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Indonesia to issue a moratorium on new palm oil concessions

by Reuters
Thursday, 14 April 2016 12:30 GMT

Indonesian students holds posters as they protest against the palm oil industry in Pekanbaru, Riau province, Indonesia, Oct. 23, 2015 in this picture taken by Antara Foto. REUTERS/FB Anggoro/Antara

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Ban announced by president is aimed at reducing environmental impact and protecting forests

By Bernadette Christina Munthe

JAKARTA, April 14 (Reuters) - Indonesia, the world's top producer of palm oil, will issue a moratorium on new palm oil concessions, President Joko Widodo said on Thursday, part of the country's efforts to reduce the sector's impact on the environment.

Home to the world's third-largest area of tropical forests, Indonesia has been criticised by green activists and other Southeast Asian nations on its forestry policy and for failing to stop the region's annual "haze" problem caused by forest-clearing for palm and pulp plantations.

Palm oil is a major growth driver in Southeast Asia's largest economy, and the industry is sensitive to the issue of environmental standards, used by global food and consumer goods giants like Kellogg, Mars and Unilever, to determine which producers are acceptable.

"They can no longer ask for concessions for palm oil [or] mining," Widodo told reporters on Thursday, when asked about the moratorium plans. Widodo said he had spoken to government ministers regarding the plan but stopped short of providing a timeline for the move.

Based on the government's calculations, the area already issued to oil palm growers could be more than twice as productive "provided they use the right seeds", the president said.

Agriculture Minister Andi Amran Sulaiman said he agreed with the plan, adding that in terms of productivity Indonesian palm growers were a long way behind those in Malaysia.

"We should invest in sugar, corn and cattle," Sulaiman told reporters, noting that Indonesia is already the world's top palm oil producer and that output from its existing plantations is expected to climb.

Earlier on Thursday, the government's anti-monopoly agency announced it would investigate suspected cartel practices among a grouping of the country's biggest palm oil producers - including Wilmar International, Cargill Inc and Golden Agri Resources - that are signatories to the Indonesian Palm Oil Pledge.

The landmark pledge to cut deforestation, agreed in 2014, was seen as in direct competition with the government's own standards and too difficult for smallholders to comply with.

Smallholders account for about 40 percent of Indonesia's palm output.

Last week media reports said Hollywood actor Leonardo DiCaprio faced the risk of being banned from returning to Indonesia over his comments that palm oil plantations are destroying the Sumatran rainforests and endangering wildlife.

Later, however, the forestry minister said she shared DiCaprio's concerns and that he had acted in good faith.

(Reporting by Jakarta bureau, Writing by Fergus Jensen; Editing by Himani Sarkar and Susan Fenton)

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