Olam defends against attack on its palm oil practices in Gabon

An aerial view showing palm oil plantations belonging to Olam in Kango, central Gabon, in 2014. PHOTO: AFP

SINGAPORE - Olam International, one of the world's biggest traders of agricultural commodities, has hit back against a report by a US-based environmental lobbying group accusing it of endangering the forest habitats of African wildlife with widespread deforestation in its palm oil concessions in Gabon.

In a filing with the Singapore Exchange on Monday (Dec 12), Olam said the report, to be published on Monday, has important factual errors, and several key misinterpretations of Olam's policies and implementation.

The report is by a US-based communications and lobbying company, Mighty Earth (Mighty), working with Brainforest, a Gabon-based non-governmental organisation (NGO).

Olam said the Mighty Report levels two main claims against the company:

- That Olam is deforesting in Gabon and will not sign a no-deforestation commitment that adheres to the High Carbon Stock Approach (HCSA) methodology.

- That Olam's third party sourcing of palm oil comes from companies that are environmentally destructive and causing fire and haze.

On the deforestation claim, Mr Sunny Verghese, Olam's co-founder and group CEO said: "Gabon has a right and an essential need to develop its agriculture sector to diversify its economy, improve food security to feed its people and create new livelihood opportunities, while also protecting its natural forests.

"Olam's palm plantations in Gabon are being developed in an environmentally and socially responsible way to contribute to each of these objectives. Our approach balances palm plantation establishment with natural forest protection. In fact we are conserving and protecting areas of verified high conservation value forest within our concessions greater in size than our plantations."

Olam added that Gabon has about 33 per cent of its people living at or below the poverty line, and its reliance on oil-and-gas revenues is not viable in the long-term.

"The government therefore has a justifiable imperative to grow the agricultural economy beyond just subsistence farming. Its medium-term goal is to establish 300,000 hectares of agriculture, which will amount to about 1 per cent of Gabon's total national land area," said Olam.

Olam's working plantation in Gabon holds a Roundtable on Sustainable Palm Oil (RSPO) certification, it said.

On why it cannot sign up to the no deforestation commitments that adhere to the HCSA approach, Olam said this had to do with the amount of available land in Gabon:

"Getting high-yielding plantations up and running requires an appropriate initial land base. Given much of Gabon's non-forested land is infertile savannah or swamps, there simply isn't enough available non-forested land to start up such a development. It is therefore necessary to include some highly degraded forest lands."

On the second claim that Olam has failed to disclose the identity of third-party suppliers of palm oil, Mr Verghese said the company is "still a small player, accounting for only 0.4 per cent of global palm volumes in 2016".

He added: "We already expect full compliance to our Sustainable Palm Oil Policy and Supplier Code, and have absolutely zero tolerance for the burning of forests. All of our current suppliers have either signed this code or have their own codes consistent with ours. We are also now releasing our full supplier list."

Olam also said that it has discontinued many suppliers who did not conform to its Supplier Code, reducing its supplier list from 48 in 2014 to 14 today.

It also clarified a figure cited in the report which said that in 2015 the company had sourced 1.53 million tonnes of palm oil. Olam said close to three-quarters of it was paper-traded volume. Companies do not take delivery nor ship this "hedged" oil - it is used for risk mitigation in trading.

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