KL and Jakarta plan carbon trading for oil palm industry

Wednesday April 29, 2009 The Star, Malaysia

KOTA KINABALU: Malaysia and Indonesia are exploring the possibility of adopting carbon trading system for its oil palm industry.

Primary Industries and Commodities Minister Tan Sri Bernard Dompok said the two countries were establishing a focal point to work out details relating to carbon trading for the industry.

“We are committed to addressing the issues and concerns raised by the international community,” he told reporters at a joint press conference with Indonesian Agriculture Minister Dr Anton Apriyantono at the end of the three-day fourth joint committee meeting on Bilateral Cooperation on Commodities here yesterday.

Carbon credit is a system that allows a company or country which reduces its carbon dioxide emissions below a targeted level to sell the extra reduction as credit to a company or country which has not met the target level.

The meeting also agreed to the establishment of focal points to coordinate work under the Reduced Emission from Deforestation and Degradation.

Both countries would also work together to address barriers to palm oil trade, they said in a joint communique.

The meeting also agreed for more cooperation in research and development initiatives for cocoa; while Indonesia has agreed to assist Malaysia in diversifying the use of pepper to include non-food applications such as in traditional medicine.

http://thestar.com.my/news/story.asp?file=/2009/4/29/nation/3792000&sec=nation

Simunjan natives ink deal to turn land into oil palm plantation

2009/04/29

KUCHING, Wed:

One-thousand-five-hundred native customary rights landowners in Simunjan (SARAWAK), in the Samarahan division, yesterday committed their land, totalling over 9,600 ha, to be developed into an oil palm plantation.

This will be done in a joint venture with the state land development agency, Pelita Holdings Sdn Bhd, and plantation company, DD Plantations Sdn Bhd.

The state government is throwing in 5,000ha of state land to give the plantation at Kepayang-Semalatong area in Simunjan a total of 14,000ha.

Debunking the widespread claim that such a deal is a precursor to a land grab by the government, these NCR landowners put pen to paper to seal the joint venture at a brief ceremony here.

Pelita chief executive officer Abdullah Chek Sahamat signed on Pelita's and their behalf while DD Plantation's managing director Yee Ming Seng signed on behalf of the plantation firm.

Pelita has been designated the NCR landowners' "managing agent".
In the agreement, a joint venture company would be formed where the landowners would hold a 30 percent stake, DD Plantations the majority 60 percent and Pelita the remaining 10 percent.

The joint venture yesterday was the 26th such deals the government had worked out between NCR landowners and private sector firms to develop idle native land in the state.

Abdullah said when 23 similar joint ventures currently being worked out are all sealed, 250,000 ha of NCR land would have been committed to the planting of oil palm.

He said to date, 46,000ha of NCR had already been developed in 25 joint ventures.

DD Plantations, formerly known as Good Solid Corporation Sdn Bhd, was picked for this venture due to its experience in similar venture worked out by Pelita.

The joint ventures are in Sebungan and Sebauh Genaan in Bintulu totalling 23,000ha.

7,500ha in Sebauh Genaan had already been planted.

DD Plantations have also been given permits to open up state land for oil palm plantation in nearby Gedong and Sadong.

The Gedong and Sadong estates have both been pioneer state land project joint ventures with Pelita.

The mill it operated there has a capacity of processing 60 metric tons of CPO per hour.

Yee said the company would invest RM140 million to develop the Kepayang-Semalatong plantation.

He said land clearing would start in July and planting at the same time next year.

The 1,500 landowners are from 46 longhouses.

http://www.nst.com.my/Current_News/NST/Wednesday/NewsBreak/20090429163014/Article/index_html

ANALYSIS-Economic woes may damage moves to slow deforestation

Wed Apr 29, 2009

By Niluksi Koswanage and Aloysius Bhui

KUALA LUMPUR/JAKARTA, April 29 (Reuters) - Growing economic pain may increasingly force consumers to turn to palm oil, one of the cheapest cooking oils, a move that could scupper nascent plans to slow deforestation in Southeast Asia.

With rising output in Indonesia, the world's biggest palm oil producer and home to the eighth largest expanse of forests, and tight land supplies in Malaysia, the world's second largest supplier, conservation's economics look even less appealing.

Under a United Nations scheme to slow deforestation, countries that preserve forests could be paid up to $2,077.50 per hectare, but that compares with the $4,826.11 per hectare that could be earned at current prices on a well-managed palm estate, Reuters calculations showed.

The UN plan, called the Reduced Emissions from Deforestation and Degradation (REDD), was supposed to allow investors to buy carbon credits and bring in $10 billion to $30 billion yearly to over 60 developing nations with forests.

"REDD has no chance. Malaysian palm oil yields are high and better estate management is key," said an official with a listed Malaysian planter with holdings in Indonesia as well as Malaysia, who declined to be named due to the sensitivity of the issue.

"Even in Indonesia, which many thought would revert back to keeping forests, yields are going up and above the usual 3-4 tonnes because Malaysians are buying up these estates and Indonesian companies are developing very fast," he said.

For a related factbox on REDD, see [ID:nSP409319]

Last month, environmental lobby group Greenpeace accused Indonesian planter Sinar Mas (SMAR.JK) of cutting down virgin forest, sparking an angry denial from the company.

Even companies that use degraded farm land say that the economics of palm and growing demand mean that there is simply no choice but to expand.

"It's hard to resist expansion when (palm oil) prices go up," said Velayuthan Tan, chief executive of Malaysia-listed IJM Plantations (IJMP.KL), which bought land in Indonesia last week.

"It would be suicide to buy up and clear forests so we bought some degraded agriculture land in Sumatra (island)," he said.

STILL PROFITABLE

Current palm prices of 2,464 Malaysian ringgit ($686) a tonne, although still way below their $1,239 record peak hit in 2008, are 77 percent more than the costs involved in setting up a new palm oil estate.

This means planters can quickly recoup their initial outlay of $22,000 per hectare that officials in Malaysia and Indonesia say is needed to clear forests, grow oil palms and put up mills once the palms have matured three years from planting.

REDD credits are only traded on the Chicago Climate Exchange (www.chicagoclimatex.com) where prices of $1.50 per tonne of CO2 are at a more than 80 percent discount to benchmark European carbon prices of 13.61 euros ($17.74) CFI2Z9.

"Demand for REDD credits today is on a voluntary or speculative basis," said Suzanne Chew, senior broker with Singapore-based emissions trading firm TFS Green.

"In general the regulatory and project risks involved are higher compared to credits from approved methodologies under the Kyoto Protocol, that's why there's a significant discount in the price," she said.

For a graphic on palm oil and REDD earnings from a hectare of land, click here

CONVERTING FORESTS "BY DESIGN"

Indonesia has defended forest clearing for palm oil, saying high conservation value forests are being left alone as it prepares to boost oil palm estates by 125 percent to 18 million hectares (45 million acres) by opening up more forests.

"If we convert forests, it is something by design," said Achma Mangga Barani, plantations director-general at the agriculture ministry, although he did not give a time frame for the palm planting.

So far, despite promises, Indonesia's decree on implementing REDD is still at the draft stage and focuses only on how the government can benefit from carbon investment, says Greenpeace.

"The draft decree just does not explain how to stop deforestation," said Bustar Maitar, team leader of Greenpeace Southeast Asia's forest campaign.

Indonesia has 88 million hectares of forests and recorded the second biggest net loss of forest cover during 2000-2005 at 1.5 million hectares annually, 2005 data from the Food and Agriculture Organisation showed.

Palm-driven deforestation has accelerated as Indonesia's planters and foreign firms rushed to increase estates during a two-year price rally from 2007, more than doubling the expansion rate to 1 million hectares a year from the 400,000 hectares norm.

For a graphic on Indonesian and Malaysian palm expansion, click on: here

ILLEGAL OIL PALMS

Malaysia has 100,000 hectares left for expanding palm oil plantations without touching forest to add to existing 4.5 million hectares under oil palms.

Even so, wildlife officials say that there is significant illegal encroachment into Malaysia's 14.3 million hectares of forests.

Much of this happens in Sabah state on Borneo island, the country's top palm oil producing region with large tracts of pristine forests where officials say that small palm companies have illegally cut down trees.

That process might now accelerate as people lose their jobs as the global economy slows.

"The recession is a worry. Companies might shift priorities to saving themselves first. There could be less interest in carbon credits, conservation schemes and reforestation plans that we have in place," said Sam Mannan, director of the forestry department in Sabah.

It is less than clear how the billions of dollars under REDD could trickle down to poor people who have few economic alternatives than to try and clear a small patch of jungle to feed and house their families.

"God has given us ample land and oil palms and we should make use of it," said Munir, an Indonesian worker in a plantation in central Malaysia who wants to use his savings to set up a small estate in his hometown in Kalimantan on Borneo island.

"I am suspicious of this (forest saving) scheme. I don't think I will see the money from it. It is more honest to work the land on your own and the government in Indonesia encourages us," said Munir, who goes by one name like many Indonesians. ($1=.7674 Euro) ($1=3.595 Malaysian Ringgit) (Additional reporting by Ed Davies; Editing by David Chance and Sambit Mohanty)

http://www.reuters.com/article/latestCrisis/idUSKLR460422

Wildlife rescue center in dire food shortage

Personal note: An almost identical situation to one Hardi and I discovered a long way from this centre, on the island of Sulawesi, where many birds and animals were/are dying of starvation………..in a purpose built Gibbon Foundation rescue centre which is otherwise vastly superior to any zoo in Indonesia. Just a shame the animals are dying like they are, almost always in areas where food is otherwise plentiful and cheap.

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Theresia Sufa , The Jakarta Post , Sukabumi | Tue, 04/28/2009

The screeches of gray long-tailed monkeys and Javan gibbons responding to each other shattered the silence at the Cikananga Wildlife Rescue Center (PPSC) in Sukabumi regency, West Java.

The center, located in a 14-hectare sanctuary in Cikananga village, Nyalindung district, was set up on Aug. 27, 2001 by a wildlife conservation NGO.

Budiharto, the center's wildlife manager, said the center had been built to assist the government in the rescue and conservation of wild animals and their habitat, as well as boosting efforts to uphold enforcement of wildlife protection laws.

"Some of the animals accommodated here came from the various species seized from the public by staff of the Natural Resources Conservation Agency *BKSDA*, while others were voluntarily given up by society. We're taking care of them and training them before releasing them to their natural habitat," Budiharto said.

According to Budiharto, the center now has 296 animals of 40 species, including Javan hawk eagles (Spizaetus bartelsi), mountain eagles (Spizaetus alboniger), gray long-tailed monkeys (Trachypithecus cristatus), Javan gibbons (Hylobates moloch), tailless gibbons (Symphalangus syndactylus), honey bears (Helarctos malayanus), orangutans (Pongo pygmaeus), and long-necked tortoises (Chelodina siebenrocki).

They are animals native to Indonesia whose populations in the wild are greatly endangered.

The animals in the center, however, are in very poor condition because of a food shortage that began when a foundation that worked with the center discontinued funding for food in 2006.

"Actually, the arrangement was due to end at a specified time after a period of five years, but even before the term expired the foundation had ceased providing aid for animal feed," Budiharto said.

"We got into a panic because there were 1,000 animals under our care with large numbers of carnivores and primates were to be fed."

To ward off any further worsening food crisis, the center's 14 employees worked hard to secure food supplies by seeking help from their friends working with chicken breeding farms in Sukabumi to get chicken meat.

The center also rents out guesthouses within its compound at rates ranging from Rp 20,000 (about US$2) to Rp 150,000 per night, but few people stay there apart from students or researchers studying certain species on this rescue site.

"We had to search for chicken meat from several friends as we needed it badly to feed panthers, crocodiles and various eagle species, while also trying to produce brown sugar for sale. The money we made was spent on fruit and vegetables for the primates," Budiharto said.

"Yet whatever we collected, it was never enough to meet the rescue center's needs. So they got fed only once daily, but occasionally they went without food for days."

Finally, in August 2008, the center received aid from Biofarma, a pharmaceutical company in Bandung, to the value of Rp 5 million a month to purchase feed for the center's 10 primates. In early 2009, the center reached an arrangement with a Jogya department store and Tiara supermarket in Sukabumi to get hold of other foodstuffs.

"The two major stores supply animal food whenever their vegetables, fruit or meat go past their shelf life, perhaps slightly rotting. It's also a sign of their concern about conservation issues," Budiharto said.

"We hope more department stores will follow in their footsteps, and the government will extend aid because all of the center's animals belong to the state and should be protected."

He also hopes that members of the public "adopt" the animals in the center to give them better care; food costs range from Rp 150,000 to Rp 2 million.

A leopard costs Rp 2 million per month to feed, a reptile Rp 150,000, an orangutan Rp 1 million, and a bear Rp 600,000.

Unu Nitibaskara, head of the West Java BKSDA, said the government allocated funds to feed the animals two years ago.

"But because the center could not account for its funding spending as required, such as by delivering receipts, the aid was finally halted. We will submit another request for government aid although it may take a year to obtain the subsidy," he said.

"I hope the center's wildlife adoption program will proceed smoothly."

With regard to the time limit for the care and training of endangered species in the center, Unu explained there was no fixed standard for such custody, although some requirements have to be met: The habitat for animal release should be made ready, the animal should be healthy and not carry hepatitis, the animal's existence in its natural habitat should be well protected, and local people have no objections, in order to avoid conflict arising later.

http://www.thejakartapost.com/news/2009/04/28/wildlife-rescue-center-dire-food-shortage.html