Oil palm plantation expansion in IndonesiaAgrofuels meeting, July 2007Down to Earth

Indonesias remaining forestsForests in Indonesia are being destroyed at a rate of 6 football fields a second (300ha/s).Coast linePrimary ForestSecondary ForestForest Cover

Logging ConcessionsPrimary ForestSecondary ForestCoastlineForest CoverLogging Concession (HPH)Forest Concession Permits

Pulpwood PlantationsPrimary ForestSecondary ForestCoast LineForest CoverPulpwood plantation (HTI)Forest Concession PermitsPaper pulp production consumes 23-25 million cubic metres of timber/year, while production of pulpwood from plantations is still only 3.8 million cubic metres/year.

Plantation ConcessionsPrimary ForestSecondary ForestCoastlineForest CoverPlantation (HGU)Forest Concession Permits

Forest Concessions and Over-exploitationOf the 673 natural disasters that occurred in Indonesia between 1998 2004, over 65% were due to environmental mismanagement floods, land slides and forest fires.Primary ForestSecondary ForestForest CoverCoastlineForest Concession PermitsPrimary ForestLogging Concession (HPH)Plantation (HGU)Pulpwood plantation (HTI)

Palm Oil Production in SE AsiaArea of oil palm plantation concessions in Indonesia is now 6.4 million hectares - second largest global producer of crude palm oil (CPO) after Malaysia.

Indonesia & Malaysia control some 80% of the worlds palm oil production.

The Indonesian government wants to overtake Malaysia and become the worlds biggest palm oil producer, so it has been promoting plantation expansion since the 1990s.

Only 3 million ha of oil palm plantations in Indonesia in 2000 with production of just over 6 million tonnes of CPO.

Indonesia produced 16 million tonnes in 2006 (nearly as much as Malaysia).

Volume expected to increase as plantations planted within the last 10 years reach full production and as the area of oil palm plantations is expanded.

Palm oil plantations in IndonesiaPlantations are state-owned and privately-owned (large companies and smallholders) much is under nucleus estate + outgrowers schemes.

Size of plantations rights for one company is limited, so parent companies set up new subsidiaries which collectively control huge areas.

Example: Singapore-based palm oil trader Wilmar now controls around 500,000 ha of plantations.

Many palm oil plantation companies are owned by big groups which also have interests in logging (HPH) and pulpwood (HTI) concessions e.g. Sinar Mas.

Indonesian government has export-led growth model which is encouraged by World Bank Group (IMF, IFC) and some European banks (Rabobank).

Area under oil palm plantations in Indonesia 1967 2005Source: Directorate of Plantations in BisInfocus, 2006

Indonesia Malaysia connectionOver 50% of Indonesian oil palm plantations are controlled by Malaysian companies

Some 50 Malaysian companies are operating in Indonesian oil palm sector

Land availability, lower costs, loser controls on env + social impacts

Cant distinguish between Indonesian and Malaysian palm oil even if labelled

Agreement to co-operate on prices

MPOA very active in trying to weaken RSPO standards openly (at RT meetings) and behind the scenes.

DemandMore than 70% of Indonesias palm oil is exported.

China & India are major markets, apart from Europe and N America

Palm oil has largely replaced other vegetable oils, such as coconut, for cooking in Indonesia

High demand from food processing (margarine, biscuits, cakes, confectionary); soaps & detergents, and cosmetics.

CPO (Crude Palm Oil) exports 2000 2006Source: Central Statistics Agency

ExpansionIndonesia is experiencing a second palm oil boom, largely driven by talk of the demand for biofuels.

Global price of CPO increased 27% in 2006 to US$564/tonne and is rising month on month

European Union: 10% of vehicle fuel from biodiesel by 2020. SE Asia also developing biodiesel for its own use.

Indonesia is expecting to more than triple the area under oil palm cultivation to meet this demand.

Sawit Watch estimates that a further 20 million hectares has been zoned for oil palm plantation. Plans to expand into Papua recently announced.

40% will be reserved for domestic biofuel needs.

BiofuelsMalaysia and Indonesia are gearing to supply 20 percent of the market in Europe and have just announced that they will set aside 40 percent of their palm oil output for biodiesel.

Indonesian finance ministry is preparing a package of incentives to support biofuel development.

Target is 200,000 barrels/day by 2010

Malaysian and Chinese investment

6.5 million ha of uncultivated land has been designated for biofuel production (March 2007 - Is this in addition to the 6 +20 million ha or not?)

Not just oil palm but Jatropha, sugar and cassava

PRICE OF INDONESIAN CRUDE PALM OIL

Chart2

5026

5433

5511

5534

5584

6059

6399

6333

6486

7165

8291

8787

8584

Harga (Rp/kg)

Price Rupiah/kg

Harga CPO 2006-2007

Harga CPO di Rotterdam 2006-2007 (US$ per ton)

Jan 2006425

Feb.430

Mar427.5

Apr.440

Mei417.5

Jun.432.5

Jul.480

Agt.505

Sep.502.5

Okt.520

Nov.555

Des.610

Jan. 2007597.5

Feb.607.5

Mar.627.5

Apr.740

Harga CPO terus meroket

Harga CPO 2006-2007

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0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

US$ per ton

Harga CPO di Rotterdam 2006 - 2007

Pemain Utama CPO & Turunannya

PerusahaanCPOProduk turunan CPO

KPN/Wilmar Group15%41%

Musimas Group14%21%

Sinar Mas Group14%5%

Group PTPN10%

Permata Hijau Group8%9%

PE & kuota ekspor beratkan industri minyak sawit

PE & kuota ekspor beratkan industri minyak sawit

Minyak Nabati

Produksi dan konsumsi minyak nabati dunia (ton)

Uraian/tahun1993-19971998-20022003-20072008-2012

Produksi

M. Sawit15,500,38220,752,64025,340,36029,949,312

M. Kedelai17,765,27819,915,84022,376,01625,174,784

M. Kanola10,121,25411,966,24012,526,74415,517,216

M. Bunga matahari8,351,8049,790,56012,526,74412,044,832

M. Lainnya19,039,28221,254,72022,854,13625,825,856

Total produksi70,778,00083,680,00095,624,000108,512,000

Konsumsi

M. sawit15,385,17020,021,95225,973,42029,752,650

M. Kedelai17,828,69720,126,23322,313,52925,124,460

M. Kanola10,045,61111,783,75313,577,01515,471,378

M. Bunga matahari8,326,0929,593,85210,861,61212,033,294

M. Lainnya38,915,43042,755,21045,335,42449,852,218

Total konsumsi90,501,000104,281,000118,061,000132,234,000

Sumber: BKPM di olah dari oil world

Bisnis Indonesia, 12 Juni 2007

Ladang emas cair Indonesia masih berlimpah

Ladang emas cair Indonesia masih berlimpah

Pasokan Minyak Goreng

Komitmen/rencana pasokan produsen CPO untuk OP minyak goreng

No.Industri pengolah CPOAlokasi (ton)

1-912 perusahaan63,000*)

10London Sumatera5,000

11Asian Agri5,000

12Domba Mas1,000

13Bakri Group2,000

14Socfindo3,000

15Unggul Widya500

16Makin (Gudang Garam)500

17Cargill3,000

18Incasi Raya3,000

19Sungai Budi2,000

20Permata Hijau Sawit3,000

21Karya Prajona Nelayan5,000

22Tolan Tiga2,000

23Sawindo Kencana1,000

24Tasik Raja3,000

25Sampurna Agro3,000

26Austindo3,000

Sumber: Bisnis Indonesia, 3 Mei 2007

Pengusaha CPO diduga sulit penuhi pasok 150.000 ton

Pengusaha minyak sawit diperkirakan sulit memenuhi kuota pasok yang ditetapkan Wapres sebesar 150.000 ton CPO karena hingga kemarin komitmen yang ada baru sekitar 130.000 ton.

Pengusaha CPO diduga sulit penuhi pasok 150.000 ton

Produsen minyak sawit nas

Produsen Besar CPO yang berkomitmen pasok untuk OP

No.Industri Pengolah CPOAlokasi (ton)Pasar

1PTPN III, IV, V, XIII20,000Diatur lebih lanjut

2PT SMART Tbk10,000Surabaya

3Minamas5,000Jakarta

4PT Musim Mas5,000Jakarta & Medan (@ 2.500 ton)

5PT Astra Agro5,000Jakarta

6PT Best5,000Semarang

7Salim Group5,000Jakarta

8Wilmar Group5,000Jakarta & Surabaya (@2.500 ton)

9PT Darmex Oil3,000Jakarta

63,000

Sumber: Departemen Perindustrian dalam Bisnis Indonesia, 2 May 2007

Wapres ancam naikkan pajak CPO

Wapres Jusuf Kalla mengancam menaikkan pajak ekspor (PE) CPO jika Gapki gagal menurunkan harga minyak goreng ke level Rp6.500, sementara itu produsen minyak sawit diharuskan menambah pasok 150.000 ton ke pasar domestik.

Wapres ancam naikkan pajak CPO

Pungutan Ekspor

Perkembangan pasokan dan Permintaan CPO di Indonesia

UraianVolume (juta ton)

20062007*)

Ekspor12.113.2

Konsumsi3.33.8

Industri Turunan0.50.4

Total Produksi15.917.4

Keterangan: *) Perkiraan

Sumber: BPS, Depdag, Gapki di olah dalam Bisnis Indonesia, 1 Mei 2007

Produsen CPO usulkan subsidi

Kalangan produsen minyak sawit (CPO) mendesak pemerintah mensubsidi harga minyak goreng af pabrik yang diambil dari anggaran pungutan ekspor (PE) selama ini di tengah menguatnya harga komoditas itu di pasar internasional. Derom (Gapki) mengusulkan, pemeri

Produsen CPO usulkan subsidi

Harga Minyak goreng

Harga Minyak Goreng (MG) per kg dari Pemerintah Rp6.500 - 6.800

WilayahHarga (Rp/kg)Sumber

Lubuk Pakam7.300 - 7,500http://www.metrotvnews.com/berita.asp?id=40927

Palembang8,2002007_Jul_15_Kompas_Harga minyak goreng kembali naik

Batam8,800http://batampos.co.id/index.php?option=com_content&task=view&id=25421&Itemid=97

Jakarta Pusat8,5002007_jul_4_ANTARA News_Harga Minyak Goreng di Jakarta Masih Rp8.500_Kg

Surabaya7,8002007_May_15_Sindo_OP-minyak-goreng-belum-efektif

Klaten8,500 - 9,0002007_Jul_6_Media Indonesia Online_Harga Minyak Goreng masih mahal

Brebes8,300

Banyuwangi8,400

Samarinda10,3002007_Jul_11_TI_Harga Minyak Goreng Masih Tinggi

Kotabaru (Kalsel)10,500 - 11,000http://www.radarbanjarmasin.com/berita/index.asp?Berita=Kotabaru&id=71843

Makasar7,9502007_Jul_11_TI_Harga Minyak Goreng Masih Tinggi

Kupang9,775http://www.elshinta.com/v2003a/readnews.htm?id=41330

Papua30,000 - 40,000http://www.media-indonesia.com/newsprint.asp?Id=134960&Jenis=a&cat_name=%3Ca+href%3D%2Frubrik%2Fdefault.asp%3Fcat_id%3D4%3ENusantara%3C%2Fa%3E

2007_jul_4_ANTARA News_Harga Minyak Goreng di Jakarta Masih Rp8.500_Kg

2007_May_15_Sindo_OP-minyak-goreng-belum-efektif

2007_Jul_11_TI_Harga Minyak Goreng Masih Tinggi

2007_Jul_11_TI_Harga Minyak Goreng Masih Tinggi

2007_Jul_6_Media Indonesia Online_Harga Minyak Goreng masih mahal

2007_Jul_15_Kompas_Harga minyak goreng kembali naik

Fluktuasi MG

BulanHarga (Rp/kg)

Jul-065,026

Aug-065,433

Sep-065,511

Oct-065,534

Nov-065,584

Dec-066,059

Jan-076,399

Feb-076,333

Mar-076,486

Apr-077,165

May-078,291

Jun-078,787

Jul-07*8,584

Sumber: Departemen Perdagangan

* : hingga pekan pertama

http://www.tempointeraktif.com/hg/ekbis/2007/07/11/brk,20070711-103496,id.html

Fluktuasi MG

Harga (Rp/kg)

Price Rupiah/kg

ProblemsForest destructionForest firesClimate changeImpacts on wildlifeDestruction of livelihoodsLand rightsIndigenous peoplesDebtPovertySmallholdersWomen[GM varieties]

Forest destructionIndonesians forest destruction rate is the highest in the world at 2.7 million ha /year (WALHI)

Estimated 87% of deforestation in Malaysia between 1985 and 2000 was caused by new oil palm plantations (FoE EWNI)

Oil palm plantations have probably been directly responsible for the destruction of 10 million ha of Indonesian rainforest (FoE EWNI)

Heart of Borneo vs border mega-plantation project (1.8 million ha)

Developments are still going ahead along the 850 km Kalimantan Sarawak border. (CERD submission led by AMAN June 2007)

Forest FiresHotspots in Sumatra 2006Forest Fire

Forest FiresHotspots in Kalimantan2006Forest Fire

Climate ChangeNew information about the carbon costs of production of CPO is emerging.Indonesia is the worlds 3rd largest contributor to carbon emissions.Indonesias 1997-8 forest and peatland fires were equivalent to 40% of all global emissions from burning fossil fuels that year (Nature 7/Nov/02). Drainage & destruction of peat swamps releases up to 2 billion tonnes of carbon/yr. Forest fires contribute 1,400 million tonnes of C per year.Most Indonesian CPO has net emissions throughforest clearance peat decomposition both (where swamp forest is cleared for new oil palm plantations, as in areas of Riau and Jambi)Biodiesel from from south-east Asian palm oil may cause 2-8 times more CO2 emissions than the mineral oil it replaces.More research needs to be done on the length of time and conditions needed for net carbon sequestration, including cradle-to-grave studies which cover transport, mill construction etc as well as the establishment of the plantations.

Land rightsIndonesian law basically allows (or even promotes) land grabbing by companies without FPIC or due compensation.

Sawitwatch states that large-scale oil palm plantations had caused over 500 conflicts in the country by 2006

If Indonesia is to meet RSPO standards there must be a change in the laws on land acquisition

Promised Land: Palm Oil & Land Acquisition in Indonesia Implications for Local Communities and Indigenous Peoples (Forest Peoples Programme, Sawit Watch, HuMA & ICRAF, Nov 2006)

DebtOil palm plantations drive local people (including indigenous communities) into debt slavery through co-operative schemes KKPA.

Local people have to pay for the cost of clearing their land and planting with oil palm, plus the costs of fertilisers and pesticides for 4-6 years until the trees are productive. During this period, they have no income. All these expenses must be repaid from the price of fresh palm fruits processed at the factory.

People suffer from land insecurity + adverse prices in their dealings with companies

Ghosts on our own land: oil palm smallholders in Indonesia (Forest Peoples Programme and Sawit Watch, Nov 2006)

SmallholdersComplex issue as many different types

Some may be producing sustainably (e.g. in Deli Serdang, North Sumatra) but only small amounts and no way of identifying this

Under-represented in RSPO

RSPO Principles and Criteria must not disadvantage them

Vulnerable to calls for boycott due to debt

More studies needed

New smallholders associations established: SPKS in Sanggau, West Kalimantan(2006) + Jambi, Riau, E Kalimantan (2007)

WomenLowest pay/casual labour

Exposure to pesticides as often work as sprayers

Men go to Malaysia to work on plantations

Wives are illegal immigrants or husbands take 2nd wives

Vulnerable to sexual harassment

Invisible in surveys

Not involved in decision-making or consultations as not considered head of households

What are communities saying?It all stems from the land: if we dont have land, how can the community prosper? (Talang Nangka, S Sumatra)

We are not against oil palm plantations or development. We just want a fair deal (Sanggau, W Kalimantan)

Indigenous people can no longer grow their own rice, vegetables and other crops; we must buy food. So the introduction of oil palm plantations has made local communities poorer. (Cion, W Kalimantan)

In the old days, if anyone wanted access to our land they had to ask our permission first. Now all sorts of people just come and take our timber; cut down the forest. Like the logging and oil palm companies. (Batin IX, Jambi)

I only realise now how big the demand for palm oil is from RSPO members. And the meeting ( RSPO RT4 Singapore Nov 2006) also made me realise how little they all know about the impacts of oil palm plantations on communities and the environment. (Djelani, W Kalimantan)

What are Indonesian CSOs saying?Biofuels is one of the new driving forces of large-scale, monoculture oil palm plantation expansion that contributes to global warming, social conflict and rights abuses in producing countries, particularly in Indonesia (Sawitwatch letter to EU 29/Jan/07)

Large-scale plantation expansion could be at a high cost to the Indonesian people because the forests that provide livelihoods for hundreds of thousands of local communities especially indigenous peoples will be converted to oil palm plantations.

Indonesias system of large-scale plantations, including oil palm, violates local peoples rights particularly those of indigenous peoples and ignores their rights to a better standard of living.

RecomendationsEach drop of palm oil used in European Union countries represents the blood, sweat and tears of ordinary Indonesian people.For that reason, we call on all buyers of Indonesia palm oil, investors and plantation companies to:Stop expansion of large-scale plantationsIncrease productivity on existing plantationsSettle conflicts with communitiesApply standards agreed by the RSPOSupport the shift from large-scale plantations which currently prevails in Indonesia towards one that is more favourable to local livelihoods instead of just providing profits for big companiesFacilitate the transfer of technology from companies to communities on quality standards for palm fruits in order to improve local peoples incomes.

ConclusionsBiofuelwatch is doing great work debunking the myth of oil palm as a green fuel.

More information is needed on the link between producer and consumers e.g. biofuel imports, biofuel processing and biofuel distributors in UK.

Should not have any confidence in RSPO as solution to all the problems at best it is a tool.

Listen to the voices of and support Indonesian CSOs: Sawit Watch, AMAN, SPKS, YKR, WALHI.

Most not lose sight of the livelihoods, human rights, food security aspects in current concerns with climate change.

Thank youTerima Kasih

dtecampaign@gn.apc.org

Updated version of presentation to FME in May. Not a comprehensive overview, but a few observations based on DTEs involvement with RSPO process, earlier campaigns and info from Indonesian CSOs . Thanks to my DTE colleague, Betty Tiominar. Pulpwood plantations are marked in black mainly acacia but also some eucalyptus and pine. Currently only 3m ha but big expansion planned to supply demand from pulp mills (another 5m ha by 2009 when all existing pulp plants must use pulpwood from plantations). The growth of oil palm plantations in Indonesia was 300-400,000 hectares per year by 2004; 70% of this expansion was in areas which were natural forest. Oil palm first planted in Indonesia in early 19th century during the Dutch colonial period (mainly N. Sumatra)1990s large expansion started (first palm oil boom)Most is in Sumatra and Kalimantan. Significant amounts in Sulawesi. Expansion in Papua is startingThe Indonesian advocacy network on oil palm(Sci name) related to castor oil grows in drier areas so suitable for eastern Indonesia.JP 7/Feb/07 said 5.25 m ha of idle land for biofuels 1.5 m for sawit, 1.5 for jatropha, 0.75 tebu, 1.5 cassavaSW open letter (29/Jan/07) says GoI & GAPKI have agreed to at least 3 million ha of land for oil palm for biodieselLand clearing for large-scale plantations, such as for oil palm, creates many problems for communities, particularly indigenous and local people many of whom are still heavily dependent on natural resources from forests.

Borneo Orang Utan Survival Foundation (UK): orang utans in the wild could be close to extinction by 2012UNEP report The Last Stand of the Orang Utan: State of Emergency:The natural forests of Indonesia and Malaysia are being cleared so rapidly that up to 98% may be destroyed by 2022 and the lowland forests of orang utans much sooner, unless urgent action is taken.Request for Consideration of the Situation of Indigenous Peoples in Kalimantan, Indonesia, underthe United Nations Committee on the Elimination of Racial Discriminations Urgent Action and EarlyWarning Procedures Committee on the Elimination of Racial Discrimination 71st Session30 July 18 August 2007

(Wetlands International/Delph)forest clearance (6 tonnes)peat decomposition (30 tonnes.)both (where swamp forest is cleared for new oil palm plantations, as in areas of Riau and Jambi)There may be a small amount of overall carbon capture where estates have been established many years.Indonesia has about 20 million hectares of peat forests and peat swamps.http://news.mongabay.com/2007/0711-indonesia.html Indonesia's peat swamps worth $39B/year At the going rate of 14.59 euros per ton of carbon offset, eliminating these emissions would be worth 29 billion euros mongabay.com July 11, 2007

(cf P2P3 in forest certification) 500 conflicts from SW database, cited in CERD submission p20

200th anniversary of abolition of slave trade.

Oil palm is a relatively new crop for most Indonesian people, so there is no traditional knowledge. There is also no technology transfer from plantation companies to communities about quality standards. The result is that the companies determine prices. There is no opportunity for local people to improve their bargaining position because they lack the knowledge and skills to process the palm fruits that they have produced.