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Cargill to boost investment in Indonesian oil palm plantations

Cargill plans to “aggressively” expand its palm oil holdings in Sulawesi, Indonesian Borneo, and Sumatra, reports The Wall Street Journal.

The agribusiness giant says it will target areas where it is “environmentally safe to expand our oil-palm footprint”, according to Cargill’s Anthony Yeow, who spoke to Dow Jones Newswires. Cargill says this means it won’t invest in plantations that convert peatlands or forests currently off-limits under Indonesia’s two-year moratorium, which is set to expire in May.

Cargill currently produces roughly 300,000 tons of crude palm oil annually in Indonesia from 42,000 hectares of plantations under its direct control and another 27,000 ha from small-holder affiliates. The privately-held company says most of the palm oil it sources in Indonesia is certified under the Roundtable on Sustainable Palm Oil (RSPO), an eco-standard that sets social and environmental criteria for production.

However both Cargill and the RSPO in Indonesia have been under fire by environmentalists, who say loopholes allow RSPO-certified companies to continue destructive practices, including converting forests and peat areas. The RSPO lacks a greenhouse gas accounting standard that could help mitigate the risk of converting carbon-dense ecosystems.

Oil palm plantation

Over the past 20 years, palm oil has emerged as one of the biggest drivers of deforestation and peatlands conversion in Indonesia. Critics notes that oil palm expansion is a major threat to a number of charismatic species and a substantial source of greenhouse gas emissions.

The palm oil industry maintains that the crop provides more oil per unit of area than other oilseeds, helping supply a cheap source of vegetable oil on less land. Producers also note that palm oil is an important source of income in many rural communities.

The high profitability of palm oil has spurred a global land rush for new plantations, increasing the near-term risk of over-expansion — palm oil prices are currently more than a third off their all-time highs. Still the crop presently offers higher returns than other forms of rural land use in the tropics.

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