Finger pointed at Felda for ties with controversial palm oil company

(foresthints.news) - It turns out that some major Malaysian palm oil companies are among the biggest buyers from controversial supplier PT Austindo Nusantara Jaya Tbk (ANJT) - a company which itself declared that it had ‘busy years ahead’ clearing Papua’s intact forest.

In fact, more than 40% of ANJT’s revenue derives from sales of palm oil and palm kernel to PT SON, a Felda-Tabung Haji joint venture company.

Meanwhile, the Astra-KLK joint venture company accounts for the purchase of over 25% of ANJT’s sales. In addition to its purchases as part of the joint venture company, KLK alone is listed as the purchaser of more than 10% of ANJT’s sales.

These three companies, which are largely Malaysian based, contribute a combined almost 80% of purchases from ANJT, the equivalent of nearly USD 74 million.

This is actually the figure from the third quarter of 2016, which was included in the publicly available data from ANJT as a company listed on the Indonesia Stock Exchange. The purchasing volume from ANJT almost certainly increased in last year’s fourth quarter, along with the value of these transactions.

The following Google Earth images (2014) demonstrate how ANJT keeps clearing Papua’s forest as there remain significant parts of it the company has yet to work on.

Dramatic rise

It is evident from ANJT’s third quarter report how sharply the volume of purchasing made by Felda and its joint venture company went up.

The report shows that at the end of September 2015, the joint venture company bought a mere 9% of ANJT’s sales. In contrast, by the end of September 2016, this figure had shot up to a much more substantial 41%.

Purchasing by both KLK and the Astra-KLK joint venture company from ANJT over the same period also underwent a drastic increase. The combined total of both soared from 8% to nearly 40%.

These remarkable surges in purchasing coincided with the decision by several other palm oil giants, such as GAR and Wilmar, to phase out their buying from ANJT, as seen in the first quarter of 2016.

Felda and KLK, along with their joint venture companies, essentially moved in and “took over” the positions vacated by GAR and Wilmar, to become the biggest buyers from ANJT during 2016.

Important lesson learned

The emergence of Felda and KLK, together with their joint venture companies, as the ‘top buyers’ of palm oil and palm kernel produced by ANJT most certainly represents an important lesson learned in terms of cleaning up supply chains from deforestation.

ANJT, which was abandoned by its former top customers as they attempted to clean up their supply chains from deforestation, was quite simply able to enjoy the arrival of some new top customers to replace the previous ones.

As a result, ANJT suffered no losses whatsoever despite its operations which involve the ongoing clearing of Papua’s forests.

This is clearly apparent in ANJT’s recently-released sustainability policy, in which the company emphasizes that its operations will still include the clearing of secondary forest which forms an important part of the area’s High Carbon Stock (HCS) forest.

Astra has stated that it has stopped purchasing from ANJT, which would certainly pertain to the policy of the joint venture company it shares with KLK. Now it remains for KLK itself to commit to a sustainability policy which precludes it from engaging with companies that retain links to deforestation, such as ANJT.

As for Felda, it declared in its group sustainability policy that it will continue working to improve its traceability of raw materials with the goal of building stakeholder trust. As such, the Malaysian company should be doing all it can to steer clear of the list of companies still involved with deforestation.