Monday, 16 March 2009

Indonesia must boost palm yields to save forests

Mon Mar 16, 2009

By Aloysius Bhui and Ed Davies

JAKARTA (Reuters) - Indonesia needs to squeeze far higher yields from existing palm oil plantations rather than open up more land in a country with some of the world's swiftest deforestation, a Greenpeace official said on Monday.

Indonesia, the world's top palm oil producer, yields only about 2 tonnes per hectare from its plantations, or just a third of the 6 to 7 tonnes in countries such as Malaysia with better estate management practices, said Annette Cotter, campaign manager for the forests campaign in Greenpeace Southeast Asia.

"What's interesting about palm oil in Indonesia is that the current plantations actually yield a very, very poor return," Cotter said, speaking as part of the Reuters Food and Agriculture Summit.

Indonesia has 7.1 million hectares, or 17.5 million acres of palm oil estates, with smallholders accounting for about 35 percent, but is looking to expand further.

In a controversial move, Indonesia's agriculture ministry said last month it would allow 8 percent of its 25 million hectares of peatlands, which harbor huge carbon stocks, to be used for palm oil, ending a freeze on permits dating from December 2007.

"You don't need to expand into further forest and further peatland to get increased economic benefits from palm oil," said Cotter, calling the move to end the freeze on peatlands "a total disaster."

Up to 84 percent of Indonesia's carbon emissions come from deforestation, forest fires and peatland degradation, a report sponsored by the World Bank and Britain's Department for International Development says.

"So what you've got is a situation of relatively poor management of existing plantations and you've got companies looking for further expansion to increase production but not looking at increasing productivity in existing estates," said Cotter, who has spent 12 years at Greenpeace with time in Brazil monitoring Amazon forests.

By boosting existing estates' productivity, Indonesia would "go a very long way to increasing production and increasing therefore Indonesia's exports," she added.


Under fire from green groups and consumers, the palm oil industry set up a Round Table on Sustainable Palm Oil (RSPO) in 2004, to develop an ethical certification system, with commitment to save rainforests and wildlife.

One of Indonesia's top palm companies, PT Musim Mas, was its first to be certified by RSPO in January.

Cotter called RSPO a "toothless tiger" that has failed to seriously curb deforestation.

"They (RSPO) need to prove that they are actually committed to their principles before we can say they are actually doing a good job," she added.

The global financial crisis was delaying planned palm oil expansion and showing up its flaws, she added.

"What palm oil is being sold as is the green gold, but it's another classic boom and bust industry," said Cotter, noting that a collapse in palm oil prices late last year led to job losses and fruit rotting on trees.


The growing trend of palm oil use in biofuel also threatened conservation and food security, Cotter said.

Indonesia and Malaysia, the world's top two palm oil producers, have made the use of palm-based biodiesel mandatory from this year.

Cotter said biofuel could be looked at for development only after food security issues had been addressed, and principles of sustainable agriculture enforced.

"But that's not the case we are in at the moment."

Sharp drops in global food prices, including palm oil, have temporarily eased concerns over food security.

"If you look where the trends are going internationally with palm oil it's focusing more and more on biofuels and less and less on food," she said.

"And so you're actually going to see in the future questions around food security."

(Editing by Clarence Fernandez)