Everything wrong with Indonesia’s palm oil industry

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Palm oil is big business in Indonesia but the impacts of slash and burn farming, human rights abuses and ecological destruction are creating a toxic haze over the industry’s future. 

by Zofia Reych

A new report claims that a renowned South Korean company is responsible for large-scale, aggressive deforestation, as well as “systematic use of fire during the land clearing process” in the primary Indonesian rainforests of Papua and North Maluku.

Korindo Group PT holds eight concessions in the region, totalling 160,000 hectares. Its website states that they plan to develop 200,000 hectares of palm oil plantations by 2020.

The report, entitled “Burning Paradise”, also points to violations of local community rights by the Jakarta-based firm.

Meanwhile, the haze caused by rainforest fires is already choking the country, with students across many provinces forced to miss classes. As seen during the dry season every year, the fire-induced smog has also descended on Singapore and other parts of Southeast Asia.

Hazy business

With over half of the world’s palm oil production based here, the staple product is the primary growth driver for Indonesia. The edible oil is used widely in food products (chocolate, packaged bread, margarine), cosmetics (soaps, shampoo, lipstick), and even biofuels and, as global demand keeps growing, Indonesia remains under constant pressure to increase output.

In the decade preceding 2012, global palm oil production doubled, and Indonesia promises to produce 40 million tonnes a year by 2020. In 2015, the palm oil industry generated 11% of the country’s export revenues, and officials claim it is good not only for corporations but also for the small, independent farmers responsible for a third of the country’s production. Maintaining its position as the world’s single biggest supplier is Indonesia’s best chance for economic development, but also for an ecological disaster.

Every year during the dry spell, the haze associated with the use of fire in oil palm planting drifts across Southeast Asia causing not only an offensive smell but also severe health problems and significant financial losses. Last year’s record pollution is said to have cost Indonesia USD16.1 billion. Its impact on neighbouring countries was also vast, with Malaysia and Singapore mounting pressure on President Joko Widodo to tackle the problem.

Despite all the associated cost, for many palm oil offers the only way out of poverty. Apart from multinational corporations, Indonesia has approximately 1.5 million individual farmers producing the crop, most of them concerned only with their hand-to-mouth existence, and not ecological sustainability.

However, it is not poor, small-time producers who should bear the majority of the blame for slash and burn farming. Instead, at this very moment, big companies with huge concessions are setting vast areas of primordial rainforest ablaze.

“Burning Paradise”

The islands of Borneo and Sumatra account for 96% of the country’s oil palm plantations. The primary rainforests of this part of the world are the last habitat of many endangered species such as orangoutangs, pygmy elephants, rhinos and tigers. Unsustainable palm oil farming poses an immediate threat to their existence, but even more worryingly, it is also at the core of human-rights abuses inflicted on local communities.

Ex-employees of a Malaysian-owned plantation in Sumatra speak of slave-like working conditions, which included forced two year contracts, poor food rations, and the use of toxic herbicides.

Up until recently, the remote province of Papua and North Maluku Islands were free from the consequences of palm oil farming, but thanks to Korindo Group PT they are the newest frontier in producing the crop.

“The extent of Korindo’s systematic clearing and burning of Indonesia’s pristine rainforest is downright tragic,” says Deborah Lapidus, member of the international team of whistleblowers behind the “Burning Paradise” report. One of the last untouched jungles of the world is soon to be changed forever with many species, such as the endemic tree kangaroo, under threat. According to the report, Korindo has already chopped down an area of forest approximately the size of 35,000 football pitches.

Due to the rapid deforestation, it is not only kangaroos that are losing their homes, but also members of the local, indigenous communities. Villagers have called on the government to withdraw Korindo’s permits, and a lawsuit against the firm was filed by the Indonesian Forum for Environment (Walhi).  

In the latest, bold attempt to reduce the fires and promote sustainable farming, President Widodo banned further deforestation – a move that infuriated industry leaders. “Our reputation as the biggest palm oil producer will be history,” warned Eddy Martono, an executive from the Indonesian Palm Oil Association, as companies and small-time farmers fear for their jobs. Time will show how effective the anti-logging decree will be in the remotest parts of the country such as Papua.

Widodo had been pushed to taking radical steps as international contractors such as Unilever, or Mars, are pulling out from business with Indonesia over poor environmental standards. In 2016, Indonesia’s crude palm oil production is expected to fall 5% short of last year’s 31.3 million tons due to unfavourable weather.