18/09/2010 (Deforestation Watch) - Indonesia's palm oil industry that has been supporting the livelihoods of 2.8 million families or close to 10 million Indonesians. However, of late, it has to cope with resisting attacks from green groups that has forced its own government's to adopt a forest moratorium plan and from foreign companies that have capitulated to these green groups to stop buying crude palm oil (CPO).
The moratorium obligation against the clearing of primary forests and peat lands set in a Letter of Intent (LoI)signed  between Indonesia and Norway is expected to pose problems for the country's palm oil industry as the policy is regarded as counter-productive and an impediment to the country's status as the world's largest CPO producer.

If the moratorium policy is adopted, there will be no more land expansion for plantations, posing a risk of declining and decreasing production.

Besides, 40 percent of palm plantations in Indonesia are currently smallholdings operated by individual farmers. This involves 2.8 million families or 10 million people who rely  on the industry for their livelihoods.

Meanwhile, the industry was also hit by the decision of Burger King to stop buying CPO from PT Sinar Mas Agro and Resources Technology (SMART) early this month, a move that mirrored actions by Unilever, Nestle and Kraft.

The Corporate Secretary of PT SMART Jimmy Pramono said that CPO sales to Burger King was only 0.06 percent of total sales in 2009. "The temporary business cut did not impact on its financial condition as the transaction value was not significant," he said.

However, this is a bad precedent for Indonesia's CPO industry and speaks volumes of the blind reporting on the issue by the main stream media, who unquestioningly reproduces the press releases and "reports" released by green groujps who are obviously  working as proxies in a trade war to stop the growth of palm oil.

A recent well researched paper by Caroline Boin and Andrea Marchesetti entitled “Friends of the EU” (see: http://www.policynetwork.net/accountability/publication/friends-eu) revealed that the EU, via its environmental ministries and commissions, had actively funded up to 70% of the operating budgets of environmental NGOs - many of which were mostly the same groups viciously campaigning against palm oil imports into the EU. Among the major recipients include the Friends of The Earth.

Now why would the EU fund green NGOs who proceeded to mount what was tantamount to a trade protectionist scheme in the guise of environmental activism? It does not take a genius to figure this one out. The EU has homegrown oilseed industries like rapeseed and sunflower that were unfortunately not quite as productive as palm oil. In fact, their typical yield is just 10% that of palm oil!

And so a renewable energy directive (EU RED) was issued in 2008 by the European Union parliament on biofuel content which imposed strict regulations on carbon emission.

The EU RED has also put many palm oil-based biodiesel producers in a limbo as the directive distorts the commodity price and its trade. Many trade observers see the directive as a tactical unfair business ploy and a non-tariff trade move by the EU to single out palm oil for not able to reduce greenhouse gas (GHG) emissions and preserving biodiversity.

According to the EU scientific and technical research, palm oil biodiesel - which has only about 19% GHG - failed to meet with the EU RED requirement. The directive states that biofuel must result in GHG savings of at least 35% versus fossil fuel in 2009 and also increase over time to 50% by 2017.

This claim, however, is contrary to many research views, indicating that palm oil biodiesel actually has an estimated GHG savings of 55%!

While many palm oil biodiesel producers were doubling their efforts to convince the EU on the sustainability of palm oil, there have been a continuous slew of anti-palm oil campaigns launched by Western environmental NGOs.

The Association of Indonesian Palm Oil Producers (GAPKI) said that environmental activist group Greenpeace is attempting to destroy the country's CPO industry and in the process will reduce modest income earning plantation workers and smallholders to penury!

In the view of Deforestation Watch, that surely cannot the be the best solution in this palm oil debate.