Sunday, April 26, 2015

Indonesia policy & regulations (update 7): The Indonesian National Carbon Accounting System (INCAS); mood for provincial autonomy grows in PNG ; RSPO-Guardian - Local and national interests clash in Indonesia's palm oil industry, "bupatis... take decision in best interest of (Singapore or Jakarta) companies.. rather than communities... there is low level oppressions and sometimes’s a simmering human rights issue" says EIA and “There are rogue operators who are playing the corruption game with the local authorities.... A big problem is the overlapping land rights, which causes a lot of conflict... there is an increasingly wealthy middle class who see land as an investment for the future..." says CIFOR

26 April 2015: The Indonesian National Carbon Accounting System (INCAS); mood for provincial autonomy grows in PNG

Indonesia has a new tool against climate change  13 Apr 2015 BY Center for International Forestry Research; JAKARTA, Indonesia—It has one of the world’s largest forest estates …. and one of the highest rates of deforestation and degradation. The government of Indonesia has a serious target: reducing greenhouse gas (GHG) emissions by 26 percent by 2020, and – if international assistance is forthcoming – by 41 percent during that same period. To assist in that aim, a monitoring system to track the country’s GHG emissions has been developed by the Indonesian government.
The Indonesian National Carbon Accounting System (INCAS) will serve as the basis for the country’s measurement, reporting, and verification (MRV) system for the land sector.
MRV is required under the UN Framework Convention on Climate Change  (UNFCC).
The Minister of Environment and Forestry, Siti Nurbaya formally endorsed INCAS, at a recent public seminar in Jakarta. .........INCAS uses a Tier 3 approach for forestland that includes a carbon mass balance model, and a Tier 2 type approach for peatlands. Both tiers use nationally specific data.... "The INCAS is an open, transparent, and continually improving framework, which is designed to incorporate new data, and technology as it becomes available,” says Harvey. ........Central Kalimantan province was the first to demonstrate the use of INCAS before it extends nationally. The data – gathered between 2000 and 2011 – showed significant annual variations in GHG emissions and removals in Central Kalimantan, which are indicative of issues around historical land management, current practices, and weather patterns – like dry years and high incidents of fire. The year with greatest GHG emissions was 2006 with 195 million t CO2 –e. The lowest year was 2010 with 74 million t CO2 -e. Biological oxidation of peatlands was generally the largest single source of emissions, although peat fires in 2006 and 2009 greatly contributed to the elevated emissions in those years.......The interim results are the first time that a GHG emissions profile has been broken down into its “constituent elements of forest carbon stock change, non-CO2 emissions from biomass burning, CO2 and non-CO2 emissions from mineral soil, as well as biological oxidation and direct N2 O, dissolved organic carbon and CH4 emissions from disturbed peat, and CO2 and non-CO2 emissions from peat fire”.....

Mood for provincial autonomy grows in PNG by Johnny Blades, Radio New Zealand International - Updated at 1:06 pm on 20 April 2015;  While the call for more devolution of powers from central government to the provinces is not new, PNG's continued development struggles mean more provinces are talking about autonomy. And throwing a cat among the pigeons, PNG's opposition leader has now proposed the idea that PNG's four main regions could be given autonomy The growing skyline of the capital Port Moresby reflects PNG's unprecedented economic growth of the past decade. It's been forged mainly through a boom in the mining, oil and gas sectors. But the majority of people in the country have seen few tangible benefits, and PNG is languishing near the bottom in the United Nations Human Development Index world rankings.
The governor of New Ireland province claimed that PNG risks breaking up if it continued with the inefficiency of central government machinery. Sir Julius Chan, who is a former Prime Minister, said Waigani takes 90% of provincial revenues yet had failed to adequately manage basic service delivery to provinces......... "Everything comes from Port Moresby and Port Moresby is the worst, most inefficient organisation in PNG today," he said. "If we continue to allow a very disorganised group or people running the rest of the country, it's sure to break up."...... Sir Julius said the time is right for provinces to take on more powers of taxation, over natural resources, education, health and other sectors. This feeling was echoed at a recent summit of PNG's 22 provincial governors, many of whom were frustrated at the lack of control their administratrions have over development in their provinces....... Meanwhile, the autonomous Bougainville government has started laying the groundwork for a referendum to be held on possible independence from PNG. As provided for in the peace agreement negotiated after the Bougainville civil war, that vote has to occur by 2020 at the latest. As the former president of the autonomous Bougainville government James Tanis explained, this lead-up was a key focus for the new parliament to be elected next month........ To date, PNG's national government has shown little appetite for granting more autonomy to the provinces. However, increased discussion about the issue among the nation's leaders shows that momentum is gathering for change on this front.,,,,,

24 April 2015: RSPO-Guardian - Local and national interests clash in Indonesia's palm oil industry, "bupatis... take decision in best interest of (Singapore or Jakarta) companies.. rather than communities... there is low level oppressions and sometimes’s a simmering human rights issue" says EIA and “There are rogue operators who are playing the corruption game with the local authorities.... A big problem is the overlapping land rights, which causes a lot of conflict... there is an increasingly wealthy middle class who see land as an investment for the future..." says CIFOR

Local and national interests clash in Indonesia's palm oil industry - Political unrest intensifies as largely autonomous district authorities put the interests of palm oil developers and investors first
Sponsored by: RSPO, by Oliver Milman @olliemilman Thursday 23 April 2015 15.43 BST
The industry of palm oil, the product found in everything from chocolate to lipstick that is habitually reviled by environmentalists, is facing new challenges due to unrest in key producing regions.
It was reported by the Cameroonian Association of Oil Refineries this month that the export of refined products including palm oil from several African nations, including Nigeria and Cameroon, has been “virtually at a standstill” for several months due to a spate of murders and kidnappings committed by Islamic militant group Boko Haram. The unexpected slowdown in palm oil production in Africa, seen as a key growth area for the product, comes as political tensions are heightening in Indonesia, the world’s leading producer of palm oil............Following the end of Suharto’s 31-year dictatorship in 1998, Indonesia went through a process of decentralising power. Much of the power over land allocation flowed to bupatis (little kings) who preside over districts and have been accused of widespread corruption in the way they hand out logging concessions. “They take decisions in best interest of companies, often from Singapore or Jakarta, rather than communities,” said Tomasz Johnson, forests campaigner at the Environmental Investigation Agency (EIA). The EIA conducted an in-depth investigation into the palm oil industry last year and found multiple instances of corruption and lax law enforcement. Violations included the flouting of plantation licensing laws, attempts by a palm oil firm to bribe police to drop an investigation into its activities and regional governments transferring community resources to private firms. “When companies come up against opposition from communities, bupatis will mobilise state forces against them,” says Johnson, whose research has focused on the central Kalimantan area. “There is low level oppression and sometimes violence. In Kalimantan it’s rare that you go into community where there’s conflict. Often, communities have given up hope of holding onto their land. “We went to see one concession where the community believes someone was killed by security forces that were employed by a palm oil company. These people just can’t win, it’s a simmering human rights issue.” ..........President Joko Widodo has warned: “We mustn’t allow our tropical rainforest to disappear because of monoculture plantations like oil palm.”.... David Gaveau, a scientist at the Center for International Forestry Research, said: “The central government is now trying to pull back that power and recentralise things. They realised it all went too far. It’s uncertain which way things will go, but there’s certainly a lot of tension around it............. “There are rogue operators who are playing the corruption game with the local authorities,” said Gaveau. “They get land through dodgy deals and they are totally under the radar, they basically do what they want while the big companies are trying to clean up their acts.
“A big problem is the overlapping land rights, which causes a lot of conflict
. When you don’t have any power, someone can come in and clear your land, even though that goes against the country’s constitution. While Indonesia is largely an agrarian society, there is an increasingly wealthy middle class who see land as an investment for the future.”

3 April 2015: Conditional suspension for 1 April 2015 mandatory L/C rule

Govt provides conditional suspension for mandatory use of L/C Linda Yulisman, The Jakarta Post, Jakarta | Business | Wed, April 01 2015, 8:55 PM .box-profile {font-size:12px;font-face:verdana;background-color:#000;color:#fff;padding:1px 5px;float:left;margin:2px;} .box-profile:hover {background-color:#ff0000;} Business News Streak of strong US hiring likely extended into March Govt to build new port in Subang or Indramayu Rupiah rises 70 points to Rp 12,978 at opening The government has offered flexibility for exporters who still cannot comply with the obligatory use of letters of credit (L/C), which took effect starting from Wednesday.The L/C rule governs four primary commodities: coal; palm oil and palm-kernel oil; oil and gas; and minerals, including tin.Trade Minister Rachmat Gobel said that the suspension could apply to exporters who obtained exclusions from either the Energy and Mineral Resources Ministry or the Agriculture Ministry.“This is intended to give time for exporters to adjust and revise contracts made and signed before the Trade Ministry Regulation No. 04/2015 [on mandatory L/C use] was issued so that it will not hamper their exports,” he said in a statement. Following the suspension, an audit will be carried out to decide whether the exporters are eligible to be excluded temporarily from the obligation, according to Trade Ministry Regulation No. 26/2015 that specifies the suspension.Apart from that, the L/C term can be carried out later through export financing institutions to be set up by the government in addition to foreign-currency banks. - See more at:

14 March 2015: BI to take action to halt bond sell-off, push for development of more agro-industrial estates, biogas facilities and rural electrification

BI to take action to halt bond sell-off Satria Sambijantoro, The Jakarta Post, Jakarta | Headlines | Fri, March 13 2015, 7:09 AM; Bank Indonesia (BI) promised on Thursday to conduct market operations to protect government bonds and the rupiah following a massive withdrawal of foreign funds from the bonds market, totalling to Rp 10 trillion (US$759 million), over the past two weeks.BI Senior Deputy Governor Mirza Adityaswara said Thursday that the central bank would intervene to stabilize yields of government bonds to prevent further sell-off in the bond market.....Massive foreign fund outflows have recently hit Indonesia as indicated by the sharp drop in foreign investors’ ownership of Indonesian bonds. The foreign investors’ ownership was roughly 40 percent of the total tradable bonds at Rp 509.3 trillion earlier this month, but this figure shrunk by about Rp 10 trillion to Rp 499.3 trillion as of March 10, according to Finance Ministry data.In the same period, total government bonds held by BI declined slightly from Rp 53 trillion to Rp 52.7 trillion, suggesting that the central bank has not yet bought enough bonds to counteract the outflow.Renewed concerns of interest-rate hikes in the US have drained assets stashed in emerging markets, including Indonesia, with both the rupiah and Indonesian bonds suffering the hardest hits.This month, the rupiah led losses in Asia as it depreciated by more than 2 percent to hit 13,176 per dollar on Thursday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).Meanwhile, the yields for the benchmark 10-year rupiah bonds have risen 78.4 basis points month-to-date to 7.84 percent. Yields move in the opposite direction of prices such that bonds with higher yields are rated as cheaper assets among investors. - See more at:

Agro-industrial estates outside Java in pipeline Linda Yulisman, The Jakarta Post, Jakarta | Business | Thu, March 12 2015, 5:57 AM..... The government is set to start construction on three agro-based industrial estates outside Java to bolster industrial growth in Southeast Asia’s largest economy.Development of two estates, to be located in Palu, Central Sulawesi, and in Bitung, North Sulawesi, may begin by mid-year, to serve as centers of coconut and fishery processing and the manufacturing of cocoa derivatives and rattan-based products, respectively.Another estate, to be situated in Kuala Tanjung, North Sumatra, and concentrate on palm-oil-based industries, will be built next year, according to industry officials.... The government’s minor stake in industrial zones has contributed to uncontrollable land prices and rents nationwide.“Right now it is hard for us to control the price of land in industrial estates owned and run by the private sector. Land issues are often a major deterrent to new investment,” he told reporters on the sidelines of an agro-industry meeting. The central government would cooperate with regional administrations to execute the projects with a possibility of jointly managing the zones once they were operating, Heru added. The Indonesian government is involved in 6 percent of existing industrial estates in the country, a far cry from the 78 percent engagement by the Malaysian government and 48 percent by the Thai government.The three new agro-based industrial estates are among 14 planned to be established by 2019 outside Java — where most industrial estates are located — with the majority of finance coming from private investors.....

Regulating access to palm oil-based biogas facilitates rural electrification by Ade Cahyat and Daddy Ruhiyat, Samarinda | Opinion | Mon, March 09 2015, 6:40 AM; The administration of Joko “Jokowi” Widodo has ambitious targets for both the electrification ratio and the renewable energy share in the energy mix. According to the mid-term development plan (RPJMN) 2014-2019 — the official document outlining the president’s development targets — by the end of his tenure the electrification ratio should reach 96.6 to 100 percent while the share of renewable energy of the national energy mix should be 10 to 16 percent.The achievement of these two targets is interdependent when it comes to rural electrification. Most of the households without electricity — between eight and 11 million households — are located in remote rural areas, where renewables are the most efficient resources for small-scale, decentralized power generation....Biogas from palm oil mill effluent (POME) is among the least cost renewable and is available in some remote rural areas in palm oil producing regions. The high organic content effluent — produced alongside with the crude palm oil production, which is mainly located in remote rural areas — results in a high volume of biogas. A palm oil mill processing fresh fruit from 10,000 ha to 15,000 ha of mature oil palm estates can produce biogas that is sufficient to fuel biogas engines with an installed capacity of more than 1 megawatt (MW), enough to electrify 2,000 households with 24 hours of electricity.In the case of East Kalimantan, for example, each of 12 potential — out of the total 62 — mills could generate 1 MW or more, all of which are close to villages with enough inhabitants to absorb the additional produced power. Those villages currently have no electricity or have less than 15 hours of supply per day from diesel generators. The marginal cost to generate a kWh of power from POME biogas is less than half of that from diesel....

5 March 2015: Indonesia to crack down on tax avoidance - transfer pricing in coal, palm oil, cocoa and other commodities a problem, includes some major companies; greater effort to prosecute agroforestry companies

Indonesia to Crack Down on Corporate Tax Avoidance By Gayatri Suroyo & Eveline Danubrata on 09:16 pm Feb 24, 2015; Jakarta. The government plans to crack down on corporate tax avoidance via transfer pricing this year to try and recoup Rp 200 trillion ($15.6 billion) in lost state income, mainly in the commodities sector, the new head of the tax office said.... President Joko Widodo’s administration is planning to double its infrastructure spending this year to build ports, power plants and other projects, and the tax office figure for lost income would cover more than two-thirds of that spending... As a proportion of gross domestic product, Indonesia has one of the lowest tax takes in the region, trailing behind Malaysia, Singapore, Thailand and the Philippines, according to the World Bank.... Sigit Priadi Pramudito, director general of taxes, said in an interview with Reuters late on Monday that many Indonesian firms, particularly those in the coal, palm oil, cocoa and other commodities sectors, were avoiding corporate taxes by using transfer pricing.... He declined to give names, but said some of them were major companies....

Govt ramps up efforts to prosecute agroforestry firms Hans Nicholas Jong, The Jakarta Post, Jakarta | National | Sat, February 21 2015, 7:05 AM; With forest fires in Sumatra challenging the country’s aim to reduce greenhouse gas emissions by 26 percent to 41 percent by 2020, the government has rolled out a plan to boost law-enforcement measures against agroforestry firms.The Environment and Forestry Ministry said on Friday that it would step up its oversight of agroforestry firms as well as monitoring of legal proceedings involving companies that were alleged to have started forest fires. Environment and Forestry Minister Siti Nurbaya Bakar previously expressed her disappointment over the Bengkalis State Court’s decision to declare two executives of PT National Sago Prima (NSP) not guilty of burning forests in Riau.... “The judges did not apply Law No. 18/2013 on the prevention and eradication of forest damage,” she said during a recent visit to Pekanbaru, Riau. “We [also] found that the three judges did not have environmental credentials [on their resumes].”PT NSP was found guilty earlier of burning forested land that had destroyed thousands of hectares of sago plantations in the Meranti Islands regency....

24 Feb 2015: Tax amnesty proposed, palm oil businessmen sentenced for bribing Riau governor

Jokowi political and police-KPK tussles? Jokowi adds on tax amnesty offer to commodity export LC requirement to shift money flows and expand Indonesia capital market; Singapore observations.

Palm oil businessman gets 3 years for bribing governor Haeril Halim, The Jakarta Post, Jakarta | National | Tue, February 24 2015, 6:57 AM; The judge said Gulat, who is chairman of the Indonesian Oil Palm Farmers Association (Apkasindo) Riau chapter, had violated Article 5 of the 1999 Corruption Law on bribery of state officials, which carries a maximum sentence of five years.... Supriyono said that evidence and witness testimonies during the two month trial had confirmed that Gulat had paid Annas $166,100 for his service obtaining a land conversion permit for a total of 1,188 hectares of land in Kuantan Sengingi regency and 1,214 hectares in Rokan Hilir regency belonging to Gulat and his friends. This was part of the 1,638,249 hectare forest conversion proposed by the Riau administration to the Forestry Ministry last year......
8 Feb 2015: According to Jakarta sources (including bankers), the LC issue is significant. Big volumes leave the country without LC. The issues at hand include transfer pricing, offshore booking centers and tax issues. In recent years, commodity trading has been specifically targeted with lower taxes and declining tax rates on higher volumes by key centers. Producers may also be public listed in other countries. Does this hamper Indonesia's effort to expand and widen it's tax base? Notable too is Jokowi speaking of "dangerous inequality" in this. Tax loyalty of rising interest? Watch out for compliance. Tax issues for multinationals and individuals are increasingly under the microscope in the  USA, Europe and elsewhere.
L/C required for exports of key commodities Linda Yulisman, The Jakarta Post, Jakarta | Business | Fri, January 16 2015, 9:18 AM . A new regulation set to take effect in April will require exporters of the country’s key commodities to use letters of credit (L/C) in their overseas shipments, a move that will help generate a reliable record of export earnings. The rule, issued by the Trade Ministry last week, is set to affect four primary commodities: coal; palm oil and palm-kernel oil; oil and gas; and minerals, including tin. On average these items accounted for 41 percent of overall exports in the five years from 2009 to 2013 with an average of US$71.04 billion a year, according to the ministry’s statistics.“By demanding the application of L/C in exports, we want to increase export earnings and at the same time get accurate records, particularly from sales of natural resources,” Trade Minister Rachmat Gobel said in a press conference on Wednesday evening. Based on the rule, the prices in the L/C should reflect actual transaction value. It also stipulates that without the letters, overseas delivery cannot be executed.
4 Feb: M&A and public listing for 100,000ha limit?
Regulatory loophole, weak prices spur Indonesia palm oil takeovers by Reuters, Wednesday, 4 February 2015; JAKARTA: Some Southeast Asian agri-companies are exploiting a regulatory loophole and turning to takeovers to expand their oil palm acreage in top exporter Indonesia just as weak demand for the edible oil makes smaller producers more open to deals....  Under a 2013 law, companies can only plant up to 100,000 hectares with oil palms, a limit put in place mainly to protect the smallholders that account for about 40 percent of Indonesia's palm oil output....  The restriction, however, exempts listed companies majority owned by the public, which makes some of the 11 palm oil firms listed on the Jakarta stock exchange potential takeover targets for others seeking to expand their land bank. Nine of these listed companies have a market value of less than $1 billion, according to Thomson Reuters data....  "The local regulations do indeed provide strong impetus for private owners to consolidate and list their plantation holdings on the Indonesian stock exchange or inject into a listed company," Le Sa Cheah, head of Indonesia equity capital market for Singapore's DBS Bank, told Reuters.... Malaysian firm Sime Darby Bhd, one of the world's biggest palm oil producers, recently said it may list its palm oil assets in Indonesia or launch a reverse takeover of an Indonesian firm. Smaller local firm PT Sawit Sumbermas Sarana Tbk has also said it plans to acquire two firms for 1.5 trillion rupiah ($119 million) this year....  Some agri-conglomerates that have already reached their acreage limit in Indonesia, however, are unwilling to test the regulations and are looking elsewhere, such as in Africa, where land is still abundant and companies are less restricted in increasing their acreage....

Traceability moves: Need for traceability says consultants including PwC; Hershey Announces Results of First Phase of Palm Oil Supply Tracing - TFT traceability; RSPO Traceability Taskforce has IDH who runs Palm Oil Traceability Working Group initiative

24 March feedback from industry specialists: Traceability is being pushed by Wilmar as it shifts stance on RSPO with its TFT-led program. A new Traceability Working Group (includes several plantation companies) is reported as something parallel to the Wilmar efforts. Now, the RSPO has moved on its step up on within certification traceability that was promoted by Unilever at its November annual gathering and accepted by a vote. The stated goal: mills to record the origins of all third-party sourced FFB. This does seem to go beyond the traceable to mill goal to get to traceable to estate.

23 April comments:

The oft cited cautionary note from those in sustainability: "traceability does not equate to sustainability"

Note: There is traceability within RSPO certification and also traceability outside of RSPO certification too. Certification has tended to be more of an exclusive / big boys' game, and traceability hopes to make things more inclusive. The supply-chain cares, but likely consumers are too confused to tell the difference.

What to look out for: The concept of a "supply shed" to gear things more toward the refinery level.

The shift to traceability, background links (and we've added to bottom of this the Wilmar first report on TFT traceability):

26 April 2015: Need for traceability says consultants including PwC

Unlocking Palm Oil’s Potential By Susetyo Priyojati, Moray McLeish & Charles Vincent on 10:32 pm Apr 22, 2015; Palm oil is one of the most important agricultural commodities in Indonesia. It represents the third largest export earnings after oil, gas and coal, contributing $17.7 billion in 2013.
By comparison, textile exports were valued at $12.7 billion in the same year. In addition, between 2010 and 2013, the value of palm oil exports grew at a rate of 14.6 percent per year. Palm oil also provides work opportunities in many rural communities. According to an estimate by the Ministry of Trade, the palm oil sector generates over 15 million jobs in Indonesia which tend to be in  nderdeveloped areas. By comparison, Indonesia’s textile and clothing industry provides some 1.1 million jobs, according to Statistics Indonesia (BPS) as quoted in the Global Business Guide‘s Website....... In 2013, around 40 percent of the land covered in mature, productive plantations was owned and managed by smallholders — up from 28 percent in 2000. This represents a three hundred percent increase in production area during the same period. Moreover, immature (not yet productive) plantations constitute 28 percent of the total plantation area in Indonesia. This indicates high potential growth for palm oil production. ........There are many market-defined issues in the palm oil industry, in particular quality control and the perception of palm oil plantations as a driver of deforestation. Those issues reduce consumer confidence in this remarkable crop commodity, in which Indonesia holds a comparative advantage.......... At the root of those issues is the lack of traceability, that is the ability of palm oil users to trace their palm oil supply all the way to the plantations. A traceability system could help address the issues, by providing information on the sources of oil palm fruits and their farming practices. This information would enable palm oil users to choose deforestation-free suppliers, as well as highlighting potential areas for improvement on farming practices. Comprehensive data collection and analysis is the first step towards improving the quality, image, and competitive positioning of Indonesia’s palm oil in the global market..... Susetyo Priyojati is a consultant, Moray McLeish is a technical adviser in sustainability and climate change practice, and Charles Vincent is president director, all at PwC Consulting Indonesia.

23 April 2015: Hershey Announces Results of First Phase of Palm Oil Supply Tracing  - TFT traceability

Hershey Announces Results of First Phase of Palm Oil Supply Tracing - Initial Mapping Effort is First Step to Validating Responsible Palm Oil Sources, April 21, 2015 10:25 AM Eastern Daylight Time; HERSHEY, Pa.--(BUSINESS WIRE)--The Hershey Company (NYSE: HSY) today announced the results of its first phase in tracing its global palm oil supply chain. Working in partnership with The Forest Trust (TFT), Hershey has traced its supply chain to more than 94 percent of all the mills that supply its palm and palm kernel oil globally.  Key highlights of Hershey’s palm oil tracing:
• More than 1,200 mills supply palm oil to Hershey manufacturing facilities worldwide
• Mills are located in two regions; Southeast Asia (1,235 mills) and Central America (11 mills)
• Palm oil is used in 13 Hershey plants located in three countries: The United States (9 plants), Mexico (2 plants) and China (2 plants) ......

24 March 2015: Taking a step towards FFB traceability and legality by RSPO News, 24 March 2015; The first meeting for RSPO FFB Legality and Traceability Task Force kicked off recently in Jakarta, Indonesia. The newly established task force held a mandate to work towards producing an improved supply chain standard to assure the traceability of robust Fresh Fruit Bunches (FFB). The Task force took into account all legal requirements related to the implementation of the new indicator of 4.1.4 in the RSPO Principles & Criteria 2013, where mill(s) shall record the origins of all third-party sourced FFB.........  The meeting was attended by 17 constituent representatives, including Indonesian growers, Malaysian growers, financial institutions, environmental NGOs, IDH and RSPO Secretariat. The task force appointed Sabarinah Marzuky from Sime Darby and Bpk. Agung from WWF Indonesia as Interim Co-Chairs..... The meeting began with a presentation on FFB Trading from a Landscape Perspective conducted by Earth Innovation Institute followed by IDH sharing their experience in managing the Palm Oil Traceability Working Group initiative. The task force’s term of reference was one of the main topics discussed at this first meeting in addition to key activities for 2015, among which will be to pilot and share the approaches for FFB legality issues to wider stakeholders that will complement each other... To complete the structure and continue on this progressive journey, the taskforce agreed to reconvene in April, in Kuala Lumpur, Malaysia.

29 January 2015: Wilmar brings change with disclosure of names of suppliers to its refineries and kernel crushing plants via TFT. Includes traceability ratios for each facility covered.
 Comment: Having logged into the Dashboard yesterday, it was interesting to see names of suppliers to each key facility (refineries and palm kernel crushing plants) covered. A snapshot of map also shows the level of detailed attained - GPS location of even individual smallholder suppliers with map boundary of estates supplying to Wilmar (including its own estates and those of large suppliers) - a map example was shown and presumably available to buyers from Wilmar (but without this fine level of detail for public access). I big step up in marketing compliance scrutiny for suppliers of palm oil products with Wilmar pushing with more data. Notably, there is also a grievance process and ultimately a plantation grower has been caught up in it (on Sulawesi estate land clearance) and promising to abandon development (likely to sell off the estate?). In the last year or so, key targets under NGO scrutiny include fast growing plantations in the sub and 100,000 plus hectare or so category. Those with large unplanted land banks may also face very tight scrutiny as (technical) NGOs are keeping a close eye via remote sensing / satellite imagery studies and many RSPO growers have submitted vector boundaries of their concession areas (and more of these are being put on line and available to public scrutiny), aiding this effort. One key website with official RSPO company data included is:

  • Wilmar's supply policy 4Q2014 report here:
  • Wilmar Opens Palm Oil Supply Chain to Scrutiny By Reuters on 08:54 pm Jan 22, 2015;  Singapore-based Wilmar said it would give outsiders, from customers to environmentalists worried about deforestation, access to online maps showing where it buys palm oil in Indonesia and Malaysia;  Oslo, Norway. Wilmar International Ltd., the world’s largest palm oil processor, opened its supply chains to outside scrutiny on Thursday in what environmentalists called an unprecedented step to help safeguard tropical forests. Singapore-based Wilmar said it would give outsiders, from customers to environmentalists worried about deforestation, access to online maps showing where it buys palm oil at more than 800 mills in Indonesia and Malaysia.....
  • Can palm oil companies deliver on deforestation promises? BY Oliver Balch Monday 26 January 2015 07.00 GMT; Wilmar, the world’s largest palm oil trader, has committed not to engage in deforestation. But with little control over smallholders, can palm oil companies shake of their environmentally destructive reputation? On the face of it, the praise appears merited. Wilmar’s new policy (which also includes a ban on developing palm on peat areas) stands to save more than 1.5 gigatonnes of carbon dioxide by 2020 – equivalent to the combined annual energy-related carbon emissions of Central and South America.... That’s all supposing the company can deliver, of course. So can it?  On its wholly owned, directly managed palm plantations, meeting its pledge should be straightforward. The real challenge arises with the franchised or independent smallholder farmers from whom Wilmar buys around one third of its raw supply....

Thursday, April 23, 2015

Food labelling and tax ideas (update 5): Obesity blamed on food (diet with sugar and carbo excess), public falsely told couch potato lifestyle to blame - report in British Journal of Sports Medicine, Malhotra et al.; US views on palm oil plantations, FDA food labels concerns on health claims; Nestle reformulates Nesquick, Fruit drinks with more sugar than sodas, sugar lobby tactics compared to tobacco denials; Food industry battles against added-sugar label in US; Caps on fat, salt and sugar promised by UK Labour

23 April 2015: Obesity blamed on food (diet with sugar and carbo excess), public falsely told couch potato lifestyle to blame - report in British Journal of Sports Medicine, Malhotra et al.

Sugar is to blame for obesity epidemic - not couch potato habits - You cannot out run a bad diet, experts warn, as they suggest greed, not sloth is causing Britain's expanding waistlines; By  Laura Donnelly, Health Editor 11:30PM BST 22 Apr 2015;  Sugar and carbohydrates are the real culprits in the obesity epidemic - and the public has been falsely told that couch potato lifestyles are to blame, a new report has claimed. Writing in the British Journal Of Sports Medicine, they said poor diet now generates more disease than physical inactivity, alcohol and smoking combined. The editorial, by a group of cardiologists and sports experts, says that while obesity has rocketed in the past 30 years there has been little change in physical activity levels.  "This places the blame for our expanding waistlines directly on the type and amount of calories consumed," they write.....
The authors, who include Prof Aseem Malhotra, a cardiologist and adviser to the campaign group Action on Sugar, said the public had been sold a “false perception” that exercise was more important than eating healthily, when the opposite was true. Prof Malhotra said US data which tracked obesity and activity levels found little change in activity levels over two decades, while obesity levels soared.
In Britain, 25 per cent of adults are now obese, compared with less than 3 per cent in the 1970s.
• Obesity not dementia will be the biggest threat to the NHS.  Activity levels have not been tracked consistently over the same period, but data from the 1990s and 2000s suggests exercise levels could even be increasing......

22 April 2015: US views on palm oil plantations, FDA food labels concerns on health claims

Palm Oil Plantations Are Blamed For Many Evils. But Change Is Coming April 21, 2015 3:55 AM ET Anthony Kuhn; Palm oil is in everything, from pizza dough and chocolate to laundry detergent and lipstick. Nongovernmental organizations blame it for contributing to assorted evils, from global warming to human rights abuses. But in the past year, this complex global industry has changed, as consumers put pressure on producers to show that they're not destroying forests, killing rare animals, grabbing land or exploiting workers. I was somewhat astonished to discover, on a trip to a palm oil plantation in the province of North Sumatra, Indonesia, that this much-maligned commodity actually begins with an innocuous-looking, beautiful creation of nature. Palm fruit is composed of ovoid kernels, which, when ripe, shine with lustrous hues of crimson toward their tips, orange in the middle and yellow at their stems........Asked whether he knows where all his firm's palm oil is coming from, and that all of it is produced sustainably, Hartmann says that Cargill keeps complete records on the smallholders' production. "All of the crop ... that we get, every ton, we know where it came from," he insists.....

Nut So Fast, Kind Bars: FDA Smacks Snacks On Health Claims  April 15, 2015 6:37 PM ET Poncie Rutsch; As William Correll, the director of the FDA's Center for Food Safety and author of the letter, writes, "None of your products listed above meet the requirements for use of the nutrient content claim 'healthy,' even though the Kind label reads 'Healthy and tasty, convenient and wholesome.' "
The FDA takes issue with many other aspects of the labels, including Kind's use of the plus sign on some of its products, which it uses to designate bars with extra antioxidants, fiber or protein.
Technically, to bear the symbol or word "plus," the bar has to contain 10 percent more of the nutrients than a bar the FDA has deemed representative of the snack bar category..........As The Salt has reported, the latest research suggests saturated fat may not be the nutritional villain it has been made out to be. High-fat nuts, in particular, may help control our appetites, to keep weight down.
Walter Willett, a professor of epidemiology and nutrition at Harvard University, says it's not as though Kind's mislabeling is egregious. "You wouldn't want a product that's loaded with mostly palm oil and other sources of saturated fat [to be labeled healthy]," he says. Willett has researched how nuts contribute to human health, and he tells The Salt that they reduce LDL cholesterol (the bad kind) and lower rates of heart disease and mortality. "They're probably one of the healthiest choices you can make in a diet," he says........

13 April 2015: Nestle reformulates Nesquick, Fruit drinks with more sugar than sodas, sugar lobby tactics compared to tobacco denials

Nestle cuts added sugar in Nesquik; nutrition concerns remain NEW YORK, April 13  |  By Anjali Athavaley  Markets  |  Mon Apr 13, 2015 12:01am EDT; (Reuters) - Nestle SA said on Monday it is cutting the added sugar in its Nesquik flavored milk products, the latest in a series of moves by the Swiss food company to reduce sugar and salt in its offerings amid growing public health concerns.
The overhauled Nesquik powders, to be launched this month, will contain 10.6 grams of sugar per two tablespoons, marking a 15 percent reduction in the chocolate version and a 27 percent cut in the strawberry flavor. The products will also no longer contain artificial colors or flavors......  Nesquik ready-to-drink beverages will also contain 10.6 grams of added sugar per eight-ounce serving, but 22 grams total due to lactose, a naturally occurring sugar. "Added sugars" are sugars and syrups added to foods when they are processed or prepared, as opposed to naturally occurring sugars.......  Still, Nestle's changes, similar to efforts at big food companies including General Mills Inc, fail to satisfy concerns of many health advocates. "It's a nice step in the right direction, but it's not a huge victory for nutrition," said Michael Jacobson, executive director at the Center for Science in the Public Interest, a consumer advocacy group. He still advises parents against giving their children Nesquik. "I would recommend water or skim milk or low-fat milk as something that is more appropriate to drink."......

Obesity Policy Coalition warns lunch box fruit drinks have more sugar than Coca-Cola  by Amy Corderoy Health Editor, Sydney Morning Herald   Date April 13, 2015 - 9:23AM
Many popular children's lunch box juices contain more sugar than Coca-Cola and parents should steer clear of them, health groups say.... The Obesity Policy Coalition is warning parents that with the school holidays ending, they should not assume products like juice are healthy just because of claims that they have "less sugar" or are "free from artificial colours and flavours". Th group's analysis of the lunch-box size poppers has found many have the equivalent of five or more teaspoons of sugar in them, with several containing even more sugar than the same size serving of Coca-Cola.

Opinions - The sugar lobby’s sour tactics By Dana Milbank Opinion writer April 10  
Our mothers told us: Sugar is filled with “empty calories,” and it can rot your teeth, make you fat and give you diabetes..... They told us this because, unfortunately, it’s true. But this is Washington, and things ate here much like in Willy Wonka’s world of “Pure Imagination,” where fantasies become real simply by wishing them... In that same can-do spirit of “Charlie and the Chocolate Factory,” the Sugar Association industry lobby has stepped up its campaign to convince Americans and their government that sugar is good for us. Or, at least, not bad for us. ... Consider the 2015 Agriculture Department dietary guidelines now being prepared by the Obama administration. A scientific advisory committee is recommending Americans hold calories from added sugars to 10 percent of their diets, because: “strong and consistent evidence” shows they are “associated with excess body weight”; “strong evidence shows” they increase the risk of Type 2 diabetes; “moderate evidence” shows sugars are “consistently associated with increased risk of hypertension, stroke and CHD [coronary heart disease]”; and “moderate consistent evidence” links cavities to sugar intake.
Enter the sugar lobby’s Andy Briscoe. The head of the Sugar Association wrote to the advisory committee to say there was no “proof of cause and effect” linking “ ‘added sugars’ intake with serious disease,” nor any “significant scientific agreement” to justify telling the American public sugar is “a causal factor in a serious disease outcome.” Added Briscoe: “There is not a preponderance of scientific evidence for conclusion statements that link ‘added sugars’ intake to serious disease or negative health outcomes or for a recommendation to limit ‘added sugars’ intake to less than 10% of energy.”......... The old-school approach of denial has a 1960s tobacco-industry feel, but the Sugar Association has been successful so far in derailing restrictions on sugar consumption in past dietary guidance, the last of which came out in 2010.......

12 April 2015: Sugar warning label - New York and in California are trying to emblazon sodas with a message that looks very similar to one you see on cigarette packages or alcohol bottles

Is It Time For A Warning Label On Sugar-Loaded Drinks? by Poncie Rutsch  April 09, 2015 3:52 PM ET; We've said it before, and we'll say it again: We consume a lot more sugar than is good for our health. Because of this, the next generation of Americans will struggle with obesity and diabetes more than any other. The most obvious culprit is the added sugar in sodas and other sugary beverages, like sports drinks or teas..... One idea public health advocates have floated to bring sugar consumption down is to tax beverages with more than a certain amount of added sugar. (Berkeley, Calif., and the Navajo Nation have managed to pass such legislation.) Another is to shrink the size of soda cups........ The latest idea is a warning label. Legislators in New York and in California are trying to emblazon sodas with a message that looks very similar to one you see on cigarette packages or alcohol bottles.......

19 March 2015: The sweeteners debate and soda chasing sweeteners

Diet soda sweeteners may lead to bigger belly, extra fat: study  By Douglas Ernst  - The Washington Times - Wednesday, March 18, 2015; Participants in a study have given Texas researchers some interesting data on diet soda drinkers — elderly individuals who went for the “healthy” option put on much more weight than those who abstained. University of Texas Health Science Center at San Antonio found that over the course of nearly a decade, diet soda drinkers added and average of 3.16 inches to their waist while those who drank standard versions of their favorite soda increased by 0.8 inches. The study was published by the Journal of the American Geriatrics Society. The study used 750 adults with an average age of 65 when it began, ABC Radio reported Wednesday.
Ms. Fowler believes that sweeteners like aspartame, saccharin, and sucralose have an effect on the body’s digestive system to properly do its job, which may contribute to weight gain over time. Those extra pounds then make the body more susceptible to health conditions like obesity, high blood pressure, and diabetes. Read more:

Scientists Are Racing to Build a Better Diet Soda  'By' Duane Stanford 8:00 PM HKT   March 19, 2015; Major soda makers are desperate for a drink that tastes like the real thing, but doesn’t contain sweeteners that spook consumers ... In a crowded lab on the edge of Copenhagen, food scientists at Swiss biotech company Evolva Holding are scrambling to help reinvent one of the world’s most popular drinks. The location is no accident. The Danish city’s Carlsberg brewery discovered a way to isolate pure yeast cells in 1900, which was crucial to the mass production of beer, and the town has been a hub of fermentation innovation ever since. But instead of designing a new Pilsner or bock, these researchers are harnessing high-tech yeast to craft a far different quaff: the perfect soda.... In biotech labs from California and New Jersey to Denmark, Coca-Cola, PepsiCo, and their suppliers are racing to find the industry’s holy grail—a soda that tastes as good as the iconic colas, is sweetened naturally, and has zero calories. Falling out of sync with consumers’ taste buds isn’t the issue. A century after first appearing as a drugstore elixir, the sweet, caramel-colored beverage remains the world’s most popular packaged drink. Globally, colas account for more than half of all sodas sold. The challenge for the $187 billion soft drink industry is giving consumers in developed markets the sugary taste they want without giving them the mouthful of calories they don’t. Concerns about obesity and health have led to nine years of falling U.S. soda consumption..... America’s 4 percent-a-year drop in cola sales has wiped out $2.7 billion in annual revenue over the past five years, according to Euromonitor. The decline has pushed Coca-Cola, PepsiCo, and Dr Pepper Snapple, the three largest U.S. soda makers, to crank out new beverages, including energy drinks and even designer milks. But soda makers have too much at stake to simply resign themselves to cola’s slow decline....Biotech companies including DSM in the Netherlands are working on their own fermentation methods. At a lab in North Brunswick Township, N.J., run by plant-science company Chromocell, Coca-Cola is hedging its bets. Work there is centered on enhancing sugar’s taste, so less is needed to offset the aftertaste of stevia. The goal is to cut the sugar by at least 90 percent without losing any of the clean sugary taste. Chromocell takes taste receptor cells from animals and records how they respond to contact with specific sweet molecules from plants. “We have the technology to make them [react] exactly like they are in your mouth,” says Chromocell CEO Christian Kopfli....All of this science is likely to raise red flags for some consumers, who are increasingly demanding “natural” ingredients in foods and drinks, says Euromonitor’s Telford. Then there’s the cost. As with molecules created by fermentation, sweetness enhancers will have to be price-competitive with sugar and artificial sweeteners to be commercially viable. So while scientists may find cells from, say, a Himalayan orchid that heighten sugar perception, they might also come at twice the cost of sugar, cautions Chromocell’s Kopfli. “Consumers are very demanding,” he says. “They say, ‘Less calories and same taste, but I’m not willing to pay more for whatever it is.’ ” The bottom line: U.S. cola consumption is falling by about 4 percent a year. Soda makers are seeking new sweeteners to reverse the trend.....

18 March 2015: Food industry battles against added-sugar label in US

Food industry waging a bitter battle over proposal on added-sugar labels By Evan Halper  March 17, 2015, 3:00 AM|Reporting from WASHINGTON; Of all the issues the Obama administration is grappling with, a modest redesign of what food labels say about sweeteners might not have seemed among the more controversial. But ever since First Lady Michelle Obama unveiled the plan last year, a lobbying frenzy has ensued... The objections have come not only from candy makers and bottlers of soft drinks. The governor of Massachusetts implored the administration to rethink its proposal. The governor of Wisconsin protested too. So did the government of Australia, which warned the move could violate international trade agreements.... The proposal being considered by the Food and Drug Administration would add a new line to labels on packaged products noting how many teaspoons of sugar had been added.... The furor over the idea reveals the extent to which extra sugar is infused into even the most unlikely foods and the concerns that manufacturers have about consumers finding out. The FDA has received 287,889 public comments on the plan, including many from major food companies and trade associations.....  Nutrition advocates say the strong reaction shows just how much is at stake. "They know this will impact how people choose their products, and that terrifies them," said Renee Sharp, director of research for the Environmental Working Group, one of several advocacy groups campaigning for the label change.....

28 January 2015: Caps on fat, salt and sugar promised by UK Labour

Caps on fat, salt and sugar promised by Labour By Nick Triggle Health correspondent, BBC News  15 January 2015 Last updated at 02:45; Maximum limits would be set on levels of fat, salt and sugar in food marketed to children, under a Labour government, the shadow health secretary will say.
In a speech, Andy Burnham will say it is time for tough action to protect children and tackle obesity.
He will criticise the government's approach to industry, which has been categorised by voluntary agreements.... The levels of fat, salt and sugar in food has been reduced in recent years, but many people still consume above the recommended levels. There are signs that the rise in obesity among children has started levelling off, but 15% of under 15s are still obese.... On food labelling, Mr Burnham wants to see a clearer traffic light-based system. A front-of-pack colour coding and nutritional information system is currently being used. It is not clear how this will be done, as introducing food labelling has proved difficult because of industry opposition and the need for mandatory rules to be agreed at an EU level.... "Children need better protection from the pressures of modern living and the harm caused by alcohol, sugar and smoke. and Labour will not flinch from taking the action needed to provide it."

17 September 204: Sugar & food tax ideas news

Experts back a 'sugar tax' to increase the retail price of sugar-rich products  By Lizzie Parry for MailOnline Published: 11:14 GMT, 16 September 2014  | Updated: 14:00 GMT, 16 September 2014; "Just HALF a can of Coke exceeds the new daily sugar guidelines backed by scientists - who recommend just three cubes a day. Study by scientists at University College London has called for recommended daily sugar intake to be slashed to 14g - three cubes a day. World Health Organisation currently advises a maximum of 10% of our total energy intake from free - or added - sugars, with 5% as a 'target'. This equates to 50g of free sugars (10 cubes), with 25g (5 cubes) as the target each day - but 14g would be just 3% of energy from added sugars. One 330ml can of Coca Cola contains 35g of sugars - or 7 cubes. Bar of Dairy Milk has 7 cubes, while McDonald's Strawberry Milkshake has 12. Diet Coke and Coke Zero alternatives are both sugar-free and low-calorie. Calls for sugary food and drinks to be banned from schools and vending machines to be removed from public places..."

22 June 2014: Sugar & food tax ideas news

"..... Coca-Cola Life, a stevia-sweetened version of regular Coca-Cola. Coca-Cola has been quietly test-marketing its new beverage, the first addition to the trademark “Coke” branded sodas in almost eight years. It released the drink in Argentina and Chile last year, and this fall it’s launching in the U.K. Coke Life isn’t exactly a diet drink. According to the Guardian, it contains more than four tablespoons of real sugar and has about 89 calories per can—less than the 140 calories found in a can of regular Coke ....Coke Life is Coca-Cola’s answer to the two health concerns that have been hitting the company’s soda sales with a one-two punch: the anti-sugar movement, which rails against its full-calorie, full-sugar line of beverages, and the perception that artificial sweeteners such as aspartame (found in both Diet Coke and Coke Zero) are unhealthy and can even contribute to weight gain....As soda sales have fallen, Coke has also found itself fending off health-policy experts and state governments pushing for increased regulation of sugary drinks and snacks. New York City’s limit on soda container sizes is currently making its way through state courts, and a California law that would add a warning label to cans saying, “Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay” has made it through the state senate...";
"...Current UK guidance says sugar should not make up more than 11% of our daily calories. The World Health Organisation has recently recommended 10% but urged countries to have an ambition to bring it down to 5%. A paper published today in the journal Public Health Nutrition says even that is too high. Sugar should not make up more than 3% of our energy intake. We have a very long way to go. Children in England aged 4-10, according to the government's latest National Diet and Nutrition Survey, are on 14.7% and older children, aged 11-18, are on 15.6%...the UK's scientific advisory committee on nutrition (SACN) will publish the results of a long inquiry into carbohydrates, including sugar, in the diet next week....".;

'Sugar tax' needed to curb childhood obesity, say experts. Tax to deter consumption of soft drinks among measures proposed by Action on Sugar, as well as ban on junk food sports sponsorships
Press Association,, Sunday 22 June 2014;; A campaign group has called on the government to introduce a "sugar tax" to discourage consumption of sweetened soft drinks. Action on Sugar said it had developed a seven-point plan to curb childhood obesity following a request for its views from the health secretary, Jeremy Hunt.
The measures include bringing in a sugar tax, limiting the availability of ultra-processed foods and sweetened soft drinks, and banning "junk food sports sponsorships".
The seven measures called for are:
• Reduce added sugars by 40% by 2020 by reformulating food.
• Cease all forms of targeted marketing of ultra-processed, unhealthy foods and drinks to children.
• Dissociate physical activity with obesity via banning junk food sports sponsorships.
• Reduce fat in ultra-processed foods, particularly saturated fat – 15% reduction by 2020.
• Limit the availability of ultra-processed foods and sweetened soft drinks as well as reducing portion size.
• Incentivise healthier food and discourage drinking of soft drinks by introducing a sugar tax.
• Remove responsibility for nutrition from the Department of Health and return it to an independent agency.

Sunday, April 19, 2015

HCS vs HCS vs HCS?: Greenpeace led HCS Approach toolkit approved; Greenpeace promotes its HCS Approach as a "tested and leading methodology"

The HCS approach is getting rather contested and confusing as companies straddle different areas.  One is led by Greenpeace is the HCS Approach (apparently done largely by the NGO via pilot study with Golden Agri Resouces and possibly with a handful of other corporate sector players). Another (still ongoing) is via the Sustainable Palm Oil Manifesto Group (SPOM) led by academics and think tankers. At the RSPO, the equivalent is the GHG emission reductions policy in its New Plantings Procedure (we're not sure who vetted the parameters in its calculator).

19 April 2015: Greenpeace led HCS Approach toolkit approved in April

Palm oil companies, NGOs endorse new deforestation-limiting toolkit by  Morgan Erickson-Davis April 06, 2015; Forests not only house many of the world's species, but also much of its carbon. Now, a toolkit has been developed by a group of companies and organizations with the aim of helping other companies and NGOs identify High Carbon Stock (HCS) forests. The toolkit was endorsed last week by major NGOs and plantation companies in Singapore....
HCS Approach toolkit here:

12 December 2014: Greenpeace promotes HCS Approach as a "tested and leading methodology"

Jokowi's Call for Ecological Reform Reaches Palm Oil Firms; Jakarta Globe  - ‎Dec 9, 2014‎;  "Following last week's strong pro-peatlands and forests commitment by newly inaugurated President Joko Widodo, two of the world's largest palm oil producers and traders have announced policies to address the criticism of deforestation in their supply ...The High Carbon Stock Approach, (Greenpeace) the global environmental group argues, is a tested tool that identifies degraded areas suitable for plantation development and forest areas that merit protection to maintain and enhance carbon, biodiversity and social values.... It is being overseen and further refined by the multi-stakeholder High Carbon Stock Approach Steering Group, which involves international non-governmental organizations including Greenpeace as well as palm oil producers Cargill, Agropalma, Wilmar, New Britain Palm Oil, Daabon and Golden Agri Resources, and one of the world’s largest pulp and paper companies Asia Pulp & Paper (APP)...... Both Musim Mas and KLK are part of the Malaysia-based Sustainable Palm Oil Manifesto (SPOM), an industry initiative that has commissioned further carbon study. In their new policies, the companies say they will adopt the outcomes of that study after 2015....";

Philippines palm oil: 1 million hectare oil palm hopes center on Caraga? FGV, NBPOL, Pertamina, PTPN among key intended FDI players?

19 April 2015: 1 million hectare oil palm hopes center on Caraga? FGV, NBPOL, Pertamina, PTPN among key intended FDI players?

Caraga eyed for oil palm amid 1-M-hectare target for Mindanao By Carmelito Q. Francisco, Correspondent  April 05, 2015 08:18:00 PM; DAVAO CITY -- Mindanao authorities are looking at developing about a million hectares for oil palm farming with about a third of the total area in the Caraga Region.... The Mindanao Development Authority (MinDA), through Public Affairs Division Chief Romeo M. Montenegro, said Caraga can become the center of oil palm production in Mindanao as studies show the climate and soil condition in parts of the region, particularly in the Agusan provinces, are ideal for both nurseries and farms. Caraga is composed of 5 provinces: Agusan del Norte and Sur, Surigao del Norte and Sur, and the Dinagat Islands..... About 60,000 hectares in Mindanao have so far been developed for oil palm production, a large portion of which are in Caraga and some in the Autonomous Region in Muslim Mindanao, according to MinDA data.....  The industry has become “exciting”, said Mr. Montenegro, as nine companies from Malaysia and Indonesia, the two biggest oil palm producers and exporters, have signaled their intention to invest.
Among these companies are Felda Global Ventures, New Britain Palm Oil Ltd.-PNG, Pertamina-Indonesia, Perkebunan Nusantara-Indonesia, and Bali Palm Oil-Indonesia
..... Officials of Felda, the Malaysian government’s Federal Land Development Authority, have visited Mindanao twice in recent months to look into investment possibilities in Mindanao..... In Davao City, oil palm projects are being eyed in the remote agricultural districts, particularly in Marilog, including some areas covered by Certificates of Ancestral Domain held by various indigenous communities.....
The Philippine Palm Oil Development Council is also pushing for the expansion of the industry in Mindanao, saying it can potentially match the importance of coconut, the country’s top agricultural export commodity.....

Thursday, April 9, 2015

How the deal was done - changing palm oil trade policy to eliminate deforestation: the Wilmar-TFT-Forest Heroes story

This is a very in-depth (long) and interesting reportage of what went on behind the scenes to drive the 5 Dec 2013 shift to the "no peat, no deforestation, no...." policies. I remember this period quite vividly for all the chatter swirling over large plantation groups pondering over these new pledge terms. These are being operationalised as de facto trade standards for the palm oil trade, and percolating surely down to the entire supply-chain. It is part of  the "second wave" of NGO policy makers into the palm oil sector (first wave being lead by WWF-RSPO).

What it doesn't discuss: It doesn't talk much about the traceability versus certification issues*. Nor does it address the many commercial drivers associated with these. Also, traceability deforestation policies have different special clauses for each company; so you'd probably need to seriously read it to tease out the big commercial impacts. That's a big difference versus the more public RSPO program.
*Traceability moves: RSPO Traceability Taskforce has IDH who runs Palm Oil Traceability Working Group initiative

Looking ahead. Questions: Will there be a  third wave? On social issues** perhaps? Notably, as more service-providing NGOs enter the palm oil fray, and as policy areas get earmarked by different groups of NGOs, the push is into more challenging (= complex and costly) policy areas (like social issues) and also the spread to other commodities such as cane sugar and others will be useful to observe. Already, those operating in Indonesia note that local NGOs are already quite active on these issues, but there is certainly room for more? With limited growth potential (under the new realities of enviro-social "voluntary" policies) for large companies in Indonesia, the push is on downstream expansion and also growth elsewhere, including in Africa.
**Social issues could relate to local peoples, indigenous rights and labour contestation. Example, Blockade at Wilmar mill could erupt into full-blown strike by  Andi Fachrizl April 03, 2015;

In our conversation with Indonesia specialists the last few days, we note the bottom line: Plantable areas dropping to around 50% or lower on HCS enviro standards, depending on site and domestic policy overlays; and the socio-economic inti:plasma ratios seen more operational in the 60:40 range across oil palm and cane sugar. Also, consider how the purchase of external crop from forested areas will be handled? This policy is said to be about the business of reforestation cum soft/food crop concessions - how can existing farmers be accommodated, and will more plantations have to develop their skill-sets in such a reforestation move?

The Corporate Capture of Sustainable Development by Leslie Sklair;


48 hours that changed the future of rainforests By Nathanael Johnson, 2 Apr 2015

Catchy excerpts:

Hurowitz emailed his co-workers at Forest Heroes, the nonprofit he’d founded, telling them to prepare for a protracted struggle. “I said, ‘Suit up, we’re going to war’,” Hurowitz told me. Then he got into bed, deflated. As he was settling in, his iPhone chimed a new text message. It was Scott Poynton, head of The Forest Trust, who had been working closely with Hurowitz and Kuok. Kuok was ready to make a commitment, the text said......Hurowitz rushed to book a flight to Singapore. That Monday, he was on the airplane...... It takes 24 hours to fly from Washington, D.C., to Singapore. By the time Hurowitz got off the plane, he saw he had another email from Kuok. Perhaps the time was not right, the palm oil exec was saying now; he wasn’t going to make any commitments unless the other palm oil companies did the same...... Hurowitz knew that wasn’t going to happen. Negotiations had been proceeding for years and had consistently failed to stop the chainsaws. He fired back an email with a picture of protesters holding banners outside the Kellogg’s headquarters in Battle Creek, Mich. (Kellogg’s bought oil from Wilmar.)...... “Every one of your customers’ headquarters is going to look like this,” Hurowitz remembers writing. “This is an opportunity to distinguish yourself.” Then he waited. There was no immediate response from Kuok. “That was a good sign, because usually if he was mad he’d fire something right back.” Two hours later, Kuok sent an email telling Hurowitz they would talk over dinner...........Within 48 hours, Wilmar had signed a sweeping commitment that went further than any other company in the industry. Wilmar not only promised to stop cutting down forests; it pledged to ensure that all the farmers it bought from did the same..........

.............One day, Kuok’s wife confronted him: She had seen an interview on Bloomberg Television in which Hurowitz lay the blame for the haze on Wilmar. Here’s how Poynton later told me that conversation went. (I didn’t get to speak directly to Kuok for this article.) “His wife said to him, the TV and all the articles in the news are saying that this is your fault that we are all choking here. She asked him, ‘What’s going on?’”... Kuok was upset. Surely Wilmar was a more responsible corporate citizen than some of the other traders. It was by the book and law-abiding, in the Singaporean way. Why was this fellow on Bloomberg singling them out?........... “You have been a huge part of the Asian success story,” he remembers telling Kuok. “Now it’s time to solve the Asian environmental crisis.” Then he flew to Singapore to meet Kuok in person.....

..........Hurowitz suggested that Wilmar bring in Scott Poynton’s organization, The Forest Trust, to help work out a more detailed approach to changing his company’s palm oil sourcing. Coincidentally, Goon had also emailed Poynton, asking for his help. The Forest Trust is a nonprofit that contracts with companies to teach them how to stop deforestation. “Glenn [Hurowitz] was able to raise the problems, but he was not able to raise solutions,” Poynton said. “That’s my role. I’m the guy who shows you the path out of the wilderness.”....... Poynton also got a lecture from Kuok when they first met, but, having been through this process with business leaders many times, he was expecting it. Kuok, Poynton said, felt misunderstood by the activists in the nonprofits and NGOs. So it made perfect sense that he would spend those first meetings trying to get Hurowitz and Poynton to see things from his perspective.......Hurowitz was the catalyst, Goon said. “But he’s not the one who convinced Mr. Kuok to take the plunge. Scott Poynton’s role was probably the most crucial. I think Mr. Kuok resonated a lot with Scott. Scott was the guy who knew his stuff, [he was] my chairman’s sounding board, his voice of reason, and perhaps his voice of conscience too, to a certain extent.”
By midsummer, Kuok had decided that Wilmar had both the ability and responsibility to effect change in the palm oil industry
. It’s hard to know what was going on in his head, but we do know that he had a growing interest in the environment....

......Kuok didn’t want it to look like he was bowing to the pressure of activists and NGOs. But it was getting harder to do that as the environmental nonprofits stepped up their campaigns. The NGOs had all aimed their fusillades at Wilmar, because it had the greatest market share and greatest ability to move the industry..... In September, Kuok met with Greenpeace official Bustar Maitar and other Greenpeace leaders in Singapore. “He asked me what he should tell them,” Poynton remembered. “I said, tell them everything, inspire them with your vision! So here’s this 64-year old Asian billionaire, confronted by these young Greenpeace people, and he opened himself to them totally, and thought the meeting went very well.”....

Kuok also said he’d show Greenpeace the policy he’d been developing. But Wilmar delayed sending it over. It had begun negotiating with Unilever, to try to get the Roundtable members to adopt this policy, and the policy was in flux........In October, Greenpeace released a report called “License to Kill” filled with heartbreaking pictures of wounded orangutans and smoking wastelands. It featured a prominent indictment of Wilmar. Then Greenpeace activists broke into a Wilmar plantation, crashing through the gate and unfurling banners. ..........Poynton implored Maitar to hold off further actions until after Dec. 5. The companies in the Roundtable were thinking about signing the policy that Wilmar and Unilever had negotiated, and they had promised to make a decision by that date. Just wait until Dec. 5, Poynton urged Maitar. If Kuok failed to act by then, it meant he needed more pressure.....

Nov. 27, 2013... Goon, Poynton, and Hurowitz had worked feverishly to get the other companies in the Roundtable to adopt their policy, but at least three of the corporations in the Roundtable had rejected it, and all the other palm-oil traders seemed to be balking......... At 10:41 p.m. Poynton sent a long email from his home near Geneva, Switzerland, to Kuok, urging him to sign, rather than wait for consensus. A few hours later, midday in Singapore, Kuok responded noncommittally, indicating that he would only sign if two others corporations, Cargill and Musim Mas, also pledged to end deforestation......... Kuok didn’t want to be the only one breaking ranks. If Wilmar acted alone, he pointed out, it might look like it was responding to attacks from the NGOs, rather making a solid business decision, that the other companies would be likely to emulate. He wanted to bring the other companies along, he said, and it would be more difficult to do that if it looked like Wilmar had switched sides....... 1:30 a.m., Nov. 28, 2013, Switzerland......... As soon as he received Kuok’s email, Poynton began hammering at his keyboard, speedily composing a 2,000-word response. Poynton argued that if Kuok was worried about alienating the other companies, this was the time to act, because the NGO campaigns would only intensify. The acrimony would only get worse. The people who wanted to keep making money destroying forests and people’s lives were hiding behind Wilmar, letting it absorb the PR attacks, while thwarting the very changes that Kuok wanted to make to stop the destruction, he wrote. Finally, he told Kuok he could throw out this latest Roundtable manifesto for all he cared. You know your own values, Poynton said; simply make those values Wilmar policy.
“It was time to just get it out there and say, for fuck’s sake — pardon my language — you know the path, you’ve known it since August. And now you are saying that you won’t go down the path unless your stupid mates go with you. And they aren’t ready,” Poynton told me
.... At the last minute, Poynton attached a cartoon by Michael Leunig, showing a powerful but lonely man whose heart contained “the deepest pit in the world.” But in the bottom of that black pit, the last panel reads, “lay the lightest, loveliest, tenderest, most beautiful, happy angel in the universe. So things weren’t so bad after all.”... Poynton knew he was taking a risk. Would it look like he was saying that Kuok was a lonely, dark-hearted man, with just a flicker of good in him? He hesitated, then thought: “No, bugger it, I’m going to send it. If he reacts badly he’s not the right bloke. But if he is the guy I think he is, he’ll resonate to it.”....... 7:30 a.m., Nov. 29, 2013, Singapore..... The response would come a little under 24 hours later. Kuok gently teased Poynton for writing such a long and impassioned email. He said he still wanted to persuade another company to join them, but he had talked to Goon and another executive, and he was ready to sign........

.....Unilever, which declined to comment for this story, was the most important Wilmar customer telling Kuok not to sign, said Poynton, who had grown increasingly frustrated with the company
.....“Let’s write to [Unilever CEO Paul] Polman,” he said.... “Right,” said Poynton. That made sense: Bypass the midlevel Unilever employees, go straight to the top. .....When they finally arrived, Engel met them at the door. He wasn’t smiling. He’d gotten their email, forwarded by Polman, with a brusque note to sort it out, Poynton recalls......... They spoke in a conference room in a newly constructed Unilever training facility on the edge of the city. Things didn’t look good. Unilever wasn’t going to break ranks and sign the Roundtable manifesto with Wilmar, and Engel didn’t have the authority to shift that position........ But according to Poynton, Engel had long questioned the commitment to consensus. After hours of hashing it out, Engel thought up a compromise. Unilever had recently asked for bids to supply it with a large quantity of palm oil; Wilmar was in line to get a big piece of that contract. Engel offered to add a line to that contract making it contingent on Wilmar signing the sustainability policy. In other words, Unilever would award the contract to Wilmar only if it committed to ending deforestation.... .By 5:30 p.m. the work was done, and everyone met back at the Unilever building. Kuok arrived just before 6 p.m. and the others met him outside. Poynton half-lifted his palms from his sides. Kuok reciprocated the gesture and smiled. Neither man is a casual hugger, but they walked forward and embraced.... Engel and Kuok signed the agreement. Cameras flashed. Champagne corks popped. But Poynton was still nervous. He’d promised Bustar Maitar, of Greenpeace, that Wilmar would make an announcement by Dec. 5. And if there was no announcement on Wilmar’s website, Poynton expected a Greenpeace campaign. “I knew that the guns were loaded and pointed,” he said.....

.........Of course, that, too, was a false ending. Sure, one year later, every major palm oil trader had made pledges like Wilmar. But not all these companies are truly committed. Some seem to be backsliding already. Forests are still burning. Some brands, like Kraft, have refused to commit to deforestation-free palm oil. Others, like Burger King and McDonald’s, haven’t updated their policies to require anything more than Roundtable certification..... But the accepted norm has shifted, as has the momentum. And it is spreading to other products. Last September, a host of major companies made vague promises to end deforestation. Cargill stepped up with a clear commitment to eliminate deforestation from all its supply chains, across all commodities, all around the world. Then ADM committed to a no-deforestation commitment for soy and palm oil, with even more details about how it would make it work......

........Since the Wilmar pledge, Hurowitz has shown an ability to achieve results, Poynton said, because he is not purely oppositional. “Glenn’s a different kettle of fish,” Poynton said. “He can see the good in these people. He’s ready to sit down and engage with them as a human.”.... Several activists told me they thought Wilmar changed thanks to the accumulated pressure. Perhaps. Or perhaps NGOs had been failing for years to make the kind of connection Hurowitz achieved with Kuok. Probably both are part true: Kuok needed the NGO pressure to start thinking about this, and he also needed the pragmatic partnership he found in Poynton and Hurowitz.....