Friday, May 7, 2010

Unilever still buys Indonesian Palm Oil

Last December, Unilever the world's largest consumer of Palm Oil stopped buying Palm Oil from PT Sinar Mas, the largest producer/supplier of Palm Oil in Indonesia.

However, according to Reuter (below) Unilever is still buying 65% of its Palm Oil from other suppliers in Indonesia.

In my humble opinion, as long as the Palm Oil producer/supplier do their business according to the valid laws and regulations therefore do not disturb/damage the forest and nature in Indonesia, there would not be any problem at all. 

Unilever unit says Indonesia remains key palm oil supplier

JAKARTA, May 5 (Reuters) - The Indonesian unit of Unilever (ULVR.L) (UNc.AS), the world's top palm oil buyer, on Wednesday said it gets 65 percent of its palm oil from Indonesia despite halting purchases from a unit of market leader Sinar Mas Group.

Unilever, which uses palm oil in such products as Dove soap and Ben & Jerry ice cream, cancelled its annual 20 million pound ($30.27 million) contract with one of its Indonesian suppliers, PT SMART (SMAR.JK) in December. SMART is part of Sinar Mas Group, Indonesia's biggest palm oil producer.

The move prompted speculation that Unilever might cut palm oil purchases from other Indonesian suppliers, but a spokeswoman for the company said it was still buying from Indonesia.
"About 65 percent of palm oil bought by Unilever worldwide comes from Indonesia. We only stopped buying from SMART but we are still buying from other Indonesian suppliers," said Maria Dewantini Dwianto, a spokeswoman for PT Unilever Indonesia (UNVR.JK).

SMART had shipped some palm oil cargoes up to April to fulfil an agreement made ahead of Unilever's decision to stop purchasing from SMART, Dwianto added.
Other palm oil suppliers in Indonesia include Musim Mas and an Indonesia unit of Singapore-listed Wilmar (WLIL.SI), she added.

Unilever consumes about 1.9 million tonnes of palm oil each year -- of which about four-fifths comes from Indonesia and Malaysia -- and has pledged to buy only from certified sustainable plantations from 2015.
Greenpeace has alleged that Sinar Mas, Indonesia's biggest palm oil producer and the second-biggest in the world, has been responsible for widespread deforestation and peatland clearance, practices which release vast amounts of carbon dioxide.

PT SMART and PT Unilever Indonesia agreed to appoint two independent auditors -- Netherlands-based Control Union Certification (CUC) and British Standard institute -- last month to investigate the environmental allegations.

SMART's president director, Daud Dharsono, has said that the independent auditors would complete their study by the end of June.

The allegations by Greenpeace prompted Nestle (NESN.VX) to stop buying palm oil from Sinar Mas, while agribusiness giant Cargill Inc [CARG.UL] has also threatened to remove Sinar Mas as a palm oil supplier. ($1=.6606 Pound) (Reporting by Telly Nathalia; Editing by Yoko Nishikawa and Sara Webb)


colson said...

You are right of course: there is no objection whatsoever to dealing with clean palm Oil companies.

Yet I think another factor may play some role.

In as long as Unilever's profits benefit from it, the multinational will buy from the devil if necessary. It was only because of a huge campaign by 'green'activists and the pressure it did put on Unilever's public relations, that they stopped buying from PT Sinar Mas.

As soon as the issue has evaporated in the media, it will be business as usual.

H. Nizam said...

Hi Colson,
You've got a point there, as a multinational company Unilever will
do anything to get more profit, and Sinar Mas can always find ways to sell under other party's name.
Even other supplier cannot be guaranteed that they don't damage the forest, especially that some forest which were originally protected by the law have been legally transformed to commercial plantations.