KHOR REPORTS' PALM OIL MAY/JUN 2013, ISSUE 2: The Carbon Conundrum: Carbon thresholds on deforestation & peat? Palm producers push for biodiesel mandates. Natural: Red palm oil and the organic frontier. Fat standards & fat targets.Chocolate campaigns & Norway’s realignment.
View our newsletter here: http://tinyurl.com/cyyc3ek
Contents:
Indonesia's 100,000 ha ceiling?
East Malaysia factors.
Frontiers grow organic.
EU transfat and Australia SAFA cuts target.
Natural claims for red palm oil.
US & UK choc campaigns.
Norway repositions.
Ferrero fights back.
The carbon conundrum: deforestation & peat, Indonesia’s
moratorium and detecting deforestation.
Malaysia producers push for biodiesel.
Key vegetable oils.
Weather outlook.
CPO technical view.
Price charts.
This blog highlights news and views on markets, marketing, sustainability and political-economics of palm oil. Any views belong to the respective authors and do not represent that of any particular organization. I update this in my spare time. Since mid-2016, the more "comprehensive" news is available on customized request. Market news and big news continue to be updated. Thank you for reader interest that has generated over 130,000 page views in 2016.
Tuesday, May 7, 2013
Sunday, April 14, 2013
Deforestation detection, RSPO GHG and trade clashes
Khor Reports comments and views:
DEFORESTATION DETECTION
All the pieces are falling in place for the global monitoring of deforestation, with the year-end launch of a platform promising near-real time satellite data combined with submitted from-the-ground data. Global Forest Watch 2.0 is an initiative of NGO World Resources Institute, Google, University of Maryland and the UN Environment Program.
NGOs started using satellite imagery to good effect, to identify open burning incidents in plantation concessions, notably in Sumatra, Indonesia. The plantations generally attributed it to third-party burning on their land (not their doing nor by their contractors) and pledged to try to better police the situation. Open burning in peat land areas has been a key source of the annual haze in Southeast Asia. A series of academic studies of satellite imagery have also shed light on deforestation rates in the region, including peat swamp forest deforestation. It has highlighted interesting regional trends, including those in Sarawak and Kalimantan.
Satellite imagery studies for high carbon stocks has also been done by Golden-Agri Resources with the aid of sourcing facilitator TFT and a key NGO, Greenpeace. Importantly, this included the ground-truthing of carbon stocks measures of canopies viewed from satellites. In a nasty surprise for the palm oil industry, it found pretty high carbon stocks in what has been loosely called "degraded areas." Bottom-line: even large areas of degraded scrub lands should not be planted.
Also notable in recent writings by international research organisations and in marketing of end products is the wider reference to "deforestation-free commodities." Deforestation detection is likely to be a negative for oil palm extensification (land development) by plantations in higher carbon stock areas. The logical move would be for NGOs to highlight their expansion moves to buyers in developed markets, who are most conscious of sustainability and leery of socio-environmental issues.
RSPO GHG WILL CHALLENGE GROWERS
In a tough revision of its certification standard for growers, the RSPO will require measurement of GHG emissions from operations and new plantings. Some time will be given to develop these tools, and public reporting will only start 31 Dec 2016. Nevertheless, the implications are obvious and significant for plantations. The new P&Cs will require changes in carbon stocks to be measured against a baseline of land use in November 2005 (dig out those satellite images and peat land maps!). This could generate a list of the biggest net destroyers of carbon stocks in a recent ten year period; such retroactive reporting will also catch those who were less than fulsome in their new planting procedures reporting. Current RSPO grower members, should prepare for potential bad publicity surrounding such retrospective analysis of their land developments.
RSPO defines low carbon stock areas "as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
This is likely to mean:
a) low or no peat land development (negating or superseding* Principle 7.4 which allows for non-extensive planting on peat?);
b) usage of the 35 tonnes carbon per hectare ceiling** (the often cited measure of carbon sequestered in oil palm; which Golden Agri has accepted for its pilot scheme) which would supersede* Principle 7.3 on non-usage of primary forest from November 2005); and
c) much higher set-asides (i.e. areas not to be developed).
*Why not just rewrite Principles 7.3 and 7.4 if they are set to be superseded by a new measure in Principle 7.8?
** "The time averaged carbon stock in an oil palm plantation appears to be in the order of 35 tonnes carbon/ha, calculated over... 25-30 years... by various authors using different approaches... " (source: Greenhouse Gas Emissions from Palm Oil Production, Literature review and proposals from the RSPO Working Group on Greenhouse Gases, Final report, 9 October 2009)
RSPO's new P&C is set to be ratified soon. All RSPO ordinary members will be able to vote on the revised P&C at an Extraordinary General Assembly on 25 April 2013 (Thursday week, in about 10 days time) in Kuala Lumpur, Malaysia. Oil palm growers represent 15.4% of RSPO members. If the other member categories vote by bloc, it is likely that oil palm growers views may be isolated. If palm oil processors vote as a bloc with oil palm growers, these two categories represent 52.4% of members.
TRADE CLASHES
On deforestation-free palm oil concerns in end markets, Khor Reports notes that the Ferrero Group has for years been carefully sourcing palm oil from Peninsula Malaysia, a long human use area i.e. plantations there developed many decades ago. However, it faced a negative marketing blitz in the so-called Nutella Wars in France last year. It is interesting to note that it has lodged a complaint against its fellow RSPO members, Groupe Casino and Systeme U on 2 April 2013. In one, Ferrero says that "The complaint is made on ground that the Groupe Casino is undermining the objectives of the RSPO, as enshrined in the RSPO Vision and Mission, and breaching the RSPO Code of Conduct..." It has lodged a similar complaint against Systeme U.
Palm oil sustainability has been morphing into palm-oil free in some areas. This unfortunate linkage has to be addressed. At the same time, negative health claims still abound. Strategic consultancy, Hill & Knowlton (whose clients include big brands and big banks) has been a key player in global opinion-making on palm oil acceptance recently, just as it was in yesteryear. It had roles in the clash of US soybean interests and Malaysia palm oil over 20 years ago; which ended with 1992 US non-discriminatory legislation which outlawed "no palm oil, no cholesterol" labels and the 1993 US military lifting on its ban on palm oil usage.
We reckon that the deforestation / high carbon stocks challenge will be heating up, and it will need to be watched. With some serious challenges faced upstream and downstream, many industry players consider this a period of edible oil trade wars.
Announcements & news:
"Global Forest Watch 2.0 will enable users to track deforestation over time, including forest clearing that has occurred within the past 30 days. It will also allow users to submit georeferenced photographic evidence of forest destruction, supporting efforts by journalists and concerned citizens to report on deforestation." source: http://news.mongabay.com/2013/0409-global-forest-watch.html?goback=.gde_2007470_member_231012851
"The Groupe Casino: has initiated a campaign aimed at denigrating palm oil in general as well as products containing palm oil (the tag line of such campaign being "L'huile de palme c'est nul" which can be translated as "Palm oil is rubbish"); is fueling the negative perception of palm oil in France and other parts of the world; has launched a number of palm oil free products under its own brands and promotes them through denigrating statements about palm oil in general as well as through disparaging comparisons with competing products containing palm oil (including Ferrero Group's Nutella), refers to palm oil in a general way without making any distinction between sustainable palm oil promoted by the RSPO and non sustainable palm oil; fails to promote the use of sustainable palm oil; hasn't been willing to resolve the matter despite direct contacts made by the Ferrero Group." source: http://www.rspo.org/en/status_of_complaint&cpid=27
"The RSPO has revised an existing Criterion on monitoring and reporting GHG emissions from existing operations and developed a new Criterion on minimising net GHG emissions from new planting developments. However, it is recognised that these significant emissions cannot be monitored completely or measured accurately with current knowledge and methodologies. Therefore, growers and millers commit to an implementation period for promoting best practices in reporting to the RSPO and after December 31st 2016 to public reporting against both of these Criteria. During the implementation period the RSPO will further develop and improve the RSPO carbon assessment and reporting tools. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO. These revisions demonstrate the RSPO’s commitment to developing credible requirements relating to GHG emissions."
Notably in Principle 5.6: "during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8."
And in Principle 7.8: "Growers are strongly encouraged to establish new plantings on mineral soils, in low carbon stock areas, and cultivated areas, which the current users are willing to develop into oil palm. Millers are encouraged to adopt low-emission management practices (e.g. better management of palm oil mill effluent (POME), efficient boilers etc.) in new developments... Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period until December 31st 2016...Thereafter growers and millers will ensure that new plantation developments are designed to minimise net GHG emissions and commit to reporting publicly on this."
In Annex 2: "Definition of Low carbon stock areas: As per the recommendation of the RSPO GHG WG2 the total carbon emissions (above and below ground) from new developments should ideally not be greater than the carbon which can be sequestered in the period of one rotation over the whole new development (i.e. the average of oil palm, riparian areas, forest set-aside etc.). To help achieve this the expansion of plantations should be on low carbon stock areas (i.e. mineral soils, areas with low biomass etc.) or on land which is in current intensive agricultural or plantation use where the current users agree to its conversion to oil palm. An agreed methodology for assessing and reporting carbon stocks and sources of emissions as well as default figures for estimates of both are being developed by the RSPO. As guidance to growers low carbon stock areas are defined as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
More background on the palm oil sustainability movement (upstream impacts) here:
DEFORESTATION DETECTION
All the pieces are falling in place for the global monitoring of deforestation, with the year-end launch of a platform promising near-real time satellite data combined with submitted from-the-ground data. Global Forest Watch 2.0 is an initiative of NGO World Resources Institute, Google, University of Maryland and the UN Environment Program.
NGOs started using satellite imagery to good effect, to identify open burning incidents in plantation concessions, notably in Sumatra, Indonesia. The plantations generally attributed it to third-party burning on their land (not their doing nor by their contractors) and pledged to try to better police the situation. Open burning in peat land areas has been a key source of the annual haze in Southeast Asia. A series of academic studies of satellite imagery have also shed light on deforestation rates in the region, including peat swamp forest deforestation. It has highlighted interesting regional trends, including those in Sarawak and Kalimantan.
Satellite imagery studies for high carbon stocks has also been done by Golden-Agri Resources with the aid of sourcing facilitator TFT and a key NGO, Greenpeace. Importantly, this included the ground-truthing of carbon stocks measures of canopies viewed from satellites. In a nasty surprise for the palm oil industry, it found pretty high carbon stocks in what has been loosely called "degraded areas." Bottom-line: even large areas of degraded scrub lands should not be planted.
Also notable in recent writings by international research organisations and in marketing of end products is the wider reference to "deforestation-free commodities." Deforestation detection is likely to be a negative for oil palm extensification (land development) by plantations in higher carbon stock areas. The logical move would be for NGOs to highlight their expansion moves to buyers in developed markets, who are most conscious of sustainability and leery of socio-environmental issues.
RSPO GHG WILL CHALLENGE GROWERS
In a tough revision of its certification standard for growers, the RSPO will require measurement of GHG emissions from operations and new plantings. Some time will be given to develop these tools, and public reporting will only start 31 Dec 2016. Nevertheless, the implications are obvious and significant for plantations. The new P&Cs will require changes in carbon stocks to be measured against a baseline of land use in November 2005 (dig out those satellite images and peat land maps!). This could generate a list of the biggest net destroyers of carbon stocks in a recent ten year period; such retroactive reporting will also catch those who were less than fulsome in their new planting procedures reporting. Current RSPO grower members, should prepare for potential bad publicity surrounding such retrospective analysis of their land developments.
RSPO defines low carbon stock areas "as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
This is likely to mean:
a) low or no peat land development (negating or superseding* Principle 7.4 which allows for non-extensive planting on peat?);
b) usage of the 35 tonnes carbon per hectare ceiling** (the often cited measure of carbon sequestered in oil palm; which Golden Agri has accepted for its pilot scheme) which would supersede* Principle 7.3 on non-usage of primary forest from November 2005); and
c) much higher set-asides (i.e. areas not to be developed).
*Why not just rewrite Principles 7.3 and 7.4 if they are set to be superseded by a new measure in Principle 7.8?
** "The time averaged carbon stock in an oil palm plantation appears to be in the order of 35 tonnes carbon/ha, calculated over... 25-30 years... by various authors using different approaches... " (source: Greenhouse Gas Emissions from Palm Oil Production, Literature review and proposals from the RSPO Working Group on Greenhouse Gases, Final report, 9 October 2009)
RSPO's new P&C is set to be ratified soon. All RSPO ordinary members will be able to vote on the revised P&C at an Extraordinary General Assembly on 25 April 2013 (Thursday week, in about 10 days time) in Kuala Lumpur, Malaysia. Oil palm growers represent 15.4% of RSPO members. If the other member categories vote by bloc, it is likely that oil palm growers views may be isolated. If palm oil processors vote as a bloc with oil palm growers, these two categories represent 52.4% of members.
Note: These statistics should represent ordinary members, eligible to vote at the EGM.
Source: RSPO website, accessed 5.30pm 14 April 2013
TRADE CLASHES
On deforestation-free palm oil concerns in end markets, Khor Reports notes that the Ferrero Group has for years been carefully sourcing palm oil from Peninsula Malaysia, a long human use area i.e. plantations there developed many decades ago. However, it faced a negative marketing blitz in the so-called Nutella Wars in France last year. It is interesting to note that it has lodged a complaint against its fellow RSPO members, Groupe Casino and Systeme U on 2 April 2013. In one, Ferrero says that "The complaint is made on ground that the Groupe Casino is undermining the objectives of the RSPO, as enshrined in the RSPO Vision and Mission, and breaching the RSPO Code of Conduct..." It has lodged a similar complaint against Systeme U.
Palm oil sustainability has been morphing into palm-oil free in some areas. This unfortunate linkage has to be addressed. At the same time, negative health claims still abound. Strategic consultancy, Hill & Knowlton (whose clients include big brands and big banks) has been a key player in global opinion-making on palm oil acceptance recently, just as it was in yesteryear. It had roles in the clash of US soybean interests and Malaysia palm oil over 20 years ago; which ended with 1992 US non-discriminatory legislation which outlawed "no palm oil, no cholesterol" labels and the 1993 US military lifting on its ban on palm oil usage.
We reckon that the deforestation / high carbon stocks challenge will be heating up, and it will need to be watched. With some serious challenges faced upstream and downstream, many industry players consider this a period of edible oil trade wars.
Announcements & news:
"Global Forest Watch 2.0 will enable users to track deforestation over time, including forest clearing that has occurred within the past 30 days. It will also allow users to submit georeferenced photographic evidence of forest destruction, supporting efforts by journalists and concerned citizens to report on deforestation." source: http://news.mongabay.com/2013/0409-global-forest-watch.html?goback=.gde_2007470_member_231012851
"The Groupe Casino: has initiated a campaign aimed at denigrating palm oil in general as well as products containing palm oil (the tag line of such campaign being "L'huile de palme c'est nul" which can be translated as "Palm oil is rubbish"); is fueling the negative perception of palm oil in France and other parts of the world; has launched a number of palm oil free products under its own brands and promotes them through denigrating statements about palm oil in general as well as through disparaging comparisons with competing products containing palm oil (including Ferrero Group's Nutella), refers to palm oil in a general way without making any distinction between sustainable palm oil promoted by the RSPO and non sustainable palm oil; fails to promote the use of sustainable palm oil; hasn't been willing to resolve the matter despite direct contacts made by the Ferrero Group." source: http://www.rspo.org/en/status_of_complaint&cpid=27
"The RSPO has revised an existing Criterion on monitoring and reporting GHG emissions from existing operations and developed a new Criterion on minimising net GHG emissions from new planting developments. However, it is recognised that these significant emissions cannot be monitored completely or measured accurately with current knowledge and methodologies. Therefore, growers and millers commit to an implementation period for promoting best practices in reporting to the RSPO and after December 31st 2016 to public reporting against both of these Criteria. During the implementation period the RSPO will further develop and improve the RSPO carbon assessment and reporting tools. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO. These revisions demonstrate the RSPO’s commitment to developing credible requirements relating to GHG emissions."
Notably in Principle 5.6: "during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8."
And in Principle 7.8: "Growers are strongly encouraged to establish new plantings on mineral soils, in low carbon stock areas, and cultivated areas, which the current users are willing to develop into oil palm. Millers are encouraged to adopt low-emission management practices (e.g. better management of palm oil mill effluent (POME), efficient boilers etc.) in new developments... Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period until December 31st 2016...Thereafter growers and millers will ensure that new plantation developments are designed to minimise net GHG emissions and commit to reporting publicly on this."
In Annex 2: "Definition of Low carbon stock areas: As per the recommendation of the RSPO GHG WG2 the total carbon emissions (above and below ground) from new developments should ideally not be greater than the carbon which can be sequestered in the period of one rotation over the whole new development (i.e. the average of oil palm, riparian areas, forest set-aside etc.). To help achieve this the expansion of plantations should be on low carbon stock areas (i.e. mineral soils, areas with low biomass etc.) or on land which is in current intensive agricultural or plantation use where the current users agree to its conversion to oil palm. An agreed methodology for assessing and reporting carbon stocks and sources of emissions as well as default figures for estimates of both are being developed by the RSPO. As guidance to growers low carbon stock areas are defined as those with (above and below ground) carbon stores, that would be lost by conversion to oil palm, smaller than that which would be sequestered within an oil palm crop and other set-aside areas within the management unit over the period of one rotation."
More background on the palm oil sustainability movement (upstream impacts) here:
ISEAS Perspectives: Struggle for sustainability in palm oil industry shows results By Khor Yu Leng ; Just
published by ISEAS Perspectives, my paper on the shift of the Malaysia
and Indonesia palm oil sectors to sustainability efforts. One group of
transnational NGOs, led by the WWF, has
pressured large corporate growers as well as
multi-national consumer brands to accept Europe-centric voluntary
certification standards. Thus, since about 2003, the net impact of
various NGO pressures has helped to rein in the speed and prospects for
oil palm expansion in Indonesia and Malaysia by large corporate growers.
The authorities in Indonesia and Malaysia have reacted by creating
their own certification schemes.
Tuesday, March 26, 2013
UK Easter chocolates rated highest if "palm oil free"
Khor Reports: Sustainable palm oil has become inexorably linked with the rise of “palm oil free.” This is confirmed in the latest “ethical rating” of palm oil usage in consumer products: UK's Easter chocolates in this instance (Easter is just around the corner). Get a high score by various degrees of effort or “RSPO-ness.” Else you could simply opt out of palm oil to get the top score (and never mind the attributes of the ingredient you substitute it with i.e. sustainability, transfat and so forth).
The methodology: “Products
are ranked on a scoring system of 1-20....Companies
that do not use palm oil or their derivatives score 20 (best score). Companies that
use it but make no substantial policy statements and are not members of the
Roundtable on Sustainable Palm Oil score 0.” In addition, there are negative
marks for any missing or inconsistent information provided.
RSPO's Annual Communication on Progress (ACOP) was greatly strengthened last year but it has been hampered by significant non-responses and non-disclosures. This move in consumer product ratings highlights these issues and marks down companies for their lack of full disclosure.
65 products were rated and only 8 get the "green light": Divine Chocolate, Booja Booja, Traidcraft, Co-op Chocolate, Sainsbury's Chocolate, Waitrose, Biona and Plamil.
Chocolate makers buy specialty fats from palm oil providers in the form of CBE and CBS. To be rated high by ethicalconsumer.org a chocolate manufacturer using palm needs to do the following: be a RSPO member; for all group companies buy segregated sources for all CPO, PKO and palm derivatives used; disclose all relevant data to RSPO, disclose all suppliers and label palm oil in ingredients. The do-nots: provide incomplete or inconsistent information. The alternative, just don't use palm oil to get top marks i.e. go "palm oil free". Back to cocoa butter?
News: UK Easter chocolates
rated on sustainable palm oil. "Consumers are unaware of palm oil
content, the campaign says, because of current labelling laws. Palm oil is a
key ingredient in many food products – including chocolate and biscuits – but
companies are not required by EU law to label products containing it until
December 2014. The aim of the campaign is to encourage consumers to buy the best-rated
products, forcing those companies that are not taking their environmental
responsibilities seriously to use more sustainably sourced palm oil. Divine and Booja-Booja were
deemed to have the best overall credentials, with neither using any palm oil in
their chocolate products. Traidcraft, Co-operative Food and Sainsbury's
also scored very highly. The bottom three chocolate companies were deemed to be
Lindt, Thorntons and Guylian. Lindt reportedly supplied inaccurate figures to
Ethical Consumer, while Thorntons and Guylian failed to submit any
documentation to the organisations that set international sustainable palm oil
standards...." http://www.guardian.co.uk/environment/2013/mar/25/easter-eggs-palm-oil
Scoring methodology details from www.ethicalconsumer.org:
Companies are scored out of 100 possible points, with 100 being the best score.
Companies that do not use palm oil or its derivatives score 100. Please note the final score on the tables are given out of 20 by dividing the total by 5.
Companies that use it but make no substantial policy statements and are not members of the RSPO score zero.
50 marks are available for companies' actual palm oil use. Scores are applied for the companies' use of crude palm oil (CPO), palm kernel oil (PKO) and palm oil derivatives. Of these, 40 marks are awarded to companies that source 100% of their palm oil through RSPO-approved mechanisms for the trade in sustainable palm oil.
Up to ten additional marks are awarded for the proportion of RSPO-certified palm oil that is segregated.
The above certified mechanisms must apply to the companies' CPO, PKO and palm oil derivatives used. If it only applies to one of these, the mark out of 50 is divided by three.
10 marks are available for each of the following:
- Companies that make a public commitment to reduce their use of palm oil.
- Companies whose RSPO ACOP or CSR information in relation to palm oil applies to the whole company group.
- Companies that disclose their suppliers.
- Other positive initiatives, such as labelling palm oil where it is used.
- Companies that disclose the actual volumes used of CPO, PKO and palm oil derivatives.
- Ten marks are deducted if the information provided by the company to the RSPO is internally inconsistent, or inconsistent with its CSR information provided elsewhere.
- Five marks are deducted if the information it has provided is incomplete.
Friday, March 22, 2013
Sarawak controversies
Global Witness, a corruption busting NGO focusing on resource-based industries, recently released a video sting on Sarawak land deals. The video features cousins of the long-time Sarawak Chief Minister Taib and two lawyers. They are shown explaining to the purported foreign investor how he might acquire oil palm plantation land and circumvent Malaysian regulations on foreign-ownership limits and evade real property gains tax by using nominees and effecting so-called secret payments via a Singapore entity.
Khor Reports comment:
Stories about timber and oil palm links to corruption are not new. Various NGOs have been featuring similar issues in Sarawak. These include the Bruno Manser Fund and the Sarawak Report (run by Clare Rewcastle Brown, a sister-in-law of UK ex-Prime Minister Gordon Brown). Global Witness is a prominent NGO and its film about Sarawak land dealings is attention-grabbing. Sarawak issues may gain more global attention, building on other NGO exposes. Global Witness notes on its website: "Our campaigning led to the creation of the precedent-setting Kimberley Process Certification Scheme and to our joint nomination for the Nobel Peace Prize. Three years later we contributed to research and campaigning around the 2006 Hollywood blockbuster, Blood Diamond."
Indeed, the Global Witness report, "Corruption in Malaysia laid bare as investigation catches Sarawak’s ruling elite on camera," (weblink: http://www.globalwitness.org/insideshadowstate/), has garnered over 900,000 views on youtube in just three days (in English and Malay languages).
Sarawak is Malaysia’s remaining frontier for oil palm expansion, and various controversies have arisen in recent years. These include:
a) The IOI–Pelita landmark case: At end March 2010, the Miri High Court declared four natives the winner in a class action suit against the Sarawak government, Land Custody and Development Authority and IOI Pelita Plantation Sdn Bhd. Reports on the RSPO website indicates that IOI subsequently lost control of the estate.
b) Hundreds of pending land dispute cases: A listing of land disputes for 1995 to 2010 is available on various Sarawak linked websites, including here: http://www.illegal-logging.info/uploads/ListofSarawaklanddisputesJOANGOHUTAN.pdf
c) Sime Darby case: A former CEO of the largest plantation company in the world, stands accused of CBT over a Sarawak oil palm land deal apparently gone sour.
d) Recent expansion: Some academic satellite imagery studies show significant oil palm development in Sarawak in recent years (including on peat land). This supports recent comments by Dorab Mistry, a key speaker on palm oil market and prices, that there has been significant expansion in the Sarawak palm oil sector.
source: http://www.youtube.com/user/GlobalWitness, accessed 11pm on 22 March 2013
Khor Reports comment:
Stories about timber and oil palm links to corruption are not new. Various NGOs have been featuring similar issues in Sarawak. These include the Bruno Manser Fund and the Sarawak Report (run by Clare Rewcastle Brown, a sister-in-law of UK ex-Prime Minister Gordon Brown). Global Witness is a prominent NGO and its film about Sarawak land dealings is attention-grabbing. Sarawak issues may gain more global attention, building on other NGO exposes. Global Witness notes on its website: "Our campaigning led to the creation of the precedent-setting Kimberley Process Certification Scheme and to our joint nomination for the Nobel Peace Prize. Three years later we contributed to research and campaigning around the 2006 Hollywood blockbuster, Blood Diamond."
Indeed, the Global Witness report, "Corruption in Malaysia laid bare as investigation catches Sarawak’s ruling elite on camera," (weblink: http://www.globalwitness.org/insideshadowstate/), has garnered over 900,000 views on youtube in just three days (in English and Malay languages).
Sarawak is Malaysia’s remaining frontier for oil palm expansion, and various controversies have arisen in recent years. These include:
a) The IOI–Pelita landmark case: At end March 2010, the Miri High Court declared four natives the winner in a class action suit against the Sarawak government, Land Custody and Development Authority and IOI Pelita Plantation Sdn Bhd. Reports on the RSPO website indicates that IOI subsequently lost control of the estate.
b) Hundreds of pending land dispute cases: A listing of land disputes for 1995 to 2010 is available on various Sarawak linked websites, including here: http://www.illegal-logging.info/uploads/ListofSarawaklanddisputesJOANGOHUTAN.pdf
c) Sime Darby case: A former CEO of the largest plantation company in the world, stands accused of CBT over a Sarawak oil palm land deal apparently gone sour.
d) Recent expansion: Some academic satellite imagery studies show significant oil palm development in Sarawak in recent years (including on peat land). This supports recent comments by Dorab Mistry, a key speaker on palm oil market and prices, that there has been significant expansion in the Sarawak palm oil sector.
Thursday, March 14, 2013
Documentary on soy in Argentina
An interesting
documentary on soy in Argentina. The film makers highlight problem of GM
soy, using large amounts of pesticide. Argentine doctors interviewed
worry that this has resulted in birth defects and childhood
cancer in local populations living near soy fields. Soy growers say
they are using pesticides the government has approved. Violent encounters over land also a concern.View here: http://www.aljazeera.com/programmes/peopleandpower/2013/03/201331313434142322.html
Wednesday, March 13, 2013
45% area usable for Kalimantan plantations?
Khor Reports: HCS implies net
area of 45% for Kalimantan plantations?
This
morning, GAR and SMART made an announcement on its implementation of its pilot
on High Carbon Stock (HCS) forest conservation. Here is Khor Reports’ quick review
of GAR/SMART’s HCS issues and implications for the palm oil industry.
For the pilot,
“HCS is defined as comprising BT, HK1, HK2 and HK3 areas”. Thus, all types of
forest (high, medium and low density) as well as old scrub lands cannot be
developed. Only “young scrub” and “cleared / open land” can be utilized. Thus, despite
industry rumours of a higher ceiling that would be less of a constraint for oil
palm development, it appears that the NGO-preferred 35tC/ha ceiling still
applies. GAR/SMART’s preliminary study in June 2012, which was done together
with certification facilitator The Forest Trust and Greenpeace, found the weighted
average carbon stock in four Kalimantan concessions in degraded lands in tC/ha:
17 in cleared / open land, 27 in young scrub, 60 in old scrub, 107 in low
density forest, 166 in medium density forest, and 192 in high density forest.
a)
In unplanted
areas, 19,103 ha to be set aside for HCS (highlighted with yellow marker on slide #18). Add on 25,567 ha unplantable for reasons
of HCV, peat and government regulations (slide #17). Total of 35% set-aside area of total
concession.
b)
Add on (minimum)
20% area for smallholder / plasma schemes. The net area for the plantation / nucleus
could be 45%?*
* And this is in partially developed concession areas; area usable
in “new” concession areas could be lower assuming some HCS inadvertently cleared
in the past.
source: "GAR and SMART implement pilot on High Carbon Stock forest conservation"
With this ground-truthing
of satellite image mapping for Kalimantan degraded areas, NGOs may be more
confident to make advanced (and even historical) studies to inform plantation
companies on estimated HCS set asides they should have (or might have had) in
place. As we have mentioned before, we think this is a pre-cursor to a push for
rural land use planning which has been generally lacking in Southeast Asia. NGOs
appear well advanced in using satellite imagery for studying oil palm developments. Other issues arising would be connectivity of HCS areas and the need for 100 meter connectivity buffer corridors (see slide #31 below).
source: "GAR and SMART implement pilot on High Carbon Stock forest conservation"
The HCS
ceiling is fundamental to arresting deforestation. It seems a low key issue,
but it will be a thorny question for plantations on the usability of their land
banks. Elsewhere, Norway (population 4.9 million) has also been highlighting
concerns about palm oil’s impact on deforestation, perhaps in less impactful
but highly symbolic ways; weblink:http://khorreports-palmoil.blogspot.com/2013/03/norway-goes-cold-on-palm-oil.html
Also refer to Khor Reports on details of preliminary HCS report findings in GAR/SMART-TFT-Greenpeace report: Khor Reports Palm Oil Strategic Analysis #7, 11 June 2012, "Carbon Stocks Study Presages Problems for Plantations." Ask for a copy if you don't have it yet.
Info source: Golden
Agri-Resources Ltd: "GAR and SMART implement pilot on High Carbon Stock forest
conservation," 13 March 2013.
Norway goes cold on palm oil
Khor
Reports: Norway says "no way", with (i) a key pension fund
selling down all plantation equities except for Sime Darby at end-2012
and (ii) a successful NGO campaign slashing palm oil consumed by
two-thirds on fears of deforestation.
There has
been a symbolic sell-down of plantation company equity holdings by the Norwegian
Government Pension Fund Global (GPFG). Pressured by activists, the hydrocarbon exporting
nation decided to become “more green” by selling off all holdings, while
raising its stake in Sime Darby (the largest plantation company) by end 2012. This
move relates to the “Fund’s policy on risk related to climate change and tropical
deforestation.”(1) Experts question its methodology of selection and analysts
worry about whether other fund managers in developing countries might be
pressured to do the same.
Other news from
Norway is of a highly successful campaign by Rainforest Foundation
Norway to cut by two-thirds its 2011 level of consumption of palm oil from 3 kg
to 1 kg per capita (Norwegian food producers used 15,000 tons of palm oil in
2011). “Producers were asked to disclose details about their use of palm oil,
and whether the palm oil was sourced from sustainable sources. Norwegian law
obliges companies to provide such information, if it is considered relevant for
environmental concerns. The results of the investigation were published in a
“palm oil guide”, a unique web-based tool where consumers can check the
occurrence of palm oil in Norwegian food products. Previously, this information
was unavailable, and the use of palm oil concealed as “vegetable oil” or
“vegetable fat”.” (2) The palm oil guide is worth a look as it gives details on
palm oil content in different products (850 food products by October 2012) (3).
Apparently, all food producers except for General Mills made disclosure or were
compelled to. As it is not a Norwegian company, the US food producer could not
be made to do so. The pressure group reports that in trying to educate the Norwegian
public on deforestation issues, they often found journalists and others
distracted by concerns on saturated fats.
News sources:
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