Sustainable development not sole responsibility of producing countries, says coordinating minister

Nusa Dua, Bali ( - Indonesia, the worlds largest CPO producer, must have the foresight and ability to anticipate future challenges and opportunities, said Indonesian Coordinating Minister for the Economy Darmin Nasution in his opening address to the fifth International Conference on Oil Palm and Environment (ICOPE) in Nusa Dua, Bali, on Wednesday (Mar 16).

In addition, he said, the country needs to be forward-thinking and able to identify new ways of overcoming old challenges.

Darmin said that the 21st Conference of Parties to the United Nations Framework Convention on Climate Change (COP 21) in Paris had agreed to limit the increase in global temperature to less than 2 degrees Celsius, while others had urged the increase to be limited to 1.5 degrees Celsius.

It is therefore important, he said, to reaffirm the binding obligations of the developed nations under UNFCCC to support the efforts of the developing nations.

"I want to emphasize that the developed countries must also help developing countries in support of these efforts," said Darmin.

Premium prices for sustainable products

Darmin said that the developed nations needed to acknowledge that countries with competitive products were more likely to be successful, more likely to reduce poverty, and more likely to be able to devote greater resources on protecting the vulnerable, the environment and economic interests over the long term than countries that lacked competitive products.

Therefore, he said, every country should try to identify its competitive products and focus on developing them.

Darmin said that the developed nations also needed to put real money on the table, rather than just talk.

"As an economist, I would use the term 'willingness to pay,'" he said.

Therefore, he continued, we have to change mindsets so that sustainability is no longer viewed as being the sole responsibility of the producer, but also that of the consumer.

"We expect our partners to work together with us, not only to encourage good environmental practices in the producing countries but, more importantly, to also help finance sustainable practices by paying a premium for sustainable products. Boycotting products, such as has happened in the cases of Iran and North Korea, does not provide a win-win solution. I believe in dialogue," he said.

Darmin said that Indonesia had successfully launched its Biodiesel B-20 initiative in 2015, despite the myriad challenges faced.

This initiative, he said, provides a major boost to the countrys energy mix as previously it was highly dependent on fossil fuels. As an importing country, Indonesia needs more sustainable energy sources.

Higher demand for CPO has slightly increased the CPO price to USD 565/ton from USD 535/ton when the biodiesel program levy was first imposed.

Protecting smallholders

Darmin said that this showed that the Biodiesel Policy not only created additional demand for CPO, but also helped protect smallholders from potential crises resulting form declines in market prices.

He said that palm oil was one of Indonesias most competitive sectors and that it served as an effective tool for poverty alleviation.

One hectare of palm oil plantation, he said, could produce an average of 3.8 tons of oil. At current prices, this would generate income of approximately USD 2,150 per hectare, which compared favorably to the rubber sector, where productivity averaged around one ton per hectare, generating some USD 1,500 in income per ton.

He said that an oil-palm plantation needed an average of 0.12 worker per hectare. This level of labor intensiveness played a major role in poverty alleviation and employment creation in Indonesia.

Oil palm plantations, he said, provide more than four million jobs directly and more than 10 million indirectly. In addition, he said, the sector makes an enormous contribution to Indonesias non-petroleum and gas exports.

Darmin said that sustainable palm-oil practices had an important role to play in reducing carbon emissions by 29% by 2030, which figure could rise to 41% if sufficient international support was forthcoming.

The government planned to focus the planting of palms on degraded and low productivity land so as to improve yields.

"By promoting the Mandatory 20% Biodiesel (B20) program in 2016, which figure will gradually increase to 30% by 2025, we believe that we will be able to promote a more sustainable energy mix. We are currently involved in a non-mandatory (Non-PSO) process with a 20% mix, which will further boost demand for CPO. We introduced this policy at a time of low hydrocarbon prices so as to ease the burden on consumers. To cover the price gap, we plan to make up the difference from the margins of the oil producers and not pass it on to the consumer," Darmin explained.

Darmin said that the total area of Indonesian palm oil plantations extended to 11 million hectares in 2015, with total palm-oil production standing at 32 million tons. Some 45% of the plantations were owned by smallholders, while the remainder was controlled by corporations and state enterprises.

Private and
state-owned plantations have an important role to play in helping smallholders, he said. Large companies enjoy better market access and bargaining power on the international stage. Thus, private and state-owned plantations are required to help smallholders.

Darmin said that the stronger companies needed to seek long-term solutions to encourage the adoption of sustainable practices by smallholders. In this regard, such companies needed to work closely with government.

we will prioritize disaster prevention for this year. Much of the attention and assistance we receive focuses on medium and long-term issues. But, in the short term we need to immediately prioritize prevention so as to avoid the recurrence of forest fires," Darmin said.