Indonesian Sustainable Palm Oil scheme to speed up palm oil development

DTE 88, April 2011

A new certification scheme – Indonesian Sustainable Palm Oil (ISPO) – is being introduced in Indonesia this year. Announced in November last year by Indonesia’s Agriculture Minister Suswono, the scheme is being seen as a rival to the Roundtable of Sustainable Palm Oil (RSPO). Indonesia’s powerful oil palm industry sees the RSPO as slow, biased towards consumer countries and expensive.

According to Agriculture Minister Suswono, the new Indonesia Sustainable Palm Oil (ISPO) is designed to make palm oil production sustainable in compliance with Indonesia’s laws and regulations.[1]In contrast to the Roundtable on Sustainable Palm Oil (RSPO), which is voluntary, ISPO rules are mandatory.[2]

There are 98 indicators which elaborate seven principles and criteria contained in the ISPO. These seven principles cover 1) the plantation licensing and management system 2) the application of technical guidelines for palm oil cultivation and processing; 3) environmental management and monitoring; 4) responsibility towards workers 5) social and community responsibility; 6) empowering the community economy and 7) sustainable business improvement.[3]

Officially, IPSO is applied from March 2011. Up to now, twenty companies have carried out ISPO certification trials. In March 2012 all oil palm companies, large and small, are obliged to carry out an ISPO audit, with an estimated completion of this process in 2014.[4]

Companies ready to trial the ISPO process include PT Rea Kaltim Plantation, PTPN XIII, PTPN III, PT Padang Halaban (SMART Tbk), PTPN V, PT Sejahtera, PT Agricinal, PT AM Plantation (Wilmar), PT Sari Adhitya Loka (Asian Agro Lestari) and PT Aek Taurm (Sampoerna).[5]The trial auditors indicated by ISPO are Sucofindo and Mutuagung Lestari.[6]

Indonesia’s Oil Palm Association GAPKI says the scheme is intended to “speed up the implementation of sustainable palm oil.” An August 2010 GAPKI website post  states that more than 12 companies audited by certification bodies appointed by the RSPO have been waiting since 2009 to be approved.[7]

For the Indonesian palm oil industry, including the Indonesian Association of Oil Palm Growers (Apkasindo) and GAPKI, ISPO, a creation of Indonesia’s Ministry of Agriculture, is considered more suited to the situation in Indonesia than the RSPO. Among other reasons, the industry believes ISPO will work better for them than the RSPO because:

• The RSPO is believed to put the interests of consumer countries above those of producer countries like Indonesia and Malaysia;[8]
• The RSPO is considered a burden on development of the palm oil sector;[9]
• The RSPO principles and criteria change every year, tending to make things more difficult for producers who are RSPO members;[10]
• The RSPO is considered to listen to the voice of foreign NGOs more than government and business;
• There is as yet no clarity about the premium paid on sustainable palm oil, even though the certification and audit costs cost a large amount – USD800-1,000 per hectare.

NGOs are doubtful that the ISPO is anything more than an attempt to permit the oil palm industry in Indonesia to continue business as usual practices while being seen to apply some kind of sustainability criteria.

Greenpeace said the scheme was likely to be a smokescreen to convince buyers that environmental problems are being addressed. Forest campaigner Joko Arief said the process to establish had been non-transparent, with no stakeholder participation. He called for the standard to be amended to stop the conversion of peatlands and forests into palm oil plantations, and to include meaningful stakeholder participation.[11]The ISPO also has weaker standards than the RSPO which requires the recognition of customary rights and for communities to give or withhold their Free, Prior and Informed Consent to operations planned on their lands, according to the Forest Peoples Programme.[12]