Palm oil firms, farmers back Indonesia's ban on concessions

Indonesia is the world's top palm oil producer and planted area by the end of last year was nearly 11 million hectares, according to the United States Department of Agriculture.
Indonesia is the world's top palm oil producer and planted area by the end of last year was nearly 11 million hectares, according to the United States Department of Agriculture.PHOTO: REUTERS

They will focus on productivity after Joko announces moratorium in Indonesia

Several palm oil companies and farmers are throwing their weight behind Indonesia's proposed ban on new oil palm concessions to lessen the sector's impact on the environment, saying they would instead focus on boosting the productivity of their crops.

President Joko Widodo last week said a moratorium will be issued on new permits or licences for palm oil companies to expand in Indonesia, arguing that yields from existing cropland could be doubled with better seeds.

Acting on his plan, Environment and Forestry Minister Siti Nurbaya Bakar on Tuesday declared an immediate moratorium in the Leuser Ecosystem, a forest area in Aceh and North Sumatra provinces, placing a temporary suspension on all land-clearing operations by palm oil companies as their licences are reviewed.

"The imposition of a moratorium on palm oil... expansion demonstrates his (Mr Joko's) real commitment, especially with regard to efforts to improve the productivity of the country's own natural resources, and provides indisputable evidence of Indonesia's contribution to resolving climate change issues," a ministry statement said.

 
 

Minamas Plantation, the Indonesian subsidiary of Malaysia's Sime Darby, which owns concessions spanning more than 280,000ha in eight provinces, said its palm oil yield could be raised by as much as over two-thirds through the process of replanting.

Indonesia is the world's top palm oil producer and planted area by the end of last year was nearly 11 million hectares, according to the United States Department of Agriculture, with new plantings increasing by between 300,000ha and 500,000ha a year.

Malaysia, the world's second-largest producer, has much less land and palm oil yields are twice those of Indonesia.

Backing Mr Joko's plan, Minamas president director Roslin Azmy Hassan said a majority of oil palm plantation companies, especially in Indonesia, are now studying ways to use technology to improve planting varieties as well as the process of extracting palm oil.

"Since land is getting scarce, what the company should do now is to make use of the present land that we have to develop and increase production. Part of it is the replanting process," he told reporters in the South Kalimantan capital of Banjarmasin.

"If we are able to improve our yield per hectare, there is no reason why we should expand the area."

Agreeing, Singapore-based Cargill Tropical Palm Holdings said the ban would significantly increase the adoption of sustainable practices but it required a "flawless orchestration" of public and private efforts to enable access to the most productive varieties of oil palm, and expand knowledge and application of good agricultural practices.

"It's possibly the most powerful catalyst to compel the right responsible behaviours on the ground," company chief executive officer John Hartmann told The Straits Times.

Mr Mansuetus Darto, national coordinator of the Indonesian Oil Palm Smallholders Union representing 48,000 farmers, said a moratorium would force independent farmers to source for quality seeds and fertilisers, and improve their farming skills.

"Now they simply clear new land to grow oil palm because there's nobody to stop them," he told The Straits Times. "A moratorium also means the government will have to take the lead in providing proper materials and equipment, hence ensuring that the livelihood of the farmers is secure."

Mr Mansuetus said Indonesia produces a "very low" 31.5 million tonnes of crude palm oil a year, and Mr Joko's move could see production rise to 45 million tonnes.

A version of this article appeared in the print edition of The Straits Times on April 23, 2016, with the headline 'Palm oil firms, farmers back ban on concessions'. Print Edition | Subscribe