We picked up on recent news articles that offer insights into implementation of Wilmar's new palm oil procurement policy. Articles from Mongabay (17 Feb 2014), Reuters (20 Feb 2014) and The Edge (24 Feb 2014) all cite statements from Wilmar and more. We highlight some interesting points below and include excerpts and links to the said news articles at the bottom.
Interesting points include:
(i) Wilmar on continued Sarawak purchases from previously developed areas & smallholders, Wilmar said. "It is not true that Wilmar will no longer buy palm oil from Sarawak.... Our Policy will not affect our purchase of oil from suppliers who had previously developed tracts of peatland, or from smallholders" (Mongabay, 17 Feb 2014).
(ii) Mongabay on Sarawak expansion headwinds, Where Sarawak may face headwinds however is in its plan to convert up to a million more hectares of forests and peatlands for palm oil production by 2020. These new areas, much of which fall under native customary rights (NCR), would potentially run afoul of Wilmar's environmental and human rights safeguards if they were logged for plantations (Mongabay, 17 Feb 2014).
(iii) Wilmar on likely impact on cost and premium for sustainability, "Adopting sustainable practices will result in slightly higher costs and also prevent some plantations from maximizing their land bank. On the other hand, without any effort to make the industry sustainable, green lobby groups will continue to damage the image of palm oil leading to lower usage of palm oil for food and biofuels, and eventually lower palm oil prices. Therefore the higher price commanded by developing palm oil sustainably will more than offset the cost..." Wilmar said (Mongabay, 17 Feb 2014).
(iv) Wilmar on a cut-off set at November 2005, Wilmar said it will help suppliers to meet its new rules, retaining supply links with growers who developed estates from tropical forests and peat swamps before November 2005 (Reuters, 20 Feb 2014). UPDATED - our check with Wilmar shows no such cut-off date. The relevant date on Wilmar's policy is 5 Dec 2013.
(v) Onimmediately* shifting away from development of peat, HCS and HCV areas, "Wilmar's policy document says "in addition to immediately shifting development activities from high carbon stock, high conservation value and peat areas upon announcement of this policy, we expect suppliers to be fully compliant with all provisions of this policy by Dec 31, 2015"... Wilmar also tells The Edge it has engaged suppliers and advised them not to conduct any new peatland clearance (The Edge, 24 Feb 2014). *to verify on implementation dates.
(vi) Wilmar on helping responsible development of smallholders and farmers (with technical and financial support), working with government agencies on local community projects, Wilmar, in it statement, said it will be helping smallholders and farmers developing their native customary land responsibly, irrespective of whether it is peatland or not. It would also reach out to various government agencies to work together to look into areas being proposed for oil palm cultivation for local communities... "We will be ready to offer assistance, in the form of technical and financial support, to those farmers to ensure sustainable development..."...(The Edge, 24 Feb 2014).
(vii) Mistry on investment research on increased productivity (reducing cost of sustainability in the long-term), "The feeling is that it will lead to more investment in research to increase productivity. So in the long run, if you take a 20-year view, sustainability should come at very little extra cost," said Mistry at Godrej Industries (Reuters, 20 Feb 2014).
.............................
Excerpts from Mongabay, 17 Feb 2014 (newslink: http://news.mongabay.com/2014/0217-wilmar-refutes-sarawak-misinformation.html#ymu225b3gUwT7L7Y.99):
"Sarawak State Land Development Minister Tan Sri Dr James Masing, the report asserted that Sarawak would lose up to 400 million Malaysian Ringgit ($121m) in sales tax revenue per year as a result of Wilmar's policy, which will soon exclude palm oil from new plantations established at the expense of rainforests and peatlands.... "If we are not allowed to plant in those two areas, then there will be no oil palm planted in Sarawak," Masing was quoted as saying. "We have no areas where there are no forest... if you want to plant oil palm where there is no forest, you will have to go to the Sahara Desert because there is no forest there."
"It is not true that Wilmar will no longer buy palm oil from Sarawak," Wilmar told mongabay.com via email.... "Our business is fully integrated and we are dependent on supply from many independent suppliers, it is, and was never our intention to exclude suppliers or to put a stop to expansion and growth of the industry, especially in the state of Sarawak, where we have been operating for many years," Wilmar said. "Our Policy will not affect our purchase of oil from suppliers who had previously developed tracts of peatland, or from smallholders."
Wilmar added that it was working with suppliers to help smallholder palm oil producers comply with its policy.... "We remain committed to supporting the growth and development of Sarawak and in all other areas we operate. With respect to smallholders, we also recognize that they are a critical part of the industry, and that they face unique situations. We will be developing a program in conjunction with various stakeholders to help local smallholders and farmers develop their native customary land responsibly."
Where Sarawak may face headwinds however is in its plan to convert up to a million more hectares of forests and peatlands for palm oil production by 2020. These new areas, much of which fall under native customary rights (NCR), would potentially run afoul of Wilmar's environmental and human rights safeguards if they were logged for plantations.
Wilmar adds that while greener palm oil will be initially more costly to produce, it will pay off in the long-run.... "Adopting sustainable practices will result in slightly higher costs and also prevent some plantations from maximizing their land bank. On the other hand, without any effort to make the industry sustainable, green lobby groups will continue to damage the image of palm oil leading to lower usage of palm oil for food and biofuels, and eventually lower palm oil prices. Therefore the higher price commanded by developing palm oil sustainably will more than offset the cost. It is regrettable that, as yet, not more plantations and refineries have come forward to support these policies. It is only through sustainable operations, innovation, constructive dialogue and close cooperation between key players and stakeholders of the palm oil industry, including local and indigenous communities, can we truly transform the industry into a sustainable one."
Excerpts from "Palm planters, politicians test Wilmar's new green credentials," 20 Feb 2014(newslink: http://in.mobile.reuters.com/article/idINL3N0LC33U20140219?irpc=932):
Given Singapore-listed Wilmar's muscle - its refineries process nearly half the world's palm oil - it could also drive up prices of the oil, used in cooking oil to cosmetics and biofuels, especially in price-sensitive India and China... "That's the unfortunate consequence of any steps taken to make agriculture more sustainable. It's a cost we must learn to bear," said Dorab Mistry, head of edible oil trading at Indian conglomerate Godrej Industries, a big Wilmar customer.
"We need your support and urgent action to de-link your operations from deforestation," it wrote to suppliers in a Jan. 7 letter obtained by Reuters, referring to the practice of clearing rainforests to expand oil plantations, potentially speeding up climate change.... Producers who fail to comply with Wilmar's "No Deforestation, No Peat, No Exploitation" rules risk being cut off from more than 140 refineries that Wilmar and its associates operate globally.
Wilmar, which buys around 30,000 tonnes of palm oil every day - equivalent to a day's demand across the whole of India - faces opposition from within its own industry... Planters and politicians in Indonesia and Malaysia, which together account for almost all the world's 52 million tonnes of palm oil production, accuse Wilmar of siding with Western green groups to set up trade barriers.
Wilmar said it will help suppliers to meet its new rules, retaining supply links with growers who developed estates from tropical forests and peat swamps before November 2005, when a surge in palm oil prices spurred rapid plantation expansion.... "It's regrettable that, as yet, not more plantations and refineries have come forward to support these policies," Wilmar said in a statement to Reuters. "In spite of the objections ... we are heartened that there are suppliers, especially the younger generation of planters, who are keenly aware of the need for environmental protection and are supportive of our move."
Planters' dissatisfaction at Wilmar stems partly from the firm's dominance of markets in India and
China, which soaked up demand for palm oil when its use declined in Europe. The company has 82 refineries in those two markets, and extensive distribution networks, leaving little wiggle room for suppliers.... "Wilmar can create positive incentives to change by rewarding compliant producers with long-term contracts on favourable terms," said Gary Paoli, an analyst who tracks Wilmar with Indonesian environmental consultancy Daemeter Consulting.
Traders predict that slower land expansion and supply growth, as planters in Indonesia and Malaysia are more careful in choosing where to plant, will push up palm oil prices.... "The feeling is that it will lead to more investment in research to increase productivity. So in the long run, if you take a 20-year view, sustainability should come at very little extra cost," said Mistry at Godrej Industries.
Excerpts from "Wilmar's sustainability moves riles Sarawak" 24 February 2014, The Edge Malaysia:
Wilmar's policy document says "in addition to immediately shifting development activities from high carbon stock, high conservation value and peat areas upon announcement of this policy, we expect suppliers to be fully compliant with all provisions of this policy by Dec 31, 2015"... Wilmar also tells The Edge it has engaged suppliers and advised them not to conduct any new peatland clearance.
Wilmar, in it statement, said it will be helping smallholders and farmers developing their native customary land responsibly, irrespective of whether it is peatland or not. It would also reach out to various government agencies to work together to look into areas being proposed for oil palm cultivation for local communities... "We will be ready to offer assistance, in the form of technical and financial support, to those farmers to ensure sustainable development..."...
Interesting points include:
(i) Wilmar on continued Sarawak purchases from previously developed areas & smallholders, Wilmar said. "It is not true that Wilmar will no longer buy palm oil from Sarawak.... Our Policy will not affect our purchase of oil from suppliers who had previously developed tracts of peatland, or from smallholders" (Mongabay, 17 Feb 2014).
(ii) Mongabay on Sarawak expansion headwinds, Where Sarawak may face headwinds however is in its plan to convert up to a million more hectares of forests and peatlands for palm oil production by 2020. These new areas, much of which fall under native customary rights (NCR), would potentially run afoul of Wilmar's environmental and human rights safeguards if they were logged for plantations (Mongabay, 17 Feb 2014).
(iii) Wilmar on likely impact on cost and premium for sustainability, "Adopting sustainable practices will result in slightly higher costs and also prevent some plantations from maximizing their land bank. On the other hand, without any effort to make the industry sustainable, green lobby groups will continue to damage the image of palm oil leading to lower usage of palm oil for food and biofuels, and eventually lower palm oil prices. Therefore the higher price commanded by developing palm oil sustainably will more than offset the cost..." Wilmar said (Mongabay, 17 Feb 2014).
(v) On
(vi) Wilmar on helping responsible development of smallholders and farmers (with technical and financial support), working with government agencies on local community projects, Wilmar, in it statement, said it will be helping smallholders and farmers developing their native customary land responsibly, irrespective of whether it is peatland or not. It would also reach out to various government agencies to work together to look into areas being proposed for oil palm cultivation for local communities... "We will be ready to offer assistance, in the form of technical and financial support, to those farmers to ensure sustainable development..."...(The Edge, 24 Feb 2014).
(vii) Mistry on investment research on increased productivity (reducing cost of sustainability in the long-term), "The feeling is that it will lead to more investment in research to increase productivity. So in the long run, if you take a 20-year view, sustainability should come at very little extra cost," said Mistry at Godrej Industries (Reuters, 20 Feb 2014).
.............................
Excerpts from Mongabay, 17 Feb 2014 (newslink: http://news.mongabay.com/2014/0217-wilmar-refutes-sarawak-misinformation.html#ymu225b3gUwT7L7Y.99):
"Sarawak State Land Development Minister Tan Sri Dr James Masing, the report asserted that Sarawak would lose up to 400 million Malaysian Ringgit ($121m) in sales tax revenue per year as a result of Wilmar's policy, which will soon exclude palm oil from new plantations established at the expense of rainforests and peatlands.... "If we are not allowed to plant in those two areas, then there will be no oil palm planted in Sarawak," Masing was quoted as saying. "We have no areas where there are no forest... if you want to plant oil palm where there is no forest, you will have to go to the Sahara Desert because there is no forest there."
"It is not true that Wilmar will no longer buy palm oil from Sarawak," Wilmar told mongabay.com via email.... "Our business is fully integrated and we are dependent on supply from many independent suppliers, it is, and was never our intention to exclude suppliers or to put a stop to expansion and growth of the industry, especially in the state of Sarawak, where we have been operating for many years," Wilmar said. "Our Policy will not affect our purchase of oil from suppliers who had previously developed tracts of peatland, or from smallholders."
Wilmar added that it was working with suppliers to help smallholder palm oil producers comply with its policy.... "We remain committed to supporting the growth and development of Sarawak and in all other areas we operate. With respect to smallholders, we also recognize that they are a critical part of the industry, and that they face unique situations. We will be developing a program in conjunction with various stakeholders to help local smallholders and farmers develop their native customary land responsibly."
Where Sarawak may face headwinds however is in its plan to convert up to a million more hectares of forests and peatlands for palm oil production by 2020. These new areas, much of which fall under native customary rights (NCR), would potentially run afoul of Wilmar's environmental and human rights safeguards if they were logged for plantations.
Wilmar adds that while greener palm oil will be initially more costly to produce, it will pay off in the long-run.... "Adopting sustainable practices will result in slightly higher costs and also prevent some plantations from maximizing their land bank. On the other hand, without any effort to make the industry sustainable, green lobby groups will continue to damage the image of palm oil leading to lower usage of palm oil for food and biofuels, and eventually lower palm oil prices. Therefore the higher price commanded by developing palm oil sustainably will more than offset the cost. It is regrettable that, as yet, not more plantations and refineries have come forward to support these policies. It is only through sustainable operations, innovation, constructive dialogue and close cooperation between key players and stakeholders of the palm oil industry, including local and indigenous communities, can we truly transform the industry into a sustainable one."
Excerpts from "Palm planters, politicians test Wilmar's new green credentials," 20 Feb 2014(newslink: http://in.mobile.reuters.com/article/idINL3N0LC33U20140219?irpc=932):
Given Singapore-listed Wilmar's muscle - its refineries process nearly half the world's palm oil - it could also drive up prices of the oil, used in cooking oil to cosmetics and biofuels, especially in price-sensitive India and China... "That's the unfortunate consequence of any steps taken to make agriculture more sustainable. It's a cost we must learn to bear," said Dorab Mistry, head of edible oil trading at Indian conglomerate Godrej Industries, a big Wilmar customer.
"We need your support and urgent action to de-link your operations from deforestation," it wrote to suppliers in a Jan. 7 letter obtained by Reuters, referring to the practice of clearing rainforests to expand oil plantations, potentially speeding up climate change.... Producers who fail to comply with Wilmar's "No Deforestation, No Peat, No Exploitation" rules risk being cut off from more than 140 refineries that Wilmar and its associates operate globally.
Wilmar, which buys around 30,000 tonnes of palm oil every day - equivalent to a day's demand across the whole of India - faces opposition from within its own industry... Planters and politicians in Indonesia and Malaysia, which together account for almost all the world's 52 million tonnes of palm oil production, accuse Wilmar of siding with Western green groups to set up trade barriers.
Wilmar said it will help suppliers to meet its new rules, retaining supply links with growers who developed estates from tropical forests and peat swamps before November 2005, when a surge in palm oil prices spurred rapid plantation expansion.... "It's regrettable that, as yet, not more plantations and refineries have come forward to support these policies," Wilmar said in a statement to Reuters. "In spite of the objections ... we are heartened that there are suppliers, especially the younger generation of planters, who are keenly aware of the need for environmental protection and are supportive of our move."
Planters' dissatisfaction at Wilmar stems partly from the firm's dominance of markets in India and
China, which soaked up demand for palm oil when its use declined in Europe. The company has 82 refineries in those two markets, and extensive distribution networks, leaving little wiggle room for suppliers.... "Wilmar can create positive incentives to change by rewarding compliant producers with long-term contracts on favourable terms," said Gary Paoli, an analyst who tracks Wilmar with Indonesian environmental consultancy Daemeter Consulting.
Traders predict that slower land expansion and supply growth, as planters in Indonesia and Malaysia are more careful in choosing where to plant, will push up palm oil prices.... "The feeling is that it will lead to more investment in research to increase productivity. So in the long run, if you take a 20-year view, sustainability should come at very little extra cost," said Mistry at Godrej Industries.
Excerpts from "Wilmar's sustainability moves riles Sarawak" 24 February 2014, The Edge Malaysia:
Wilmar's policy document says "in addition to immediately shifting development activities from high carbon stock, high conservation value and peat areas upon announcement of this policy, we expect suppliers to be fully compliant with all provisions of this policy by Dec 31, 2015"... Wilmar also tells The Edge it has engaged suppliers and advised them not to conduct any new peatland clearance.
Wilmar, in it statement, said it will be helping smallholders and farmers developing their native customary land responsibly, irrespective of whether it is peatland or not. It would also reach out to various government agencies to work together to look into areas being proposed for oil palm cultivation for local communities... "We will be ready to offer assistance, in the form of technical and financial support, to those farmers to ensure sustainable development..."...