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Deforestation on Oil Palm Concessions Continued to Decline in First Half of 2021

October 11, 2021

Analysis by Chain Reaction Research (CRR) shows that 10 palm oil companies were responsible for approximately 5,000 hectares (ha) of forest clearing during the first six months of 2021 in Indonesia, Malaysia, and Papua New Guinea. The figure is approximately 43 percent of the total 11,500 ha of deforestation detected within known oil palm concessions in the region. Total detected deforestation within oil palm concessions is almost half of the amount seen in the same regions during the first half of 2020. Against the backdrop of this reduced rate of deforestation, some companies with as little as 200 ha of deforestation were on the top 10 list. In the same timeframe in 2020, the minimum amount of deforestation was 700 ha.

A feature of this year’s list compared to previous years is the presence of two companies in Peninsular Malaysia, YP Olio and Nadi Mesra. Last year’s largest deforesters were exclusively Indonesian companies. Another feature is the number of concessions clearing forest despite not having a mill and seemingly without links to the international No Deforestation, No Peat, No Exploitation (NDPE) market. This trend has been growing in the palm oil sector in the last few years, particularly in Indonesia. In 2020, domestic consumption in Indonesia drove demand for palm oil in Indonesia as exports fell due to the COVID-19 pandemic. Demand has particularly come from Indonesia’s domestic biofuel sector, where weak standards have long presented a leakage risk.

The decline is also a consequence of the successful uptake of NDPE policies in the palm oil sector. As buyers have increasingly removed deforestation-linked palm oil from their supply chains, those companies still deforesting are operating outside of the NDPE market.

Figure 1. Top 10 Palm Oil Deforesters in the First Half of 2021

1. Bengalon Jaya Lestari

Bengalon Jaya Lestari first made CRR’s list of the top deforesters for the first half of 2020, and has continued to appear. During the first half of 2021, approximately 1,800 ha of peat clearing happened on two oil palm plantations operated by the group in North Kalimantan, PT Kartika Nugraha Sakti and PT Wana Jaya Abadi. Bengalon Jaya Lestari does not appear to own any mills, so it is difficult to link it with any NDPE supply chains.

Figure 2. Deforestation in Bengalon Jaya Lestari’s Concessions

2. YP Olio

In second place is YP Olio Sdn Bhd, a Malaysian oil palm plantation company whose concession is in Pahang, Peninsular Malaysia. The plantation project has included forest clearing of 660 ha between January to June 2021. The total area of the landbank is 8,500 ha. The location was once part of Bukit Ibam Forest Reserve, which was degazetted in November 2020.

Half of the shares of the company are owned by a member of the Pahang Royal family. YP Olio is reportedly involved in a land conflict with members of the Orang Asli indigenous people. Claims include that the company misled Orang Asli into signing a contract supporting plantation development. YP Olio does not have palm oil mills, and links to NDPE supply chains is unknown.

Figure 3. Deforestation in YP Olio’s oil palm plantation in Pahang

3. Sulaidy-owned companies

Sulaidy-owned companies have been in the top three top deforesters in the palm oil industry every year since 2018. During the first half of 2021, around 440 ha of forest clearing was detected within oil palm concessions belonging to Sulaidy. The majority of the clearing took place within PT Citra Palma Pertiwi and PT Borneo Citra Persada Jaya, both of which are located in East Kalimantan, and around 350 ha of forest loss has occurred on both concessions.

CRR has never conclusively connected Sulaidy-owned concessions to international supply chains. However, a recently constructed palm oil mill in West Kutai, East Kalimantan likely belongs to Sulaidy, given its proximity to Sulaidy-owned concessions. CRR has not been able to obtain further information. However, a building of the new mill risks deforestation-linked palm oil entering NDPE-covered refineries, prompting buyers to be vigilant and conduct due diligence on all potential new suppliers.

Figure 4. Deforestation in oil palm plantations belonging to Sulaidy

4. Digoel Agri Group

In the fourth position is Digoel Agri Group, a plantation company operating in Papua owned by a New Zealand property developer. The plantation is known as the Tanah Merah project and was previously operated by HSA Group/ Pacific Inter-Link and Maxim Group. Between January to August 2021, 400 ha of deforestation was detected within its oil palm plantation concessions in Papua, PT Manunggal Sukses Mandiri and PT Trimegah Karya Utama.

Digoel Agri has allegedly been conducting land clearing without obtaining consent from the local indigenous people. In a response letter from Digoel Agri to a journalist, Digoel Agri said that it will identify High Conservation Value and High Carbon Stock areas and develop a recovery plan that protects and assists forests and local communities. The concession has not been linked to international supply chains.

5. PT Agrindo Sukses Sejahtera

PT Agrindo Sukses Sejahtera has appeared in the top deforester list for the first time. Approximately 370 ha of clearing was detected within the company’s concession in East Kalimantan in the first half of 2021. The company is owned by Agus Suparmanto, a well-known businessman who was Indonesia’s Minister of Trade between 2019 and 2020. There is little public information about the company, and it does not appear to have a mill.

6. Nadi Mesra

In the sixth position is a Malaysian company with an oil palm plantation in Johor, Nadi Mesra. Analysis by CRR shows a total of 330 ha of land clearing was detected within the company’s concession during this period. The concession was once part of Tenggaroh Permanent Reserve Forest and was degazetted in 2015. The plantation business permit given to Nadi Mesra covers 5,000 ha.

In August 2020, Nadi Mesra was reportedly applying for another 2,000 ha of land in the same reserve forest for the purposes of developing oil palm plantations. The Tenggaroh forest is home to rich array of biodiversity. Nadi Mesra does not appear to have a palm oil mill, and therefore there are no known links to NDPE supply chains.

7. PT Permata Sawit Mandiri

The seventh position is filled by PT Permata Sawit Mandiri in Ketapang, West Kalimantan, which was fifth last year. Between January to August 2021, approximately 320 ha of deforestation was detected within PT PSM’s concession. The company is owned by Mr. Ikhsanudin. Due to limited information, CRR cannot link the company to any NDPE supply chains.

8. Sumber Tani Agung Resources

Sumber Tani Agung Resources is a Sumatra-based palm oil company that manages 13 oil palm plantations and nine palm oil mills in Sumatra and Kalimantan. Around 270 ha of clearing was detected within the concessions of PT Tantahan Panduhup and PT Flora Nusa Perdana, both in Central Kalimantan. STA Resources has a sustainability policy covering NDPE commitments but does not appear to have a grievance mechanism. Sumber Tani Agung Resources appears in the supply chains of several companies with NDPE policies, including AAK, Avon, Avon, BASF, Bunge Loders Croklaan (BLC), Cargill, Cofco, Colgate-Palmolive, Danone, Ferrero, Friesland Campina, Fuji Oil, General Mills, Grupo Bimbo, Hershey, HSA/Pacific Inter-link, IFFCO, Itochu, Johnson & Johnson, Kao, Kellogg’s, KLK, L’Oreal, Louis Dreyfus Company, Mondelēz, Musim Mas, Nestlé, Nisshin OilliO, Olam, Olenex, Oleon, Permata Hijau Group, PZ Cussons, Reckitt Benckiser, P&G, Sime Darby, Unilever, Upfield, and Wilmar.

9. Rugao Shuangma Chemical

Rugao Shuangma Chemical, a Chinese chemical company producing fatty acids, operates two oil palm plantations in North Kalimantan, PT Sebaung Sawit Plantation and PT Palem Segar Lestari. Both together are responsible for 245 ha of deforestation between January to June 2021. PT Sebaung Sawit Plantation and PT Palem Segar Lestari have appeared on the top deforesters list since 2019. CRR recently found that PT Sebaung Sawit Plantation also has a palm oil mill, but it does not show up in any NDPE supply chains.

PT Sebaung Sawit Plantation and PT Palem Segar Lestari have a puzzling ownership history. Initially, CRR attributed both companies to Rugao Shuangma. In a report on the China’s role in palm oil business, CRR separated the ownership of these two companies, with PT Sebaung Sawit Plantation belonging to Shanghai Xinjiu Chemical and PT Palem Segar Lestari under Henan Jiujiu Chemical. CRR recently revised the ownership and has now re-grouped them under Rugao Shuangma Chemical based on the following:

  • Notary acts of both companies show the same directorship and commissionership, except for the main shareholders.
  • The three companies mentioned in this article — Shanghai Xinjiu Chemical, Henan Jiujiu Chemical, and Rugao Shuangma — sell palm oil under the same brand of stearic acid, “Duanma.”
  • A Chinese website mentions Rugao Shuangma’s name in relation to oil palm plantations in Indonesia.

10. PTPN II (Unit Arso)

In the last position is PTPN II, a subsidiary of the Perkebunan Nusantara holding company. Perkebunan Nusantara is a state-owned enterprise whose businesses are focused on agricultural commodities, including oil palm, coffee, tea, sugarcane, tobacco, cacao, and rubber. It has nine other oil palm subsidiaries beside PTPN II.

CRR has detected around 120 ha of forest clearing in Unit Arso, an oil palm concession in Keerom District, Papua, Indonesia. As well as this deforestation, PTPN II in Arso is known to have been involved in a longstanding land dispute with indigenous people of Keerom. PTPN II enters NDPE supply chains through Bunge Loders Croklaan (BLC), Danone, HSA/Pacific Inter-Link, Kellogg’s, KLK, Olam and P&G.

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