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Jakarta Post

Turnaround in palm oil industry?

  • Wimar Witoelar

    The Jakarta Post

Jakarta   /   Sat, October 24, 2015   /  04:07 pm

Five palm oil giants made history in 2014. Looking for long-term viability in the economy, they announced the Indonesian Palm Oil Pledge (IPOP) at the UN with the objective of making the palm oil industry sustainable.

Taking huge chunks of wisdom from the body of knowledge that had accumulated around the fight against climate change, the theme of IPOP is strong and simple with zero deforestation as their clarion call for reform.

To take IPOP beyond the realm of catchwords, they recruited a management team of young ethical professionals with backgrounds in technology management and legal and environmental issues.

The stage was set for a turnaround in the palm oil industry to make it a partner in human development, leaving the paradigm of business as usual.

The emergence of IPOP gives hope to Indonesia'€™s forests and their crucial role in mitigating climate change. Since 1990, Indonesia has lost nearly a quarter of its forests; at current rates, it could lose all remaining forests by 2056.

Many of these forests have been turned into oil palm and pulp plantations. This economic activity provides short-term income, but it also accelerates greenhouse gas emissions and harms the forests Indonesians depend on.

Indigenous peoples are the largest group of people who place forest sustainability at the center of their lifestyles. Large corporations instead see forests as a land resource to be converted to plantations.

Thus it was historic when five palm oil companies were facilitated by the Indonesian Chamber of Commerce (Kadin) in the signing of a collaborative pledge between major companies in the palm oil sector with the common goal of working toward sustainable palm oil that is '€œdeforestation free, respects human and community rights and delivers shareholder value through collaborative multi-stakeholders efforts'€.

IPOP seeks to advance Indonesia'€™s sustainable palm oil business practices by collaborating with the government and stakeholders.

It was designed to improve Indonesia'€™s market competitiveness by gaining acceptance of Indonesian palm oil products that are increasingly rejected by environment-conscious consumer markets.

But in a reversal of direction, the government announced that a new palm oil producer council was being set up by Indonesia and Malaysia. It would replace '€œno deforestation'€ pledges made by major palm companies in favor of a joint set of standards proposed by the two countries.

Indonesia wants big palm oil companies to cancel the historic pledges of IPOP.

Indonesia is the world'€™s biggest producer and exporter of palm oil producer. Malaysia is the second. '€œIndonesia and Malaysia have agreed to harmonize and combine our two standards,'€ Coordinating Maritime Affairs Minister Rizal Ramli said.

'€œThis is an example of how to fight for our sovereignty. We are the biggest palm oil producer. Why should consumers from developed countries set the standard for us as they want?'€ Rizal asserted.

This is a misleading statement. The insistence on maintaining sustainability standards comes from educated consumers. Indonesian consumers have not had the opportunity to gain an understanding of industry practices. They have been constantly deceived by palm oil conglomerates.

Indonesia, home to the world'€™s third-largest area of tropical forests, has been criticized by activists and other Southeast Asian nations for its forestry policy and for failing to stop the region'€™s annual '€œhaze'€ problem caused byforest burning. Major palm oil companies are being investigated and may face legal and administrative sanctions for forest burning.

It is in this setting that the shattering statement came from Minister Rizal negating the positive trend in reform that would bring Indonesian palm oil in line with the long-term development needs of the people.

 Incredibly, Rizal said IPOP protected the interests of developed countries'€™ vegetable oil markets, and the new council would set a standard that would also consider the welfare of smallholders.

This is a blatant reversal of the truth. Smallholder palm oil growers in fact support IPOP.

The new Indonesia and Malaysia Council, Rizal continued, would also look to promote the image of palm oil, stabilize prices, improve cooperation between top producers and coordinate on production, stocks, biodiesel mandates and re-planting schemes, industry groups have said.

This sounds good from the viewpoint of the companies, but hardly helps the general public, who need to sustain the forests by halting deforestation.

From the global point of view, Indonesia is a major contributor to the fight against climate change.

Will it continue in that role or succumb to the insatiable appetite of large corporations to expand profits at any cost?

The reversal of direction is met by disbelief. Is this an immature statement by a high government official? Will the government reaffirm its commitment to protect the forests and the long-term security of the people?

It depends on President Joko '€œJokowi'€ Widodo'€™s political will.


The writer is founder of Intermatrix Communications, which advises the Indigenous People'€™s Alliance of the Archipelago (AMAN).

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