JAKARTA • The Indonesian government is asking major palm oil companies to roll back on the historic "no deforestation" pledges they made at last year's United Nations climate change summit, officials and company sources say.
Major palm oil companies invited to a series of meetings at the economics ministry last week were told that their pledges are causing big problems for smaller palm oil firms in their supply chain, the sources told Reuters.
The Deputy Food and Agriculture Minister at the Coordinating Ministry for Economic Affairs, Ms Musdhalifah Machmud, said the government has asked palm oil firms that signed the Indonesian Palm Oil Pledge (IPOP) to exempt smallholders, which are not yet ready to practise the same level of sustainable forest practices as big players. "They need to let smallholders fulfil their trade," she said.
Indonesia is the world's biggest palm oil producer and exporter and its industry employs nearly five million workers. A top official at one of the major palm oil companies, who did not want to be named, said the firms "received guidance notes" from ministry officials.
A representative of an environmental group said the government is urging big palm oil firms to "water their stance down" and to continue to buy palm oil from their suppliers, even if that company is cutting down forests for new plantations. "This would pretty much ruin the whole attempt to create an industry-wide no-deforestation situation to remove the stigma from Indonesian palm oil," the representative from the non-governmental organisation said.
The pressure from the national government comes after local governments began taking away concessions from palm oil companies that tried to convert them into conservation forests, according to several big palm oil companies.
When Golden Agri Resources, one of the IPOP companies, tried to convert an area designated for plantations in Kalimantan into a conservation forest, the local government threatened to revoke the concession, said Mr Agus Purnomo, its director for strategic stakeholders agreement.
"If we are not developing it into plantations, they cancel (the concession)and give it to somebody else - a competitor," he added.
The controversy over the IPOP pledges is arising as Indonesia comes under pressure from its neighbours over the haze from forest fires that has blanketed much of the region in recent weeks.
Plantation firms that use "slash-and-burn" techniques to clear forests - most of them smallholders now - are one of the biggest reasons for the fires.
Home to the world's third-largest tropical forests - and the world's fifth-largest emitter of greenhouse gases mainly due to their destruction - Indonesia will be one of the countries in the spotlight at the UN climate change conference in Paris in December. The meeting will try to get legally binding commitments from the 190 member nations to slash greenhouse gases.
Over the past 25 years, the spectacular growth of palm oil plantations, now covering 11 million ha in Indonesia, has been a leading cause of deforestation.
The no-deforestation pledges are putting smallholders at risk, said Ms Machmud.
The problem, she said, is that companies like Golden Agri are setting aside forests in their concession area for preservation that the government has already assigned for development. "If you don't like it, no problem," she said. "Another company will come to develop it."
It is a stance that makes environmental groups unhappy.
The biggest palm oil and timber firms in Indonesia have all committed to the "no-deforestation" pledge and now they are losing concessions when they try to preserve forests, said Mr Bustar Maitar, head of Greenpeace's campaign to save Indonesia's forests.
"This is enough to gain the momentum to tell the government that business as usual has already passed," he said.