Summary of Paper for RT5 Session I on Results of 2-year Trial Implementation of RSPO Principles & Criteria for Sustainable Production

Title of paper:

IOI Group’s experiences and approach in testing RSPO Principles & Criteria

Organisation:

IOI Group ()

Authors:

Mathews J, Ng S, Lee N

Objectives:

To show that the three pillars of sustainability – Good Agricultural Practice (GAP) (1) Social aspect, (Profit) (2) Environmental aspect and (3) Good Agricultural Practice (GAP) – are dynamically interacting with, and interdependent of, Social Environment each other. (People) (Planet)

Methodology: Approach taken for the P&C trial implementation:

Understanding the definition of sustainability. Understanding the Principles & Criteria. Creating various documentation for sustainable palm oil e.g. policies and plans. Understanding and adhering to national and local laws, rules, regulations and ratified international laws and regulations. Regular participation in conferences/seminars that highlight sustainability issues e.g. MPOA Malaysia National Interpretation Meetings and Seminar Series, renewable energy road show, biodiversity talk etc. Internal audits carried out within Group estates and mills to monitor compliance and identify areas for improvement. Subjecting to and learning from second party audits.

Summary of Results:

IOI Group adopted 8 principles and 39 criteria at the roundtable 3 (RT3), and committed to test the (P&C) for a period of 2 years and to report the results of P&C at the roundtable 5 (RT5) in November 2007. Initially, difficulties were encountered in understanding the whole P&C and the process of testing. However, with greater participation and discussions within the Group and the national interpretation meetings through Malaysian Palm Oil Association (MPOA), a better understanding was attained.

Principle 1 describes the commitment to transparency. The documents related to stakeholders, environment and/or social impact assessments are not available in the old establishments. Only new plantation developments will have such assessments especially on environment. For old plantation establishments, documents are to be developed with regard to stakeholders, internal environmental and social impact assessments and action plans after consultation at the Group level. Principle 2 is about laws and regulations related to the compliance of National Laws and Acts ranging from land matter to export of oil. will have to abide with international conventions or ratifications, if the Nation is signatory for such international conventions. Principle 3 concerns long-term financial profitability, a product of crop harvested and pricing of palm oil, of which the FFB production is scientifically fixed within the concept of oil palm site yield potential (OPSYP) to maximize yield. Aiming for such high economic yield would be desirable for the support of social and environmental issues. The Group is public listed in the Kuala Lumpur Stock Exchange (KLSE) and naturally has a strong commitment to long-term financial profitability.

Principle 4 is related to best and sustainable agricultural practices to achieve such site yield potential. Initially only Group agricultural policies were available. Standard Operating Procedures (StOPs) with respect to estate and oil mill operations have been developed with cross references to policies and national law. Agro-chemical substitute to Paraquat dichloride was studied to control leguminous cover plant only at immature planting. With timely spraying under right climatic conditions, with some supporting equipment to minimize spray drift and with a slight increase in labour and material cost, it is possible to control leguminous cover plant in the immature palm circles and rows. Rain-fastness effect of agro-chemicals as an alternative to Paraquat dichloride and its combination with other herbicides in immature plantings of high rainfall region with vigorously growing natural weeds like Stenochlaena palustris needs investigation. In relation to agrochemical, chemical, machinery and electrical usage, safety and health plans will have to be enforced as per national law of Occupational Safety and Health Act 1994 (Act 514). Safe Operating Procedures (SaOPs) for each operation in the estates and oil mills were developed. Fertilizer dosage reduction is possible for the estates within the mill vicinity by applying empty fruit bunch (EFB) and palm oil mill effluent (POME) and for fields that are ready for re-planting for at least 2 years prior to felling.

Principle 5, the zero burning policy for new and re-planting areas in compliance with the ASEAN policy is practical to be adopted. Biodiversity surveys carried out on flora of an existing estate can be applied for agro-ecological functional services like soil erosion, biological pest control, nitrogen fixation, minimizing pollution in tributaries and rivers and to support the existence of fauna like birds, amphibians, fishes and some mammals leading to eco-friendly plantation management. The existence of about 2000 hectares of high conservation value (HCV) areas (mainly HCV1, HCV4 and HCV5) within the established plantation has been identified at various locations. Wild life within HCVs are to be protected as per national law (Protection of Wild Life Act 1972, Act 76). A survey may be necessary to have a detailed flora and fauna inventory of the HCV areas and necessary programs to be incorporated in the environmental management plan to enhance it. Land application or irrigation of oil mill waste especially POME needs regular water quality index analysis (Environmental Quality Act 1974, Act 127). Environmental risk assessment and action plans should be incorporated in the internal Group environmental management plans and monitoring.

Principle 6 concerns social matters. Historically, it was and even now is a necessity in the plantation to provide basic amenities of housing, water and electricity to employees of all levels. The plantation community and the complex are provided with clinic, crèche, schools (only in large plantations), community hall, playground and places of worship. Workers in plantations are of foreign origin from South East Asia and South Asian region are recruited as per Immigration Act 1959/1963 (Act 155). Abolishment of child labour is in the work policy of the Group prior to RSPO formation and it is in line with the national law of Children and Young Person Employment Act 1966 (Act 350). The Group further supports the noble primary education activities of “Humana Child Aid Society Sabah” in the interior parts of Sabah. Problems like cattle incursion, road and land disputes etc. are likely to develop with the local community that live surrounding the plantations. The matters that arise will have to be settled amicably through negotiation although issues like crop theft will have to be tackled within the National law and order. The wages of workers were strongly correlated to yields and productivity of the workers indicating again that high potential yield is vital for good earnings of the worker and socio-economic well- being of the plantation community, nation development, and improvement in foreign currency exchange in some South East Asian and South Asian regions.

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The Group is yet to be exposed to the HCV assessments as per principle 7 in new plantings. Principle 8 is about the activities implemented and monitoring it for further improvement in the fields of agrochemical usage, environment and social impacts. No single criteria or factor can stand on its own for continuous improvement. With the present technology and practices the improvement on a particular factor will have a positive or negative impact on one another due to the linkage between the good agricultural practice, environmental and social factors. More cost effective technological advancement is required for continuous improvement.

Conclusion:

Sustainable palm oil engulfs three subjects of Good Agricultural Practices, environmental protection and social responsibility.

There must be a plan, policies, standard operating procedure, communication, implementation and monitoring systems to be successful in sustainable palm oil.

There is a need of a paradigm shift in our thoughts and deeds. The planters and millers not only plant oil palm, nurse it to the production of crude palm oil (CPO) but also she/he has to be an environmentalist, socialist, possess basic knowledge in medicine, a lawyer, economist, agronomist, accountant, civil and mechanical engineer, politician, chemist and safety officer.

Recommendations (if any):

Profile of Organisation :

IOI is one of Malaysia's home-grown business conglomerates. Within 30 years, the IOI Group has firmly established itself as a leader in its core business areas of Plantations, Property Development & Investment, and Manufacturing. From an oil palm plantation entity, the IOI Group has transformed itself to become a leading integrated palm oil player in the country.

Through the acquisition of Loders Croklaan, IOI is now a strong global player with a strategic focus on growth in palm based oil products. It is one of the largest plantation groups in Malaysia with a plantation area of over 160,000 hectares. Annual production of CPO is in excess of 800,000 tonnes.

IOI Edible Oils' palm oil refinery in Sabah is a manufacturer of various quality processed palm oil products. It has its own jetty and bulking installation facilities for direct shipments of palm oil products. It is the first palm oil refinery in Sabah to obtain certification for ISO 9001.Through IOI Oleochemical Industries Berhad, the Group operates one of the most established and largest oleochemical production facilities in Malaysia, producing a wide range of oleochemical products for food and non-food industrial applications. It is the largest producer in Asia.

Profile of the Speaker:

Joshua Mathews is Senior Manager (Agronomy) of IOI Research Centre. He has a Master of Science in Genetics and Plant Breeding, University of Kerala, India (1988). Work Experience - 7 years (1989 – 1996) with Agricultural Research and Advisory Sdn Bhd, starting as Research and Advisory Officer; 9 years (1996 – 2007) with IOI Corporation Berhad, Research Centre, as Agronomist and Senior Manager (Agronomy). His main areas of interest are Oil Palm Agronomy and Breeding and currently sustainable oil palm cultivation; he has published 11 papers in international, local journals and seminars with regard to latex extraction and oil palm agronomy.

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