Rainforest fears slow Indonesia's palm oil growth

Efforts to preserve Indonesia's rainforest, in the face of international pressure, look set to accelerate a decline in the plantation expansion which has driven the country to top rank in palm oil.

Provincial authorities have already stopped issuing permits for planting on Indonesian land deemed forest by the government, and so protected from development even if their restraint is far considered reluctant and temporary.

 "Provincial [officials] insist that land the government considers as primary forest has already been degraded and should be suitable for planting," US Department of Agriculture attaches in Jakarta said.

"There remain fundamental disagreements over the definition of 'degraded land'."

'Continue to decline' 

The pace of expansion in oil palm plantations has already slowed to an annual rate of 350,000 hectares, from 400,000 hectares in the decade to 2006 which drove Indonesia above Malaysia to top of the palm oil producers' league, and has since given it top rank in exports too.

And the rate of plantation growth "will continue to decline over the next few years", the attaches said in a report.

Indonesian industry group Gapki sees the pace of plantation growth slowing to 150,000 hectares.

The pace will also be affected by competition with mining concessions for area, with Bengkulu in Sumatra an area where planting rates will "be slow" for this reason. London-listed REA Holdings has expanded from its historic plantation operations into coal mining.

Environmental 'uncertainty' 

The attaches' comments come amid growing international concern that areas of significant environmental importance are being destroyed to make way for oil palm plantations.

Vegetable oil users including Cargill, Ferrero and Nestle have tightened purchasing criteria following pressure from activists.

Meanwhile, the Indonesian government has set up a "reduce emission from deforestation and forest degradation" task force, or Redd, to develop a national plan to promote environmental protection, although work on a national strategy has been slow.

"No real progress has been made," the attaches said, adding that "this creates uncertainty for the palm oil industry".

The Roundtable on Sustainable Palm Oil, which is formalising efforts to improve the industry's environmental record,  last month highlighted that areas containing secondary and degraded forests can, nonetheless, be "important for environmental conservation and community wellbeing", and were open to sustainability assessments.

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