Peatlands in Malaysia and Indonesia - map and info sources

Khor Reports: The TFT-CA-Wilmar new policy is generating big questions on the palm oil supply chain impacts in peatland zones. For convenience of Khor Reports readers, we have collated below some useful resources on the topic. A slew of reports are emerging from equity analysts as several listed plantation companies are highlighted as impacted in Sarawak, Malaysia; The Edge Malaysia reports http://www.theedgemalaysia.com/business-news/275623-highlight-pressure-on-sarawak-planters.html. In addition to Sarawak, there are also significant peatland zones in Sumatra and Kalimantan. The reaction and impacts on Indonesia plantations will emerge in due course. It is notable that the Norway-funded Indonesia moratorium has been extended and the moratorium zones are distributed and interspersed with plantation concession zones. NGOs such as Greenpeace have complained that the moratorium does not cover enough area (see Greenpeace links below; Greenpeace is associate of TFT in high carbon stocks policies for Golden-Agri Resourcs / Sinar Mas). Various studies by Miettinen et al. have informed ILUC parameters that is expected to impact market acceptance for biofuels from Malaysia and Indonesia.
 
source: APFP website, accessed 18 Feb 2014


ASEAN Peatland Forests Project (APFP)
Overview Map of Peatlands in Southeast Asia (SEA); http://www.peat-portal.net/index.cfm?&menuid=62; Peatland hectarage: Malaysia 2.6 million, Indonesia 20.7 million (map above)
Malaysia, http://www.peat-portal.net/index.cfm?&menuid=81&parentid=67
Indonesia, http://www.peat-portal.net/index.cfm?&menuid=125&parentid=68

"Two decades of destruction in Southeast Asia’s peat swamp forests," by Jukka Miettinen*, Chenghua Shi, and Soo Chin Liew in Front Ecol Environ 2012; 10(3): 124–128, doi:10.1890/100236 (published online 14 Apr 2011).

source: Miettinen et al., 2012
note: 1 sq km = 100 hectares


Wetlands International: different options available to palm oil; http://www.wetlands.org/WatchRead/Currentpublications/tabid/56/mod/1570/articleType/ArticleView/articleId/3553/Poster-Palm-oil-and-Peat.aspx
Wetlands International: Central Kalimantan Peatland Project; Action Duration: Dec 2005 Until Nov 2008;  Donor: Ministry of Foreign Affairs, Netherlands; with video on peat restoration project; http://www.wetlands.org/Whatwedo/Actions/tabid/2661/mod/601/articleType/ArticleView/articleId/7/Central-Kalimantan-Peatland-Project.aspx

Greenpeace: Indonesia's Forest and Peatlands; Legally protected areas, proposed moratorium areas, and forests and peatlands at risk, http://www.greenpeace.org/international/en/publications/reports/Indonesias-Forests-and-Peatlands/
Greenpeace: Indonesia's Forest and Peatlands Map Source, http://www.greenpeace.org/international/en/publications/reports/Indonesias-Forest-and-Peatlands-Map-Source/

Source: Greenpeace website, accessed 18 Feb 2014  

Malaysia - Sarawak palm oil concerns

Khor Reports blog exclusive: Sarawak palm oil has expressed concerns about the new TFT-Wilmar procurement policy which states that come 2016, it will only buy from planters who commit to no development on peat of any depth. Sarawak has several peat zones and several plantations have some land bank on peat. Malaysia palm oil watchers are looking out this month for other plantations to sign up to more rigorous pledges than RSPO; either signing on with TFT-Wilmar or proposing something similar.

Khor Reports attended at MPOC's forum at Kuching, Sarawak on Monday 10 February 2014 where we listened to the speeches and spoke to knowledgeable people on the side-lines:

1)  A keynote address by the Deputy Chief Minister, Alfred Jabu, expressed strong concern over new policies affecting the Sarawak palm oil sector: a barrage of new policies from developed countries is said to be tantamount to stifling (state) government programs on peatland abodes and native-customary right (NCR) areas with secondary forests. Jabu pointed out that Sarawak still has a good percentage of tree cover and that it has a right to economic development, just as other developed countries have substantially deforested to do likewise in the past. Palm oil development has been used as part of the state's poverty alleviation and high income generating project. Sarawak has 46% of its population or 1.15million people in rural areas. In peatland abodes there are 236,000 people and in NCR areas there are some 380,000 people. So, a "selfish boycott" would impact these people. Jabu said that it is time to "question the NGO lobby... some key criticisms are flawed.. well-meaning sentimentality can impact those working their way out of poverty." He worried that "commercial rivalries and jealousies are fertile ground for NGOs to create havoc from far away." Thus, Sarawak authorizes are engaging with Europe-based think tanks and policy makers to bring them the facts of the situation. He also pointed to the good work of SALCRA, which has paid dividends of some RM635 million to 22,000 landowners (time period not indicated). SALCRA has a policy of zero-burning and it has been asked to expand these activities in oil palm development.

2) Khor Reports was also interested to ascertain if there were any socio-political risks. We spoke to a socio-political analyst who explained that the peatland zone (coastal) is inhabit by ethnic groups who are mostly followers of Islam. The interior mineral soils of NCR areas are mostly inhabited by Dayaks, most of whom are Christians. As always, Malaysian politics has an ethnic-religious dimension. Malaysia is a plural society where big business-economic changes can trigger socio-political concerns.

3) A question was also raised during the Q&A on the competition act; what if there are unfair trade practices by dominant players? It is apparent that the Malaysia industry and policy makers have looked into the act and its market access impact clause. In a separate conversation with an industry group, we also found that some new projects have been designed so that collaboration by several commercial companies do not fall on the wrong side of the act.

The palm oil supply chain is facing significant changes as its dominant players shift to meet buyer's requests on sustainability. We are entering a phase of heightened supply-chain change. Regulatory and socio-political questions are starting to be asked. These bear watching.

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Updated at 4pm for news: Wilmar "will no longer buy palm oil from firms planting in cleared forest and peat swamp from next year out of environmental concerns. Sarawak Land Development Minster Tan Sri James Masing said Singapore-based Wilmar International Ltd conveyed its decision to the state in December. “Since most of the state's oil palm are grown in cleared forests and peat swamp, (that means) they won't be buying from us....Wilmar said from next year, it would buy CPO from oil palm grown in “areas with high carbon content” and from oil palm planted in forests before 2005. Masing said Wilmar buys 45% of Sarawak's crude palm oil (CPO) and refined it at its 10-year-old Bintulu refinery... “It's pure economics and Wilmar is being used by the sunflower and soya bean producers to bully Sarawak.” (Masing said)" newslink http://www.themalaysianinsider.com/malaysia/article/singapore-based-refinery-will-no-longer-buy-sarawaks-palm-oil-says-masing.

Updated 5.20pm for Bernama newslink: http://www.bernama.com/bernama/v7/bu/newsbusiness.php?id=1014477

Africa: NGOs asked to disclose info?

Thank you to a Khor Reports' international reader for alerting some news, in response to our recent posting on remote sensing and transparency. Interestingly, the Liberia government asks NGOs for some information disclosure (see news clipping image below). Might other Africa governments do the same?

 
Khor Reports comment: As Africa is in development mode, they will probably be more sensitive to interventions that affect their economic development policies. The asymmetry of information flows generated by plantation sustainability is notable. Plantations have released a lot of information and have also brought NGOs in-house to assist them in various technical and market access fields. They will be giving out more data such as the geovectors of their boundaries, land bank maps and land type details for usage by the public and NGOs via new RSPO and TFT-Wilmar's policies. In contrast other stakeholders have not needed to release much information.

Remote sensing brings new transparency

From Khor Reports's Palm Oil Newsletter #6 Jan/Feb 2014

New transparency

The use of remote-sensing technologies in the industry are in its early stages while some NGOs are also advanced users. Aerial sensor technologies use images from satellites and drones, to detect and classify objects on the surface; saving the need to be on the ground. Given the importance of its applications, expanding availability of cost-effective data sets, equipment and services, it is set to grow. We look at three usages: the first informs biofuels policy and two have significant potential impact.

1. Setting biofuels policy

To help set biofuels policy, the International Council on Clean Transportation or ICCT needed to know and project how much oil palm is developed on peat. Satellite images were used to estimate the area of expansion 1990-2010: Data sets used include 1990 GeoCover with 28.5 m spatial resolution, 2007 Satellite Pour l’Observation de la Terre (SPOT) satellite images with high spatial resolution (10–20 m) . Spatial resolution refers to how close two features can be within an image and still be recorded as distinct.

Four maps presenting the extent and distribution of industrial oil palm plantations on peatland in 1990, 2000, 2007, and 2010 in Peninsular Malaysia, Sumatra, and Borneo were produced from the high resolution data sets with visual interpretation. The reported producer’s and user’s accuracies of 96% to 97%, suggest “high reliability” of the maps produced by this approach For 2007 through 2010, the area on peat increased 190,000 ha/year and “taking Indonesia and Malaysia together, the linear projections imply a 32% rate of palm expansion onto peat soils.” This is a key data point for biofuels policies in various developed markets. It is contested by the palm oil industry which: i) argues against the use of a simple projection from past to future, ii) points to the need for updated peatland area maps, iii) laments the poor scientific basis for voluntary policies against shallow peatland use, and the general lack of tropical peat studies. Why is less than 50 cm peat not considered by some voluntary standards? This is the depth set by the US Department of Agriculture to classify organic from peat soils [1].


2. Upstream planning & management

Satellite images are often used in due diligence studies on acquisitions. Plantations can also use satellite or drone-acquired images for topographic mapping, to help in planning for drainage, planting terraces, and planting patterns on slopes. RSPO also asks companies to produce accurate maps to identify areas with slope over 25 degrees* and 300 m above sea level. Interestingly, there is work to establish spectrum responses for early detection of chloropyll and moisture stress for better management. Can a narrow band even pick up on certain diseases? Previously, 4-5 bands were available and now 300 bands of specific wavelengths can detect variations [2].


3. NGOs bring “radical transparency”

Technical NGOs are actively using imagery from satellites to monitor plantation activity. The WWF has also started to use drones in conservation projects. External monitoring of peat smog fire hot spots were speedily done with accuracy in the 2013 record-breaking Sumatran peat smog season. Back in n 1997 hot spots could be 1km out and a hot zinc roof might also be mistaken for a fire [2]. Now, high resolutions including 2.5 meter resolution can pinpoint with confidence.
World Resources Institute (WRI) has its Global Forest Watch (GFW) initiative that is seeking palm oil supply chain clients. “(Using) near real-time satellite monitoring technology, forest management, and company concession maps, protected areas maps, mobile technology, crowd-sourced data, and
on-the-ground networks to promote transparency in forests around the world (15 Nov 2013, csrwire.com). Similarly, The Forest Trust (TFT) plans “To bring more transparency to a complicated forestry supply chain… (it) developed a monitoring tool that allows companies to convey real-time radical transparency in supply chains.” TFT’s tool is piloted for Asia Pulp and Paper (APP), with a dashboard that “allows the company to display detailed data going beyond compliance and displaying implementation of sustainability commitments (on 2.6 million hectares).” “In February 2013, after working closely with leading NGOs, APP launched a new Forest Conservation Policy… with a range of stakeholders” (15 Nov 2013, csrwire.com). As TFT also leads Wilmar, the above appears likely for Wilmar’s new policies and approach for palm oil.

Separately, we hear from NGO specialists they NGOs are ready to report on plantation impacts (Khor Reports interview, Nov 2013). This could mean that there will soon be contested reports in this vein: Plantation A has cleared an estimated X hectares and Y tonnes of high carbon stock since a cut of date, e.g. Nov   2005; with a breakdown by estimated non-peat and peat land area, HCV vs non-HCV etc. NGOs lacked accurate concession boundaries data. However, at the recent RSPO General Assembly, a resolution for growers to submit soft copies of their geovector boundaries was passed. These will be posted on the RSPO website for public access and use. While new corporate-ready technical NGOs such as TFT and WRI seek to provide radical transparency solutions for plantations, there will be others who may use the same data and approach for campaigning purposes. There are many possible users and usages, once technology costs have fallen as they have, and the necessary crucial private data is released. Eyes wide open!

[1] “Historical Analysis and Projection of Oil Palm Plantation Expansion on Peatland in Southeast Asia” by J Miettinen et al. White Paper Number 17 | February 2012. Indirect Effects of Biofuel Production. www.theicct.org.
[2] Khor Reports visited Applied Agricultural Resources Sdn Bhd, 10 Dec 2013, on technical updates. In future newsletters: carbon measurements, pests & diseases, genome prospects, and the politics of peat science.

Look out for Khor Reports' Palm Oil Newsletter #6, Jan/Feb 2014! This article is a sneak preview article from this issue (delayed in publication process).

Khor Reports blog exclusive note: Industry sources tell us that Wilmar's new procurement policy is being activated with a request for detailed maps and information about their supplier's land banks. This dovetails with RSPO policies in a way that could make transparent the maps for many plantation companies in the larger categories. If you are a RSPO member, you need to disclose and/or if you are a Wilmar supplier.

Update for reader comment *Enjoyed reading your article but I was wondering whether for point number 2 on Upstream planning and management’s paragraph line 5, the slope which RSPO ask companies to identify was 25 degrees rather than 25%. 45 degrees is equal to 100%. The 25 degrees is threshold slope for land development in the land code for Sabah and Sarawak whilst in the Peninsular, it is 20 degrees.

Editorial: New challenge for the supply chain

From Khor Reports's Palm Oil Newsletter #6 Jan/Feb 2014

Editorial: New challenge for the supply chain

Wilmar, the largest trader of palm oil in the world, has come out to change its supply chain promise, signing a deal to secure its position supplying to Unilever. The Anglo-Dutch consumer goods behemoth, ranked #2 in the world after Nestle, had weeks earlier promised to accelerate its sustainability push. Unilever has taken a lead in promoting the principle of sustainability in its materials sourcing via a top role at the RSPO from its inception nearly 10 years ago. For Unilever’s efforts to reduce environmental damage, Dutchman "Polman is the first CEO of a major multinational company to receive the Duke of Edinburgh conservation award since it began in 1970," Bloomberg reported 3 Dec 2013. Wilmar has faced NGO grumblings for not practicing sustainable sourcing for its third-party purchases (which is many times bigger than its own internal production) and over its sale of troubled assets. With its new promise, the giant trader is challenged to rationalize its supply chain. How will Wilmar achieve this without downsizing its business? In general, traceability with high level promises is tougher for large traders with complex supply chains. Industry talk in recent weeks has centered on top producers being asked to sign on to a new RSPO++ manifesto (characterized by multiple additional criteria), building on TFT-Greenpeace principles (they have become de facto new leaders of palm oil sustainability, seizing power from the WWF-driven RSPO). If the key palm oil producers accede, it could be business-as-usual for Wilmar but its cost structure may shift. Its promises can be fulfilled by tough action by its trade partners. Thus, we await information from other industry players on the manner of their support of Wilmar-Unilever.

Questions of impact abound. Could this bring on faster unit cost convergence for large-scale corporate SE Asia palm oil vs Brazil soybean oil? For the industry at large, policy makers should be concerned with: a) how a traceable, no-peat, no deforestation, GHG-reducing palm oil supply chain will look like; b) who will be the winners and the losers; and c) how the transition will be effected, and with what effort to mitigate the impact on the losers. Politics may even be a factor given the size of the smallholder sector, rural development programs and promises. How will the new TFT-Greenpeace-driven principles be operationalized? Khor Report thinks that each palm oil mill will need to be supply-chain risk categorized. Could this segment different production zones with discounting factors? Will a November 1995 baseline apply and will high carbon stock measurement become essential? In this regard, the Golden Agri/Sinar Mas pilot done by TFT-Greenpeace is important. What requirements will Africa face even as it remains a net importer for years and has great hopes for rural development?

Various tropical and other commodities face pressures from an ascendant and increasingly well-funded international green movement. The key to its penetration is in promoting new global voluntary standards that have strong staying power. In taking on technical consulting roles NGOs can become self-funding and perpetuating in these sectors. In relative terms, the corporate sector has been scrabbling for footing amidst this structural change, while the independent and smallholder sectors are adrift with little voice. The largest plantation companies (especially those with European assets and market exposure) have been moving ahead. The swing from WWF to TFT-Greenpeace leadership in sustainability is happening just as developed markets think twice about biofuels policies and bumper oilseed crops are anticipated. The falling price ceiling of vegetable oil substitutes is crushing the palm oil price discount differential while big growers (i) face a new cost component at newly acquired estates via the RSPO compensation procedure (in “staged implementation” with a launch target of Nov 2014) and (ii) plan how to step up to the TFT-Wilmar demands. This new cost and opportunity cost intensive phase of the sustainability push proves its strategic importance on the entire palm oil supply-chain, if ever there were any doubt.

Look out for Khor Reports' Palm Oil Newsletter #6, Jan/Feb 2014! This article is a sneak preview article from this issue (delayed in publication process)