Rainforest conversion for oil palm in Malaysian Borneo.
Palm oil giant Wilmar has refuted a claim that it will stop buying crude palm oil from the Malaysian state of Sarawak due to its new “no deforestation” policy.
On Saturday Malaysian state media published a report claiming that Wilmar would halt purchases of palm oil from Sarawak-based mills. Citing Sarawak State Land Development Minister Tan Sri Dr James Masing, the report asserted that Sarawak would lose up to 400 million Malaysian Ringgit ($121m) in sales tax revenue per year as a result of Wilmar’s policy, which will soon exclude palm oil from new plantations established at the expense of rainforests and peatlands.
“If we are not allowed to plant in those two areas, then there will be no oil palm planted in Sarawak,” Masing was quoted as saying. “We have no areas where there are no forest… if you want to plant oil palm where there is no forest, you will have to go to the Sahara Desert because there is no forest there.”
Wilmar, however, rejected the report.
“It is not true that Wilmar will no longer buy palm oil from Sarawak,” Wilmar told mongabay.com via email.
“Our business is fully integrated and we are dependent on supply from many independent suppliers, it is, and was never our intention to exclude suppliers or to put a stop to expansion and growth of the industry, especially in the state of Sarawak, where we have been operating for many years,” Wilmar said. “Our Policy will not affect our purchase of oil from suppliers who had previously developed tracts of peatland, or from smallholders.”
The expansion of oil palm plantations in Sarawak between 1990 and 2010. Petrus Gunarso et al 2013.
Wilmar added that it was working with suppliers to help smallholder palm oil producers comply with its policy.
“We remain committed to supporting the growth and development of Sarawak and in all other areas we operate. With respect to smallholders, we also recognize that they are a critical part of the industry, and that they face unique situations. We will be developing a program in conjunction with various stakeholders to help local smallholders and farmers develop their native customary land responsibly.”
Wilmar’s zero deforestation policy, launched in December 2013, has three major areas: deforestation, conversion of peatlands, and human rights. The policy specifically commits Wilmar to avoid buying or trading palm oil that is produced at the expense of high carbon stock (HCS) forests or high conservation value (HCV) areas, avoid sourcing palm oil produced on peatlands, and zero tolerance on palm oil linked to child labor or forced and bonded labor. The policy also requires Wilmar to seek Free, Prior and Informed Consent (FPIC) on community lands and to resolve conflicts through a consultative process.
Given that Sarawak already has more than a million hectares of oil palm plantations — including nearly 500,000 hectares converted from forests and peatlands over the past 20 years — a large volume of the state’s palm oil is effectively exempt from Wilmar’s policy, which applies only to new plantation development. Where Sarawak may face headwinds however is in its plan to convert up to a million more hectares of forests and peatlands for palm oil production by 2020. These new areas, much of which fall under native customary rights (NCR), would potentially run afoul of Wilmar’s environmental and human rights safeguards if they were logged for plantations.
Wilmar, which accounts for an estimated 45 percent of the global palm oil trade and does business with more than half of the world’s palm oil companies, says its policy is a response to changing preferences in the international marketplace.
“With noticeable environmental damage and climate change, consumers globally are all moving towards sustainable production of commodities,” the palm oil giant told mongabay.com. “The palm industry must therefore adjust to meet market needs and expectations if it wants to remain competitive.”
Wilmar adds that while greener palm oil will be initially more costly to produce, it will pay off in the long-run.
“Adopting sustainable practices will result in slightly higher costs and also prevent some plantations from maximizing their land bank. On the other hand, without any effort to make the industry sustainable, green lobby groups will continue to damage the image of palm oil leading to lower usage of palm oil for food and biofuels, and eventually lower palm oil prices. Therefore the higher price commanded by developing palm oil sustainably will more than offset the cost. It is regrettable that, as yet, not more plantations and refineries have come forward to support these policies. It is only through sustainable operations, innovation, constructive dialogue and close cooperation between key players and stakeholders of the palm oil industry, including local and indigenous communities, can we truly transform the industry into a sustainable one.”
Sarawak has lost vast areas of old-growth forests in recent decades due to intense industrial logging and conversion to timber and oil palm plantations. According to a study published last July in PLOS One, only 20 percent of the state’s forest cover can be classified as “intact”, far below the 70 percent claimed by state officials. Forest loss has been an ongoing source of conflict between traditional forest peoples like the Penan and forestry companies allied with the government.
James Masing’s office did not reply to request for comment.
|Wilmar’s full statement to Mongabay
Our Policy will not affect our purchase of oil from suppliers who had previously developed tracts of peatland, or from smallholders. We have already begun to engage many of our suppliers to see how we can help them meet the requirements of our Policy. We remain committed to supporting the growth and development of Sarawak and in all other areas we operate. With respect to smallholders, we also recognise that they are a critical part of the industry, and that they face unique situations. We will be developing a programme in conjunction with various stakeholders to help local smallholders and farmers develop their native customary land responsibly, irrespective of whether it is peatland or not, as we understand that indigenous communities depend on this land for their livelihoods. We would also like to reach out to various government agencies to work together to look into the areas being proposed for palm development for local communities. We will be ready to offer assistance, in the form of technical and financial support, to help these farmers towards sustainable development.
Palm oil is an excellent agricultural crop with high oil yield that can help address food security issues, alleviate poverty and develop local economies. We believe there is no reason for a confrontational approach between green lobby groups and the palm industry as it is possible to make palm cultivation more environmentally-friendly by adopting sustainable practices, albeit at slightly higher costs, for the long-term sustainability of the industry. On the other hand, the green lobby groups should also be more pragmatic and not set too low a carbon threshold for forests that can be planted, especially with respect to the native customary rights (NCR) land. The livelihoods of local indigenous communities and smallholders should not and must not be compromised.
With noticeable environmental damage and climate change, consumers globally are all moving towards sustainable production of commodities. The palm industry must therefore adjust to meet market needs and expectations if it wants to remain competitive. The RSPO was formed to encourage sustainable practices in the palm industry. We have been adopting these responsible practices in our plantations since the RSPO standards were introduced but still we were accused of causing deforestation by certain civil society groups due to our purchases from third-party suppliers (rather than our own operational practices). After much deliberation, we felt that with time and effort, it is possible to make our supply chain sustainable if we explain to our suppliers the commercial justification for sustainable palm development and also help them towards that goal. We are also convinced that big corporates have to lead in the drive towards sustainability. Therefore when Unilever proposed their initial Manifesto for No Deforestation and No Exploitation to its suppliers, we were the first to show support.
Our Policy sets broad guidelines on the types of land (which often fall under complicated mosaic landscapes and situations unique to particular geographies and social conditions) that can be planted but more research and ground truthing still need to be carried out to even more clearly define the areas suitable for planting and conservation respectively. We have made it clear to the environmental specialists helping us to implement our Policy that for the sustainability drive to be successful, the standards set must be practical and pragmatic. If they are set too high or unrealistically, they will not gain the support of the industry, local communities and other stakeholders and will ultimately fail. We continue to engage in constructive dialogues with stakeholders and industry experts to develop further practical standards and at the same time we are assembling a team to help our suppliers improve their current practices. In spite of some of the objections reported in the media, we are heartened that there are also many of our suppliers, especially the younger generation of planters, who are keenly aware of the need for environmental protection and are very supportive of our move. What they have requested for is assistance with implementation. Adopting sustainable practices will result in slightly higher costs and also prevent some plantations from maximizing their land bank. On the other hand, without any effort to make the industry sustainable, green lobby groups will continue to damage the image of palm oil leading to lower usage of palm oil for food and biofuels, and eventually lower palm oil prices. Therefore the higher price commanded by developing palm oil sustainably will more than offset the cost. It is regrettable that, as yet, not more plantations and refineries have come forward to support these policies. It is only through sustainable operations, innovation, constructive dialogue and close cooperation between key players and stakeholders of the palm oil industry, including local and indigenous communities, can we truly transform the industry into a sustainable one.
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