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Olam takes aim at critical report on deforestation, palm oil sourcing

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Commodities trader Olam International on Monday pre-empted an impending report by a US lobbying group that would criticise Olam's stance in deforestation and palm oil sourcing - saying that the report has factual errors and has misinterpreted several of Olam's key policies and implementation.

COMMODITIES trader Olam International on Monday pre-empted an impending report by a US lobbying group that would criticise Olam's stance in deforestation and palm oil sourcing - saying that the report has factual errors and has misinterpreted several of Olam's key policies and implementation.

It was referring to a report soon to be released on its palm operations. Olam said questions leading to the report came from a US-based communications and lobbying company, Waxman Strategies, working as Mighty Earth (Mighty) and with Brainforest, a Gabon-based non-governmental organisation (NGO).

Olam took on two main claims made by the report.

The first is that Olam is deforesting in Gabon through its operations there, and will not sign a no-deforestation commitment that adheres to the High Carbon Stock Approach (HCSA) methodology.

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The second claim is that Olam's third party sourcing of palm oil comes from companies that are environmentally destructive and causing fire and haze.

Addressing the first claim over its deforestation stance, Olam said that Gabon has about 33 per cent of its people living at or below the poverty, and its longstanding reliance on oil-and-gas revenues is not viable over time.

"The government therefore has a justifiable imperative to grow the agricultural economy beyond just subsistence farming," said Olam, noting that 90 per cent of its land area is forested. Gabon has a medium-term goal to establish 300,000ha of agriculture, translating to about one per cent of Gabon's total national land area. Olam's working plantation in Gabon holds a Roundtable on Sustainable Palm Oil (RSPO) certification, it said.

"Getting high-yielding plantations up and running requires an appropriate initial land base. Given much of Gabon's non-forested land is infertile savannah or swamps, there simply isn't enough available non-forested land to start up such a development," Olam added.

For this reason, Olam cannot sign up to the no-deforestation commitments that adhere to the HCSA approach, which is, according to Olam, designed for use in fragmented forest landscapes and mosaics in the humid tropics, and effectively does not even apply to Gabon.

In the case of its palm oil sourcing, Olam clarified a sourcing figure cited in the report. It said in 2015 Olam had sourced 1.53 million tonnes of palm oil, but Olam said close to three-quarters of it was paper-traded volume. Such volume refers to oil taken as reference for risk mitigation in trading. Companies that cite paper-traded volume of palm oil do not take delivery or ship this "hedged" oil.

"We appreciate the vital role played by NGOs and civil society to keep the industry in check and working in partnership to drive best practice. The Mighty Earth report acknowledges some of Olam's responses, especially where the authors feel progress has been made. The report has also provided a series of recommendations, some of which we will take on board," Olam said.

"However, we are disappointed to see some important factual errors, and several key misinterpretations of Olam's policies and implementation. Considerably more fundamental though is the basic principle of how Mighty views a country like Gabon and its sovereign right to develop sustainably, with the assistance of a responsible company, in a public private partnership arrangement."

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