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Rogue Palm Oil Companies Continue to Destroy Indonesia's Forests

The world's largest agricultural corporations have pledged to stop deforestation, but the small and mid-sized companies they sometimes work with continue to operate illegally, say conservationists.
Imagen vía AP/Achmad Ibrahim

Widespread corruption and the absence of adequate law enforcement continue to enable deforestation in Indonesia, despite recent pledges from the world's largest agricultural corporations to halt forest clearing and a national moratorium on the issuance of new logging permits, according to a report from the Environmental Investigation Agency (EIA).

Palm oil firms in the province of Central Kalimantan, EIA found, were clearing forests to make way for their plantations without proper permits and were passing off the logs as legally harvested wood. Central Kalimantan is located on the island of Borneo, which Indonesia shares with Malaysia, and is where some of the highest rates of deforestation in the world have occurred.


EIA estimates some 52 million cubic meters of wood were cut down to make way for oil palm plantations in the province between 2000 and 2010, yet official Forestry Ministry figures were only 39 million cubic meters. The difference, says EIA, is illegal timber.

"Illegal logging in oil palm concessions is out of control and Indonesia's revamped timber laws have completely failed to rein it in," said EIA's Tomasz Johnson.

Agricultural commodities giants such as Unilever and Cargill, as well as large palm oil suppliers like Wilmar, have announced zero-deforestation policies that cover at least 75 percent of the global trade in palm oil, which is an ingredient in everything from ice cream to lipstick. However, EIA's report suggests illegal clearing remains widespread among small and medium-sized firms.

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"Companies like Wilmar may be able to produce deforestation-free palm oil for sensitive markets," Johnson told VICE News, "but the net gains will be totally undermined by rogue firms producing for less sensitive markets."

Among those firms, says EIA, are Anglo Eastern Plantations, based in London, and Malaysia's CB Industrial Product.

There may be more than 1,000 such small to mid-sized firms operating under the radar of international environmental groups, Johnson said.

For several years, environmental groups, like EIA, Greenpeace, and the Rainforest Action Network, have pressured companies through often-sensational direct action protests to adopt zero-deforestation commitments.


But supply chains in the palm oil sector are among the murkiest and difficult to monitor of any agricultural commodity. Corporations can pledge to halt their own environmentally destructive practices but they sometimes end up sourcing palm oil from companies that slash and burn forests. The key to ending this practice, says environmentalists, is to trace the palm oil back to the particular mill or refinery where it is produced. Once the refinery is identified, watchdog groups can more easily audit plantations around the site and determine whether or not they are properly permitted and policed for government authorities.

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Some companies have taken responsibility for their supply chains. Cargill, for example, helped a 45-member smallholder cooperative in South Sumatra obtain certification from the Roundtable on Sustainable Palm Oil (RSPO). Under the RSPO program, farmers pledge not to clear forests and learn how to boost yields by using efficient fertilizer and improved farming techniques. In exchange, Cargill buys their crops at a price that is about a third more than what the cooperative earned before.

Indonesia accounts for over half of the world's palm oil production. But the crop is also Indonesia's single biggest driver of deforestation. Between 2009 and 2011, some 300,000 hectares - an area roughly the size of Yosemite National Park - were cleared for palm oil plantations, according to a 2013 report by Greenpeace.

But Indonesian president Joko Widodo says his government is committed to addressing deforestation.

"If they are indeed destroying the ecosystem because of their monoculture plantations, they will have to be terminated," he said on a visit to Sumatra in November, two months after taking office. "It must be stopped, we mustn't allow our tropical rainforest to disappear because of monoculture plantations like oil palm."

Follow Grace Chua on Twitter: @gracechua