10/10/2011 (Jakarta Globe) - Palm oil companies pledged their support for a new government certification scheme following a decision by the Indonesian Palm Oil Association to walk out on the global Roundtable on Sustainable Palm Oil last week.

Companies such as Bakrie Sumatra Plantation (UNSP), Indofood Sukses Makmur and its subsidiary London Sumatra Plantation have stated they would abide by the certification standards of both the RSPO and the Indonesia Sustainable Palm Oil, a newly formed national group.

The RSPO is a global non-profit organization comprising planters, conservation groups and consumers that promotes green standards of production for the palm oil industry.

A key guideline states that new plantations should not be created by clearing peatland and at-risk forests that shelter endangered species and trap vast amounts of climate-warming gases.

An industry source, who declined to be identified, said the main difference between RSPO and ISPO was the price for certification. RSPO certification is priced at $20 to $25 per hectare, while the palm oil association, also known as Gapki, is lobbying the government for ISPO certification at a rate cheaper than the RSPO. Certain RSPO standards are more strict than ISPO, the source said, without elaborating.

Some of the biggest palm oil producers have backed Gapki’s decision and at the same time said they would abide by RSPO guidelines.

Fransiscus Welirang, a director at Indofood, supported Gapki’s decision, saying that the government should be allowed to set Indonesia’s own production standards. Benny Tjoeng, president director of London Sumatra, the plantation unit of Indofood Group, said his company had been a member of the RSPO since 2009 and had no plans to abandon the group.

“We will abide by all regulations on palm oil. This means that we will be using both RSPO and ISPO,” he said.

Iqbal Zaenuddin, a director at UNSP, said the company would focus on earning ISPO certification by 2014, which is a mandatory deadline, while RSPO certification is voluntary.

In September, Nestle said it would resume purchasing palm oil from Sinar Mas Agro Resources and Technology, Indonesia’s biggest palm oil producer, after the company reportedly made significant progress in improving the sustainability of its operations. Sinar Mas is a member of the RSPO.

Rismansyah Danasaputro, a director overseeing plantations at the Agriculture Ministry, said that seven companies out of more than 2,000 palm oil producers in Indonesia had so far registered for ISPO certification.

“We have until 2014 to get all of these companies ISPO certified,” he said.

He added that the ISPO was still not recognized by European buyers, but he said that by 2014, major buyers would accept the ISPO as a fair standard. Otherwise, Indonesia would contact the World Trade Organization to request its support, he said.

Of the 435 Gapki members that control 2.7 million hectares of palm-tree plantation, only 16 companies have RSPO certification. Around 90 Gapki members produced 1.95 million tons of certified palm oil last year out of the 4.9 million tons produced by all of Indonesia’s certified palm oil companies.

Gapki has forecast that produ ction will rise by 5 percent to 6 percent to 23 million tons this year from 2010. Most uncertified palm oil is sold to India and China.

Fadhil Hasan, an executive director at Gapki, said that as the biggest palm oil producer in the world, Indonesia should set the benchmark, not only regarding the sustainability of production methods but also by setting its own price regime.