JAKARTA. Palm oil businesses have urged the government to take strong action against the European Union, including retaliation, in response to a recent European Parliament resolution that they regard as detrimental to the local industry.
In its resolution last week, the parliament demanded the bloc gradually reduce the use of vegetable oils, including palm oil, that are not sustainably produced in biodiesel production, in a bid to reduce deforestation. Indonesia is one of the world’s largest producers of palm oil.
Indonesia Oil Palm Producers Association (Gapki) executive director Fadhil Hasan called for solid measures ranging from retaliation to termination of ongoing talks on a comprehensive economic partnership agreement (CEPA) with the 27-member bloc.
“The government needs to think up concrete steps to retaliate,” he said during a press conference held by the National Palm Oil Board (DMSI) on Tuesday.
Fadhil cited wine, aircraft, perfume and pharmaceutical products from the region as examples of goods against which to retaliate.
Palm oil producers under the group view the matter as an issue that should be addressed at the government level and urged the country’s leaders to approach the EU directly.
On April 4, the EU’s parliament called for a single certification scheme for palm oil entering the EU market. The non-binding resolution suggested that only palm oil supplied through sustainable methods, according to its criteria, could enter the bloc after 2020.
Despite its non-binding nature, the resolution is likely to affect the EU Commission’s trade policy-making, according to the DMSI.
Several senior Indonesian officials have expressed their disappointment at the resolution. Environment and Forestry Minister Siti Nurbaya has described the resolution as an insult to the local palm oil sustainability scheme, the Indonesian Sustainable Palm Oil (ISPO).
Meanwhile, Agriculture Minister Amran Sulaiman described it as a “black campaign” against the domestic palm oil industry.
Voicing similar concerns to Gapki, the Indonesian Vegetable Oil Refiners Association (GIMNI) also urged the government to fight hard against the EU’s latest measure.
GIMNI executive director Sahat Sinaga said the resolution was a continuation of a negative campaign since the 1970s directed at the Indonesian palm oil industry. This was attributed to the competitive edge of palm oil in comparison to other vegetable oils as well as its multi-functionality.
“We knew such a thing would happen. The EU has launched various negative campaigns from time to time. Finally, Indonesian leaders need to take bold action to stop this from occurring again and again,” he said.
On the same day, officials from Indonesia and its neighbor Malaysia, the world’s biggest palm oil producer, convened in the fourth ministerial meeting of the Council of Palm Oil Producing Countries (CPOPC) in Jakarta.
Coordinating Economic Minister Darmin Nasution co-chaired the meeting with his counterpart the Malaysian minister of plantation industries and commodities.
The meeting decided that Indonesia and Malaysia would carry out a joint mission to meet EU officials next month to express their objections to the resolution and avert the implementation of the resolution.
CPOPC ministers expressed deep concern about the resolution, which they claim will have negative repercussions on the palm oil trade. They also object to a number of issues, notably the single palm oil certification scheme, which they consider ignores existing certification schemes developed separately by both countries.
“False allegations that perceive global palm oil production breaching fundamental human rights and adequate social standards neglect the reality that palm oil is an important economic enabler and provides employment opportunities and vital income for poor communities,” the ministers said in press statement issued by the CPOPC.
Palm oil is one of the biggest contributors to Indonesia’s non oil and gas exports, amounting to $18.23 billion, 13.8 percent of total exports worth $131.3 billion, last year.
Oil palm plantations span 11.9 million hectares and produce more than 30 million tons of crude palm oil (CPO) and kernel oil each year, affecting the lives of at least 4.8 million smallholders, quite apart from those working in the refinery and processing sector.
The EU, meanwhile, is Indonesia’s second-biggest palm oil importer after India. It imported 4.3 million tons of palm and kernel oil, or 17 percent of Indonesia’s total palm oil shipment of 25.1 million tons in the past year.
Indonesian officials have complained that the domestic palm oil certification scheme, the ISPO, has struggled to gain global recognition, which they attribute to tight competition in the international vegetable oil market.
Despite the government’s claim about the ISPO, local forest group Forest Watch Indonesia said that after four years, the implementation of the scheme was very slow, with last year around 800 oil palm plantation firms still awaiting certification, while 115 others were under assessment. As of December, only 226 firms were already certified. (Stefani Ribka)
