Cargill denies its palm estates destroy Asian forests

Thu May 6, 2010 2:00am EDT

Related Topics

* Cargill slams a green group for false allegations

* Says does not clear forests, drain peatlands

* Also does not practice open burning

By Niluksi Koswanage

KUALA LUMPUR, May 6 (Reuters) - Agribusiness giant Cargill [CARG.UL] on Thursday dismissed claims by a green group that the firm's estates expanded at the expense of rainforests and peatlands on Borneo island.

Cargill said it wanted to "set the record straight on the false allegations" by Rainforest Action Network (RAN), which published a report this week looking at how the U.S. firm was operating its oil palm estates on the Indonesian side of the island.

The report signals that green groups are increasingly scrutinising the Minneapolis-based firm, which earlier threatened to delist Indonesian planter Sinar Mas as a key palm oil supplier over allegations of illegal logging.

RAN's latest report now says that Cargill's plantations were draining peatlands and practiced open burning to clear land, which pumps vast amounts of global warning emissions into the atmosphere.

"RAN claims Cargill has cleared rainforests...this is categorically untrue," said Cargill on its website on Thursday. "The entire area where our properties are located in Kalimantan were deforested over ten years ago, which was before we acquired the plantations."

Cargill owns and operates two plantations in Indonesia and 12 palm oil refineries worldwide.

One of its estates in Kalimantan province on Borneo island has an acreage of 32,000 hectares or two-thirds the size of Singapore. Cargill says no peatlands are found on their estates and no rainforests are in the vicinity.

One of the world's largest privately owned corporations, Cargill is a key palm oil importer to the U.S., which annually consumes over one million tonnes of the vegetable oil, or 2.5 percent of the world's total palm oil trade.

Its key customers who use palm oil include General Mills (GIS.N), Kraft KFT.N as well as Nestle (NESN.VX), which wanted to stop buying from Cargill's supplier Sinar Mas and directed the U.S. firm to probe its supply chain, green groups say.

Cargill has pledged by end-2010 to buy 60 percent of its palm oil from planters who belong to the Roundtable on Sustainable Palm Oil -- an industry driven certification body that upholds commitments to preserve rainforests and wildlife.

It has stopped buying from another Indonesian planter Duta Palma since 2008 as the firm did not meet Cargill's environmental criteria. Unilever (UNc.AS) (ULVR.L) followed suit a year later. [ID:nSGE61N0BN]

Industry sources in Indonesia and Malaysia said Cargill coming under fire signalled that environmentalists will not spare any firm regardless of public commitments to produce or source green palm oil, which may potentially slow expansion.

"The palm oil business is like living in a glass house with the green groups throwing stones. Cargill was previously outside but as it got into the plantations it now has to bear with all the allegations," said one Malaysian planter. (Editing by Michael Urquhart)

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