100tC/ha ceiling?

Khor Reports: Palm oil rumour-mill reckons that a 100tC/ha carbon stocks ceiling is now being considered by GAR-TFT for new land development by oil palm plantations.

This is up from the initial ceiling of 35tC/ha mooted in the Nestle-GAR-TFT deal, where GAR or Golden-Agri-Resources, part of the Sinar Mas Group, also agreed to no planting on any peat land.

Behemoths' land banking efforts stutter?

"Sime Darby’s expansion into Liberia may have hit some road blocks. It was reported that citizens from more than 15 towns and villages near Sime Darby Plantation in Grand Cape Mount County have threatened that the company would face stiff resistance if it intends any further extension of its concession. Not yet known at this point is the size of the area affected as portion to Sime’s 200,000ha concession land." (ECMLibra research report, 18 July 2011)

Khor Reports comments:

a) SE Asian plantations have taken a great interest in West Africa, Papua and other 'tougher' regions, to extend their land banks. Various problems have been reported with these major expansion efforts.

b) Sime Darby is reported facing some resistance from locals in Liberia (article above). The plantation behemoth had also sought to extend its interests in Sarawak, Malaysia, by offering larger stakes to local landholders - but we hear that some of these efforts may have gone 'on hold' for various reasons.

c) Golden Agri is also looking to develop 220,000 ha in Liberia via the USD1.6 billion deal with Golden Veroleum (the land area was initially reported as a 500,000‐acre palm oil plantation in the southeast of the country).3 September 2010: Golden Agri said its “subsidiary Golden VerOleum would form a partnership with the Government of Liberia in a palm oil project… for the cultivation of sustainable palm oil by the company and by Liberian smallholders and farmers, mill processing and value‐added manufacturing…The investment is expected to total USD1.6 billion” (source: http://www.reuters.com/article/2010/09/03/goldenagri‐liberia‐idUSSGC00373720100903). In October 2010. Golden Agri reported it disposed of its entire shareholding comprising one share of HK$1 in Golden Veroleum Limited. A clear status update is needed.

d) Sometime in 2009‐2010, Golden Agri’s “in progress” acquisition of 1 million ha in Papua falls through. Now, players like Wilmar are looking to Papua for major cane sugar projects. Will they have a happier outcome in the low-lying and seawater-flood prone region?

Golden Agri -TFT deal sets 35 tonnes carbon stored per ha ceiling

I sent out an alert via email to readers on 9 Feb 2011: BBC article on GAR deal with TFT. Weblink: http://www.bbc.co.uk/news/science-environment-12397427 (please scroll down for excerpts).

This initially sets the ceiling on land bank development at 35 tonnes of carbon stored per hectare.

Feedback to Khor Reports: Subsequently, we hear that the deal may be dependent on a) further research to validate claims that there is plenty of degraded land available for new plantings and b) the creation of a mechanism for Golden Agri to swap out of current licenses on forested land for degraded land. *This information needs to be checked and validated.

Khor Reports comment: Analysts of plantation land banks will find publicly available information to be frustratingly limited. The companies do not disclose the high risks to the 'usability' of their land banks for plantation development i.e. what proportion is on forested land, on peat land, with high biodiversity and so forth?



Snippets from "Palm oil deal aims to save forests and carbon," 9 Feb 2011, BBC news :

"A major palm oil producer is joining forces with environmental campaigners in a bid to ramp up forest protection. The giant Indonesian company Golden Agri-Resources (GAR) has agreed to work within new standards aimed at saving forests that store a lot of carbon. International environment group The Forest Trust (TFT) is partnering the company and will monitor compliance. The palm oil industry has regularly been accused of destroying old-growth forest as demand rockets. The new deal expands on existing standards agreed under the Roundtable on Sustainable Palm Oil (RSPO), an international alliance of producers, processors, retailers and environment groups...."

"...Already, RSPO rules forbid clearing old-growth forest or land with high conservation value, and developers are also supposed to obtain informed consent from local people before initiating new plantations. Under the new deal, GAR will go further, vowing not to plant on peat, and not to clear forest where significant carbon is locked up in trees. This should mean that large tracts of forest that have been partially logged will now be off-limits to the company. Initially, the figure of 35 tonnes of carbon stored per hectare will be used as a ceiling; but that could change as research progresses. "We're not trying to undermine the RSPO - we're saying 'this is something you guys need to look at and maybe move towards,'" said Scott Poynton, TFT's executive director...."

"...Earlier in the year, TFT finalised a deal with Swiss-based food giant Nestle designed to "ensure that its palm oil procurement had no deforestation footprint". This led to discussions with suppliers such as GAR - and the conclusion that in order to preserve their markets, growers would have to purify their operations. Greenpeace, which has taken the lead on the issue among international NGOs, sees the deal as a potential step forwards. "This is really throwing a gauntlet down to the rest of the palm oil sector, and to other players," said campaigner Phil Aikman. "It's setting a threshold for carbon, and that's pretty good - it'll protect a lot of orangutan habitat and other important areas that have been threatened by palm oil plantations. "It challenges the rest of the sector to increase its productivity rather than target new areas over and over again, and that's been the main issue." With RSPO, another issue has been compliance, with a number of companies accused of failing to live up to their promises...."

Source: BBC news article.