Issues on Sustainable Palm Oil in Indonesia

Peatland and Palm Oil

There are global interests on utilizing peatlands, which cover 3% of the total earth land mass. The intentions are to use them as massive blocks of agricultural plantation, to extract energy contents, and simply to conserve them as giant but natural carbon storage. Redapes.org (2007) argued that despite peatlands occupy only 3% of the globe land mass; they contain approximately 550 billion tonnes of carbon, as twice as much as all forests can hold. This naturally abundance of carbon is a major concern to global climate issue.

To developing countries located on tropical region, peatland is a potential agricultural site for large monoculture plantation. Indonesia and Malaysia are the leading countries for palm oil plantations on peatlands (International Herald Tribune, 2009). With regard to an increasingly sensitive issue on creating more responsible and eco-friendly agriculture, palm oil plantations on peatlands become one of the main key issues in reducing global warming. However, to our interest, this issue is a distraction issue from developed countries who try to find easy ways than converting their carbon producing industries, pushing the agenda to developing countries.

In response to the issue, there are ways to reduce the climate impact on utilizing peatlands as agricultural fields. An initiative of Sustainable Palm Oil (SPO) production was started in recent year, producing a resolution to trade certified palm oil products in near future. This initiative was disseminated on a newly established RSPO (Roundtable for Sustainable Palm Oil) organization’s website last year (RSPO.org, 2008a). Regardless the initiative, many problems are yet to solve. The key issues on sustainable palm oil production are:

1. supply chain mechanisms and deliverance of palm oil products through the world,
2. a pilot project that show sustainable palm oil concept is workable,
3. incentives to companies that practice RSPO initiative,
4. technology that supports sustainable palm oil initiative, and
5. traceability and standardization on various plantation and processing facility issues.

Specific issues on SPO implementation in Indonesia

Sustainable palm oil inherits problems of many other sustainable agriculture initiatives which are established a long time ago. For example, the operational costs from some types of field areas and productivities simply cannot cover the burden that comes with sustainable palm oil implementation. The private but small-scale plantations owned by locals, as a common model of empowering locals throughout agriculture in Indonesia, are beyond sustainable palm oil standardization. Meanwhile, SPO certification requires 95% of sustainable palm oil initiative is to conform to standards (RSPO.org, 2008b). The production capacity from small-scale plantations contributes nearly a half of the total capacity of large plantations. To make things more complicated, through mutual partnership concepts, as stated in Laws in Indonesia, a large plantation should taking care of and accepting products from their local partners. Thus, it will cause a potential problem to companies that need the certification to trade their products around the globe.

Derivative issues on SPO

Palm oil is a source to broad ranges of industrial products, including foods, personal care products, chemical and pharmaceutical products, as well as bio-energy. Simple derivative products, like soap, vegetable (edible) oil, margarine and bio-diesel are produced locally but many sophisticated products like enzymes, fatty acids, and essential oils are manufactured in developed countries.

With regard to a requirement from certain countries to obtain certified sustainable palm oil products, derivative products should also be certified in order to meet other countries’ requirement. This will affect a large number of palm oil derivative industries, resulting more rigorous checking, which ends to increasing price.


Further, the mechanism of assessing and certifying sustainable palm derivative products is yet to be agreed. This will be a major work and discussion, affecting developed countries as the main buyers and producers of palm derivative products and developing countries as the origins of raw materials.