The Palm Scribe

Plenty of Homework Left as Indonesian Palm Oil Industry Enters 2019


As Indonesia’s palm oil industry prepares to enter 2019, its stakeholders are pointing out the substantial number of homework that remained  to be done to turn an industry which has become one of the nation’s main bread earner into one that is sustainable and therefore immune to the continuous attacks and criticism it has been plagued so far.

Derom Bangun, Chairman of the Indonesian Palm Oil Council (DMSI) said that the heaviest and pressing challenge faced by the Indonesian palm oil industry was its sustainability, that everyone adheres to good agriculture practices.

“The biggest challenge is the matter of sustainability that needs to be accelerated so that the negative accusations addressed against the palm oil industry could be silenced,” Bangun told The Palm Scribe in a short text message.

He said that besides accelerating the process of sustainability certification to cover at least all palm oil plantation, it was also important for all companies to control their operation so that they do not engage in practices that could result in criticism from others.  A consistent and persuasive supervisory role of the government was also needed to ensure the good practices are respected.

Tiur Rumondang,  Indonesia Director of the Roundtable on Sustainable Palm Oil (RSPO) also said that Indonesia needed to be able to show that palm oil is and can be sustainably grown in Indonesia but emphasized that this needed collaborative efforts from all stakeholders.

“Looking ahead into 2019, there must be a renewed focus on collaboration, inclusivity, and results that help demonstrate to the world that palm can be, and already is, being grown sustainably in parts of Indonesia and other regions. We must work to bridge our differences and collaborate with those we have often disagreed with, to understand their criticism and continue to evolve the industry,” Rumondang told the Palm Scribe.

She said that efforts needed to be made to engage more smallholders by being inclusive and that raising their standard of living must also remain a top priority. Real progress on the ground must also be made in terms of the protection of biodiversity and human rights.

Rumondang said that the new RSPO Principles & Criteria (P&C) 2018 agreed in November can help drive this agenda, but added a caveat. “We will need stakeholders from all sectors to make this a reality.”

Bangun also added another serious challenge that needed to be addressed,  “the imbalance between supply and demand so that prices have been under heavy pressure since the mid of 2018.”  Continuing weak prices of the commodity in international markets have already forced the government to temporarily lift its levy on exports of Crude Palm Oil and its derivatives in a bid to improve prices at farmers’ level. Farmers, however, are saying they still have yet to see an impact of the policy.

Bangun believed that the government’s move to temporarily scrap the export levy was “accurate and has already led to a positive impact.” He also said that the government’s mandatory B20 fuel mixture policy was beginning to run smoothly and was having a positive impact too on prices. The government is now making it mandatory to use a 20 percent mixture of palm oil-based biofuel in diesel oil for all usage.

Bagi Soelthon Nanggara, Direktur Eksekutif Forest Watch Indonesia, keberlanjutan juga merupakan bagian dari tantangan utama yang dihadapi industri kelapa sawit Indonesia.

For Soelthon Nanggara, Executive Director of Forest Watch Indonesia (FWI) the sustainability of the industry also featured among the main challenges.

“The biggest challenges are to prove to the public that this industry is one that has an open permit information, an industry that is environmentally friendly and not built on the processes of forest or peat conversion, an industry that does not give rise to conflicts or one that settles conflict in a fair manner, an industry that respect the rights and access of existing local communities,” said Nanggara.

One of the way to help achieve that would be through reforming the Indonesia Sustainable Palm Oil  (ISPO) system in line with those challenges. In its efforts to assure the sustainability of its palm oil industry, the government is making mandatory the ISPO certification for all producers. The standard, however, has yet to receive international recognition and many buyers overseas still insist on other sustainability standards such as the Roundtable on Sustainable Palm Oil (RSPO), Roundtable on Sustainable Biomaterials (RSB), Sustainable Agriculture Network (SAN), International Sustainability & Carbon Certification (ISCC).

The Malaysian Sustainable Palm Oil (MSPO) and ISPO have come out last in the ranking so far,

Nanggara added that in the long run, if those challenges remained unaddressed, “there will always be a rejection against palm oil because this industry is no longer a mere affair of economics.”

For Marselinus Andry, the Secretary General of the Indonesian Oil Palm Farmers Union (SPKS), the implementation of the three-year Oil Palm Moratorium has become the biggest challenge, especially in how to attain the aims of the moratorium, be that the evaluation of existing permits and the suspension of new permits.

“At the farmers level, it is about improvement of the management of peoples’ oil palm plantation, in relations to plantation mapping in APL and forest areas, increasing productivity, guidance for or the revitalization of farmers’ institutions, the implementation of the ISPO and the allocation for the rights of the people in the form of 20 percent of the HGU and the release of forested areas,” he said.

These were not only the priorities but also achievements that needed to be evaluated again late, during the implementation of the oil palm moratorium

He also said added that the other important challenge at the farmer’s level was the matter of assurance regarding higher prices for oil palm Fresh Fruit Bunches (FFBs).

After the policy on the revocation of CPO export duties, farmers are still awaiting its impact in the form of a significant price increase. He cited the example that in Kalimantan, the price of FFBs is still around eight hundred rupiahs at the level of independent farmers and 1,000 at scheme farmers level.

“Therefore there is yet no significant change. There must be other efforts made by the government in the short and long-term in relations to this price. We cannot hope to just depend on this policy,” he said.

For Isna Fatimah, a researcher with the Indonesian Center for Environmental Law (ICEL), the main challenges for 2019 got plantation companies to implement good governance, including in transparency.  She said that companies should take into account the recommendations of environmental watchdog Greenpeace contained in its latest report titled “Final Countdown.”

“Presenting accurate and comprehensive data as a form of accountability towards investors and the public. One of the real challenges is how to see the suggestions offered by Greenpeace in ‘Final Countdown’ as a necessity for the company and not as an attack,” Fatimah said.

She concluded by saying that any response to the Greenpeace report, would not be convincing unless they can be accounted for and published, and show among others, the result of the mapping of their concession and also their supply chain network.

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