Palm Kernel Feed - World Bank Review Of Funding And RD1/Fonterra

Greenpeace NZ is today blockading a ship in the port of Tauranga that is attempting to dock a cargo of Palm kernel animal feed, allegedly bound for Fonterra's rural merchandising company RD1. RD1 have been quick to state say the shipment wasn't theirs. (Another Tui moment?) but you can bet your bottom dollar a lot of the animal feed produced from it will end up in RD1 outlets.

RD's John Lea, chief executive of RD1, also said in a quote in today's Herald:

" Fonterra's RD1 did import palm kernel as a small (about 1 per cent), but important, feed source for New Zealand dairy cows.

"However, prior to commencing shipments of PKE (palm kernel extract) we went to considerable lengths, including my personal visit to their operations, to find a sustainable supplier" he said.

RD1's supplier, Wilmar, was a founding member of the Roundtable for Sustainable Palm Oil. A recent audit by the World Bank found that Wilmar was managing its operations in accordance with the roundtable's principles, he said.

"We're continuing to work with Wilmar to do everything we can to ensure that every tonne of PKE, which is a waste product of the palm oil industry, is truly sustainable."

Mr Lea, would do well to read the press release by Forestpeoples.org and he'd know that Wilmar subsidiaries are alleged to have both illegally used fire to clear land and seized indigenous people's lands. The statement "managing its operations in accordance with the rountable's principles" seems rather naive. But perhaps Mr Lea didn't read the Forest Peoples press release? it's easy to miss these things so we have it here:

http://www.forestpeoples.org/documents/ifi_igo/ifc_wilmar_cao_fpp_press_rel_aug09_eng.pdf: link

Press Release 10 August 09

"World Bank violates its own standards in palm oil sector in Indonesia"

"The World Bank’s private sector arm – the International Finance Corporation (IFC) – has allowed commercial interests to override its social and environmental standards in making major loans to the oil palm sector in Indonesia, an internal audit reveals.

Oil palm has become synonymous with widespread clearance of forests and peatlands massive CO2 emissions and the theft of indigenous peoples’ lands.

Although the IFC knew about all these risks, due to its experience with prior projects and the warnings of non-government organisations, it went ahead with loans to the Wilmar palm oil trading group, in violation of its own standards, according to the report. The IFC failed to assess the supply chains or look into the damaging impacts of the company’s subsidiary plantations that were taking over community lands and forests in Borneo and Sumatra.

The findings have major implications for the IFC: not only must it apply its standards more carefully but it must check out concerns about where the companies it funds are sourcing their raw materials. Palm oil is only one example of commodities produced in violation of norms.

These findings come from a highly critical audit report just issued by the Compliance Advisory Ombudsman of the IFC which looked into a detailed complaint filed by the Forest Peoples Programme and a coalition of 19 Indonesian civil society and indigenous organisations, including SawitWatch and Gemawan.

Norman Jiwan of the Indonesian monitoring NGO, SawitWatch, notes:
When we filed our complaint we noted that Wilmar subsidiaries were illegally using fire to clear primary forests and high conservation value areas and seizing indigenous peoples’ lands without their free, prior and informed consent, triggering serious conflicts.

This report shows that the IFC overrode its standards and ignored our previous warnings.

In response to the report Lely Khainur of the NGO Gemawan says:
Development is meant to prioritise the needs and rights of local communities. The IFC’s standards require this. Yet they put business interests first and allow peoples’ lands to be stolen for the sake of cheap palm oil in the international market. Our peoples and our forests are being ruined to no good end, and ultimately the whole planet is suffering.

Marcus Colchester the Director of the Forest Peoples Programme adds.
We are satisfied that this report vindicates in great detail our main concerns. Also, the response of the IFC Management to the audit suggests they will now try to do things differently. Still, we remain somewhat exasperated. It has taken us more than five years to get the IFC to take these issues seriously. Given the urgency of halting forest loss and human rights abuses, we call on the IFC President to take personal proactive steps to ensure this never happens again."

The issues are rather more than the IFC not following good lending pratices:

NZ imports a quarter of the world's supplies of PKE: 1.1 million tonnes of palm kernel animal feed in 2008 (which contributed to the release of up to 20 million tonnes of greenhouse emissions) which is worth around $300 million a year, more than just a 'waste product'.

Over 1.5 million hectares of palm plantations planted on previously rain forested land in Malaysia and Indonesia would have been needed to meet the 2008 New Zealand imports of PKE.

The RD1 website has a page advising farmers on the benefits of buying PKE through legally binding contracts, it gives some indication of how much a single vessel may carry:

"From the palm oil plantations in Malaysia to your farm gate, RD1 Nutrition manages
the production, shipping and distribution of our Country Mile Palm Kernel Expeller.
We plan the details with you, the New Zealand dairy farmer, in mind.....

"Having a contract for PKE means surety of supply for that volume, regardless of what is happening with the availability of PKE in the market. Likewise, for RD1 the commitment to bring in a 25,000 tonne vessel of PKE (ed: rather more than 1%) to meet contracted demand comes at a considerable cost and relies on contracted parties honouring their legal contractual commitments"

How do some farmers view the farming of palm oil plantations in Asia? According to Straight Furrow:

"Don Nicolson, president of Federated Farmers, said it was not New Zealand’s place to tell countries like Malayasia and Indonesia how to farm.

As New Zealand had already cleared a lot of its forests for farming, he said it would be “arrogant” of us to say they couldn’t develop, and for a country of our size to tell them how to operate."

After all the protesters had been removed from the ship today he was quoted in the Herald saying:

"I fully respect the freedom of Greenpeace to protest legally but they have crossed the line by interfering with legal commerce and free navigation on the high seas,"

He described the protest as "economic treason".

He claimed Greenpeace was anti-farming: "It's a despicable new tactic that has Greenpeace's loathing of farming written all over that ship."

We think Greenpeace probably loathes the destruction of irreplaceable rain forests and would prefer to see sustainable farming practices in New Zealand. But then, wouldn't we all?