08/03/2010 (Commodity Online) - World's two top palm oil producers, Indonesia and Malaysia have signed a MoU to jointly tackle challenging environmental and labor issues which threaten to hinder the development of the industry in both countries.

Palm oil producers from the two South East Asian nations agreed to collaborate and improve communication between producers in both countries to counter the impact of critics of the industry and also to improve sustainability.

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Producers have lately come under attack on a number of fronts. Environmentalists complain the growth of palm oil plantations contributes to deforestation, threatens wildlife and increases greenhouse gas emissions, while there has also been criticism of th e industry’s use of underage labor.

“Through collaboration, hopefully we can face the negative campaign [against the industry and the accusations of environmental damage,” said Indonesia’s Agriculture Minister.

He cited Unilever’s suspension last year of palm oil purchases from PT Smart, after a report from Greenpeace which claimed the company did not use sustainable production processes, as an example of the type of situation where the industry would benefit from enhanced cooperation.

As part of the coordination efforts, six palm oil industry associations from Indonesia and Malaysia on Friday signed a memorandum of collaboration that will, among other things, establish a steering committee to advise the Roundtable on Sustainable Palm Oil, an organization that issues certificates to palm oil producers that comply with certain environmental standards.

A number of major palm oil buyers do not buy fro m companies that lack the certification.

Under the memorandum of collaboration, producers are also encouraged to develop sustainable plantation practices, including restoring land after it has been used for palm oil plantations.

Malaysian Plantation Industries and Commodities Minister said environmental issues were being increasingly used to attack the palm oil industry’s.

“There is no reason for palm oil producers in the two countries to not to cooperate and discuss issues of common interest,” he said.

Malaysian Palm Oil Association said the industry would face increased environmental challenges in the future.

One hurdle for the water-intensive industry was the development of so-called water footprints, a measure used to show how much water is used in the production of palm oil, it said.

Indonesian Palm Oil Producers Association said the cooperation efforts were also aimed at helping In d onesian and Malaysian palm oil producers to improve sustainability.

The world’s top palm oil producers, Indonesia and Malaysia together account for about 85 percent of global output.