Olam Linked to Palm Oil Related Deforestation in Scathing New Report

12 Dec 2016 --- Olam International is fighting back against a new report that heavily criticizes its palm oil sourcing policies and practices even claiming that a market for deforestation-linked palm oil is being created and then funneled to some of the world’s best known brands. Olam is pre-empting today’s release of an investigation by Mighty and Gabon-based NGO Brainforest which seriously slams the company’s stance on palm oil sourcing and deforestation.

Mighty is a global environmental campaign organization that works to protect forests, conserve oceans, and address climate change.
“Olam is operating a giant ‘black box’ of palm oil from unknown sources,” said Etelle Higonnet, Campaign and Legal Director at Mighty. “Unlike its more responsible competitors, Olam gives its suppliers until 2020 to comply with its sustainability requirements. That’s like waving a green flag at rogue palm oil companies telling them to get as much deforestation as possible done now–before the deadline.”

The videos featured in the report shows bulldozing of Gabonese rainforests to establish Africa’s largest palm oil plantation. Gabon is 80 percent forested, and abundant in wildlife such as gorillas, chimpanzees, bonobos, and forest elephants. The analysis found that Olam cleared approximately 20,000 hectares of forest across its four concessions since 2012. Photos and videos collected on the ground reveal large areas of devastated forest and giant mature trees being cut down by bulldozers and chainsaws.

“Olam broadcasts that it is a sustainability leader to the world, but that is far from the reality in Gabon,” said Marc Ona Essangui, founder of the environmental NGO Brainforest and Goldman Award Winner. “After fighting for years, we hope this report will finally spur action by Olam to truly adopt industry best practices to protect the forest homes of our communities and precious wildlife.”

The extent of deforestation documented would put Olam, which is majority owned by Singapore’s national wealth fund, Temasek, in violation of its commitments to the Forest Stewardship Council, claims Mighty. Olam’s customers include global brands such as PepsiCo, ConAgra, Unilever, Mondelez, and Nestlé.

Mighty’s investigation showed that over the past four years, Olam has expanded its global palm oil business twenty-fold, rising from a marginal position, but this increase, according to Mighty, has not brought increased transparency, claiming that Olam fails to reveal the third party suppliers that provide over 99 percent of its palm oil. Less than 1 percent of Olam’s palm oil comes from its own plantations. 

Olam International has come out today (December 12) with a wealth of information in response to Mighty’s report which it claims contains inaccuracies and misinterprets several of Olam’s key policies and implementation. 

“Olam International is a global listed agri-business, operating in multiple food supply chains that is committed to its core purpose of Growing Responsibly. By adhering to this core purpose Olam is able to earn the trust of its shareholders, customers, suppliers, farmers, creditors, employees and many other partners. We know that we need to maintain that trust for the well-being of our business and the millions who depend on us for their own reputations, livelihoods and food security,” it says. 

“Companies working in agricultural production and trading are sometimes accused of hiding behind complexity. But participants and well-informed observers of the sector know that this complexity is very real. Olam does not claim to get everything 100 percent right. But we do 100 percent stand by what we commit to. And where we get it wrong, we own up and see how we can correct these mistakes and improve.”

“We have been made aware of a report that will be released on our palm operations. In recent months we have responded to questions from the US-based communications and lobbying company, Waxman Strategies, working as Mighty Earth (Mighty) and with Brainforest, a Gabon-based NGO”.

“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.” 

But, Olam adds that it's disappointed to see some important factual errors, and several key misinterpretations of Olam’s policies and implementation. It also points out how Mighty views a country like Gabon and its sovereign right to develop sustainable, with the assistance of a responsible company in a Public Partnership arrangement. If planted responsibly, says Olam, oil palm is the most efficient of the oil seed crops, requiring approximately ten times less land than other vegetable oils like soy and sunflower. 

When Olam first began its palm business in 2011, it made it a condition that its plantations has to be developed sustainably, both from an environmental and social perspective, which also applied to its palm trading operations. However Olam acknowledges this is far more complex, as Olam is not in direct control of the farming operations. 

Sunny Verghese, Co-Founder and Group CEO of Olam International says: “Gabon has a right and an essential need to develop its agriculture sector to diversify its economy, improve food security to feed its people and create new livelihood opportunities, while also protecting its natural forests. Olam’s palm plantations in Gabon are being developed in an environmentally and socially responsible way to contribute to each of these objectives. Our approach balances palm plantation establishment with natural forest protection. In fact we are conserving and protecting areas of verified high conservation value forest within our concessions greater in size than our plantations.

“For our third party palm sourcing, we are still a small player, accounting for only 0.4 percent of global palm volumes in 2016. We already expect full compliance to our Sustainable Palm Oil Policy and Supplier Code, and have absolutely zero tolerance for the burning of forests. All of our current suppliers have either signed this code or have their own codes consistent with ours. We are also now releasing our full supplier list.”

Professor Lee White CBE, Head of Gabon’s National Parks Agency and UNFCCC Forest and Agriculture coordinator for Gabon adds: “I have worked closely with the Olam and SOTRADER3 senior management from the development stage of both programmes4 because Olam’s oil palm activities have an important bearing on Gabon’s commitment in its Nationally Determined Contribution (NDC) to reduce carbon emissions by 50 percent. We have mapped out low carbon and low biodiversity areas suitable for oil palm development and we have constrained the projects within these zones, providing a case study to enable us to develop a methodology to apply across all sectors through our National Land Use Plan. By working exclusively in savannahs, regenerating farmland and degraded logging areas, we have minimized the ecological impacts of the developments. Furthermore, researchers from Gabon’s Tropical Ecology Research Institute have mapped out community use of the areas to ensure there is no conflict with traditional land rights.

“It is a shame that Mighty and Brainforest did not take the time to sit down with us and understand the methodology used before launching this critique.”

Olam goes into some detail about how the Mighty report is leveling two main areas of criticism towards Olam, the first of which concerns deforesting in Gabon and will not sign a no-deforestation commitment that adhere to HCSA methodology. 

“To answer this, we have to travel to Gabon. In Gabon 32.7percent of people live at or below the poverty line (World Bank), it has 20 percent unemployment overall and 35 percent youth unemployment and the country imports 60 percent of all its food. It has relied on an oil and gas economy (60 percent of its budget revenue) that is not viable in the long-term. And 90 percent of its land area is forested. The Government therefore has a justifiable imperative to grow the agricultural economy beyond just subsistence farming. Its medium term goal is to establish 300,000 hectares of agriculture, which will amount to about 1 percent of Gabon’s total national land area.”

Minister Yves Fernand Manfoumbi, Gabon’s Minister of Agriculture also defends Olam and applauds the work on the PPP in Gabon. 

“Through our PPP the Republic of Gabon and Olam are working to create jobs for rural people, diversify the economy of Gabon and contribute to global food security. Through capacity building the GRAINE programme5 is working to improve yields by modernizing agricultural methods to take advantage of improvements made throughout the tropics and to fix people on one piece of ground. In doing so we are able to formalize rural land tenure, raise incomes, invest in fencing to protect crops from elephants and reduce CO2 emissions from shifting cultivation 10-fold.”

“We have been working in a PPP with the Government, in the form of 2 Joint Ventures, Olam Palm Gabon (OPG), and a smallholder palm and food cash crop farming project called GRAINE.5 

This will create what we believe to be a different and a more sustainable model for palm plantations:

- Selecting broad areas in landscapes which are far from national parks and where the natural environment has already been significantly degraded.
- Within specific sites, ensure that we identify the land that is of High Conservation Value (HCV) for biodiversity, community or cultural reasons.
- Prioritize the “least value” land for development and invest heavily in conserving the high value areas.
- Discuss and engage the local communities to ensure that they agree with our analysis and with the project.
- Validate our assessments through broad-based consultations with NGOs and experts.
- Create positive social and economic impact in the local communities through employment, capacity building, and rural infrastructure development.
- Ensure we are 100% RSPO certified from new planting through to mill completion with no burning for land clearance.”

Olam’s first palm plantation went from being the first in Africa to receive the Roundtable on Sustainable Palm Oil (“RSPO”) New Planting Procedure verification to also becoming the first-ever new development in Africa to have its working plantation RSPO certified, including the mill.

“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. It is therefore necessary to include some highly degraded forest lands. Therefore, Olam cannot sign up to the no deforestation commitments that adhere to the HCSA approach6 on the basis of available land in Gabon.”

“We agree with Gabon’s sovereign right to convert a tiny percentage of its least valuable forested land for agriculture, so long as it is responsibly and transparently done. Our plans and progress for developing sustainable palm oil plantations have been shared transparently with stakeholders and put in the public domain from the start and we always welcome any initiative that will help us to improve further.”

by Gaynor Selby