Malaysian palm kernel oil prices look set to climb up out of a trough as industrial buyers flock back to the soap and detergent ingredient after it regained a steep discount to rival oils. (Antara Photo/Budi Candra Setya)

Sustainable Palm Oil Not a Pipe Dream: Ministry


AUGUST 11, 2016

Jakarta. As the world’s largest producer of palm oil, the spotlight will almost always fall on Indonesia whenever a controversy arises in the industry.

The Indonesian Palm Oil Platform (InPOP) held a conference in the nation’s capital Jakarta on Wednesday (10/08), inviting representatives from the Coordinating Ministry of Economic Affairs, Ministry of Foreign Affairs and the Ministry of Environment and Forestry, as well as industry players and other relevant stakeholders, to drum it into palm oil producers that the government's mandatory palm oil certification will only help their business and that they should sign up for it.

According to the directorate general of plantation at the ministry of agriculture, palm oil exports contributed Rp 250 trillion to the national income in 2015, with 31 million tons of palm oil produced by Indonesia during the year.

However, few Indonesian palm oil producers have bothered to meet the stringent requirements to get a sustainable palm oil certification. According to the directorate general, out of a total of 1,600 palm oil companies, only 184 had earned an Indonesian Sustainable Palm Oil, or ISPO, certificate by March 2015, despite its mandatory status.

According to Musdhalifah Machmud, the deputy minister for food and agriculture at the coordinating ministry for economic affairs, getting palm oil producers to sign up for the government-issued certificate is still a challenge, as definitions of "sustainable" still vary between parties, urging a streamlining of the certification process.

"We need to work as a team to make our palm oil more competitive in the global market by getting more of our palm oil producers to get their ISPO certification as many of our overseas markets demand it," said Musdhalifah at the conference.

Her statement found support from the director for intra-regional cooperation of the ministry of foreign affairs, as getting the palm oil companies to get the ISPO certificate would go a long way to put Indonesia at the forefront of the global palm oil industry and enhance the country’s reputation in the European Union and American markets.

"The demand for palm oil in developed countries in the EU and America is still high, and they are looking for that certification. If we our companies have it, it would help us to grow our industry further," said the director Dewi Gustina Tobing.

According to her, in order for Indonesia to move towards sustainability in palm oil production, foreign aid and engagement is still required.

"What is important is to keep the discussion going with events like InPOP," the director said.

Meanwhile, the chairman of the Indonesian Oil Palm Growers Caucus, Edi Suhardi, said the government needs to change the way palm oil producers think about sustainability.

"They need to understand that an ISPO certification would actually help them to add value to their products, and improve the credibility of their company. Producing sustainable palm oil will help them with their public image as a good, responsible global citizen. And that image sells," Edi said.

Edi, who is also the director of sustainability at palm oil plantation Agro Harapan Lestari, also said the government could offer incentives like tax deduction to persuade more companies to get the ISPO certificate.

Another way to get Indonesia to move forward toward sustainability, according to Edi, is to increase transparency in government dealings, improve forest management and encourage fair trade/

ISPO to follow on the heels of FLEGT

Indonesia recently obtained the Forest Law Enforcement Governance and Trade (FLEGT) license from the European Union, which could be an ideal model for ISPO.

According to a senior advisor to the Minister of the Environment and Forestry, Agus Justianto, the government had to work extra hard, and put in long hours, to get the license. In fact, it took them over a dozen years to obtain it since the initiation of the Timber Legality Verification, or SVLK, in 2003.

"We finally got the FLEGT license from the EU on April 21, which shows the government is committed to combat illegal logging, and contribute to the global legal timber industry," said Agus in the panel discussion. "Getting the license took us a very long time, because it involved so many stakeholders and we need to consult many people from all over the country.”

However, the real challenge lies in the implementation of the license, and Agus calls for an independent agency to monitor the industry as that would help accelerate the process.

Since the SVLK has been a big success overseas, Agus believes that following SVLK standards for the government-issued ISPO will undoubtedly help Indonesia get a competitive advantage in the global palm oil industry.

"Thanks to SVLK, our timber exports have already increased, totaling $1 trillion in 2015," Agus said.

On top of increasing export, Agus also credited SVLK with improving Indonesia's reputation in the timber industry.

As global demand for sustainable palm oil rises, according to Agus, Indonesia must look into reining in unsustainable practices in palm oil production and turn the dream of a sustainable palm oil industry into reality.