Heat on Indonesian palm oil firm

Two leading consumer-goods companies, Unilever and Nestle, have stopped buying palm oil for use in its products from Indonesia’s largest producer, Sinar Mas.

The firm is accused by Greenpeace, the environmental activists, of illegally clearing forests in Indonesia for its plantations.

Sinar Mas denies the claims and says it has hired independent auditors to prove its case.

In a telephone interview on Tuesday to Al Jazeera, Vikram Agarwal, Unilever Asia’s vice-president of supply management in Singapore, said: “Unilever’s decision to suspend these purchases of palm oil was triggered by serious charges made against the company. Not just in December 2009, but going back to when the first quotes appeared from Greenpeace in April 2008, as well from other NGOs [non-governmental organisations] and independent auditors.”

He said the purpose of “making our purchases as of now is to make it clear to them that the burden of proof now rests with them [Sinar Mas] to either dismiss these allegations or to come out with some verifiable actions that will satisfy everybody, that they are going to take measures to rectify the situation.”

Southeast Asia is the world’s biggest supplier of palm oil, with Malaysia having more than 4.5 million hectares of palm plantations. Indonesia has about seven million hectares. The two countries account for 90 per cent of global production.

Rainforest loss

Environmental groups have said that palm oil is the most significant cause of rainforest loss in these countries.

One study has said that 86 per cent of Malaysian deforestation between 1995 and 2000 was to make way for palm plantations.

It is believed by some groups that Indonesia has already lost about 75 per cent of its original forest.

But growers have said that the palm-oil sector provides employment to about 1.4 million Malaysians, and, according to Sinar Mas, 4.5 million Indonesians are directly employed in the palm-oil sector .

It is estimated that in 2009 Indonesia and Malaysia earned about $10bn and $15bn, respectively, from palm-oil exports.