Wednesday, May 19, 2010

EU pledges to continue buying CPO from Indonesia

17/05/2010 (The Jakarta Post) - Ignoring environmental concerns that Indonesian producers are clearing protected rainforests, the European Union (EU) administration has pledged not to restrict exports of Indonesian crude palm oil (CPO) to Europe.

“The European Union will not restrict Indonesia’s CPO export and it can continue carrying out the export of the commodity as it is today,”  the EU’s ambassador to Indonesia and Brunei Darussalam Julian Wilson said in Jakarta last week.

Wilson was speaking about a new EU policy on renewable energy that would regulate biofuel trade when it is implemented in December this year.

Currently, Europe uses about 10 percent of the CPO it imports from Indonesian for biodiesel fuel.

The policy would increase export opportunities for developing countries like Indonesia he said as reported by Antara news agency.

However, he said, producers of the commodity needed to understand the sentiment of European consumers, which was an increasing resoluteness for environmentally friendly products.

According to the policy, EU members will offer additional incentives to promote the use of fuels produced under environmentally friendly principles.

Director of the Worldwide Fund for Nature (EEF) Indonesia Fitrian Ardiansyah said that the policy would prove both a challenge and an opportunity for Indonesian CPO producers because many were still a long way off from fulfilling the environmental standards defined by the EU policy on renewable energy.

Indonesian Palm Oil Producers Association (Gapki) secretary-general Joko Supriyono said the policy would disadvantage Indonesia’s ability to export CPO to the EU.

“I am informed that the EU will not accept CPO with certificates issued by the Roundtable on Sustainable Palm Oil [RSPO] as sustainable for biofuel consumption. It is confusing and will surely cause problems in the future,” Joko told The Jakarta Post over the phone Saturday.

He said that EU members would almost certainly continue to buy CPO from Indonesia to fulfill its demand, but the environment issue would limit the export to the EU.

He said he believed environmental concerns had been used to manipulate production costs that would in turn effect the commodity’s price.

“I think inside the EU there is an ongoing debate between the commission that deals with energy and the commission that deals with the environment,” he said, adding that the government needed to negotiate with all parties.

An Agriculture Ministry report earlier this year said that Indonesia’s and Malaysia’s agriculture ministers had discussed the possibility of diverting their CPO exports to other markets besides Europe if European countries continued to accuse Indonesian and Malaysian CPO producers of destroying forests.

Indonesia and Malaysia currently dominate the world’s CPO industry, together accounting for 85 percent of global production.

In December, Unilever suspended all future purchases of palm oil, worth up to US$33 million, from PT Sinar Mas Agro Resources and Technology (SMART) after obtaining photographic evidence that Sinar Mas was clearing protected rainforests, including reserves for Indonesia’s endangered orangutan population.

Unilever was following up a report by environmental NGO Greenpeace that had detailed serious allegations against the environmental practices of Sinar Mas.

Two independent consultants, Control Union Certification of the Netherlands and the British Standards Institute Group, have been tasked with verifying the allegation that SMART has damaged protected rainforests.

Greenpeace has since urged other CPO buyers, including Swiss firm Nestlé and US-based Cargill, to stop buying CPO from producers that disregard sustainable plantation practices, which are a requirement of the RSPO.

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