Southeast Asia’s palm oil industry touts sustainability narrative, but activists cast doubts

Southeast Asia’s palm oil industry touts sustainability narrative, but activists cast doubts

palm plantation
Harvesting in process at a palm plantation. (Photo: Sime Darby Plantation) 

SIAK, Riau: Kimia Tirta Utama Junior High School is located amid 6,400ha of palm plantation owned by Indonesian palm oil producer PT Kimia Tirta Utama (KTU).

With palm trees being a familiar plant in their surroundings, the 282 students are taught sustainable agriculture from an early age.

They learn how to recycle waste and more importantly, how to keep palm plantations free from fires. There is a special programme on palm oil environmental education for the students to learn about palm oil and peatland.

“Look at these posters. We teach our students about peatland so they are aware and will protect them,” principal Eri Apriadi told CNA.

KTU junior high school
There are 282 students studying at Kimia Tirta Utama junior high school in Riau. (Photo: Kiki Siregar)

Palm is so ingrained in their lives that even the school motto has taken on a palm oil theme. “Dr Sawit (Indonesian for palm)”, an abbreviation of a string of Indonesian words, guides the students to be disciplined, respectful, broad-minded, responsible and to have integrity.

“It is safe to say our school is the ambassador of peatland,” Mr Apriadi said.

Palm oil, which can be found in a variety of products including soaps, cosmetics and biscuits, is an important commodity in Southeast Asia, particularly for Indonesia and Malaysia.

Together, both countries produce about 85 per cent of the world's palm oil.

palm oil products
Palm oil is found in numerous everyday products. (Photo: Kiki Siregar)

The industry has encountered headwinds in terms of a negative narrative regarding how its farming practices have caused deforestation, as well as a looming ban by the European Union (EU).

Large agriculture companies interviewed by CNA say not all the criticism is warranted. Activists, however, say these companies need to back up their words with actions.

READ: It all begins with a lit match: Long odds in hunt for forest fire culprits in Indonesia

SLOWING DEMAND FOR PALM OIL

Indonesia is the world’s largest palm oil producer, with an output of 43 million tonnes in 2018. Palm oil is the country’s top commodity with a total export value of US$21.4 billion.

The industry contributes to 3.5 per cent of GDP and employs around 17 million people.

Demand has slowed since the EU said it plans to stop using palm oil in transport fuel by 2030, arguing that the cultivation of palm oil causes deforestation and yearly fires.

This is a blow for Indonesia, as the EU consumes about 7.5 million tonnes of palm oil a year. It is Indonesia’s second-largest palm oil market after India.

Indonesian President Joko Widodo has on numerous occasions said if the EU is serious about the palm oil ban, Indonesia should consume more palm oil domestically to keep prices stable.

From next month, Indonesia will use more palm oil in its biodiesel, upping the current 20 per cent bio-content to 30 per cent.

READ: Indonesia could take back 1.4 million hectares of land from palm planters, says official

Ms Tiur Rumondang, the Indonesian country director of Roundtable on Sustainable Palm Oil (RSPO), a global organisation focusing on sustainable oil palm growing, told CNA that the government should play a role in ensuring that palm oil is used in a sustainable fashion.

“If there is any practice found not complying with the regulations … the government must lead the process (to take companies to task),” she said.

Palm oil production has been blamed by environmentalists for driving massive deforestation
Palm oil production has been blamed by environmentalists for driving massive deforestation. (Photo: AFP/Wahyudi)

READ: Indonesian palm oil exec arrested over journalist killings

Meanwhile in Malaysia – the world’s second-largest producer of palm oil – politicians have hit out at Europe’s decision, saying such moves are protectionist in nature.

As of December 2018, the total oil palm cultivation area in Malaysia stood at 5.849 million ha. About half - 2.7 million ha - are in peninsular Malaysia, while the Bornean states of Sabah and Sarawak have 3.12 million ha of oil palm plantations.

Earlier this year, Malaysian Primary Industries Minister Teresa Kok said the government has capped the total oil palm plantation area at 6.5 million ha, adding that no new permanent forest areas or peatland would be allowed to convert to oil palm cultivation.

READ: Malaysia’s palm oil growers fall on hard times

Issues such as human-wildlife conflict, sometimes with fatal results, are not uncommon in oil palm estates, where wild boars often come to feed on fallen ripe palm fruit, and elephants also pass through oil palm estates on their way between their familiar grazing grounds.

In Sabah, it was revealed that 115 Bornean pygmy elephants had been killed between 2010 to 2018, with most of the deaths occurring on palm plantations or forest reserves close to the plantations.

Between late September this year right until Dec 8, six Borneo pygmy elephant carcasses were discovered, either shot in oil palm plantations or poisoned after eating tainted oil palm or possibly fertiliser. 

READ: Malaysia PM Mahathir takes aim at international community over anti-palm oil narrative

EMPHASIS ON TECHNOLOGY

Parts of Indonesia, including Riau province, have been plagued by annual forest fires for more than two decades, largely due to the slash-and-burn practices to open agricultural plantations dominated by oil palm.

This year, the situation was severe, with fires sending haze to neighbouring countries such as Singapore and Malaysia.

Singapore's Minister for the Environment and Water Resources Masagos Zulkifli said in September that the forest and land fires in Indonesia have released 360 million tonnes of carbon dioxide since August - more than Spain's emission for the whole of 2018.

Astra Agro Lestari
PT KTU plantation manager Achmad Zulkarnain says there were no fires on the company's plantation in 2019. (Photo: Kiki Siregar)

PT KTU plantation manager in Riau, Mr Achmad Zulkarnain, said there was no fire on the company’s plantation this year.

“In all Astra plantations, there was zero fire because we’ve got a system called fire management protection,” he claimed.

“So we have teams going on patrols and watching for fires. We also have monitoring towers to monitor fires.”

KTU realtime monitoring station
PT KTU has a real-time monitoring system to see what is happening in its mill plants. (Photo: Kiki Siregar)

Locals interviewed by CNA said PT KTU’s area was indeed free from fire this year. Satellite images also did not show any fires or hotspots on PT KTU’s concessions.

Mr Zulkarnain said all plantations under holding company PT Astra Agro Lestari are managed under the pillars of “good performance, people and environment”.

Astra Agro Lestari is one of Indonesia’s biggest agribusiness companies, with 41 subsidiaries in the palm oil industry.

KTU peatland hightech
A chamber to measure periodic and continuous greenhouse gas emissions in peatlands. Information can be accessed in real-time through the server. (Photo: Kiki Siregar)

PT KTU started planting oil palm in 1994 and the latest land opening was in 2004. About 2,200 ha of its land are peatland, fossil-rich soil which stores more carbon than normal mineral soil.

In order to ensure the peatlands on PT KTU’s concessions are continuously wet and hence non-flammable, the company has installed deep wells and monitoring stations. Drones are used to constantly monitor the area.

KTU deepwell
PT KTU has installed deepwells to monitor the moisture level of their peatland. (Photo: Kiki Siregar)

PT KTU also has a laboratory on its concession, an area of protected forest which the company maintains to protect wild animals and their habitats as well as employee housing.

READ: Indonesian fires burnt 1.6 million hectares of land this year, researchers say

Meanwhile, Sime Darby Plantation, headquartered in Malaysia, has put in place a real-time sustainability tracking system called Crosscheck.

Launched in April, it is an open-access platform for the public to trace the company’s palm oil supply down to the mill level.

A look at the Crosscheck system shows company-owned refineries, mills, as well as independent mills supplying Sime Darby Plantation. The system will display how the business units are linked to the company’s supply chain.

Users can overlay different risks based on parameters such as proximity to forests, peatland or megafauna (orang utan, tiger and elephant) presence based on international reports, as well as satellite data on whether there was recent clearance or deforestation on the ground.

The system also highlights mills that had issues or grievances lodged against them.

“The platform is open and we can put in more information and data over time,” said Sime Darby Plantation’s Chief Sustainability Officer Simon Lord when interviewed by CNA.

palm plantation (1)
The Malaysian industry players say they have generally adopted an approach against deforestation as well as peatland and labour exploitation. (Photo: Sime Darby Plantation) 

READ: Green palm oil push - Kit Kat, Dove makers could face fines

DOING MORE ON LESS LAND

Many corporate plantations are recognising that land expansion is not the way to grow, Dr Lord added.

He noted that Sime Darby’s plantations in Malaysia have not expanded at all following a 2014 moratorium. Five major oil palm growers agreed not to expand their plantation hectarage while a High Carbon Stock Study was being conducted.

Besides aiming to clarify high conservation value forests which should be protected from encroachment, the study also outlined how oil palm can be planted sustainably to benefit the local communities while maintaining at least carbon neutrality.

Although the findings of the study were published at the end of 2015, Dr Lord noted that the moratorium was still in place.

Now, the aim is to do more with less, he explained. Currently, palm plantations produces 35 per cent of the world’s vegetable oil supply, on less than 10 per cent of land.

Sime Darby Simon Lord
Sime Darby Plantation’s Chief Sustainability Officer Simon Lord. (Photo: Vincent Tan) 

Citing an International Union of Conservation 2018 report on palm oil and biodiversity, Dr Lord pointed out that other oil crops like rapeseed and soybean required 1.25 ha and 2 ha respectively to produce 1 tonne of vegetable oil.

In contrast, the same report showed palm requiring 0.26 ha for 1 tonne of oil.

The sustainable alternative would be to increase the per hectare productivity of palm oil, he said.

Currently, Sime Darby Plantations’ crude palm oil (CPO) yield per hectare stands at an average of 4 tonnes per hectare throughout its international holdings.

However, with a newly-developed oil palm variety, which Sime Darby planted commercially since 2016 following years of research, the yield could be increased up to 8 tonnes per hectare and beyond.

In addition, the plantation company also aims to have its trees bred to mature faster, with scout harvest (the initial harvest before the oil palm plant matures) taken by the time the tree is two years old.

Malaysia is the second-biggest producer of palm oil in the world
Malaysia is the second-biggest producer of palm oil in the world. (Photo: AFP/Mohd Rasfan)

Malaysian industry players have generally espoused an approach against deforestation, peatland and labour exploitation, he added.

Contrary to the bad press that the palm oil industry received, Dr Lord pointed out that in fact, the beef industry, particularly in South America, was responsible for the loss of up to 59 million ha of forest land in an 18-year span between 1990 and 2008.

“No responsible person in the industry wants to cut down forests and go down in history as the person who destroyed the habitats for megafauna like the elephant, tiger, orang utan and so on,” he said.

Dr Lord also explained that Sime Darby Plantation is working with its suppliers on a "Draw the Line on Deforestation" policy, with an aim to improve supplier behaviour from next month. 

Rather than simply dropping them from the supply chain, he said, it was better to re-engage errant suppliers, and encourage them to voluntarily agree to external parties conducting conservation and carbon assessments at their plantations.

palm plantation
Sime Darby Plantation will embark on a "Draw the Line on Deforestation" journey with its suppliers. (Photo: Sime Darby Plantation)

Sime Darby has been active on the rehabilitation front too, Dr Lord said.

It has restored degraded peatland in the northern part of Selangor, which has been infamous in the past for peat fires that spiralled out of control.

Sime Darby has also carried out tree-replanting efforts, establishing its own nursery in Pahang to supply saplings for more replanting efforts, he added.

READ: India resumes buying Malaysian palm oil as Kuala Lumpur offers discount, traders say 

PUSH FOR SUSTAINABILITY CERTIFICATION

Both Indonesian and Malaysian governments have implemented certification schemes for oil palm growers to promote sustainable practices and quality.

Since 2011, the Indonesian government has made it mandatory for companies to attain the Indonesia Sustainable Palm Oil (ISPO) certification to show they are practising sustainable agriculture.

The ISPO consists of seven principles, 52 criteria and 141 indicators. These include conformity to laws, plantation management, protection of primary natural forest and peatlands, as well as environmental monitoring, among others.

PTU KTU and 37 other subsidiaries of PT Astra Agro Lestari have earned the ISPO certification.

The certification, however, is voluntary for smallholders. This means not every plantation is harvested according to the ISPO principles.

Riau palm plantation
There are more than 2.7 million ha of palm plantation in Riau, making it the biggest palm oil producer province in Indonesia. (Photo: Kiki Siregar) 

When CNA visited several individually-owned plantations in Kampar, Riau, last month, local farmers said they do not have ISPO certificates.

Based on observations, they did not seem to comply with basic sustainable agricultural practices. One of them was seen setting a stack of tree branches and leaves on fire to turn them into fertiliser.

The flames burned brightly as he added more branches, sending smoke high up into the air.

Mr Anto, who like many Indonesians goes by one name, also admitted that he usually clears his 5 ha plot by using the traditional slash-and-burn method.

“I cut down the big woods, and then I burn them,” he said.

READ: Palm oil to blame for 39% of forest loss in Borneo since 2000: Study

Indonesia has been grappling with weaker prices for key commodities like coal and palm oil, as the
Indonesia has been grappling with weaker prices for key commodities like coal and palm oil, as the world economy falters on the back of the US-China trade war. (Photo: AFP/Juni Kriswanto)

Over in Malaysia, the Primary Industries Ministry is promoting the Malaysian Sustainable Palm Oil (MSPO) certification scheme for oil palm plantations, smallholdings and processing mills as an alternative scheme to the RSPO certification.

This standard was launched as an avenue for smallholders and outgrowers who could not afford the fees for third-party auditors to inspect their processes and plantations.

Although Ms Kok, the minister in-charge of palm, previously said it aims to achieve 100 per cent certification for the entire Malaysian palm oil value chain by 2019, this ambitious target has since been moderated.

In a speech at the International Palm Oil Congress and Exhibition in Kuala Lumpur in November, she said the government is now aiming to achieve 70 per cent certification for palm oil planted areas by February 2020.

On a website maintained by the Malaysian Palm Oil Certification Council, a running tally shows 3.6 million ha of palm oil land certified throughout the country, which account for 61.6 per cent of the total palm plantations.

ENVIRONMENTAL GROUPS SCEPTICAL

Environment groups, however, are critical about the plantations’ efforts.

In a Greenpeace report published in November, it said there were 151 hotspots between January and September this year on 15 of Astra Agro Lestari’s concessions.

Greenpeace Indonesia forest campaigner Annisa Rahmawati told CNA that the data was gathered from satellite images and official data from the government.

Ms Rahmawati, however, did note that PT KTU was not affected and that hotspots data should not be used as a standalone data.

Indonesia's huge palm oil industry bears the brunt of the blame for the out-of-control blazes,
Indonesia's huge palm oil industry bears the brunt of the blame for the out-of-control blazes, critics say. (Photo: AFP/Abdul Qodir) 

"Fire hotspots data should be used as a complementary data with the burnt area data which the government releases every year," she said.

There is also the issue of political clout.

Mdm Shariffa Sabrina Syed Akil, who heads the environmental non-governmental organisation PEKA, notes that the palm oil industry has a strong economic chokehold on Malaysia.

In fact, elected representatives and government officials, as well as industry lobbyists have previously made statements that palm plantations were actually considered “green cover”, she noted.

palm oil fruits
The European Union plans to phase out the use of palm oil by 2030 claiming that it causes deforestation. (Photo: Kiki Siregar)

Mdm Shariffa Sabrina said that statements on palm oil’s contribution to the loss of forests and wildlife habitats, while backed by scientific data, might be seen as anti-nationalist.

Rural smallholders constitute a majority of the voting public in Malaysia, she noted.

Mdm Shariffa Sabrina claimed that new palm plantations have been used as an excuse for logging in several areas, even within those designated as permanent forest reserves.

PEKA has been gathering relevant data and sharing them on social media for public awareness, she said.

“Instead of developing permanent forest reserves for new plantations, you could instead ‘re-forest’ existing unwanted plantation land, instead of converting these disused estates to residential townships or industrial areas,” she added.

Ultimately, the onus is on the palm companies to prove their sustainable practices and provide a transparent and accountable system for the entire supply chain, said Greenpeace Indonesia’s Ms Rahmawati. 

“It should not be just lip service.”

Source: CNA/ks(aw)(tx)

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