RI, Malaysia promote new approach to CPO exports

Indonesia and Malaysia — the world’s two largest crude palm oil (CPO) producers — seek to jointly professionalize dispute management on environmental issues and public relations to counter EU negative campaigns.

Indonesian Palm Oil Board vice chairman Derom Bangun admitted that a memorandum of cooperation between the two countries’ producers just inked last Friday did not include a dispute settlement mechanism if CPO buyers unilaterally revoked contracts with their suppliers over environmental issues.

“No, there is no specific point [on a dispute settlement mechanism stipulated in the memorandum],” he told The Jakarta Post on Monday.

“[But] perhaps that will be in place later during the joint implementation of the memorandum. What was signed was only a cooperation framework,” he said.

The memorandum was signed by the Indonesian Palm Oil Producers Association (Gapki) and the
Malaysian Palm Oil Association (MPOA).

The Indonesian Oil Palm Farmers Association (Apkasindo),the Sarawak Oil Palm Plantation
Owners Association (SOPPOA),the Federal Land Development Authority (Felda) and the Association
of Plantation Investors of Malaysia in Indonesia (APIMI) are also
involved.

The memorandum is aimed at mitigating negative campaigns on palm oil, while setting up a task force on best sustainable development practices, Antara reported.

Agriculture Minister Suwono, who also attended the signing, said Indonesia and Malaysia, controlling 85 percent of the world’s output and could control global prices, as well as fight negative campaigning which claimed producers were clearing rainforests illegally.

Indonesia’s CPO production last year topped 20 million tons and is projected to reach 40 million tons in 2020. Suswono said cooperation was to help prevent repetition of unilateral revocation of supply contracts on the lines of the Netherlands-based consumer goods giant Unilever which had ended deals with Duta Palma and PT SMART.

In December, Unilever said in a statement that it had suspended all future purchases of palm oil worth up to US$33 million from SMART after obtaining photographic evidence of Sinar Mas clearing protected rainforests, including reserves for Indonesia‘s endangered orangutan population.

SMART, Indonesia ’s largest CPO producer, is a Sinar Mas Group subsidiary. Unilever was following up a report by the environmental NGO Greenpeace that had detailed serious allegations against the environmental practices of Sinar Mas.

Two months later, Unilever blacklisted Indonesian planter Duta Palma and told its dealers not to source palm oil from that company on concerns over rainforest destruction, Reuters reported.

Duta Palma corporate secretary Sasanti dismissed Unilever’s allegation that it had destroyed forests to produce CPO, Bisnis Indonesia daily reported in its Feb. 27 issue. For the time being, Derom, who is also the Indonesian Palm Oil Producers Association’s (Gapki) representative in the Malaysia-headquartered Roundtable on Sustainable Palm Oil (RSPO), said disputing parties could report to the RSPO by also providing clear evidence to help settle any case of unilateral revocation.