Palm oil producer mired in legal troubles still razing Sumatran forest

JAKARTA — A part of the only forest on Earth where rhinos, tigers, orangutans and elephants coexist is seeing a resumption of deforestation for an oil palm concession.

Indonesian company PT Cemerlang Abadi (CA) restarted clearing forests and peatlands in September last year in its concession in the Leuser Ecosystem on the island of Sumatra, according to the Rainforest Action Network (RAN). The U.S.-based NGO analyzed satellite images to identify more than 10 hectares (24 acres) of secondary forests and 299 hectares (740 acres) of young regenerating forests (a subset of secondary forests) that had been cleared as of February 2022.

CA’s concession consists of secondary forest, which is regenerated after primary or “virgin” forest has been logged. Despite having previously been degraded, these forests still play a crucial role in maintaining biodiversity, regulating the climate, and protecting water supplies for local communities, RAN said.

A local activist who visited the concession in early 2021 told Mongabay that the concession consisted of native trees and shrubs. They said that because the concession is located in coastal area, it serves as a buffer zone for local communities against storm surges and is also a source of water.

RAN said the forests in the concession are categorized as high carbon stock (HCS) forests, and thus should be protected from deforestation. Emphasizing that the cleared areas were secondary forests serves “to highlight the fact that palm oil companies appear to be clearing secondary forests on peatlands without any consequences from the global palm oil market,” said RAN forest policy director Gemma Tillack.

CA hasn’t been identified as a supplier of palm oil to major brands, but this may be due to brands’ failure to fully trace their supply chain down to the producer level, Tillack said. The company also doesn’t have what’s known as an NDPE policy, or “no deforestation, no peatland, and no exploitation,” which many palm oil producers commit to voluntarily.

“[T]o date, brands have failed to disclose the producers of oil palm fruits in their supply chains,” Tillack told Mongabay.

That leaves open the possibility that palm oil from trees grown on land deforested by CA may be entering the global supply chain, she added.

“Yes, major brands such as Procter & Gamble, Mondelēz, Nestlé, Unilever and PepsiCo remain at risk of sourcing from PT Cemerlang Abadi via a network of crude palm oil mills located around the [neighboring] Tripa peatland,” she said. “It is our view that PT Cemerlang Abadi may be supplying both the NDPE market and non-NDPE market as it is not listed on the no-buy lists of major brands or traders.”

RAN said the fact that CA hasn’t been put on any major brands’ or traders’ no-buy list shows that existing forest monitoring and compliance systems are ineffective at addressing deforestation and new development on peatlands in palm oil supply chains in the Leuser Ecosystem.

“The case of PT Cemerlang Abadi shows that there is significant room for improvement by demonstrating that these brands cannot yet prove that they have ended their role in driving the deforestation and climate chaos caused by the degradation of peatlands in the Leuser Ecosystem,” RAN said.

To minimize the risk of palm oil that comes from deforestation entering the global supply chain, brands need to establish robust monitoring systems that identify deforestation across all threatened forests and peatlands in their supply chains and to hold bad actors to account for ongoing deforestation, RAN said.

Brands that already have monitoring systems in place need to strengthen them so that they can identify deforestation of secondary forests and young regenerating forests, in addition to primary forests, Tillack said. This way, they can ensure that all instances of deforestation are recorded and can be acted upon, she added.

“These brands must ensure that all suppliers in Aceh are adhering to their ‘no deforestation, no peatland and no exploitation’ policies and place PT Cemerlang Abadi on their no-buy lists until it halts new development and protects and restores lowland rainforests and peatlands within its concession,” Tillack said.

Lawsuits

This isn’t the first time CA has drawn criticism for its practices. Over the past decade, it has been exposed for destroying peat forests and using fire to clear land inside its concession, according to Tillack.

In 2018, seven NGOs reported CA to the police in Sumatra’s Aceh province for allegedly clearing 269 hectares (665 acres) of lands using excavators from January to May 2018. The NGOs said the clearing occurred after CA’s right-to-cultivate permit, known locally as HGU, expired in December 2017. The company also lacked an environmental impact analysis report and an environmental permit at the time, the NGOs alleged.

Responding to the report, CA said it had done nothing wrong because it was allowed to operate as usual, including clearing land for planting oil palms, while waiting for its HGU permit to be renewed.

When its HGU permit expired in December 2017, CA had cultivated 2,627 hectares (6,491 acres) of land out of its total concession of 7,516 hectares (18,572 acres). Another 2,286 hectares (5,649 acres) were occupied by locals, and the remaining 1,841 hectares (4,549 acres) were untouched.

When the land agency renewed CA’s HGU permit in March 2019, it reduced the size of the company’s concession to 2,002 hectares (4,947 acres), justifying the move on CA’s failure to fulfill several obligations. This included allocating 20% of its concession to communities under the so-called plasma scheme, as well as cultivating all of its concession within an allocated period of time.

Lawyers for CA said the company was unable to cultivate all of its concession because of security concerns, citing the armed insurgency in Aceh province that ran from 1976 to 2005. Following the peace agreement that ended the conflict, CA’s operations were hamstrung by opposition from certain individuals, the lawyers said.

“Therefore, this has obviously hampered the investment that’s [been made] by our client,” the lawyers told local media.

The government went ahead with reducing CA’s concession regardless. It allocated 4,551 hectares (11,246 acres) to the agrarian reform program, known as TORA, under which the government aims to issue land titles to small farmers, many of whom are enrolled in the plasma program.

CA sued the land agency at the Jakarta State Administrative Court in 2019, seeking to restore the original size of its concession. The lawsuit eventually went all the way to the Supreme Court, which ruled in favor of the land agency in September 2020. The Supreme Court also rejected an appeal filed by CA in March 2022.

Following the latest ruling, Akmal Ibrahim, the head of Aceh Barat Daya district, where CA’s concession is located, pledged to begin redistributing the revoked part of the concession to local communities. At the end of May 2022, local officials met with the land minister, Sofyan Djalil, to discuss CA’s case.

Sofyan, who in mid-June would be replaced in a cabinet reshuffle, said the land can’t be distributed to local communities yet because CA still has a lawsuit pending against the land ministry.

“If [the legal case] is done, the wish of the Aceh Barat Daya government which plans to redistribute the ex-concession of PT Cemerlang Abadi to be utilized [by local communities] will immediately be followed up, with the hope that this will develop the economy of the people,” he said as quoted by local media.

Mongabay reached out to CA’s lawyers’ office for comment but did not receive a response.

 

Banner image: A critical carbon storehouse for the planet, Tripa has already been 70% cleared for palm-oil plantations. Image by Paul Hilton for RAN.

 

FEEDBACK: Use this form to send a message to the author of this post. If you want to post a public comment, you can do that at the bottom of the page.