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The Chain:Cargill Receives Indonesian Sustainability Awards; FGV Seeks RSPO Certification; FELDA Purchases 37 Percent Stake in PT Eagle High Plantation

January 4, 2017

Cargill Receives Sustainability Awards from Government of Indonesia

Three of Cargill’s palm oil mills recently received Indonesian government awards for achieving significant improvements in energy use, conservation of fresh water, and emissions reductions.

From 2012 through May 2016, the Sungai Lilin, Manis Mata and Tanjung Dalam mills converted to 100% renewable energy sourced from the conversion of palm kernel shells and fiber. Cargill also provides this biomass energy to power 700 Cargill employee homes around the mills. The three mills also demonstrated significant gains in energy efficiency, GHG intensity reduction and fresh water efficiency ranging from 2 percent to 17 percent.

The awards were presented by Indonesian Vice President Bapak Jusuk Kalla, Minister of Environment and Forestry Siti Nurbaya, and Minister of Industry Bapak Airlangga Hartato.

Felda Global Ventures Announces Plan to Certify 16 Mills to RSPO in 2017

Felda Global Ventures (FGV) announced its intention to secure RSPO certification, at minimum, for at least 16 of its mills in 2017. FGV CEO Zakaria Arshad stated:

“We look forward to have at least 16 mill complexes RSPO certified in 2017 which will open us to those markets that require sustainability standards. We anticipate more premiums from sustainable palm oil, especially CPKO-related (crude palm kernel oil) products that fetch better value at this point. We also plan to have another 22 mill complexes ready for audit in 2017.”

In May 2016, FGV withdrew its RSPO certification from 58 mill complexes located in Malaysia. Many corporate buyers who purchase RSPO certified sustainable palm oil (CSPO) from FGV have clear and explicit zero-deforestation supply chain commitments. Felda’s documented deforestation of 880 ha of identified High Conservation Value peatlands puts these specific corporate procurement relationships at risk.

FGV’s Q3 2016 net income was negative $21.1 million before adjusting for exceptional items. Losses have been driven by its 51% ownership in its publicly traded sugar arm, MSM Malaysia, who saw its Q3 2016 profit before taxes fall 56 percent year-over-year.

Federal Land Development Authority purchases 37 percent stake in PT Eagle High Plantation

The Malaysian government’s Federal Land Development Authority (FELDA) announced a $505.4 million investment for 37 percent stake in Eagle High Plantations (BWPT). FELDA is purchasing this non-controlling from the Rajawali Group. FELDA, the Malaysian government entity, also owns 33 percent of Felda Global Ventures, the privately traded agriculture company.

Presently, BWPT’s planted area comprises 152,000 ha with 91 percent in Kalimantan, 8 percent in Papua, and 1 percent in Sumatra. During 2011 to 2013, it expanded on average 15,000 ha per year. Since 2014, its expansion slowed to 8,000 ha in 2014, 2,000 ha in 2015, and zero ha in 2016.

This investment by the Malaysian government has significant inherited risks given BWPT’s subsidiaries clearing of 3,000 ha of peatland from Q2 2013 to Q2 2015 in West Papua and clearing of 1,000 ha of High Carbon Stock, now stopped.

BWPT does not have a public No Deforestation, No Peat, No Exploitation (NDPE) policy. While BWPT aims to achieve 100 percent RSPO certification for its own operations by 2025, at present, it has not secured RSPO certification for any of its operations. Given that BWPT lacks a public NDPE policy, it is considered high risk.

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