Indonesian planter’s contract with Unilever is small PETALING JAYA: Unilever’s decision to suspend all future purchases of palm oil from Indonesian company PT SMART, part of the Sinar Mas group, due to concerns over rainforest destruction, is not expected to affect global palm oil demand in a major way. Unilever on Friday announced the immediate action taken against Sinar Mas, triggered by a report by environmental group Greenpeace last week on Sinar Mas’ alleged illegal deforestation and peatland clearance activities. Unilever, a heavy user of palm oil in its products such as soap, ice cream and margarine, has been scrutinising the activities of its suppliers for the past 18 months to ensure that they meet strict sustainability standards. The suspension, according to a report by Reuters, would involve an annual contract of US$32.5mil. Kenanga Research analyst Liong Chee How said the move by Unilever would have little impact on global palm oil demand due to the small amount of palm oil involved. “If we take the palm oil price at about RM2,400 per tonne for next year, the suspended contract will only translate into about 45,000 tonnes of palm oil per year while Indonesia exports 1.4 to 1.6 million tonnes of palm oil monthly, an amount close to Malaysia’s export of the commodity,” he said. Liong said the move would also have little impact on local players as most of the major domestic players adhere to the Roundtable on Sustainable Palm Oil (RSPO) standards. RSPO is an industry association which aims to promote environmental sustainability in the palm oil industry. Sinar Mas is also an RSPO member. RSPO secretary-general Dr Vengata Rao said the association would ask Sinar Mas to provide an immediate explanation over the allegations. “As the move in promoting environmental sustainability in the palm oil industry is quite new, companies are at different stages of implementing it,” he said. According to a report by Jakarta Globe dated Dec 11, the allegations that three Sinar Mas companies did not have the proper permits to clear land in West Kalimantan’s Kapuas Hulu district were unfounded. The Indonesian newspaper, citing Indonesia’s Ministry of Forestry, said Sinar Mas companies had not committed any violations, especially not in regard to land-clearing activities, and that they possessed the necessary documentation needed to clear the land. The Greenpeace report accused Sinar Mas units PT Kartika Prima Cipta, PT Paramitha Internusa Pratama and PT Persada Graha Mandiri of illegally clearing land in West Kalimantan from 2006 to 2008. Sinar Mas is the largest palm oil company in Indonesia and the second largest in the world while Unilever is one of the largest buyers of palm oil, purchasing 1.3 million tonnes annually. Source: The Star by Sharidan M. Ali