Clearing the air on haze – its root cause and challenges

Clearing the air on haze – its root cause and challenges

15 June 2014

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Indonesia — Fires in Sumatra and the yearly haze problem can be drastically reduced in five years or less.

Global Forest Watch, an organisation that monitors forest activity, tells Channel NewsAsia this is possible through concerted efforts on the ground — involving palm oil companies and law enforcement.

And all stakeholders — from financial institutions to even consumers — can do more to get the US$21b industry in Indonesia to adopt sustainable sourcing practices.

But it would seem palm oil markets in the region are not as committed to sustainability, perhaps put off by the associated costs.

The dry season begins in June and runs until October.

About 250km from Singapore, farmers on Sumatra island are getting ready to clear land traditionally — by burning vegetation.

That could be the spark needed to ignite and spread fires onto adjacent plantations.

The winds that occur during the Southwest Monsoon could fan the smoke and its unhealthy particulates right towards Singapore and Peninsular Malaysia, as it had done for years, as seen during Singapore’s worst bout of haze in June 2013.

Increasingly, the pressure is on large palm oil and pulp companies to put an end to such practices.

Nigel Sizer, director of Global Forest Watch (Forests Programme) at World Resources Institute, said: “About half of these fires are burning on land that’s in the concessions of palm oil and pulp wood companies in Riau and across Sumatra.

“We’re not saying that those companies necessarily cause those fires. In fact we know that often the fires start outside their land and spread into their land.

“A lot of illegal and small palm oil companies, and others who are taking advantage of disputes over land, use fire to clear land cheaply.”

Mr Sizer said that large companies have a responsibility to educate the farmers and provide them with alternatives to slash-and-burn methods.

The firms should also help to put out fires, not just on their own land, and investigate whether small farmers are supplying them with sustainably produced palm oil and other raw materials.

Some 40 per cent of Indonesia’s palm oil is produced by third-party crops or owners of small farms.

Cargill, the largest importer of palm oil into the United States, said 40 per cent of its palm fruit is from small holders.

It said a majority (99 per cent) of its crops are from small holders which have adopted Cargill’s own land-clearing practices.

But it also buys crops from other small holders, and it’s working with many of them to adopt sustainable practices.

Still, Cargill said that unravelling the supply chain is a complicated process, as the oil is mixed at different stages of production.

Cargill said it is working to trace its supply chain, but it would seem not all parties are ready for sustainable palm oil, which may come at a higher cost.

John Hartmann, CEO of Cargill Tropical Palm, said: “Around 87 per cent of the palm oil that is produced goes to markets which are not ready to work closely with sustainability (campaigners).

“About 13 per cent are going to the European, North American, Australia and New Zealand markets. Those markets are demanding more and more insights into the source of their food and the food products and that leverages itself well to work into sustainability.”

Singapore may be a small market, but experts say more can be done to promote sustainable sourcing and, in the process, play a part in addressing the haze that has plagued the country for years.

It’s thought that about half of household products contain palm oil.

It’s a healthier substitute for other kinds of vegetable oil.

So you may find it in margarines, cookies, chocolates and ice-cream.

Shampoos, soaps and even cosmetics contain palm oil.

Craving for a meal at your favourite fast-food joint after shopping? It’s likely been prepared in edible palm oil.

Drive a diesel vehicle? The biodiesel used by cars also comes from palm oil.

Some say certifying products will help consumers make more informed choices.

There are international certifications, such as the one by the Roundtable on Sustainable Palm Oil, a voluntary non-profit organisation comprising palm oil stakeholders.

But experts say it’s not widely used at the moment and is not likely to be found in any local supermarkets.

The Agri-Food & Veterinary Authority of Singapore (AVA) says its food labelling (based on principles applied by the United Nations and the World Health Organisation) focuses on food safety and the traceability of foods sold in Singapore.

AVA says sustainability of source declarations is not a mandatory labelling requirement.

Meanwhile, many large palm oil companies are pledging to produce palm oil sustainably — by not clearing forests of high conservation value, not developing on peat land, and adhering to a no-burn policy.

Experts say pledging sustainability throughout the supply chain could be given a further push by financial backers.

Banks, pension funds, sovereign wealth funds and asset management funds often invest in palm oil, and these investors are often listed on the stock exchanges in Singapore and Malaysia, for example.

Leon Perera, CEO of Spire Research and Consulting, said: “Investors (are) starting to become more conscious that they need to have some standards in place and hold investees to those standards to protect against financial performance risks, because if palm oil companies they invest in are subjected to boycott or blacklisting or an adverse regulatory decision, that will impact the price performance of the shares, that will impact dividends and so on.

“So from a purely financial perspective, there is a case for financial investors to pay attention to these guidelines and getting these investors to do so as well.”

Mr Perera says Singapore’s proposed Transboundary Haze Pollution Bill will put the pressure on investors, as it’s a sign that governments are ready to take tougher action to enforce laws and take companies to task.

But until it’s implemented, consumers have another avenue to pressure companies, thanks to a tool launched by the Global Forest Watch this month.

Global Forest Watch’s Nigel Sizer said: “Where we see a fire alert, we’ll actually be able to task satellites each day to photograph those areas of land at 50cm resolutions and immediately put them online, give them to the governments, let the public see.

“We believe that a very significant reduction in the fires and haze is possible in the next five years, or even less. Our research shows that the problem is very concentrated in a small number of sub-districts — literally we’re talking about a few dozen villages. That’s where most of the fires are taking place.”

Mr Sizer said this information will help with fire-fighting efforts and hold those responsible for illegal burning accountable. It will put more pressure on local and federal governments in Indonesia, which is the world’s largest palm oil supplier.

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