Palm oil supplier in trouble

I guess the “persuasive” power of Greenpeace is stronger than it seems as two more global food conglomerate, Nestle and Cargill, have followed Unilever’s footstep in dropping Indonesian palm oil producer Sinar Mas as their supplier.

Unilever dropped Sinar Mas last year December after Greenpeace alleged in a report that the company is engaging in illegal deforestation and peatland clearance in Indonesia. Unilever said it also conducted an independent audit of its major suppliers, which revealed several areas of concerns regarding Sinar Mas.

Nestle confirmed in a March 17 statement that it has replaced Sinar Mas with another (unidentified) supplier as well. Nestlé said it has only bought from Sinar Mas for manufacturing in Indonesia, and no palm oil bought from Sinar Mas has been used by Nestlé for manufacturing in any other country.

“We will continue to pressure our suppliers to eliminate any sources of palm oil which are related to rainforest destruction and to provide valid guarantees of traceability as quickly as possible.” - Nestle

Nestlé uses about 0.7% or 320,000 metric tons of global palm oil supply. Global production of palm oil, according to Nestle, is about 42 million MT. Indonesia produces around 19 million and Malaysia around 18 million.

Cargill said it is waiting response by the end of April from Sinar Mas with regards to the Greenpeace allegation. The company has also urged the Roundtable on Sustainable Palm Oil (RSPO) board to look into the allegation. 

“If the RSPO validates the allegations of improper land conversion or illegal planting in deep peat land as alleged in the Greenpeace report and Sinar Mas does not take corrective action, we will delist them as a supplier.” – Cargill

Cargill says its own palm plantation – PT. Hindoli in Sumatra, Indonesia – was one of the first to receive RSPO certification in February 2009, and that they are working to certify their other plantations.

Cargill’s goal is to buy 60% of their total crude palm oil from RSPO members by the end of 2010.

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