HAZE AND ACCOUNTABILITY

Following are the 15 largest listed palm planters, ranked by market value. They are mostly located in Indonesia and Malaysia, the top two producers of the vegetable oil.

Total plantation holdings are in hectares and include both cultivated and uncultivated land as well as joint ventures with Indonesian smallholders.

Company                                             Mkt Cap*    Short&Long    Landbank

                                                                                   Term Debt#     (hectares)

                                                               ($ mln)         ($ mln)

 1 Wilmar (WLIL.SI)                             20,814.2       4,929.9           500,000

 2 Sime Darby (SIME.KL)                    11,994.8       1,638.0            524,626

 3 IOI Corp (IOIB.KL)                           8,323.2         1,639.0           251,000

 4 KL Kepong (KLKK.KL)                    ,617.6          580.0               360,000

 5 Golden Agri (GAGR.SI)                    3,302.8          557.0              637,361

 6 Astra Agro (AALI.JK)                        2,906.4          -nil-               258,900

 7 Indofood (IFAR.SI)                            1,362.6           650.1             541,224

 8 Asiatic Dev (ASIA.KL)                      1,206.8           7.9                 164,000

 9 London Sumatra (LSIP.JK)                  864.3            73.4                169,909

10 Boustead (BOUS.KL)                         804.0           1,035.0             100,000

11 United (UTPS.KL)                              765.1            -nil-                   80,874

12 Kulim Bhd (KULM.KL)                     576.0           459.1                124,660

13 IJM Plantations (IJMP.KL)                 502.6            10.0                   70,000

14 Sampoerna Agro (SGRO.JK)             334.8            21.7                  169,000

15 Bakrie Sumatera (UNSP.JK)              303.6            156.4                   80,000

Source: PalmOilHQ (2009)

In the abstract of her research paper titled “Plantation Land Management, Fires and Haze in South Esat Asia, (Malaysian Journal of Environmental Management 12(2) (2011) :33-41), Helena Muhamad Varkkey states:

“Forest fires and the resulting haze has been a recurring trans-boundary environmental problem in Southeast Asia. This research paper shows the strong correlation between the opening of plantation land in Indonesia and Malaysia and fires that cause haze. It argues that commercial plantations contribute significantly more to open burning fires than small-scale slash-and-burn farmers. It shows that economic motivation and governmental encouragement has motivated commercial plantations, especially for oil palm, to open land on fire-prone peat land and old cropland, producing smoke that often travels across borders. This has contributed to and exacerbated the trans-boundary haze problem in the region. This paper discusses two types of land use change often employed in Indonesia, and to a lesser extent Malaysia, for conversion into oil palm plantations, and how they are linked with increase in fires: conversion of pristine peat lands, and of degraded logged-over forests and old cropland.”

In this respect purely blaming the Indonesian Government alone may not do any justice, when shareholders of the problem, seems varied. Ironically the shout appears to be the loudest coming from the Singaporean government where some of the largest plantation group originates. At least the Malaysian government is willing to render any assistance including expertise to deal with the forest fires in Indonesia without pointing fingers.

It appears that as far as the plantation industry is concerned,  the concept of “sustainable development” stops at the most as lip service only. Sustainability involves economic, ecological, political and cultural sustainability. But in this current action by the players in this quagmire, all the four domains of sustainability are blatantly ravaged for self-centered objectives, serving particular stakeholders at the expense of the rest. Sustainability initiatives must be made mandatory via compulsory reporting. Further the reporting must be made transparent via mandatory auditing as well. So any action or inaction by these corporations which violate sustainability initiatives can be monitored and punished.

On the consumption side, as consumers we should also be vigilant about the source of raw material (in this case palm oil) by producers of consumer goods. If these producers source their raw material from unscrupulous suppliers, than we should stop purchasing those goods. Today palm oil is considered to be the wonder crop, producing bio fuel, margarine, soaps, detergent, condensed milk (ironically it does not have any dairy milk content at all), animal feed and the list goes on. So it is not a wonder why there exists a passionate aggression by various stakeholders in this industry to maximize their effort in exploiting the opportunity.

So the stakeholders to the current predicament includes, plantation companies, palm oil refineries, land owners, host government, home government, off shore bankers, palm oil based goods producers, consumers, the public, and NGOs. Therefore merely holding the host government to assume accountability for the recurring haze is not going to solve anything. Instead it would have to be a concerted effort by all parties to arrest further degradation and to ensure the establishment of a sustainable industry.