Tag Archives: industry
Palm Oil Industry Key Culprit Behind Deforestation, Haze In Indonesia
New report by Greenpeace details the failure of RSPO in halting deforestation, and highlights Wilmar, Genting and Surya Dumai as firms with concessions behind the recent haze crisis in Singapore and Malaysia The palm oil industry is destroying Indonesia’s forests, said Greenpeace International in a new report on Tuesday, as the Roundtable for Sustainable Palm Oil (RSPO) is set to meet for its first European Summit in Berlin. In the investigative paper, “Certifying Destruction”, Greenpeace higlighted the failure of the sustainable palm oil and certification body in halting deforestation. RSPO concessions accounted for as much as 39 per cent of the fire hotspots on palm oil concessions in Riau during January to June 2013, when the most severe haze outbreak in history affected neighbouring Singapore and Malaysia. The report, which gives a mapping anaylsis of the concessions, charged that RSPO standards are severely lacking, leaving members “free to destroy forests” that contribute to more greenhouse gas emissions, human rights violations, loss of endangered species such as the Sumatran tiger and orang-utan and the Borneo orang-utan, and the yearly regional haze. RSPO members account for about 40 per cent of global palm oil production. With the launch of the report, Greenpeace is calling for the industry, especially those gathering at the summit, where the future of palm oil sustainability will be discussed, to take action against deforestation. Bustar Maitar, Greenpeace International’s head for the Indonesia Forest Campaign, told Eco-Business: “We want to see the companies, palm oil producers and the buyers to act more to stop deforestation … We want to see the customers make sure that their product is not associated with deforestation. Customers can’t just say that because they are buying from RSPO companies then they have no relation with deforestation and peat land destruction…” According to Indonesia’s Ministry of Forestry maps, the country has lost 1.24 million hectares of forest from 2009 to 2011. In the same period, about 300,000 hectares or a quarter of this total forest loss was due to identified palm oil concessions, said Greenpeace, making the palm oil sector the largest driver of forest destruction in Indonesia. Illegal land clearing and unsustainable sourcing “ Even among the RSPO’s own members, dirty palm oil remains the common currency – RSPO standards are inadequate, poorly enforced and offer palm oil consumers no guarantee that the oil they buy has been produced responsibly Greenpeace International “Year after year, Indonesia’s forest fires and haze wreak havoc on the region, and the palm oil sector is a main culprit,” said Maitar. He added, “While RSPO members might have no-fire policies, the peat land they have cleared and drained is like a tinderbox – one spark is all it takes.” According to anaylsis by Greenpeace, Singapore-based Wilmar International, the world’s largest palm oil trader, along with Genting and Surya Dumai, are “the three privately-owned RSPO members with the largest areas of identified deforestation”. Wilmar prohibits burning on its own plantations, but it sources more than 90 per cent of its crude palm oil from third-party suppliers. Some of palm oil products it has received come from illegal plantations inside the Tesso Nilo National Park in Riau as recently as 2012, according to a WWF investigation, cited the Greenpeace report. While the agribusiness firm denied this and mentioned of procedures stopping such practices, the lax criteria on third-party supply does not promote the strict use of clean palm oil into global supplies, said Greenpeace. This fresh fruit bunch (FFB) or palm oil products sourced from third-party suppliers could have been produced through illegal land clearing, they added. Inadequacies of RSPO The RSPO lacks standards encouraging transparency in sourcing or mechanisms that offer traceability throughout the entire palm oil supply chain, from plantation to the end consumer product sold on supermarkets and other retail stores. The report showed a visual flowchart of the RSPO supply chain illustrating three different supply systems – segregated supply, mass balance, and book and claim – that translate to different palm oil products, as well as different claims of palm oil certification. “Even among the RSPO’s own members, dirty palm oil remains the common currency – RSPO standards are inadequate, poorly enforced and offer palm oil consumers no guarantee that the oil they buy has been produced responsibly,” said Greenpeace. In fact, of the 250 palm oil consumer companies interviewed by the environmental group , those who replied stated they still rely on RSPO’s sustainability measures. Procter and Gamble, one of the respondents, said, “By 2015, 100 per cent of our palm oil purchases will be confirmed to have originated from responsible and sustainable sources… [We are] aiming to source certified sustainable palm oil and PKO (palm kernel oil) via the RSPO Mass Balanced Supply Chain model, but will also be source via the Book and Claim model.” However, Greenpeace emphasised that the RSPO is “not fit for this purpose”. The report outlines how the RSPO faces criticism from consumer companies and non-government organisations, despite having recently revised its principles and criteria and having the support of the Consumer Goods Forum and the Sustainable Palm Oil Investor Working Group. Kellogg, the company behind well-known cereals and energy bars, recently received backlash from consumer activist group Sum of Us due to its joint venture with Wilmar International. Campaign director Rob Wohl, in an article with trade website Bakery and Snacks, said, “Sourcing RSPO-certified palm oil is nice, but Kellogg’s (and really, all global corporations) need to be doing everything in their power to stop deforestation. Ideally, Kellogg should follow Nestlé’s lead by adopting strong deforestation-free principles and allow independent oversight of its supply chain.” Going beyond the RSPO Greenpeace likewise named the Swiss multinational company as an example of a consumer goods firm that has taken palm oil sustainability seriously. The environmental NGO, back in 2010, lambasted the firm’s use of unsustainable palm oil from Indonesian supplier Sinar Mas for its Kit Kat chocolate bar. Since then, Nestlé has addressed its sourcing, even including a goal on the use of sustainable palm oil by end of the year on its list of published environmental targets for 2020. Golden Agri-Resources, New Britain Palm Oil and Agropalma are the other exemplary companies cited by Greenpeace in the report. According to Areeba Hamid, the NGO’s forest campaigner, “The only solution for palm oil consumers and producers is to go beyond the RSPO – as some members are doing already. This is the challenge we set to the industry.” The Palm Oil Innovation Group, an initiative by some palm oil firms and NGOs including Greenpeace, is an example of industry efforts outside the RSPO. The group is for the conservation of high carbon stock forests and also secondary forests, which the RSPO does not protect in its stipulated forest clearance ban. Greenpeace, in the report, recommended what other actions the RSPO should take to improve its standards. They also listed their solutions and demands for palm oil consumer companies, traders and processors, and producers. Hamid said, “Brands must find out where their palm oil comes from, and guarantee consumers around the world that forest destruction is not making its way into our products.” Wilmar, as well as Golden Agri and Kuala Lumpur Kepong Bhd (KLK), showed that having questionable business operations has repercussions. Norway’s sovereign wealth fund, the richest in the world at US$737 billion, sold its investments in the palm oil producers last 2012, citing concerns on deforestation. Continue reading
Rubber Study Group Looks for Sustainability Plan
By Huileng Tan SINGAPORE — The Singapore-based International Rubber Study Group is embarking on an ambitious initiative to draw up a plan for the industry, much like what the Roundtable on Sustainable Palm Oil did in the tropical oil seed industry. Courtesy of Lekshmi Nair Senior economist and statistician Lekshmi Nair, of the International Rubber Study Group, says what is needed “is commitment from all players in the supply chain” to end up with a sustainability plan. An overwhelming 85% of rubber production comes from small growers. That has meant that the fragmented industry has never come together to agree on a common set of sustainability standards. Natural rubber is a major tropical cash crop valued at more than US$30 billion annually. It has a long history of being cultivated for commercial uses. A boom in the last decade sent prices to record highs and spurred rapid new plantings outside of the traditional producing countries of Thailand, Indonesia and Malaysia, which account for over two-thirds of the world’s natural rubber supply. With burgeoning demand from China fueling rapid planting in these new areas – such as Cambodia and Laos — environmentalists and scientists are increasingly voicing concern about the environmental impact of rubber plantations. While rubber trees are deemed to be green, because they absorb carbon, large tracts of planting will lead to habitat loss for birds, elephants, tigers and other wildlife in the region, and also disrupt water movement, they argue. Set up in 1944, the International Rubber Study Group is made up of more than 30-member governments, as well as producer groups and consumers such as tire companies. Now its members are trying to give it a new, important mission of trying to balance its commercial success while not being overly destructive of the environment. The Roundtable on Sustainable Palm Oil was formed in 2004 in response to pressure from social and environmental groups to develop global standards for the entire palm oil supply chain. Plantation firms, such as Sime Darby Bhd and IOI Corporation Bhd, with estates larger than the city-state of Singapore, were first to adopt the standards and now account for the bulk of 8.2 million tons of eco-friendly palm oil produced annually. A key figure at the rubber study group’s sustainable project is senior economist and statistician Lekshmi Nair. She spoke to The Wall Street Journal about what the organization envisions for the industry. Excerpts follow: The Wall Street Journal : You are setting up a sustainable natural rubber action plan. Define sustainability. Lekshmi Nair: The definition of sustainability varies from different stakeholders, but, in general, sustainability means ensuring continuity of raw material so that it’s not disturbed. The mission of the sustainability initiative in rubber is to promote the economic, environmental and social sustainability in the production and use through dialogue and cooperation with all stakeholders along the supply chain. Now, there is an imbalance in that 85% of natural rubber production is coming straight from small growers while 70% of the consumers are from the tire sector. So we need commitment from both sides [in the form of a memorandum]. For the producers, natural rubber has the potential to generate a number of positive environmental benefits. Sustainability initiatives in rubber have positive impacts on the development policies of the producer economies. Promotion of sustainable production can enhance producers’ market entry and competitiveness in the growing new markets for sustainable products. For the consumers, the tire industry is by far the largest end-use market for natural rubber, with tire producers purchasing around 70% of total natural rubber placed on the global market. About 85% of natural rubber is produced by smallholders, whose decision to plant new trees and tap depends on opportunity cost. [Corporate Social Responsibility] is scaling up to include social as well as environment standards, with application of sustainability principles with regard to resource efficiency or purchase of raw materials [rubber]. So what we needed is commitment from all players in the supply chain to achieve objectives in this initiative in natural rubber. From the producer end, we have to take care of resource efficiency and the purchase of raw materials. This productivity in turn will ensure income for the small growers. For all major consumers, CSR is an issue. From the CSR point of view, the raw material that they are procuring must be shown to be sustainable, and one aspect of this is in its production. What are some of the sustainability criteria you are looking at? Other than improving productivity, we want to ensure natural rubber quality. Improving quality ensures enhancing productivity that certainly will increase income of predominantly small growers. If we looking at the emerging producing countries or African countries, you can see that the rubber they produce is filled with a lot of with impurities. In fact, you can say 50% is filled with sand or wood particles. Latex is collected in a cup attached to trees. So what small growers do is to collect the lumps and throw them to the ground, So contaminants will stick them. However, if small growers take some initiative to avoid these practices, they can avoid impurities at an early stage, which will save a lot of energy during processing. So it’s also beneficial from an environmental point of view. Bad quality rubber will require more energy for cleaning and will also produce more waste. Waste reduction can at start at the production stage. Natural rubber is known as a green product as the trees absorb carbon dioxide. What impact does large-scale cultivation of rubber as a cash crop have? Because of the demand for natural rubber, there is a lot of large-scale investment in emerging countries. One issue involves the use of forested versus degraded land. We encourage using degraded forest, and this initiative encourages this type of cultivation versus cutting down forested land. A comprehensive range of social issues, like land use shift, tenure rights, food security, are also within the? broader impact on large-scale investments. Also, when land is given for rubber cultivation, investors have to ensure food security for residents in the area first before they can cultivate a non-food crop like rubber. We need to ensure a balance between the two crops. First, we need to get commitment from all supply chain stakeholders so that the sustainability efforts become voluntary standards. Natural rubber is a commodity with a long history of being cultivated for profit. What took the industry so long to come up with these standards, which you are drawing up? Many of the established rubber growing countries do have initiatives and framework for enhancing small grower productivity through some form of sustainability efforts. But our project will involve multiple stakeholders, including governments and private individuals. At this stage, no civil society organizations [non-governmental organizations] are involved. We know there are some issues surrounding rubber, such as land rights and environmental issues. What is the state of the rubber industry now? Historically you’re looking at rubber as a colonial crop. It started as an organized plantation crop before government land ownership restrictions [to prevent individuals from accumulating too much land] saw it shift to being a small-holder crop. So that’s where the rubber is coming from now, and we need to reach out to these small growers. Other than CSR standards and image, what’s in it for consumers, like major tire makers and small holders? For commodities, there’s a boom and bust cycle. During the bust cycle, growers are withdrawing from this crop. But at the same time for consumers, they want need to keep the production line going, so they need to have an ensured quantity of rubber. Here, we need the consumers’ commitment to encourage small growers to stay with the cultivation of this crop. Sustainable prices are a concern for both producers and consumers. If the price is not sustainable, consumers may find it difficult to get their assured quantity from the producers because nobody can force the small growers to produce. They can do something else. Why not? There’s an opportunity for everybody and they are businessmen. What’s the next stage in the project? We hope to get all stakeholders commitment to this initiative [to sign a memorandum] by the next World Rubber Summit [likely in May of 2014 and held in Singapore] to get their commitment to certain standards. We hope to eventually get into a voluntary certification for sustainable natural rubber. Continue reading
Sharing The Risks/Costs Of Biomass Crops
Sep. 4, 2013 — Farmers who grow corn and soybeans can take advantage of government price support programs and crop insurance, but similar programs are not available for those who grow biomass crops such as Miscanthus. A University of Illinois study recommends a framework for contracts between growers and biorefineries to help spell out expectations for sustainability practices and designate who will assume the risks and costs associated with these new perennial energy crops. “The current biomass market operates more along the lines of a take-it-or-leave-it contract, but in order to encourage enhanced participation and promote a more sustainable, stable biomass supply, a new kind of contract needs to be created,” said Jody Endres, a U of I professor of energy and environmental law. Endres said that a good contract gives everyone more certainty. “Incomplete contracts are the hazard,” she said. “We need to develop contracts that nail down all of the details and are transparent about who’s taking on the risk and who’s paying for it. If we get these considerations into the contracts, those who finance this new biomass crop industry will have more certainty to invest.” The study identifies considerations that should be included in the framework for a biomass contract, including a control for moral hazard, risk incentive tradeoff, existing agricultural practices, and risk and management tools to make the industry more sustainable financially and environmentally. Endres said that if biorefineries receive money in the form of carbon credits for reducing pollution, incentives for farmers should be included in contracts because they are the ones who are bearing the risks associated with sustainability practices. “Suppose a sustainability contract lists that the default should be integrated pest management rather than application of traditional pesticides,” Endres said. “The farmer takes on some risk to provide a sustainable product, but the biorefinery gets carbon credit for those sustainable practices. This should be worked into the contract — that if the farmer assumes the risk of IPM as opposed to traditional pesticide options, there has to be some sort of up-front payment or incentive in the contract to account for this risk. Due to the power relationships in this industry, the onus is on the biorefinery to be the leader in developing contracts in this new landscape.” The perennial nature of biomass crops also makes developing contracts challenging. “We’re in a unique environment, and traditional agricultural contracting structures just don’t apply,” Endres said. “Crop insurance is not currently available for farmers who grow biomass crops so they take on additional risk. Likewise, landowners see high prices for traditional commodity crops and do not want to be locked into a multi-year contract with a lessee to grow a perennial biomass crop. It’s complicated,” she said. Endres said that although sustainability requirements are important, having an adequate supply of biomass is important as well. “We’re trying to envision a future in which we have a lot of biomass and one way to secure that is to recognize all of the risks and costs, especially when it comes to sustainability practices. It’s unique, and we do not yet have contracts for this aspect of the industry,” she said. A newly forming biomass standards group, in which Endres holds a leadership role, is looking at how the value of sustainability practices can be measured at the watershed, eco-shed, or air-shed level rather than on the scale of individual farms. Endres said that the working group will examine how to ensure that balance is achieved between producers and consumers of biomass, including through contracts. “I’m optimistic that it can be done,” she said. “Growers and refiners right now are concerned with the industry being financially sound. “There’s also a real need for education in both developed and underdeveloped countries about biomass contracting,” Endres said. “We’re trying to shift the paradigm from traditional agriculture to something that’s more sustainable–and that takes knowledge. If we don’t have that knowledge here in the United States and we’re trying to draft contracts in our very developed system, how is this going to be rolled out in say, Africa, or other areas where the use of production contracts are much more rare, especially in the small farm context?” The research was supported by funding from the Energy Biosciences Institute and USDA National Institute of Food and Agriculture, Hatch Project No. ILLU-470-309. Continue reading
