1/3/06 PEKANBARU, Indonesia (AFP) - Margarine, lipstick, ice cream, shampoo, chocolate -- all use palm oil as a crucial ingredient but with booming demand, the plantations are swallowing up forests, a conference here heard.

How to balance profit with preserving the environment and limiting deforestation provided the cut and thrust at a two-day meeting here in Riau province on Sumatra island, where huge swathes of forest have been among the casualties of the palm oil boom.

In recent years, Jakarta has delivered huge concessions to palm oil producers, with many firms employing tens of thousands of people in Southeast Asia's largest economy.

"Up to now the government has only been looking at the profits, not at the impact of releasing so many permits," Fitrian Ardiansyah from conservation group WWF, told AFP.

The WWF organised the conference here attended by activists, companies, government officials and international financial institutions.

Ardiansyah said palm oil plantations has been blamed for environmental disasters such as floods and landslides, pushing endangered animals -- such as elephants and tigers -- to extinction, and creating Southeast Asia's annual smoke haze crisis.

According to Indonesia's forestry ministry, the area of palm oil plantations has soared from 120,000 hectares (296,000 acres) in 1968 to 5.5 million hectares in 2004.

The sector earned 4.0 billion dollars in exports in 2004 and Indonesia now appears likely to wrest the title of world's top palm oil producer from Malaysia in the next two years.

At the same time, the country is losing its forests at the rate of approximately four football fields per minute, the forestry ministry concedes -- but it still argues that the development is helping communities.

"The standard of living of the populations residing in or around the forests is still low," explained Arman Malolongan, director-general of forest and nature conservation at the ministry.

More than 10 million poor live in forests or their surrounds, he said.

The large plantations entice with promises of creating thousands of jobs.

The Singapore-based company APRIL, for instance, says it creates 30 stable jobs each time it plants 100 hectares.

Environmentalists do not call that into question but they would like to see a strict legal framework put in place along with other controls to make sure wider issues are taken into account.

For example, the WWF is pushing the High Conservation Value Forest concept, which would see a forest assessed for its ecological and social value alongside its potential development benefits.

Logging companies and plantations are advised to use this tool to gauge the value of the forest before clearing it -- if it is identified as having high a conservation value, then the company should stop its planned operation.

Some palm oil producers such as APRIL, which has adopted the tool, thus hope to placate Europeans and the Japanese, who are major palm oil consumers along with China.

"The market awareness on the environmental issues is much more intense in Europe than in China," APRIL president Jouko Virta told AFP.

Institutions such as the     World Bank and private banks such as HSBC are refusing to finance projects detrimental to primary forests with high ecological value, representatives of these institutions said here.

Another argument against the plantation projects is that they may be serving as an excuse to simply plunder the forests: once the often valuable tropical trees are cut down, the operations are too often halted and the devastated areas left as wasteland, the WWF's Ardiansyah said.

In West Kalimantan province, on the Indonesian part of Borneo, for instance, authorities have authorised 2.5 million hectares to be cleared in the past five years but only one million has been actually planted.