The clearing of tropical rainforest for palm plantations has been linked to climate change and the loss of habitat for endangered animals like the orangutan.
Fonterra imports PKE, a product made by the palm oil industry for supplementary feed. According to Greenpeace, New Zealand is the world’s largest user, bringing in a quarter of the global supply.
Through its Farm Source stores, Fonterra sells approximately one third of the PKE that is used in New Zealand.
Two years ago, Fonterra agreed to adopt an industry standard to ensure its use of PKE wasn’t leading to deforestation.
Links to destruction
Greenpeace, however, alleges the dairy cooperative’s main supplier of PKE, Wilmar International Limited, has links to the mass destruction of rainforest in Papua, Indonesia.
Greenpeace said its investigation shows the plantation concessions in Papua, Indonesia, belong to a business called Gama Corp, and the organization said in its report that documents reveal Gama is run by senior Wilmar executives and members of their family.
“The international reputation of NZs dairy industry is seriously on the line here and so are the world’s last remaining rainforests,” said Gen Toop, Greenpeace’s sustainable agriculture spokesperson.
“This revelation again implicates NZ’s dairy industry in deforestation in Indonesia.”
Wilmar response
In a statement to DairyReporter, however, Wilmar referred to the report released by Greenpeace “alleging complicity by Wilmar with Gama Corp, owned by Mr Ganda and his brother, Mr Martua Sitorus, a non-independent non-executive director of Wilmar, in “Keeping Deforestation In The Family”.
The statement said, “Wilmar and Gama Corp are two separate corporate groups, operating independently of each other. Wilmar has no control, management or otherwise, over Gama Corp. Wilmar executives with familial ties with Gama Corp do not hold any decision-making power or influence on Wilmar’s sustainability policy.
“Wilmar has engaged with and will continue to engage with Greenpeace on the issues raised in the report. In the meantime, as reflected in the report, Wilmar has, as of 20 June 2018, ceased sourcing from all suppliers that are allegedly associated with Gama Corp as identified by Greenpeace. Wilmar will not buy from any company that cannot prove to our satisfaction that they do not belong to Gama Corp because of the alleged identified non-compliance with Wilmar’s No Deforestation, No Peat and No Exploitation (NDPE) Policy.
“Wilmar’s CEO has personally responded to Greenpeace in a letter of 20 June 2018 and we will continue to engage with Greenpeace to strengthen the implementation of our NDPE Policy.
“Wilmar wishes to reiterate our commitment to sustainability and to acknowledge that while we have made progress on a range of sustainability initiatives, such as our smallholder support programmes around the world, we can still improve on, and intend to improve on, the implementation of our NDPE Policy.”
Fonterra announcement
Greenpeace International said aerial photos it took recently show an area of forest twice the size of Paris has been destroyed.
In May, Fonterra announced it had, following discussions with Greenpeace, adopted a new standard for sourcing of palm products as part of its commitment to sustainability.
Fonterra said the standard was developed in consultation with key supply partners, following discussions with Greenpeace that began in December 2015 to strengthen Fonterra’s existing sustainable palm products sourcing procedures.
“The new standard requires us to purchase only segregated supply palm oil by 2018, and to work with suppliers of palm products to ensure that plans are in place for full traceability to plantation by 2018,” Fonterra’s director of social responsibility, Carolyn Mortland said at the time.
“We want to ensure that there is no risk of deforestation within our supply chain. This standard aims to ensure the fair and ethical treatment of suppliers and to protecting conservation values.”
She added Fonterra takes its sourcing responsibilities for both products seriously, and was grateful for the significant support Greenpeace provided in the development of the standard.
Since 2009, Fonterra said, it has belonged to the Round Table for Sustainable Palm Oil (RSPO) and it currently offsets 100% of palm oil use via RSPO and Green Palm certification. It added its supplier, Wilmar International, has a "no-deforestation, no-exploitation" policy.
Fonterra responds
In response to the Greenpeace investigative report, a Fonterra spokesperson told DairyReporter, “As a matter of process, we will check with Wilmar that the information they have provided us previously is up to date and accurate.
“We understand and take seriously concerns about the exploitation of labour, human rights and land claims in South East Asia, aware also they are not confined to the palm oil sector.”
Fonterra said the cooperative has backed that with the following actions over recent times:
“Fonterra established a Palm Product Standard in 2016. This outlines our commitment to ensure the products we use meets sustainability best practice. A key commitment in the policy is that all our vendors of palm products must publicly commit to policies that fully support “No Deforestation, No Peatland Development, and No Exploitation” and have business processes in place to meet compliance.
“All PKE is sourced from Wilmar International, who was the first to implement ‘No Deforestation, No Peat, No Exploitation’ and has a strict ban on deforestation and Exploitation of labour. Fonterra has been a member of the Roundtable of Sustainable Palm Oil since 2010.
“Fonterra has been working with and has become a member of The Forest Trust (TFT), a leading NGO supporting sustainability transformation in the palm industry. Together, we are evaluating the performance of our palm products supply chain and compliance with our standard. Working with our vendors, we have confirmed 96.7% traceability to mill. Traceability to mill helps ensures we know where the PKE is sourced from and to identify any potential high-risk areas or any non-compliance.”
However, Toop said there is only one solution.
“We’ve got to ditch PKE, re-focus onto pasture based dairying and farm fewer cows. These are the first steps towards transforming NZs dairy industry to regenerative farming which is the direction we need to be going,” Toop concluded.
Gama Corp was approached by DairyReporter for comment, but has not yet responded.