palm oil firms, had planted in greenhouse gas-rich peatlands but did not fell pristine forests.
The RSPO also put pressure on SMART's parent Golden
Agri Resources to apply for membership after ticking off
the firm for publicly implying it was in the process of obtaining RSPO certification.
"Once SMART's parent becomes certified, I think customers will be comfortable, especially in the case of IOI ," a
Singaporean palm oil trader said on Monday, referring to
the Malaysian planter's move to cut ties with SMART.
But others say it may be an uphill task for SMART to win
back some clients after it gets RSPO certification.
GREEN GROUPS MUST NOT HIJACK RSPO - PLANTER
By Michael Taylor
LONDON, Oct 29 (Reuters) - Green groups' influence
within industry body the Roundtable on Sustainable Palm
Oil (RSPO) should not outweigh the voices of other palm oil
players such as growers and buyers, a West African planter
said on Friday.
The RSPO, an industry body of consumers, green groups
and plantation companies, was formed in 2004 and aims
to promote growth and use of sustainable oil palm products. Palm oil is used in products such as food, cosmetics
and biofuels.
"If you want to be sustainable, the RSPO helps provide
guidelines, but sometimes the plantation guys feel that
that has been a bit hijacked by the environmental groups,
who are just trying to stop it (industry expansion)," Michael
Frayne, chairman of Equatorial Palm Oil told Reuters.
"Some of the problems are these big groups (plantations)
are finding it hard to get properly (RSPO) accredited," he
said, speaking ahead of the RSPO's annual meeting in Jakarta from Nov. 8-11.
Burger King stopped buying from SMART even after the
audit partly cleared the firm, although Unilever said it will
resume ties after the planter gets RSPO certification.
But palm oil firms face pressure from green groups to halt
practices that contribute to global warming such as deforestation and open burning.
PATH TO ECO-FRIENDLY PALM
Accusations from green groups over deforestation have led
to some firms boycotting certain plantation companies.
In a joint statement issued with Golden Agri and RSPO,
SMART agreed to provide compensation for land cleared
without assessing environmental impact and to embark on
a peat restoration project on some of its estates in Indonesia..
"There are a lot of shades of grey in all this," said Frayne,
whose firm is part of the RSPO and has about 169,000 hectares of land in Liberia.
10
November 2010
"It's the balance that is there, and that seems to be shifting
back and forth a bit," he added. "Environmental groups
need to try and work with the palm oil companies ... (but)
there are some groups saying you can't do anymore development."
"I think we can easily achieve 17.5 million tonnes (in 2011)
even with this new replanting scheme as there will be more
young oil palms coming into maturity," Shahrir told
Reuters in his first interview with the foreign media as
MPOB chief.
Established in 2006, the company plans to start production of about 3,000-4,000 tonnes per year from December
onwards. The London AIM-listed firm has invested about
$15 million in its palm oil plantation business.
Shahrir's forecast was 4.9 percent lower than the government's production target of 18.4 million tonnes for next
year and roughly the same as his projection of 17.5 million
tonnes in 2010. "I don't think there will be a drop in production even after the erratic weather this year. The
younger trees are quite resilient," he said.
"You are often going into extremely poor countries, where
this makes a huge difference to the local people -- it can
transform their lives with potential from employment,"
Frayne said. "Palm oil is the biggest vegetable oil in the
world, so you can't just stop it all.
RUSH TO AFRICA
Malaysia and Indonesia account for around 90 percent of
the world's supply of palm oil, which is about 45 million
tonnes each year, and Frayne sees big advantages in shifting some of that production westwards to Africa.
Africa imports around 2 million tonnes of palm oil every
year, compared with about 8 million tonnes in India and 7
million tonnes in China.
Producers say the advantagesof producing African palm oil
for African consumers, is that it keeps transportation costs
down at a time when there is a shortage in the region,
which also pushes prices higher than in Asia.
Golden Agri-Resources , the second-largest plantation
company listed in Singapore, and the world's biggest listed
palm oil firm, Wilmar are looking to develop land in Africa.
"We've got very good government support where we are -they see the industry as a huge potential employer for the
country," Frayne said. "We're not in primary forest." Annual production capacity of RSPO-certified sustainable
palm oil jumped over the 3 million tonnes mark last month,
according to the Roundtable.
Food groups such as Unilever and Nestle have made
pledges to gradually switch to sourcing all palm oil from
sustainably certified sources. "The way the world is going,
there is an enormous market for that," he added. "We intend to produce sustainable palm oil."
MALAYSIA REPLANTS MORE PALM TO BOOST YIELDS
Early this year, El Nino-driven hotter weather dried up
yields and lifted the Malaysian benchmark palm oil prices ,
which have gained almost 15 percent so far this year. The
weather condition was quickly followed by La Nina, which
brings more rains and floods to Southeast Asian that can
complicate harvesting and transport of palm fruits.
Malaysia exports almost 90 percent of its output. Last year,
Malaysia derived 37 billion ringgit from crude palm oil exports and 13 billion for refined products and oleochemicals.
Shahrir said the government would allocate up to 127 million ringgit to further develop the refining and oleochemicals industries with aid mostly targeted at Sime , IOI Corp
and KL Kepong -- the top three palm oil companies in the
country.
EYES NEW AUDIT BODY
The MPOB is in discussions with the government on possible mandatory green standards to ensure palm oil does not
come from estates that expand by felling forests and marginalising local communities, Shahrir said.
MPOB has a code of practice for palm oil firms to halt environment pollution since 2007 and firms such as IJM Plantations , Genting Plantations and KL Kepong have adopted
this code. "The code is similar to the RSPO's principles and
criteria," Shahrir said, referring to the industry-driven
Roundtable on Sustainable Palm Oil that has produced a
certification system whose participants have to commit to
preserve the environment.
"The industry has asked that we keep this code voluntary
like the RSPO but we are also in discussions with the government on starting up an audit body to look at the industry, to ensure that the standards are met," Shahrir said
ahead of the RSPO conference early next month in Jakarta.
By Niluksi Koswanage and Angie Teo
KUALA LUMPUR, Oct 29 (Reuters) - The Malaysian government's new replanting scheme will target 365,000 hectares of oil palms older than 25 years as the world's No.2
palm oil producer tries to lift flagging output, a top industry official said on Friday.
Industry regulator the Malaysian Palm Oil Board's (MPOB)
new chairman, Shahrir Samad, said the scheme would take
two to three years to complete and the government had
pledged 297 million Malaysian ringgit ($95.56 million) under the 2011 budget.
The scheme is the latest inItiative to boost yields in Malaysia, which has fallen behind top producer Indonesia in
terms of output. An earlier industry-funded scheme to replant 200,000 hectares in 2008 in a bid to boost slumping
prices was almost completed this year.
REUTERS/Beawiharta
11
November 2010
EUROPE BUYERS MUST WIDEN GREEN PALM OIL
SCOPE-WWF
By Michael Taylor
LONDON, Oct 28 (Reuters) - European palm oil buyers
must extend sustainability policies beyond their European
borders and into emerging consuming markets such as
India and China, environment group WWF said on Thursday.
Palm oil firms in Indonesia and Malaysia face pressure
from green groups to halt practices that contribute to
global warming such as deforestation and open burning.
Food groups such as Unilever and Nestle have made
pledges to gradually switch to sourcing all palm oil from
sustainably certified sources.
"Someone like a Unilever -- that currently talks about sustainable palm oil in its European market -- should be doing
that in China and India where it also has a presence,"
Adam Harrison, policy officer for food and agriculture for
WWF in Scotland, told Reuters.
"Companies need to talk about it in the same way they talk
about it in Europe," he added, ahead of the RSPO's annual
meeting in Jakarta from Nov. 8-11.
The Roundtable on Sustainable Palm Oil (RSPO) an industry body of consumers, green groups and plantation companies, was formed in 2004 and aims to promote growth
and use of sustainable oil palm products.
Annual production capacity of RSPO-certified sustainable
according to the Roundtable. Consumer goods giant Unilever has pledged to buy only from certified sustainable
plantations from 2015.
PRIVATE LABEL
Earlier this month, Wal-Mart Stores Inc , the world's largest retailer, said it would require that palm oil from sustainable sources be used in all of its private-label products
by the end of 2015. "It's RSPO they are going for," Harrison
said.
Palm oil, the world's most traded edible oil, is used in
products ranging from shampoos to biofuels.
"It was a long slog in Europe -- getting awareness and confidence in the RSPO -- and that hasn't really started in
China and India," said Harrison, who is RSPO vice president. Palm oil planters have complained that premiums for
eco-friendly palm oil are not high enough to encourage
production.
Last week, Swedish oils manufacturer AAK said production of sustainable certified palm oil needed to increase
about fivefold in the next five years, to meet buyers' commitments.
"If you look at what is already out in the open in terms of
commitment from the supply and demand side -- just from
the people we know about -- there is about 10-15 million
tonnes of production capacity," said Harrison.
"A lot of companies are congregating around the 2015
deadline for 100 percent certified palm oil to be used," he
added. Part of that is getting the message back to growers."
EVIDENCE NEEDED
Malaysia and Indonesia account for around 90 percent of
the world's supply of palm oil, which is about 45 million
tonnes each year.
But accusations from green groups over deforestation have
led to some firms boycotting certain plantation companies.
In August, PT SMART Tbk released an independent audit
after Greenpeace alleged that the Indonesian palm oil giant bulldozed high conservation value forests and damaged carbon-rich peatlands.
One month later, the RSPO made its first public censure of
a member, saying SMART breached its principles and may
face sanctions, and also ticked off the firm's parent.
"We are always saying to members and non-members, that
the only way we're ever going to be able to police this, is if
we do have people coming forward with evidence," said
Harrison, who is also on the RSPO complaints panel.
Last year, the WWF issued a buyer's scorecard that showed
most European palm oil buyers have shunned green palm
oil priced at a premium.
"We are doing it every two years," said Harrison. "The intention is for the (RSPO) roundtable next year, they will
require members to report on volume data ... keeping track
of what RSPO members are up to."
CARGILL MULLS SCHEME AIMED AT SAVING INDONESIA
FORESTS
By Niluksi Koswanage and Fitri Wulandari
KUALA LUMPUR, Oct 27 (Reuters) - Agribusiness giant
Cargill Inc may well become the first major palm oil buyer
to invest in a carbon credit scheme that rewards nations
like Indonesia for preserving forests, a key official said on
Wednesday.
The reduced emissions from deforestation and degradation
(REDD) proposal would provide a stamp of approval for
firms like Cargill to assure consumers that products made
from palm oil follow eco-friendly guidelines, giving it cover
from green campaigns that allege widespread habitat destruction.
Participation by Cargill would breathe life into the scheme
now mostly pushed by governments.
"As for our direct involvement in the scheme, we're in the
early days," Cargill Tropical Oils Chief Operating Officer
John Hartmann told Reuters in a telephone interview from
Singapore.
"We're exploring this option but we need to see how the
rules are written before we make any commitment."
Cargill runs two mid-sized plantations in Indonesia and
buys palm oil from suppliers like Jakarta-listed SMART Tbk
that recently came under fire for allegations of clearing
forests and peatlands.
For a PDF package on the issue:
(http://r.reuters.com/hej64n )
12
November 2010
Palm oil firms in Indonesian and Malaysia, the world's top
producers, are eager to expand as demand for vegetable
oil soars from China and India, sending benchmark prices
above the 3,000 ringgit for the first time since July 2008
just last week.
Groups like Greenpeace however argue that expansion of
Indonesia's plantations come at the expense of cutting
down pristine forests, which leads to more carbon dioxide
pumped into the atmosphere.
The REDD scheme, which seeks to limit carbon by putting
key forest reserves off limits and identifying marginal lands
that could be reclaimed for palm oil plantations, is also a
part of Norway's $1 billion climate aid deal to Indonesia.
Part of Norway's agreement includes a formal survey or
marginal or degraded lands -- which are largely seen as
the main mode of industry expansion in the world's largest
palm oil producer.
Cargill said it broadly supported the idea.
"We are talking about degraded land that will have specific
definition which is more stringent than high conservation
value definition," Hartmann said, referring to further high
carbon value assessments.
"In essence, it will reduce the area that's available for plantation expansion. But at the same time...it will assist palm
oil plantation companies to determine their development
plans."
Singapore investment bank Hwang-DBS said last week
palm oil firms in Indonesia will hold back on aggressive
planting in 2010 and the years to come despite capital raising exercises last year to exploit low interest rates.
The bank said 60 percent of the initial location permit issued to planters will be developed compared to its previous
assumption of 80 percent.
GREEN PALM OIL OUTPUT MUST RISE 5-FOLD BY 2015AAK
By Michael Taylor
LONDON, Oct 22 (Reuters) - Production of sustainable certified palm oil needs to increase about fivefold in the next
five years, to meet buyers' commitments, the British unit of
Swedish oils manufacturer AAK said on Friday.
The Roundtable on Sustainable Palm Oil (RSPO), an industry body of consumers, green groups and plantation companies, was formed in 2004 and aims to promote growth
according to the Roundtable. Certification for green palm
oil started in August 2008.
"Many blue-chip companies are making statements that by
2015, they will use only certified palm," Ian McIntosh,
president, west division at AAK, told Reuters on Friday.
"We need to promote the reasons why plantations should
pursue certification -- the principle reason is that the market expects and demands it," said McIntosh, who is currently the treasurer at the RSPO. "It has got to be 15 million
tonnes."
Palm oil is used in products such as food, cosmetics, tyres
and biofuels, but the there has been weak demand for certified palm oil due to the higher cost involved.
Palm oil planters have also complained that premiums for
eco-friendly palm oil are not high enough to encourage
production.
Accusations from green groups over deforestation have led
to some firms boycotting certain plantation companies.
AAK recently sent an audit team to its supplier United
Plantations , after a series of critical newspaper reports
aimed at its working practices.
The audit reported back in September and found no wrongdoing. "If we have specific reasons, we will on occasion go
and audit plantations," McIntosh said, adding that no
other AAK suppliers were currently under any audit or investigation.
GREEN CERTIFICATES
AAK refines vegetable oils, using raw materials mostly obtained from areas such Malaysia. The firm has also started
up GreenPalm, a trading system where producers certified
by the RSPO can sell certificates issued for a tonne of green
palm oil to consumer firms and any individual.
It aims to reward and encourage plantations to pursue
RSPO certification, and has sold 1.1 million certificates
since launch two years ago, with around 700,000 in 2010.
An aerial view of a cleared forest area under development for palm oil
plantations in Indonesia's central Kalimantan province - REUTERS/Crack Palinggi
13
November 2010
Green groups are saying that GreenPalm system does not
encourage separate supply chains for green palm oil and
not so green palm oil.
"The criticism is that it is not ... segregated palm oil and it's
true," said McIntosh, speaking ahead of the RSPO's annual
meeting in Jakarta from Nov. 8-11. "But where segregated
palm oil physically is not available -- it's a good alternative."
On Friday, Malaysia's benchmark January palm oil futures
ended at two-year highs at 3,007 Malaysian ringgit from
2,990 at Thursday's close.
McIntosh, who was part of the RSPO organising committee
for the RSPO in 2003, is bullish on prices going into 2011
due in part to population growth.
"I don't see it coming down," he said. "If no double dip recession, no major custom duty changes or sudden shocks
in China ... I would see an average next year of 3,200
(ringgit)." For its part, AAK is set to double its palm oil capacity in the United States from November next year.
Globally, AAK will sell around 800,000 tonnes of palm oil,
little-changed from last year, with a similar number forecast for 2011.
"We have very ambitious plans," he added. "We are doubling our capacity in the U.S. in the anticipation that palm
oil sales are going to continue to grow."
GREENER PALM OIL NEEDS MORE ASIA SUPPORTUNILEVER
By Michael Taylor
LONDON, Oct 19 (Reuters) - Palm oil buyers in India and
China need to join those in Europe in signing up for a certification scheme to promote sustainable palm oil, consumer
goods giant Unilever said on Tuesday.
The Roundtable on Sustainable Palm Oil (RSPO) an industry body of consumers, green groups and plantation companies, was formed in 2004 and aims to promote growth
"We need to increase the uptake of certified oil in the market," Jan Kees Vis, global director sustainable sourcing
development at Unilever told Reuters. "We know that the
demand from Europe is not enough."
plained that premiums for eco-friendly palm oil are not
high enough to encourage production.
"There is more production at the moment than there is demand and if that continues, the incentive for more growers
to get certified will diminish," Vis said. "We need to get the
Indian and the Chinese market involved, which is difficult
to do."
"We do need to involve more smallholder farmers," added
Vis, speaking ahead of the RSPO's annual meeting in Jakarta from Nov. 8-11.
SMART RESPONSE AWAITED
Indonesia is the world's No. 2 producer of the vegetable oil.
But accusations from green groups over deforestation have
led to firms such as Burger King , Nestle and Unilever to
stop buying palm oil from firms, such as PT SMART Tbk .
In August, SMART, which is part of Singapore-listed
Golden Agri-Resources , got a mixed score card in an independent environmental audit. Greenpeace has accused the
palm oil giant of clearing peatland and forests with high
conservation value that shelter endangered species.
"The verification exercise was fine," said Vis. "We are waiting for a response from PT SMART -- a response in terms of
an improvement plan or programme to be put in place.
"So far, we're encouraged by the level of co-operation we
see from PT SMART with certifiers and the willingness they
have to communicate and discuss the findings."
Vis added that Unilever would like to see Golden AgriResources become a member of RSPO, and make a public
commitment to have all their holdings certified in a certain
time-frame.
Unilever expects to buy between 1.2 million and 1.5 million
tonnes of palm oil this year, unchanged from 2009.
"It is a real mixed (economic) picture, so the real trick for a
company, is to allocate resources into the markets that
show potential for growth," he said.
"Palm oil is the cooking oil of the 2 billion poorest people
on the planet. Population growth is going to happen, so
that's where markets will grow -- Central Asia, Africa,
South East Asia."
according to the Roundtable. Certification for green palm
oil started in August 2008. [ID:nSGE62E0N0]
"Global production is about 45 million tonnes -- India
takes 8 million tonnes, China 7 million tonnes, Europe
about 6 million tonnes, United States and Egypt 1 million
tonnes," added Vis, who was elected to lead the RSPO at
its conception in 2004. Unilever, the world's top palm oil
buyer, uses palm oil for products like Dove soap and Stork
margarine.
The Anglo-Dutch firm said in April that it would more than
double this year to 400,000 tonnes its purchases of palm
oil production certified as sustainable. But the certified
palm oil sector has been plagued by weak demand due to
the higher cost involved. Palm oil planters have also com-
REUTERS/Beawiharta
14
November 2010
OIL PALM EXPANSION TO SLOW IN INDONESIA-DBS
BANK
NORWAY SAYS MORE AID NEEDED TO SAVE INDONESIAN FOREST
KUALA LUMPUR, Oct 22 (Reuters) - Planters in Indonesia
are likely to slow oil palm estate expansion thanks to a
looming two-year ban on clearing forests and growing
scrutiny by green groups and consumers, DBS Bank said on
Friday.
By Sunanda Creagh
As a result, Malaysian and Indonesian planters will hold
back on aggressive planting in 2010 and the years to come
despite capital raising exercises last year to exploit low
interest rates.
DBS said these palm oil firms will stay away from peatlands and primary forests found within their land banks
that are issued as location permits due to stricter government control.
"For this reason, we assume only 60 percent of the initial
location permit will eventually be developed, cut from our
previous assumption of 80 percent," the bank's research
arm said in a note to clients.
Such a scenario may hurt long-term cash flows, growth
and cap planters' values, the bank said.
Following is a table by DBS on lowered expansion targets
by Southeast Asian planters that have holdings in Indonesia:
EXPANSION
TARGET
PLANTING
new
previous new
SCHEDULE
previous
(in hectares)
INDONESIA
Astra Agro
49,300 49,300 FY10F-FY14F FY10F-FY14F
London Sumatra
17,000 45,000 FY10F-FY14F FY10F-FY16F
Sampoerna Agro
40,000 45,000 FY10F-FY15F FY10F-FY16F
MALAYSIA
Genting Plant
30,000 70,000 FY10F-FY12F FY10F-FY16F
IJM Plant
28,000 23,000 FY10F-FY16F FY10F-FY15F
IOI Corp
40,000 60,000 FY10F-FY14F FY10F-FY14F
KL Kepong
15,000 15,000 FY10F-FY12F FY10F-FY12F
Sime Darby
10,000 10,000 FY10F-FY12F FY10F-FY12F
TSH Resources
31,000 38,500 FY10F-FY17F FY10F-FY20F
SINGAPORE
First Resources
38,000 50,000 FY10F-FY13F FY10F-FY15F
Indofood Agri
90,000 135,000 FY10F-FY14F FY10F-FY16F
Kencana Agri
66,000 66,000 FY10F-FY20F FY10F-FY20F
143,000
FY10F-FY20F FY10F-FY20F
213,000
Wilmar
JAKARTA, Oct 25 (Reuters) - Indonesia could match Brazil's success in slowing deforestation but needs far more
aid from rich nations such as the United States, Japan and
the European Union, Norway's environment minister said
on Monday.
Norway has signed a $1 billion climate deal with Indonesia,
under which Jakarta has agreed to impose a two-year ban
on new permits to clear natural forests.
Norway has already released $30 million of the funds, with
the bulk to be paid out later after Indonesia proves greenhouse gas emissions have gone down and an independent
audit is done.
But more aid is needed to save Indonesia's forests, said
Norwegian environment minister Erik Solheim.
"$1 billion is a huge amount of money but Indonesia needs
quite substantially more to be able to conserve and sustainably manage its forests," Solheim told Reuters in an
interview in Jakarta, where he is meeting Indonesian officials.
"The United States should come in, Japan, other European
nations could come into this scheme to make it robust
enough."
So far, Norway has been the biggest donor to protect
tropical forests. At last year's Copenhagen climate summit,
the United States, Australia, France, Japan, Britain and
Norway agreed to provide a combined $3.5 billion from
2010-12 to help save forests.
Total pledges by rich donor nations rose to $4 billion in
May, when members of a forest partnership met in Oslo.
Indonesia's vast tropical forests soak up enormous
amounts of greenhouse gases but are threatened by agriculture and biofuel cultivation. Worldwide, deforestation is
responsible for up to a fifth of all greenhouse gas emissions
from human sources, according to U.N. data.
"The logic in the past was that you can make money from
destroying the forest, you cannot make money from protecting the forest. That logic must be changed," said Solheim.
Oil-rich Norway has also allocated $250 million and $1 billion to forest conservation projects in Guyana and Brazil
respectively.
"Brazil has reduced its deforestation rate by 80 percent
from 2003 until 2010. That's a fantastic result. I think the
prospects for Indonesia are of the same magnitude," he
said.
Solheim said it was up to Indonesia, not Norway, to define
which forests would be saved under the moratorium or
whether existing permits to clear valuable forest would be
honoured.
"If Indonesia came to Norway to tell us how to do our oil
and gas production, Norwegians would laugh," he said.
15
November 2010
Palm oil firms such as Wilmar , SMART and Indofood Agri
Resources have big expansion plans and vast land banks
in Indonesia, the world's biggest producer of the oil used in
cosmetics, ice cream and other products.
While Indonesian officials have said they would prefer for
the $1 billion to be handled by an internationally reputable
Indonesian institution, Solheim said Norway preferred an
international institution such as the World Bank.
"This is a matter we have to discuss with the government of
Indonesia," he said.
MARKET-BASED OFFSETS DISTANT
Part of Norway's donation will be used to set aside forests
for pilot projects under a planned U.N-backed forest carbon offset scheme, called reduced emissions from deforestation and degradation (REDD).
So far, most REDD pilot projects are funded by governments. A market-based REDD scheme -- under which rich
polluters could offset their emissions by paying poor countries not to chop down their trees -- was a distant prospect,
Solheim said.
"That may come in 10 years time or so. It's much more
likely we will get a market-based system in other areas
such as energy," he said. "Some who are arguing that it
should not be market-based can sleep peacefully because
we are very far from a market-based system. Every single
cent will come from taxpayers."
REUTERS SUMMIT-WILMAR SAYS NO MAJOR IMPACT
FROM MORATORIUM
For other news from the Reuters Global Climate and Alternative Energy Summit, click on:
( http://www.reuters.com/summit/
GlobalClimateandAlternativeEnergy10?pid=500 )
By David Fogarty and Niluksi Koswanage
SINGAPORE/KUALA LUMPUR, Oct 12 (Reuters) - Wilmar
International , the world's No.1 palm oil firm, expects Indonesia's proposed two-year ban on clearing forests to have a
limited impact on its operations as land available for oil
palm estates is ample.
Singapore-listed Wilmar's stand run counter to many palm
oil and mining firms who fear the moratorium -- part of a $1
billion deal with Norway aimed at fighting deforestation
and carbon emissions -- will curb expansion and future
earnings.
degraded but the question of who pays for this remains
unsettled. Goon said Wilmar would abide by any regulations that governed land swaps if such rules were drafted.
Indonesia is under international pressure to slow deforestation and the destruction of peatlands, which release vast
amounts of planet-warming greenhouse gases when
cleared or burned.
Wilmar also faces an uphill task in ensuring its palm oil
supply comes from third-party estates that have not illegally cut down forests or drained peatlands to expand,
Goon said.
"NOT THE PALM OIL POLICE"
Less than half of the palm oil the firm trades comes from
its own subsidiaries, Goon said.
But unlike companies such as Malaysian-listed planter IOI
Corp , which recently excluded an Indonesian supplier over
concerns of deforestation, Goon said Wilmar usually engages with errant planters to help them become more ecofriendly. "First of all, we are not the palm oil police," Goon
said.
"If the Roundtable on Sustainable Palm Oil either suspends or terminates a member that would prompt us to
review our relationship with the company," he said, referring to industry-driven body tasked with certifying planters.
Goon, an RSPO board member, said Wilmar planned to
expand its investments in cutting carbon emissions and
would spend between $12 million and $15 million in
2010/11 on projects around East Asia. A total of 18 projects
were at various stages of development.
The company already had six projects registered under a
U.N.-backed clean energy scheme that rewards investors
with tradeable carbon offsets and focused on capturing
methane, a powerful greenhouse gas, by treating palm oil
mill waste water.
He said projects developed or planned also included burning palm biomass and rice husk waste in boilers to generate power, cutting fuel bills and reducing emissions.
"There are quite a few in process now and we will be rolling
out a number for the next 5 to 10 years," he added. He also
said the industry was far different than it was a decade
ago, with clear rules and standards under the RSPO and
Wilmar's Head of Corporate Social Responsibility Jeremy
Goon said oil palm concessions only cover 3.2 percent of
Indonesia's land mass but contribute 70 percent of total
agriculture activity in the Southeast Asian country.
"We understand there is sufficient non-forest degraded
lands in Indonesia to accommodate and support the
growth of the plantation businesses," Goon told the
Reuters Climate and Alternative Energy Summit.
Under the deal with Norway, the moratorium would apply
from the start of next year but exactly which areas of forest
will be covered remains unclear, unsettling investors.
Senior Indonesia officials have raised the idea of land
swaps to help palm oil firms expand on land already
An aerial view shows a truck carrying logs of wood in a forest in Indonesia's Sumatra
island. Indonesia's plans to halt forest clearing will slow the aggressive expansion of
plantation firms in the world's top palm oil producer, leading to higher costs as firms
will need acquisitions or improved yields to boost growth. - REUTERS/Beawiharta
16
November 2010
other bodies. Green groups have targetted palm oil and
logging firms for cutting down large areas of forest, destroying pristine rainforests brimming with plant and animal species.
But he said firms under the RSPO must complete detailed
assessments of any pockets of forest with a high conservation value in plantation concessions.
Social impact assessments were also crucial before development of any lands. "The lands that are normally
awarded by governments to palm oil companies are usually degraded, logged-over secondary forest.
They usually only give pristine rainforest with commercially
viable timber to logging companies and that's just the way
it is," he said.
INDONESIAN FIRM EYES FIRST GREEN PALM PRODUCT
SALE
JAKARTA, Oct 8 (Reuters) - Indonesian palm oil firm PT
Megasurya Mas is in talks with a Dutch buyer to sell the
country's first shipment of a palm oil-based product certified as sustainable, a company executive said on Friday.
Pressure is growing on Indonesian palm oil firms after accusations from green groups over deforestation have led to
firms such as Burger King , Nestle and Unilever to stop
buying palm oil from PT SMART Tbk .
PT Megasurya Mas, a unit of palm oil firm Musim Mas that
is owned by the Karim family, expects to sell soap made
from palm oil that is certified by the Roundtable on Sustainable Palm Oil (RSPO), said Wibowo Suryadinata,
Megasurya's general manager.
"The premium will be about 5 percent higher than the price
for non-RSPO," Suryadinata said, adding a deal was expected within two to three months. He said this would be
the first sale of a RSPO certified palm oil product from the
world's largest palm oil producer. "We're taking benefits
from being the first," he said, adding he expected it to drive
profit growth.
production. The industry has been locked in a dispute with
green groups following accusations it has cleared peatland
and high-conservation value forests that shelter endangered species and trap climate-warming gases.
SUSTAINABLE PALM OIL BODY CENSURES INDONESIA'S
PT SMART
By Sunanda Creagh
JAKARTA, Sept 23 (Reuters) - An industry body for sustainable palm oil has made its first public censure of a member, saying Indonesia's PT SMART Tbk breached its principles and may face sanctions, and also ticked off the firm's
parent.
SMART last month released an independent audit after
Greenpeace alleged SMART bulldozed high conservation
value forests and damaged carbon-rich peatlands. The
audit gave SMART a mixed score card, highlighting some
instances in which Indonesia's environmental laws were
breached.
The Roundtable on Sustainable Palm Oil (RSPO) -- an industry body of planters, green groups and consumers -said on its website its grievance panel had written to
SMART and Golden Agri censuring the firms for the
breaches uncovered by the audit.
SMART is a member of the RSPO but Golden AgriResources (GAR) is not.
"In its letter to SMART and GAR, the panel finds there has
been serious non-compliance with the RSPO code of conduct, specifically a failure by SMART to work towards implementation and certification of the RSPO principles and
criteria," it said.
In particular, RSPO principles on social and environmental
impact assessments and peatland management have been
infringed, it said.
"Members who have been found to not be in compliance
and who continue to be in non-compliance with the RSPO
regulations could ultimately face sanctions, including the
suspension and, eventually, the termination, of their membership of the RSPO."
The comments may be a blow to SMART's aims to win back
big palm oil buyers including Burger King Holdings , Nestle
and Unilever , who have said they will stop buying from
SMART because of environmental concerns.
The RSPO also urged GAR to stop publicly suggesting it
was in the process of obtaining RSPO certification.
"GAR is not a member of the RSPO, nor has the RSPO yet
received a membership application from the company. The
Panel encourages GAR to submit a full and complete application for membership," the statement said.
REUTERS/Crack Palinggi
The RSPO, an industry body of consumers, green groups and plantation companies, was formed
in 2004 and aims to promote growth and use of sustainable oil palm products. It forecast production of ecofriendly palm oil may double to 3 million tonnes by the end
of this year.
But planters have complained that premiums for ecofriendly palm oil are not high enough to encourage
SMART said in a statement it would work toward the requirements set by the RSPO, including environmental impact assessments and conservation of deep peatlands.
Enormous amounts of climate-warming gases are released
when deep peatlands are disturbed, and the deforestation
of Indonesia's extensive tropical forests led the World Bank
to name it the world's number three emitter in a 2007 report.
17
November 2010
MALAYSIA'S IOI SAYS PALM PRICES TO STAY STRONG
By Fong Min Hun
PUTRAJAYA, Malaysia, Nov 12 (Reuters) - Palm oil prices
will extend their rally into mid-2011 after touching their
highest level in over two years, the world's third largest
listed producer of the vegetable oil said.
"We are optimistic that the strong price trend (of 3,000
ringgit per tonne) will continue up to the middle of 2011,"
Lee Yeow Chor, executive director of Malaysia's IOI Corp
said in an interview. "It will certainly be very positive for IOI
for our current financial year ending June 2011."
Environmentalists have attacked expansion plans by planters in Indonesia, the world's largest palm oil exporter, because of deforestation that leads to greenhouse gas emissions and wildlife destruction, leading to pressure on growers to certify their palm oil as sustainable.
Bangun said major palm oil consumers such as Unilever ,
Nestle and Burger King , who have stopped buying from
Indonesia's PT SMART because of environmental concerns, should outline their plans to consume sustainable
palm oil. "Supply of green palm oil is available but it's
lacking buyers. That's causing prices to gradually fall," he
said.
Lee said near-term prospects were rosy for IOI, as it would
also benefit from the commissioning of two new specialty
fats plants, one last July and another next March.
For a PDF on palm and the environment, click:
Palm prices have surged since the end of August on a
global commodities rally and peaked at a two-year high of
3,452 ringgit ($1,109) per tonne on Thursday. IOI, an integrated palm player, is the second largest palm company in
Malaysia after Sime Darby .
Annual production capacity of green palm oil jumped to
over three million tonnes last month, or 6.6 percent of
global palm oil production of 45 million tonnes, but sales
of the oil have been slow. Certification of for green palm oil
started two years ago, aimed at preserving forests and protecting local communities.
IOI is also a charter member of the Roundtable Summit on
Sustainable Palm Oil (RSPO), an industry body promoting
sustainable palm development. IOI has 30 percent of its
units RSPO-certified while another 30 percent has been
audited and awaits certification.
RSPO-certified palm oil premiums now stand at $3-$5
compared to $50 at end-2008. Planters have complained
that the lower premiums will not encourage the production
of sustainably produced palm oil.
IOI has produced 900,000 tonnes of RSPO-certified palm
oil to date, but Lee is not happy with the premiums being
paid for green palm, which is more expensive to produce.
The requirement for consumers to report their sustainable
palm oil intake will be submitted to the RSPO meeting next
year to get approval for a one-year trial period, before full
implementation in 2012, Bangun said.
"We have, since 2009, a fair volume of sustainable palm oil
and it is disappointing we have not received the support
that we were expecting," he said. Lee also said that some
non-governmental organisations' allegations that IOI's
practices were environmentally unfriendly "had basis"
while others were not true.
"We are against...(NGOs) picking up on selective incidences to ridicule and undermine the reputation of the
company," Lee said. "We welcome exchanging findings,
and hope that we are allowed time to investigate."
IOI had last July stopped buying palm oil from PT SMART
after the Indonesian planter received a mixed score card on
an environmental survey.
RSPO ASKS PALM OIL BUYERS TO PLAN GREEN PALM
DEMAND
( http://r.reuters.com/hej64n )
Members of the RSPO have also agreed to review in January a proposed new planting policy which growers say may
disrupt long-term operational plans.
Dubbed the New Planting Procedure (NPP), the policy requires planters to address all grievances prior to commencing operations in a new area, a move that may slow expansion. "The main concern from growers around planting
procedures is that it is difficult to implement within the
current legal frameworks," RSPO chairman Jan Vis Kees
told reporters.
The planting procedure overlaps with local regulations.
Many firms still have ambition expansion plans, though a
planned government moratorium on new permits to clear
natural forest from next year may also limit the industry
expansion.
By Fitri Wulandari
JAKARTA, Nov 12 (Reuters) - An industry body that set up
standards for green palm oil output said that in order to
boost sales, buyers should specify end uses for the product.
The Roundtable on Sustainable Palm Oil (RSPO), an industry body of consumers, green groups and plantation companies that aims to promote use of sustainable oil palm
products, is trying to balanced increased pressure on growers by giving them clearer forecasts from potential buyers.
"Growers want a fair treatment. If we have to report our
plan to certify production, consumers must have similar
obligations," said Derom Bangun, vice president of the
RSPO, on the sidelines of an RSPO meeting in Jakarta.
First delivery of the First RSPO-certified sustainable palm oil to end-users in
Rotterdam- REUTERS/Jerry Lampen
18
November 2010
Q+A-WHY HAS SOUTHEAST ASIA'S HAZE RETURNED?
By Nopporn Wong-Anan
SINGAPORE, Oct 22 (Reuters) - Fires set off to clear forest illegally
on Indonesia's Sumatra island are sending clouds of haze across the
Malacca Strait to neighbouring Malaysia and Singapore, causing the
worst air pollution since 2006.
Apart from being a health hazard, the haze can inflict economic
costs by scaring off tourists and disrupting transport and farming.
WHY IS IT HAPPENING?
Forest fires are a regular occurrence during the dry season in areas
such as the Indonesian island of Sumatra but the situation has been
aggravated in recent decades as timber and plantation firms, as well
as farmers, start fires to clear land.
Indonesia has a long history of weak forestry law enforcement and
illegal land clearing by palm oil developers is common. Fires clear
land quickly and reduce the acidity of peatland soil, but they release
vast amounts of greenhouse gases into the air.
The fires come ahead of an Indonesian plan to impose a two-year
moratorium on new permits to clear natural forest from 2011 as
planters are looking to expand plantations on the back of rising
prices..
The fires are expected to burn as planters rush to grab land ahead of
the moratorium.
Another part of the problem is under ground.
Southeast Asia hosts 60 percent of the world's tropical peatlands,
most of it in Indonesia. Peat soil is made up of decomposed plant
material that burns easily. Peat fires are hard to put out as they can
smoulder underground and resurface, and produce thick haze and a
high amount of carbon.
Because of weather patterns, smoke from the fires often blows into
nearby countries, although Indonesia's own most populous island of
Java, where the country's capital, Jakarta, is located, is generally little
affected.
HOW BAD IS IT THIS YEAR?
In Singapore, a pollution index rose to an "unhealthy" level on Thursday. Malaysia's index rose to a "hazardous" level the previous day.
The haze has brought poor visibility for ships in the Malacca Strait,
forced hundreds of schools in Malaysia's southern Johor state to
close and shrouded Singapore's regional financial district in mist and
smoke. The situation improved slightly on Friday.
WHEN WAS THE WORST?
The worst haze hit in 1997-98, when drought caused by the El Nino
weather pattern led to big Indonesian fires. The smoke spread to
Malaysia, the Philippines, Singapore and Thailand and cost more
than $9 billion in damage to tourism, transport and farming. More
than 9 million hectares (22 million acres) of land were burnt, 6.5
million of which were forested areas. The fire produced an estimated
1 billion to 2 billion tonnes of carbon.
WHAT IS THE REGION TRYING TO DO?
Spurred on by the 1997-98 fires, Southeast Asian countries signed an
Agreement on Transboundary Haze Pollution in 2002, but it has
been toothless since Indonesia, the source of most of the smoke, has
yet to ratify it. The pact calls for signatories to work closely in monitoring, mitigating and taking preventive measures in combating
transboundary haze.
Government agencies in neighbouring countries have from time to
time offered to help Indonesia fight the fires -- for example by sending water-dumping aircraft and fire fighters or providing satellite
technology to map fires -- but Jakarta has not always accepted the
help.
WHAT IS THE DIPLOMATIC FALLOUT?
The haze and its health and economic costs can strain the region's
generally good ties. The haze returned less than a week after Southeast Asian environment ministers met in Brunei to address the fires.
For now, Malaysian and Singaporean cabinet ministers have been
measured in their response, telling Indonesian counterparts of their
concern and offering to help.
Q+A-HAS THE GREEN CAMPAIGN HURT SE ASIA'S PALM
OIL SECTOR?
KUALA LUMPUR, Oct 21 (Reuters) - Non-governmental organisations have put more pressure on Southeast Asia's palm oil industry to
become environmentally friendly by convincing consumers to shun
suppliers that cut forests to expand estates.
The impact of the green campaign on the industry will be a key issue
for the Roundtable on Sustainable Palm Oil -- an industry driven
body tasked with certifying the vegetable oil as eco-friendly -- when
it meets in Indonesia on Nov. 8-11.
Here are some questions and answers on the issue:
WHAT HAVE GREEN GROUPS ACHIEVED SO FAR?
A strong green lobby has convinced EU lawmakers to impose rules
preventing palm-biofuels from top producers Indonesia and Malaysia
from entering the market, a move seen by palm oil firms as an informal trade barrier in favour of EU oilseed producers.
The focus has since shifted to consumer products in a big way since
2009, which is harder for palm oil firms to ignore.
Indonesia's SMART had to clear itself of allegations of forest clearing
with an audit after buyers like Unilever and Nestle scrapped supply
ties with company following Greenpeace claims of environmental
damage.
WHAT HAS HAPPENED TO EUROPEAN DEMAND FOR PALM OIL?
Overall, EU actions against palm's conversion into biofuels keeps the
bloc well behind top buyers India and China and encourage these
two Asian giants to consumer more and lift the market.
So if green campaigners want to make an impact, they need to persuade price-sensitive India and China to limit their use of palm oil,
the world's cheapest cooking oil, and become more environmentally
conscious.
WILL NGO ACTION AFFECT PALM OIL FUTURES AND CASH MARKETS?
It is not the case for benchmark Malaysian futures as Asian demand
patterns, the soy crop progress in the Americas and weather concerns drive the market. But it's a different story for the physical market, especially Indonesian crude palm oil.
Under NGO pressure, Malaysia's No. 2 palm oil firm and trader IOI
stopped sourcing from SMART's parent Golden Agri in July and had
to pay more for Indonesian cargoes from other suppliers, a move that
pushed prices up by 10 percent.
If more traders single out SMART and Golden Agri, they risk dealing
with tighter supply and much higher prices as both firms make up a
third of Indonesian output.
HOW ABOUT THE INDUSTRY'S EXPANSION PLANS?
The industry says the rate of oil palm estate expansion in Indonesia
has slowed to 250,000 hectares per annum from 600,000 hectares
at the height of the palm oil price boom in 2007-2008 thanks to
greater scrutiny by consumers and NGOs.
But the impact to supply will not be felt in the next five to six years as
many foreign and local planters in Indonesia have not used up their
huge landbanks.
Any future land expansions may come in the form of acquisitions in
the sector as soaring palm oil prices provide strong cash backing.
The world's No. 1 planter Wilmar took that route. In August, it
bought a 20 percent share in Kencana Agri that has planted only a
fifth of its landbank.
Wilmar told Reuters in a recent interview that there was sufficient
non-forest, degraded land to accommodate the growth of the plantation business despite Indonesia's proposed two year ban on forest
clearing.
19
November 2010
CHINA'S SOY BUYING SPREE TO CURB VEGOIL IMPORTS
KUALA LUMPUR, Oct 28 (Reuters) - China's soybean imports smash
records every year but if the country keeps up last week's pace of
buying, its processors will have more than enough to crush into cooking oil, reducing imports of edible oil.
The world's No. 1 food buyer may be rewriting its shopping list at a
time when a weaker dollar makes bumper soy crops from the Americas cheaper than processed soyoil from Argentina as well as Malaysian and Indonesian palm oil.
More Chinese soy crushing will cut edible oil imports by 5 percent to
7 percent, to about 6.3 million to 6.4 million tonnes for the marketing year to September 2011, Reuters calculations based on industry
estimates show.
The scenario provides a bearish counterpoint to increasing U.S. soyoil
prices as South American biofuel mandates suck up more edible oil
and Malaysian palm oil prices climb on low yields after this year's
erratic weather.
"Export supplies for vegetable oils are not increasing from the Chinese point of view and they are depending more on soybean imports
to meet cooking oil demand," said Thomas Mielke, who heads oilseed research house Oil World.
China's soy buying in the new marketing year has taken on more
urgency than ever, partly driven by a delayed Brazilian soy crop and
concerns over growing food inflation after Lunar New Year holidays
in February.
U.S. sales data shows China snapped up 1.45 million tonnes of U.S.
soybeans last week, more than doubling its purchases from the week
to Oct. 15, and the highest so far for the U.S. marketing year that
started on Sept. 1.
The additional demand prompted the China National Grain and Oils
Information Centre (CNGOIC) to revise soy import estimates to 54
million tonnes in the new marketing year, or a jump of 7.2 percent
from 2009/2010.
"If soybean stocks increase by about 5 million tonnes due to the buying, it means at least 1 million tonnes more soyoil," said a trader in
Shanghai.
"The margins will go beyond 500 yuan and shrink a little at the end
of this year but it will be good margins for some time because domestic soyoil and soymeal prices are high," said Frank Chen, a
Shanghai-based analyst with Pacific Epoch Futures.
WEATHER TRIGGERS THE PANIC BUTTON
Traders say China may cut vegetable oil purchases by at least
700,000 tonnes of mainly refined palm olein from Southeast Asia,
taking the edge off Malaysian palm oil futures that hit two month
highs this week on the falling dollar.
Although some refining capacity will turn idle, crude palm oil supply
may get a breather since the Malaysian yield recovery will stay fragile
until the first quarter of 2011 after the El Nino-driven drought this
year.
La Nina, which comes on the heels of El Nino and brings heavier
rains to Southeast Asia, could also curb supplies as prolonged exposure to moisture rots palm fruits and floods complicate transport.
Weather triggers the panic button for China. In late 2007, La Nina
driven floods in Malaysia and Indonesia set off a scramble for supplies among Chinese traders that powered Malaysian palm oil futures to a record high of 4,486 ringgit.
This time the scramble has entered the soybean space with Chinese
orders for U.S. cargoes soaring as La Nina brings drier weather to
South America, delaying plantings, mostly in Brazil.
"If La Nina leads to crop failure, the Chinese would be seen as taking
a precautionary step rather than a gamble because the dollar could
slide even further and make new cargoes cheaper," said a plantation
analyst with a Singaporean investment bank.
Soaring U.S. soy futures have lifted the soyoil market to two year
highs this week on strong Chinese demand but although China's
vegetable oil purchases may slow in the future, higher South American biofuel mandates will prop up prices.
"Soyoil will widen its premium to palm oil to $100 after trading in
tandem in August," said a regional vegetable oil trader in Malaysia.
"It's more because of the huge demand for soybeans than the mandates, but who knows, that may kick in some demand for palm oil
later on."
SHIFT TO OILSEEDS
DOES THE PALM OIL PARTY END AT 3,000 RINGGIT?
China's shift to cheaper soy from pricier edible oils will be a big step
forward in reining in a growing agricultural trade deficit that hit $11.3
billion in the first half of 2010, almost double the same period last
year, according to official data.
Taxes on imports and massive expansion of soy crushing facilities
also reflect that goal.
Customs impose 9 percent duties on palm oil and soyoil but just 3
percent for soybeans. In the past, importers were willing to brave
that mechanism when soy supplies tightened and cooking oil demand surged.
"This year, more importers are going to be cognisant of the fact that
they will get more discounts by adhering to the tax structure," said a
trader with a Singaporean trading house that ships soy products to
China.
"The higher soyoil and palm oil prices are a little unattractive with
inflation on the rise," the trader said, referring to last month's annual
inflation that rose to a 23-month high at 3.6 percent.
China's lower participation in edible oil markets may pose a setback
for overseas processing sectors, but the blistering rise in soy imports
will slowly crank up its 100 million tonne crushing capacity, of which
half lies idle. [ID:nTOE60P01M]
It mostly has to do with the promise of higher margins. The CGNOIC
said Chinese traders were buying South American crops forward with
crushing profit of 302 yuan per tonne -- the highest this year, and
traders expect it to rise further.
KUALA LUMPUR, Oct 15 (Reuters) - Malaysian palm oil futures look
likely to revisit the 3,000 ringgit ($973.4) level hit two years ago as
global vegetable oil supply concerns grow and the U.S. dollar weakens.
But could the party end abruptly for palm oil, which has surged almost 24 percent so far in the second half of 2010?
Palm oil has been riding high since a drought hit oilseed crops in the
Black Sea region in July and August, getting an extra fillip this week
when the U.S. government surprisingly cut its estimates for what was
expected to be a bumper soy crop.
The third month contract on Bursa Malaysia rose 19 ringgit to 2,935
ringgit a tonne on Friday, just off the two-year high of 2,970 ringgit
hit the previous day.
GET OUT NOW?
Agricultural markets overreacted to the U.S. soybean crop estimate
cut, an analyst at a Malaysian brokerage said.
"The production numbers are still fluid and the soy harvest is picking
up very fast," said Alvin Tai, an analyst with OSK Investment Bank.
Tai expects palm oil prices to ease off in the near term and fall in the
first quarter of 2011 as the market begins to factor in strong output
from top supplier Indonesia.
20
November 2010
Malaysia should see higher production from October due to the seasonal uptick in yields.
The surge in palm oil prices may see demand rationing kick in, and
the market is vulnerable to a setback before attracting more orders,
said Thomas Mielke, head of Hamburg-based research house Oil
World.
"We do not rule out the palm oil complex coming under temporary
pressure," Mielke said. "It is possible to do some profit taking and
make some technical adjustments."
JUMP RIGHT IN?
Some say a correction in palm oil will be brief but a supply deficit in
global vegetable oil markets when top buyers China, India and Pakistan are restocking after festivals in August to October will see a
renewed rally.
This scenario loosely mirrors the grain markets, said Doug Whitehead, an analyst with Rabobank in London.
"We are not seeing demand rationing in the agriculture markets despite the price rallies. China bought more soybeans this week, Iraq
bought more wheat," he said.
Weather conditions could be the wild card.
"Weather has the potential to reduce supply of vegetable oils," said
Martin Bek-Nielsen, executive director of Malaysian-listed United
Plantations .
He was referring to the La Nina weather condition that brings heavy
rains to palm-producing Southeast Asia and triggers dry spells in
soy-exporting South America, curbing supplies.
"The market is going to trade between 2,800 and 3,300 ringgit in the
next 3-6 months," he said. "Technical play is very strong and we
could be bouncing between 3,000 to 3,200 ringgit soon."
Analysts said firms with a lack of land reserves such as Jakarta's biggest listed planter PT Astra Agro Lestari risk slower profit growth
and reduced market share, while smaller players such as Gozco
Plantation may be forced to merge or become takeover targets.
"In the short term, the moratorium will be bad for plantation firms as
plans to grow landbank will be limited, and firms with small landbanks will find it especially hard to expand," said Kenny Suyatman,
fund manager at PT Mandiri Manejemen Investasi.
The fund manages $1.9 billion in assets including stakes in London
Sumatra and Sampoerna Agro .
Firms with the smallest unplanted landbanks include BW Plantations and Bakrie Sumatra , while Wilmar and Indofood Agri have the
biggest Indonesian landbank.
The ban by Southeast Asia's biggest economy follows a $1 billion
climate aid deal Indonesia signed with Norway aimed at avoiding
greenhouse emissions from deforestation.
Palm oil buyers Unilever and Nestle have halted supply contracts
with Indonesian palm oil giant PT SMART Tbk and agribusiness
giant Cargill is conducting a review following reports from Greenpeace alleging SMART destroyed carbon-rich rainforests.
Regional planters rapidly expanded in recent years as a rally in crude
palm oil prices (CPO) was driven by growing demand from Asia and
Europe for an oil used to make products from biscuits to biodiesel.
But easy land expansion may be over.
"NGO pressures may become too intense for big cap planters to expand through new planting. The big cap planters may prefer to buy
existing estates or firms," said Ivy Ng Lee Fang, a plantation analyst
at CIMB Investment Bank Berhad in Kualu Lumpur, pointing to BW
and Sampoerna Agro as possible targets.
Consolidation in the industry may be beginning. Sources told Reuters
on Wednesday that Wilmar plans to buy a 20 percent stake in Indonesian firm Kencana Agri , which also has a relatively high unplanted
landbank.
Gozco, which has among the largest land reserves among small
caps, said that firms from Europe, Singapore, India, China plus U.S.
agribusiness giant Cargill [CARG.UL] had expressed interest in taking a stake or partnering it.
The moratorium is creating a perception of land scarcity in Indonesia,
said an industry source that does land acquisition deals for Southeast Asian planters.
"Planters are talking to us about either expanding west to Africa or
going east to Papua New Guinea," said the source, who declined to
be identified. "The moratorium, if put in place, will see land prices
rise by 30-50 percent from current levels."
ACQUISITIONS OR RESEARCH
INDONESIA FOREST MORATORIUM TO STYMIE PALM OIL
FIRMS
By Janeman Latul and Neil Chatterjee
JAKARTA, Aug 12 (Reuters) - Indonesia's plans to halt forest clearing
will slow the aggressive expansion of plantation firms in the world's
top palm oil producer, leading to higher costs as firms will need acquisitions or improved yields to boost growth.
The two-year moratorium on new permits to clear natural forest from
2011 will increase land prices, pushing some to consider following
industry leader Wilmar in expanding overseas to Africa or to diversify
into food crops.
Indonesia is regarded as a key player in the fight to slow climate
change because its tropical forests and carbon-rich peatlands trap
huge amounts of carbon dioxide but its rapid deforestation rate has
sparked concern among environmentalists.
This is not good for Astra Agro, whose trees are ageing -- at an average of 15 years old versus an optimum fruit-bearing age of 7-18 years
-- meaning it needs to plant soon. Suyatman sees it losing out from
the moratorium and has cut his holding.
Astra Agro expects its expansion to be restricted by the forest moratorium, with output flat this year.
Its stock has slipped 10 percent this year, underperforming a 19 percent rally in the Jakarta index, and with a price to earnings ratio of
19.4 is still seen as overvalued by many.
Land surveys that used to take a few days now take weeks, leading to
higher fees, given more stringent environmental criteria, the firm
said. It is now looking at expanding in neighbouring Papua New
Guinea instead.
If environmental concerns do restrict future supply of palm oil, investors say higher CPO prices could be a comfort for strong players,
given a healthy demand outlook. Analysts in a Reuters poll saw
steady CPO prices next year.
21
November 2010
Those firms able to tap that demand through better yields may be
winners.
Alfi Fadhliyah, a plantation analyst at PT Bahana Securities, picked
out London Sumatra and Sampoerna Agro because of high quality
seeds as a result of research and a young tree age -- a combination
that should boost future yields.
London Sumatra, whose CEO told Reuters the moratorium will be a
"temporary shock" for the industry, has an average tree age of 11
years.
"We like London Sumatra because it could have higher yields among
its peers as its trees are at a prime age for palm oil, which could help
the company benefit during the moratorium period," said Winston
Sual, fund manager at the $108 million top performing Indonesian
fund Panin Dana Maxima.
EUROPE EYES MORE PALM OIL AS DROUGHT SAPS SUPPLIES
By Niluksi Koswanage and Naveen Thukral
KUALA LUMPUR/SINGAPORE, Aug 18 (Reuters) - European consumers will be forced to boost shipments of palm oil, despite a vigorous campaign by green groups against it, after a drought that shrivelled oilseed crops across the Black Sea region.
Palm oil futures on the Bursa Malaysia Derivatives Exchange
climbed to a 15-month top last week and the market could be set for
further gains as European consumers scurry for supplies to satisfy
demand from the food and fuel sectors. A storm could be brewing in
global vegetable oil markets, analysts say, although not on the scale
seen in U.S. wheat futures, which surged to two-year highs this
month.
"Europe's rapeseed crop was lower than expected and Ukraine is
going to have a very limited supply available for exports," said Doug
Whitehead, a commodities analyst at Rabobank in London.
"It really means that rapeseed oil supplies will be very much constrained, so it is likely we will see palm oil moving as a substitute."
Hamburg-based analysts OilWorld forecast the European Union's
palm oil demand to rise 4.4 percent to 5.7 million tonnes in the oil
marketing year to September 2010, making the region the No.3
buyer after India and China.
"We expect to see some new orders coming in this week onwards to
about September or October," said a trader with a Singapore-listed
planter who deals with European buyers.
"Inquiries are there and sentiment is positive. European customers
will buy on small dips in the current palm oil rally. They don't want to
be caught off guard."
In the Rotterdam cash market, palm oil was up 11 percent in August,
while its discount to rapeseed oil has widened to more than $175 a
tonne from an average of $75 in the second quarter, making palm oil
a cheaper substitute.
"The law of economics will pull the cheapest oil into the European
food market and palm oil's widening discount to rapeseed makes
that happen," said Dorab Mistry, head of trading for Indian firm
Godrej's international arm.
European buyers may have to push environment issues linked to
palm oil on the back burner as they struggle with lower domestic
supplies, although top importers will be unwilling to take shipments
from firms accused of destroying rainforests to expand palm estates.
"For major consumers like Germany sustainability is important, but
we are going to see increased flows of palm oil as there are not
enough edible oil sources," said Standard Chartered analyst Abah
Ofon.
"We continue to be bullish on palm oil as we feel global consumption
of edible oils is going to outstrip supplies in the coming year."
Environmentalists say palm oil's use in biofuels has triggered a land
grab at the expense of rainforests and peatlands -- a campaign that
largely limited its use in the sector.
Rapeseed oil is mostly channeled to biofuels, leaving palm oil for the
food sector and green groups have persuaded Unilever and Nestle
to scrap supply contracts with some planters.
Some traders say European firms may import more soyoil to avoid a
backlash from environment-conscious consumers while a more compelling reason points to prospects of bumper soy crops from the
Americas.
"Even if soyoil is taken up rather than palm oil, there will be a ripple
effect as soyoil will come up short," said Kuala Lumpur-based Citi
analyst Penny Yaw.
"Countries that usually import soyoil will then have to rely on palm
oil. Somehow, palm oil will benefit," said the analyst, referring to
India, which shifted some demand to soyoil in early 2010 when palm
oil rallied on hot weather hurting output.
Palm oil production will also be affected by changes in global
weather. Prices have also risen on the back of the brewing La Ninadriven rains that may disrupt harvesting in the world's top producers
Indonesia and Malaysia in the short term but could boost output in
2011 and staunch the European oilseed decline.
The Indonesian Palm Oil Association said crude palm oil output may
grow at a slower pace of 4.5-5.0 percent this year as prolonged rains
hit yields. Malaysia's commodities ministry has revised its palm oil
output forecast this year to 17.8 million tonnes from 18.1 million on
prospects of wetter weather.
INDONESIA'S MAIN PALM OIL FIRMS
That coincides with expectations for the European Union's rapeseed
crop to fall 7.8 percent to 19.9 million tonnes in 2010 from a year ago
while Ukraine's sunflower crop may drop 2.7 percent to 7.1 million
tonnes, OilWorld data showed.
Excessive rains are likely to cut canola production in Canada, reducing exports nearly 20 percent to 6 million tonnes.
TRADERS BRACE FOR DEALS
Data from cargo surveyors shows that demand for Malaysian palm
oil from the region has outpaced India and China so far in August,
and traders expect more.
By Fitri Wulandari
JAKARTA, Aug 10 (Reuters) - An audit of Indonesian palm oil giant
PT SMART Tbk has found the firm did not destroy primary forest but
did plant on carbon-rich deep peatlands, partially clearing it of accusations by Greenpeace.
While SMART said the independent report showed a campaign by
Greenpeace was exaggerated or wrong, the audit said the firm's
planting of deep peatlands -- which trap greenhouse gases -- on two
estates contravened Indonesian and SMART's own rules.
22
November 2010
Environmentalists have for years expressed concerns over Indonesia's
palm oil producers having cleared forests to expand their plantations.
Palm oil plantations cover a total of 7.9 million hectares -- roughly
80 times the area of Cambodia's Angkor Wat temple complex. Below
are key facts and figures for Indonesia's major palm oil plantation
firms.
* PT SMART & GOLDEN AGRI-RESOURCES
Jakarta-listed PT SMART and its Singapore-listed parent Golden
Agri-Resources together run 427,253 hectares of palm oil plantations in Sumatra, Kalimantan, and Papua.
SMART runs Golden Agri's Indonesian palm oil operations. The
group is controlled by the Widjaja family which has interests in pulp
and paper, finance and property.
The groups produced 1.913 million tonnes of crude palm oil in 2009,
up 13 percent from 2008.
* PT ASTRA AGRO LESTARI
Astra Agro Lestari , Indonesia's biggest listed palm oil plantation
firm, has 264,036 hectares of palm oil plantations in Sumatra, Kalimantan, and Sulawesi.
Astra Agro, which is owned by Indonesia's biggest car dealer PT Astra International Tbk , produced 1.083 million tonnes of crude palm
oil in 2009, up 10 percent from 2008.
* PT PERUSAHAAN PERKEBUNAN LONDON SUMATRA
PT Perusahaan Perkebunan London Sumatra Indonesia , or Lonsum,
has total palm oil plantations of more than 75,000 hectares. Set up
over a century ago by London-based Harrisons & Crossfield Plc, it
has palm oil operations in North Sumatra, South Sumatra, and East
Kalimantan.
Lonsum, a subsidiary of Singapore-listed Indofood Agri Resources
Ltd , produced 377,500 tonnes of crude palm oil in 2009, up 10.5
percent from 2008.
IndoAgri is a unit of Indonesia's PT Indofood Sukses Makmur Tbk ,
the world's biggest producer of instant noodles.
These involve commitments to preserve carbon-rich peatlands in
Indonesia and Malaysia, where much of palm oil plantation expansion takes place, as well as support local and indigenous communities.
The food giant also plans to provide technical support for palm oil
suppliers that are willing to adhere to its palm eco-standards.
Here are some facts about Nestle; its place in the palm oil industry
and mounting pressure from green groups:
* Greenpeace first targeted Nestle in a social media campaign in
March of this year when it aired a commercial on YouTube showing a
bored office worker chomping on a Kit Kat candy bar only to find the
bloodied finger of an orangutan.
* Orangutans are an endangered species of primates whose habitats
in Asia often get cleared to make way for oil palm estates. Palm oil is
a key ingredient used in manufacturing Kit Kat bars.
* Nestle tried to shut down the commercial, citing a copyright claim
on Kit Kat. Greenpeace re-posted the clip on another site and used
Twitter and Facebook to highlight Nestle's move, drawing in thousands of pledges to boycott the firm.
* Within hours, Nestle announced that it had stopped buying palm
oil from Indonesia's Sinar Mas -- a planter that Greenpeace says has
openly destroyed rainforests to expand.
* Nestle also said it has pressured U.S. agribusiness giant Cargill
and other blended palm oil suppliers to avoid buying palm oil related
to rainforest destruction or risk getting delisted as a supplier.
* Indonesian oil palm farmers on the other hand have criticised Nestle for blacklisting Sinar Mar, with many saying they were ready to
boycott Nestle products sold in the Southeast Asian country, local
media has reported.
* Nestle annually buys 320,000 tonnes of palm oil -- roughly 0.7
percent of global production. It plans to source all of its palm oil
needs from environmentally friendly sources by 2015.
* Currently 18 percent of its palm oil purchases are "green" and this is
expected to hit 50 percent by the end of 2011.
* PT BAKRIE SUMATERA PLANTATIONS
Bakrie Sumatera Plantations is the agricultural unit of the politically
connected Bakrie Group, and has about 100,000 hectares of plantations in Sumatra, of which about 80 percent is planted with palm oil
and the rest with natural rubber. The firm produced 211,760 tonnes
of crude palm oil in 2009, up 3 percent from 2008.
* WILMAR INTERNATIONAL
Wilmar International , the world's largest listed palm oil firm, has a
total area of more than 235,000 hectares under palm oil, of which
roughly three-quarters is located in Indonesia -- in Sumatra, West
and Central Kalimantan -- and the remainder in Malaysia.
The firm recently expanded with the purchase of Australian conglomerate CSR Ltd's sugar business -- the world's fifth-largest sugar
refiner -- for A$1.75 billion in July.
NESTLE, "ECO-FRIENDLY" PALM OIL AND KIT KAT
KUALA LUMPUR, May 17 (Reuters) - Swiss-based Nestle , the world's
biggest food group, will work with a non-profit organisation to probe
the firm's palm oil suppliers for evidence of rainforest and wildlife
destruction.
The move is in response to growing scrutiny by green groups over
palm oil which is widely used in the food and fuel sectors.
Nestle said in a statement on Monday that The Forest Trust, a charity
that looks to halt illegal logging by tracing consumer products to
their source, has already helped the maker of Kit Kat bars formulate
guidelines for palm oil purchases.
23
Towards Sustainable Palm Oil Insight
November 2010
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SUSTAINABLE PALM OIL INSIGHT.pub

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