RSPO Certifies First Indonesian Palm Oil Company

17/04/2009 (ICTSD) - An Indonesian palm oil company has become the country’s first to be certified ’sustainable’ by the Roundtable on Sustainable Palm Oil (RSPO). But environmentalists caution that production in the world’s largest palm oil producing country continues to pose a serious environmental threat.

The sustainability certification, granted to a business unit of PT Musim Mas Group, covers two palm oil mills and six estates covering a total of 28,336 hectares in the Province of Riau on the island of Sumatra. Palm oil exports originating from the mills can now claim to be produced from a sustainable source - a valuable marketing tool.

As the largest palm oil producer in the world, Indonesia has been anxious to promote the integrity of its lucrative crop. Sustainable certification could prove to be a boon to exporters as environmentally-friendly markets are opened up. Europe began receiving shipments of RSPO-certified palm oil from Southeast Asia in November 2008 (see Bridges Trade BioRes, 14 November 2008, http://ictsd.net/i/news/biores/33649/).

Indonesian companies struggle with requirements

Some critics - such as Greenpeace - have panned the RSPO certification in the past, arguing that requirements are not stringent enough and accusing some of the Roundtable’s members of continuing to engage in unsustainable practices. However, exporters in Indonesia have found it particularly difficult to meet the standards set out by the RSPO.

Several organisations, including PT Hindoli, PT Sime Indo Agro and PT Perkebunan Nusantara III, have been attempting to acquire certification for some time. But some observers speculate that the green light given to PT Musim Mas could be the start of a series of approvals.

”This is a significant achievement for Musim Mas Group and Indonesia,” said the company’s President Director, Bachtiar Karim. “It underlines the on-going efforts in achieving the highest standards in operations and making palm oil production sustainable.”

But with as much as 40 percent of Indonesia’s palm oil being produced by small landholders (some 1.5 million farmers), creating a mass movement for industry-wide reform faces challenges. Some critics say small-scale farmers may have difficulty raising the capital needed to conform to the RSPO’s requirements, leaving sustainable certification in the hands of big business. The World Wide Fund for Nature (WWF) has recognised the problem and last month held a workshop to prepare local trainers to educate small landholders on the need for sustainable practices and how to comply with RSPO criteria.

Palm trade growing in recent years

According to the RSPO, more than 28 million tonnes of palm oil are produced around the world each year - almost one third of the world’s vegetable oil production. The oil is found in a variety of foods, including margarine, cooking oil, potato chips, cakes, and cookies. It is also an ingredient in many cosmetics, soaps, shampoos and detergents. Recently, palm oil has also begun to be used as a biofuel.

Over the past two decades, areas undergoing palm oil cultivation have grown by about 43 percent, according to RSPO - mostly in Malaysia and Indonesia, where deforestation pressures are already high.

Palm production has further increased in recent years as biofuels have gained a better foothold as a more environmentally friendly alternative to fossil fuels. Proponents argue that because the land is being used to grow palm trees, the negative aspects of clearing forests are mitigated. Additionally, they assert that because palm species for oil production have not been genetically modified and they produce the highest per hectare yield of all oil or oil seed crops, the industry should be embraced as environmentally sound.

But environmentalists often point out that the palm oil industry continues to contribute to the loss of old-growth forests and depletion of the already-scarce habitat of endangered species, such as the Sumatran tiger, orangutan, and elephant.

Moreover, a recent study appearing in the journal Conservation Biology found that rainforest conversion for biofuels production is not as environmentally benign as previously thought, due to factors such as the release of carbon dioxide during the deforestation process and the fact that crops such as palm do not absorb as much carbon dioxide as the rainforests they replace (see Bridges Trade BioRes, 15 December 2008, http://ictsd.net/i/news/biores/36360/)

Palm exports from Indonesia have been impacted severely by the global economic crisis, with overseas demand falling by as much as a third in late 2008. Moreover, Indonesia’s non-oil and gas exports, including palm oil and rubber, are expected to drop by as much as 30 percent over the next three months in response to shrinking global demand.

RSPO background

Spearheaded by WWF in 2001, the RSPO has become a global, non-profit, multi-stakeholders forum seeking to promote the production and use of sustainable palm oil. The Roundtable is comprised of an array of stakeholders, including representatives from palm oil producers, processors and users of palm oil, retailers, bankers, NGOs, and research organisations.

The group aims to define the criteria for sustainable production and use of palm oil, implement projects that will help implement these criteria, help overcome obstacles that are preventing the implementation of sustainable practices, raise funds to finance projects related to the goals of the RSPO, and to disseminate information on the group’s activities.

RSPO has developed principles and criteria as standards for the production of sustainable palm oil. Certification of sustainable palm oil is based on the RSPO protocol and certification system which has been developed for use by the certification bodies as well as for members who want their palm oil to be certified.

RSPO standards comprise eight principles, 39 criteria and 144 indicators which stipulate the requirements for legal, economically viable, socially beneficial and environmentally appropriate management and operations.

These guidelines were assessed for PT Musim Mas by Control Union Certifications (CUC) based on the Indonesian National Interpretation adopted in 2008.