Executive Column: Indonesia’s palm oil industry must focus on sustainability: Cargil
Rabu, 08 Agustus 2012 | 09:46
As the chief executive officer of the Singapore-based Cargill Tropical Palm Holdings Pte. Ltd., Angeline Ooi is in charge of the company that owns 70,000 hectares of palm plantations in South Sumatra and West Kalimantan. She recently talked with The Jakarta Post’s Amahl S. Azwar over her business venture in the country, saying that Indonesia still had a room for improvement in the future. Below are the excerpts from the interview.Question: How do you see Indonesia as a destination to expand your business?
Answer: Indonesia’s GDP stands at a little more than US$1 trillion and is set to become a multitrillion economy. From the upgrading of the country’s sovereign rating to investment grade, to rising domestic consumption and a growing middle class, we see great opportunities to continue to invest and grow our business operations in the country. Today, we have assets in 28 locations and employ more than 10,000 employees. Our businesses based in Indonesia relate to palm oil, grains and oil seeds, animal feed, cocoa, starches and sweeteners.
Our commitment to grow in Indonesia and leverage the country as a base to better serve our customers in Asia and globally through exports underlie our investments in Indonesia. There is great potential for industry expansion, especially given the Indonesian government’s recognition and support for the importance of sustainability in trade and economic growth.
The Indonesian palm oil industry must focus on sustainable business practices in the long-run. The Indonesian Sustainable Palm Oil [ISPO] and Roundtable on Sustainable Palm Oil [RSPO] are the leading sustainability standards for Indonesia; however, more can still be done for the country to be the leading producer of certified sustainable palm oil [CSPO].
What challenges have you found when doing business in Indonesia, particularly in the palm oil industry?
Poor infrastructure related to roads, ports and congested river systems are huge challenges and need to be addressed by all levels of government. Other challenges relate to legal disputes resulting from overlapping permits and tangled concessions due to different interpretations proliferating among different parties.
How about your company’s palm oil production in Indonesia?
Our current crude palm oil [CPO] production is about 300,000 tons. All of the CPO produced by our PT Hindoli oil palm plantation is RSPO certified, and that accounts for about half of our total production. The 2011 output levels were similar. Production will increase as our immature hectares come to maturity. We believe that yield intensification through sound and responsible agricultural practices is an important part of the sustainability equation. In essence, it allows plantation operations to grow without necessarily increasing land usage. Cargill and our smallholder farmers are incorporating numerous yield intensification practices into our operations. These practices include identifying blocks that are producing below site yield potential and then improving any nutrient deficiencies, organic residue utilization, water conservation practices, ground cover management, integrated pest management using natural means to deter pests, improving field access and road infrastructure conditions as well as having a tight control on harvesting practices.
Who are your main customers and where do you market your products?
Our feed business serves about 400 livestock and aquaculture customers within Indonesia. Cargill’s cocoa business in the country, established in 1995, sources, grades, packages and exports high-quality cocoa beans to customers throughout Southeast Asia, Latin America, Europe and the US. Since 1999, our grains and oil seeds business in Indonesia and has been serving local customers in both food and feed industries. For example, we supply soybeans to wholesalers who then sell to local tofu and tempeh manufacturers.
Specific to our palm oil plantations, the majority of our CPO production goes to refiners in Indonesia, and we trade GreenPalm and ISCC certificates to our global customers.
Amid critics of the environmental damages allegedly caused by the palm oil industry, how do you see the future of Indonesia?
Here’s an interesting fact. When oil palm is planted on degraded land, which is the way Cargill develops its plantations, it absorbs and stores more carbon from the environment as compared to the degraded land before it was developed. It is estimated that approximately 10 to 25 million hectares of degraded land is available in Indonesia alone for oil palm cultivation, implying the potential to produce at least 100 million tons of additional palm oil in the future from non-sensitive areas.
The future of Indonesia as the world’s largest producer of palm oil must be considered in terms of environmental sustainability as a fundamental guiding principle. What is good for the environment is good for business and sustainable farming is the key to the livelihoods of the smallholder farmers as well as to Cargill, our customers and consumers.
Cargill believes palm oil must be produced sustainably and we are committed to sustainable palm oil production. Prior to the establishment of the RSPO criteria, Cargill had already committed not to plant high conservation value forests [HCVF] and to only develop new plantations on degraded land.