Mon, 08 Mar 2010

From: The Jakarta Globe

By Arti Ekawati
Indonesia and Malaysian palm oil producers have agreed to jointly tackle challenging environmental and labor issues which threaten to hinder the development of the industry in both countries.

Producers have lately come under attack on a number of fronts. Environmentalists complain the growth of palm oil plantations contributes to deforestation, threatens wildlife and increases greenhouse gas emissions, while there has also been criticism of the industry’s use of underage labor.

Late on Friday, Indonesia and Malaysian signed a memorandum of understanding in which they agreed to collaborate and improve communication between producers in both countries to counter the impact of critics of the industry and also to improve sustainability.

“Through collaboration, hopefully we can face the negative campaign [against the industry] and the accusations of environmental damage,” said Indonesia’s Agriculture Minister Suswono, after the signing ceremony.

The world’s top palm oil producers, Indonesia and Malaysia together account for about 85 percent of global output.

Suswono cited Unilever’s suspension last year of palm oil purchases from PT Smart, after a report from Greenpeace which claimed the company did not use sustainable production processes, as an example of the type of situation where the industry would benefit from enhanced cooperation.

“It’s not fair,” he said. “In the future, if there are any accusations, we will immediately form an independent team to inspect the case. So that we, palm oil producers, will have a stronger bargaining position than the buyer.”

As part of the coordination efforts, six palm oil industry associations from Indonesia and Malaysia on Friday signed a memorandum of collaboration that will, among other things, establish a steering committee to advise the Roundtable on Sustainable Palm Oil, an organization that issues certificates to palm oil producers that comply with certain environmental standards. A number of major palm oil buyers do not buy from companies that lack the certification.

Under the memorandum of collaboration, producers are also encouraged to develop sustainable plantation practices, including restoring land after it has been used for palm oil plantations.

Malaysian Plantation Industries and Commodities Minister Tan Sri Bernard Giluk Dompok said environmental issues were being increasingly used to attack the palm oil industrys.

“There is no reason for palm oil producers in the two countries to not to cooperate and discuss issues of common interest,” he said.

Dato’ Mamat Salleh, the Malaysian Palm Oil Association’s chief executive, said the industry would face increased environmental challenges in the future.

One hurdle for the water-intensive industry was the development of so-called water footprints, a measure used to show how much water is used in the production of palm oil, he said.

“There will be new environmental issues, which could make palm oil plantations become more controversial in the future,” Dato said. “We need fair scientific research so that we can also improve our plantations,” he said.

Indonesian Palm Oil Producers Association (Gapki) chairman Joefly J Bachroeny said the cooperation efforts were also aimed at helping Indonesian and Malaysian palm oil producers to improve sustainability.