Indonesia's palm oil industry struggles to resists "black campaign"

17:33, September 09, 2010      

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Indonesia's palm oil industry that has been supporting life for 2.8 million of family is struggling to resist attacks from government's plan to adopt forest moratorium and from foreign companies that stopped buying crude palm oil (CPO) triggered by black campaign.

Moratorium obligation on primary forest and peat land set in a Letter of Intent (LoI) between Indonesia and Norway is expected to derail the country's palm oil industry as the policy is regarded as counter-productive with the country's status as the world's largest CPO producer.

If the moratorium policy is adopted, there will be no more land expansion for plantation, posing risk of decreasing production.

Besides, 40 percent of palm plantations in Indonesia currently belong to individuals, meaning that this involves 2.8 million families or 10 million people who rely their destiny on the industry.

Meanwhile, the industry was also hit by decision of Burger King to stop buying CPO from PT Sinar Mas Agro and Resources Technology (SMART) early this month, a move following actions by Unilever, Nestle and Kraft.

Corporate Secretary PT SMART Jimmy Pramono said that CPO sales to Burger King was only 0.06 percent of total sales in 2009.

"The temporary business cut did not impact on its financial condition as the transaction value was not significant," he said.

However, this is a bad precedent for Indonesia's CPO industry.

The Association of Indonesian Palm Oil Producers (GAPKI) said that environmental activist group Greenpeace is destroying the country's CPO industry.

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