Liberia Palm Oil Report

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Report and Recommendations: Liberia Sustainable Palm Oil Field Visit

May 27-June 2, 2010

Date: June, 2010

Thomas B. Fricke Senior Advisor

Fauna and Flora International (FFI) Sustainable Palm Oil and Biofuels Programmes

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Table of Contents

1. Executive Summary………. 3 2. Background and Purpose of the Field Visit………... 4 3. Current Status of the Liberian Palm Oil Industry……… 6 4. Opportunities and Threats Posed by Rapid Expansion of the Liberian

Palm Oil Sector……….… 11 5. High Conservation Value Forest (HCVF) Assessment and Management:

A Promising Means to Promote Sustainable Palm Oil in Liberia………... 19 6. Conclusions and Recommendations………... 22 7. Potential Funding and Program Support Opportunities……….… 26 ANNEXES:

A. Individuals and Organizations Consulted B. Additional Publications and Resources

C. Latest Developments in Sustainable Palm Oil and the Roundtable on Sustainable Palm Oil (RSPO)

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1. Executive Summary

This report summarizes the results of a field visit to Liberia from May 27 to June 2, 2010 by Thomas Fricke, Senior Advisor for Fauna and Flora International’s (FFI) Sustainable Palm Oil and Biofuel Programmes. The visit was requested by FFI Liberia and two of its key local collaborators, Moses Wogbeh, Managing Director of the Forest Development Authority (FDA), and the Hon. Milton Teahjay, Superintendent of Sinoe County. The main purpose of this assignment was to advise key government agencies and conservation NGOs active in Liberia in responding to the opportunities and potential threats posed by the emerging expansion of the oil palm industry in the country. About 550,000 hectares of commercial plantations and outgrower schemes are being developed, including two massive concession agreements covering over 200,000 hectares each with two large Malaysian and Indonesian companies, Sime Darby and Sinar Mas.

During his six-day visit, Fricke was able to consult a number of key stakeholders in the government, NGO, and private sectors. He obtained valuable information and insights on the state of development of the industry and its potential impacts on Liberia’s economy and natural resources. On the final day of his visit, Fricke delivered a well-attended presentation at the FDA office entitled, “Best Practices, Opportunities, and Risks for Palm Oil Sector Development in Liberia: Reflections and Recommendations”. This report summarizes his findings and includes a number of maps, charts, and photographs collected, plus several annotated annexes. At the rear of the report, he outlines several conclusions and recommendations at the national and county level, including:

Conclusions:

1. Palm oil industry expansion in Liberia brings major potential economic benefits in the form of revenues, employment, and investments, but the threat of forest conversion and biodiversity losses requires strong cooperation between government, industry, and NGOs. 2. Liberia has significant potential in promoting sustainable practices and selling higher value certified products since all four companies with established or pending concessions are members of the international Roundtable on Sustainable Palm Oil (RSPO).

Recommendations:

1. Liberia has an urgent need to create a multi-stakeholder sustainable palm oil initiative, with support from government, NGOs, companies developing the concessions, and the RSPO’s Secretariat and the Ghana National Interpretation working group.

2. Support the Liberia Oil Palm Sector Strategy with government (MOA, EPA, FDA, and IBL) support and private sector leadership (OPAL, domestic companies, and MNCs) 3. Create pilot projects in two counties, ie. Siloe and Grand Cape Mount, with the participation of FFI, CI, FDA, palm oil companies, and smallholder/outgrower groups. 4. Conduct HCV assessments and create HCV management and monitoring plans at county, landscape, and concession levels.

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2. Background and Purpose of the Field Visit

This mission was quickly arranged after the visit of several key Liberian government delegates to the international Governors Climate and Forest Task Force meeting at the REDD Technical Working Group Conference held in late May 2010 in Banda Aceh, Indonesia. Two of the representatives, Moses Wogbeh, the Managing Director of the Forest Development Agency (FDA) and Hon. Milton Teahjay, Superintendent of Sinoe County, were informed that Golden VerOleum, a subsidiary of the major Indonesian palm oil company Sinar Mas, was about to embark on a field mission to negotiate major new plantation establishment in Liberia. Sinoe County, which contains the biologically rich Sapo National Park and other important natural forest areas, was identified by the company as a key county within the approximately 500,000 hectare Gross Interest Area for its concession.

Accordingly, Superintendent Teahjay and FDA MD Mr. Wogbeh requested technical support from Fauna and Flora International (FFI) in the pending negotiations with the delegation from Golden Veroleum. They also requested that FFI engage in a series of advisory talks with various stakeholders around the theme of sustainable oil palm development, including FDA, Environmental Protection Agency (EPA), Ministry of Agriculture (MoA), and senior officials of Sinoe County, one of the potential hosts for the future oil palm concession. It was hoped that FFI could join with the government delegation in Sinoe County in the field and in Monrovia prior to the departure of the company’s representatives.

FFI offered the services of its Senior Advisor for Sustainable Palm Oil and Biofuels, Thomas Fricke, who is based in Indonesia, for this assignment. He is now working as a consultant with FFI’s Corporate Engagement Division and with FFI-Indonesia, and has also worked with the IFC, USAID, UK Department of Environment, Food, and Rural Affairs (DEFRA), and a number of leading private oil palm companies in Southeast Asia. Currently, Fricke serves as an advisor to Irwandi Yusuf, the Governor of Aceh, in developing the oil palm and biofuels components of his Aceh Green Vision. Through fast footwork and various intercontinental flight connections, Fricke was able to arrive in Liberia on Thursday afternoon, May 27th_{and stay until Wednesday, June 2}nd_.

Due to scheduling complications, neither the visit to Sinoe County nor the follow-on negotiations with the Golden VerOleum delegation took place. The delegation actually left Liberia on Friday May 28th_{without meeting either Superintendent Teahjay, FDA MD}

Mr. Wogbeh, or the FFI advisor. Therefore, in place of the narrow focus on the Golden VerOleum negotiations, the FFI advisor’s scope and objectives were broadened to include fact-finding, stakeholder consultations, and strategic recommendations for sustainable oil palm development. Annex A at the rear of this document contains a list of the various individuals and institutions contacted during the brief visit. The list encompasses various stakeholders including Liberian and foreign government agencies, non-governmental organizations, and local and international oil palm companies. The latter includes a meeting with one of Golden VerOleum’s chief representatives in Liberia, former Minister of Agriculture Dr. Chris Toe, which hopefully will be followed up in July in Indonesia.

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The advisor’s visit contained two key sessions involving FDA, representatives of Sinoe County, and FFI-Liberia Country Director Letla Mosenene. The first event was a coordination meeting on Friday, May 28th_{, involving the FFI-Liberia Director,}

Superintendent Teahjay, FDA MD Mr. Wogbeh, and several of their respective colleagues. At this meeting, the scope and focus of the Consultant’s visit was revised, and the decision was made to invite the advisor to make a presentation to a broad-spectrum of stakeholders on the theme of “Best Practices for Oil Palm Plantation Development in Liberia” on Tuesday, June 1st_{in the FDA Boardroom. Invitations were}

issued to a number of Liberian and international agencies and individuals.

The purpose of the presentation was to provide technical information in support of sustainable production and processing of palm oil to benefit Liberia’s economic development. It was agreed that such development needs to be in line with the government’s Poverty Reduction Strategy (PRS) and natural resource conservation policies. Therefore, the presentation title was amended to “Best Practices, Opportunities, and Risks for Palm Oil Sector Development in Liberia: Reflections and Recommendations”. The two-hour presentation was well-attended and covered the following topics:

1. Description of the principles and best practices of sustainable palm oil

2. Discussion of potential threats and challenges accruing from rapid oil palm development scenarios

3. Review of the current situation and pending investments in the oil palm sector for creating income and employment opportunities for boosting Liberia’s economy and preserving the peace

4. Description of a multi-stakeholder approach involving business, government, small holders, and NGOs that can promote sustainable oil palm development

FFI-Liberia Director Letla Mosenene and her spirited team provided excellent technical, logistical, and material support throughout this assignment. This included Letla and Community Forestry Technical Advisor Richard Sambolah accompanying the advisor to traditional palm oil production areas and the general concession area of the large Malaysian palm oil company Sime Darby in Grand Cape Mount County in northwest Liberia over the weekend of May 29th_{. This visit, which is documented by the photos in}

Annex D, provided very useful ground-truthing for the advisor and provided perspective in formulating the conclusions and recommendations contained in Sections 6 and 7 of this report. He was able to meet a number of farmers, the staff of a local development NGO, FACE, and a field agent for a company associated with the Sherman family, one of Liberia’s oil palm industry pioneers.

The advisor also benefitted greatly from information and insights provided by several environmental and development NGOs active in Liberia. These included Jessica Donovan, Sean Griffin, and several of their colleagues at Conservation International (CI)-Liberia, Tate Munro of Winrock International, and the Program Director of the Liberian NGO FACE. FFI-Liberia has a positive working relationships with CI and many of the

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other NGOs working in conservation and agricultural development. It was clear during the visit that these NGOs have a great deal to contribute to the promotion of sustainable palm oil (SPO) in Liberia. Collaboration between FFI and CI on SPO appears promising, and will be discussed in Sections 6 and 7 of this report.

Munro, who has served as Director of Winrock International’s USAID-funded Liberia Oil Palm Revitalization Project, was a valuable source of information about the Liberian oil palm sector. He had organized the first Liberia Oil Palm Workshop and Trade Fair in Monrovia in January 2010 (Annex B), which has opened by the Vice President of Liberia and the Minister of Agriculture. During my visit, he made the decision to accept a position in Ethiopia, so hopefully his successor at Winrock will continue to pursue the initiatives he has started.

The advisor also received very valuable inputs from principals of two international and local private sector companies—Peter Bayliss, Operational Manager of the United Kingdom-based company Equatorial Palm Oil Ltd (also known as Equatorial Bio Fuels) and Haji V. Sherman of the Liberian entity Haj Group of Companies. Bayliss, who was on his way to the UK, has extensive experience with two of the companies that are considered among the leaders within the RSPO—New Britain Palm Oil, Ltd. (NBPOL) in Papua New Guinea and P.T. London Sumatra in Indonesia. His company has purchased 34,000 hectares of unmanaged plantations in Sinoe and Grand Bassa Counties, and is pursuing eventual rehabilitation of up to 60,000 hectares in several locations. Equatorial Palm Oil is an active members of the RSPO and Bayliss indicated that they are eager to cooperate with FFI in the field.

Sherman is the scion of one of Liberia’s pioneering oil palm families. In the 1980s, his uncle Charles Sherman set up a reportedly once-thriving 10,000 acre oil palm plantation and modern oil extraction mill in Grand Cape Mount County under the aegis of the now-defunct West African Agricultural Corporation (WAAC). The plantation is mostly occupied by sharecroppers and the steel structure is all that remains of the mill (Annex D). Sherman is trying to find a joint venture partner who will invest in revitalizing the plantation and rebuilding the mill, but has not found partners he considers suitable.

3. Current Status of the Liberian Palm Oil Industry

According to the IFC (Annex B), the Government of Liberia embarked on a major oil palm production development program in the 1970s by establishing about 60,000 hectares of government and private oil palm plantations. This consisted of state-owned industrial plantations in Grand Gedeh, Maryland, and Sinoe Counties, and small to medium scale private plantations in the counties of Bong, Lofa, and Nimba. The plantations used hybrid Tenera variety seeds imported from Ghana and Ivory Coast. The expected potential production from these plantings was an FFB potential production of around 750,000- 900,000 metric tons, equivalent to 135,000-180,000 metric tons of CPO. However, this was never realized due to the onset of civil war in the late 1980s. Industrial estates almost entirely shut down or were abandoned during the conflict era of 1989-2003. Industrial post-harvest facilities were all closed and largely destroyed during the height of the conflict era. Essentially, the Liberian oil palm sector has not seen any

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improvements or recovery since then.

Almost all oil palm production in Liberia now consists of small-scale community-based farms widely dispersed throughout the country. Figure 1 lists the approximate number of households producing palm oil per district. This data was collected during a 2008 Government of Liberia LISGIS statistical survey, which concludes that oil palm production provides direct employment & income impacts to approximately 37,000 families or to an estimated 250,000 individuals. About 75% of these farmers are from Lofa, Nimba, and Bong Counties where earlier promotional efforts occurred. The same survey concluded that small household scale producers largely harvest aging trees averaging 30-35 years old, well beyond their productive potential.

Many of the smallholders and large estates have not had the financial or labor resources to rehabilitate their plantations. Most farmers practice minimum fertilization, maintenance, or replanting of old stock. Thus, yields are very low, below three tons of fresh fruit bunches (FFBs) per hectare, or less than 20% of Indonesian averages. Annex D depicts the condition of these essentially degraded plantations and the very basic processing techniques and equipment used to extract the palm oil from the fruit. The FFBs are left for several days so that the small fruits can be easily stripped from the bunch. Thereafter, the fruit is placed in an oil drum and steamed with firewood or agriwaste as fuel feedstocks. We even witnessed use of palm kernels as fuels in the field, as there are no kernel mills available in the country. The softened fruit turns into a pulp which is placed in a clay lined pan and the oil is expelled by feet in the way that grapes are traditionally crushed for winemaking in Europe.

According to data of uncertain reliability, Liberia’s total annual output of raw material in 2008 was about 183,000 tons of fresh fruit bunches (FFB), or about 40,000 tons crude palm oil (CPO). This volume of production would be valued at around US $30 million at current world prices. Domestic consumption is estimated at between 16.6 and 17.5 million gallons (62,800-66,200 metric tons). In 2009, the palm oil production level increased to 12.5 million gallons (47,300 metric tons). Given the deficit in supply and demand, Liberia imported an estimated between 14,000 to 17,000 metric tons of palm oil or roughly 3.7-4.5 million gallons with an economic value of US$10.5 – 12.8 million. These figures are difficult to verify as a fair amount of undocumented cross-border commerce occurs with neighboring countries. Until now, there are no exports of internationally-recognized food-grade Crude Palm Oil (CPO) or Palm Kernel Oil (PKO). Figure 2 presents a flow chart of Liberia’s current and potential oil palm value chain, courtesy of Winrock’s Tate Munro. Essentially, the industry is mostly limited to smallholder plantations and wildstands using traditional processing methods with a capacity of 0.2-0.3 FFBs per hour. This is covered by the section with yellow boxes to the right of the value chain. Annex D shows a portable mechanical press capable of processing 250 kg per hour that is currently being promoted for small-scale palm oil processing in various locations in rural Liberia by Winrock International through the USAID-funded Liberia Oil Palm Revitalization Project. The project has commercialized over 80 of these mills which cost about US$750. Until the major investments described in the next section occur, the Liberian palm oil value chain will largely remain as it is.

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4. Opportunities and Threats Posed by the Rapid Expansion of Liberia’s Oil Palm Sector

A. Global Opportunities and Threats through Oil Palm Expansion

Palm oil comes from the fruit of the oil palm tree (Elaeis guineensis), a tropical species that originated in West Africa, but now grows as a hybrid in many parts of the world, including Southeast Asia and Central America. Palm oil became the leading internationally traded edible oil in the year 2007. As shown in Figure 3 below, Malaysia and Indonesia accounted for about 87% of world production in 2006. In 1970, West Africa produced 75% of global palm oil, while currently the share has dropped to around 5%. The relatively low priced oil is used for a wide variety of purposes. The world demand for palm oil has soared in the last two decades, first for its use in food, soaps, and other consumer products and more recently as a biofuel raw material feedstock. The growing affluence of India and China, the world’s top two importing nations, will increase demand of palm and other edible vegetable oils for a variety of applications.

Figure 3: 2006 World Palm Oil Production

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During the past decade, Indonesia surpassed Malaysia as the world’s top producer (Figure 4). Indonesia will continue to lead the world in palm oil production for years to come, due primarily to the availability of suitable land in Indonesia, coupled with recent years of high vegetable oil demand and record energy prices. Consequently, Indonesia’s percentage share of production will continue to increase from the figures reported above. Indonesia produced 18.3 million metric tons of palm oil in 2008 and 19.8 million metric tons, and is expected to continue expanding its production at between 8-10% per year. Oil palm is the world’s most productive vegetable oil crop, yielding more oil per hectare than any other major oilseed commodity. As shown in the graphic below, the oil yield on a per unit area basis from properly maintained oil palms is significantly greater than oil yields from commercially grown rapeseed and soy, the two currently most utilized biofuel feedstocks. In terms of energy balance it takes less sunlight to produce a unit of palm oil. Over most of the last decade, palm oil has consistently traded at a discount to soy, rapeseed, and other edible oils.

0.36 0.42 0.14 3.43 0.6 0.2 Soyabean Sunflower Cottonseed Palm Rapeseed Groundnut

Source: Oil World Annual 2008

Figure 5: Productivity of Key Major Global Biofuel Oilseeds (Tons/Hectare/Year) Significant improvement in living standards, including income, education and health levels are among the economic development benefits of oil palm cultivation in parts of the world where projects have succeeded. Although oil palm cultivation has increasingly shifted towards an industrial estate crop, it has been successfully adapted to suit the needs of smallholders. The industry in Malaysia and Indonesia has made tangible contributions to poverty alleviation, affecting about 5 million smallholders in those countries. Many of the smallholders are part of outgrower schemes with large private companies, although independent smallholders are also widespread. However, oil palm development schemes have also generated landuse conflicts between local communities and outsiders.

The dramatic rise in palm oil production has also resulted in significant losses of tropical forests and peat swamps, and generated major concerns about the effect of palm oil production on habitat loss for many endangered species and the reduction of biodiversity. Therefore, a group of international palm oil buyers, producers, and NGOs came together in 2003 to develop sustainability standards and practices under the auspices of the Roundtable on Sustainable Palm Oil (RSPO). RSPO (Annex C) has now created an international production and supply chain certification scheme which has been in the market since 2008. The organization’s headquarters are in Kuala Lumpur, Malaysia, and there are National Initiatives (Nis) in a number of producer countries in Asia, Africa, and Latin America. Ghana has the most active NI among the African countries.

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B. Potential Impacts of the Rapid Expansion of Liberia’s Oil Palm Sector 1. Summary of Potential Investments

The stage is set for dramatic developments in the Liberian oil palm sector. Four major international oil palm companies, including two of the largest Malaysian and Indonesian companies, Sime Darby and Sinar Mas (known locally as Golden VerOleum), are finalizing concession permits for the development of over 500,000 hectares. Three of these companies, Sime Darby, Equatorial Palm Oil Ltd, and Socfin/Cavalla, have already completed part or all of their concession agreements with the pertinent Government of Liberia agencies, the Ministry of Agriculture and the Board of Investments. Indications are strong that the fourth, Sinar Mas/Golden VerOleum will imminently sign a concession agreement with the Government of Liberia.

Sime Darby, Sinar Mas, and Socfin are three of the most financially and technically strong oil palm companies in the world with extensive holdings, infrastructure, and research and development capabilities. Equatorial Palm Oil, though a recent player, has senior managers who have worked for many years with two Southeast Asia companies with solid reputations and track records for innovation, New Britain Palm Oil of Papua New Guinea and London Sumatra in Indonesia. Most significantly, all four of these companies are active established members of the RSPO. While no guarantee of good corporate behavior, this does provide unusual opportunities and advantages for Liberia. Based on information received from various sources, the summary of pending oil palm investments in Liberia is as follows in Table 1 and as depicted in the general areas of the circles in Figure 6:

Pending Oil Palm Investment Initiatives in Liberia

Investing Investor Estimated Outgrower Investment

Company Origin Counties Hectares Hectares Size

1. Sime Darby Malaysia

Grand Cape

Mount 220,000 44,000 $1,200 MM

Bomi Bong Gbarpolu

2. Golden VerOleum Indonesia Sinoe 200,000 40,000 $1,600 MM

(Sinar Mas) River Cess

Grand Cru Maryland Grand Gedeh 3. Equatorial Palm Oil,

United

Kingdom Sinoe 60,000 10,000 $100 MM

Ltd. Grand Bassa

4. Socfin/Cavalla Belgium Bong 10,000 - $40 MM

5. Haj Group Liberia

Grand Cape

Mount 4,500 2,000 $2.5-5.0 MM

TOTALS 494,500 56,000 $2,950 MM

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FFigure 6: Figure

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2. Review of Economic and Social Benefits from Accelerated Oil Palm Development A cursory review of the above data indicates that if these companies meet their targets, then the following benefits could be achieved:

1) Creation of over 90,000 workplaces within the investor company operations

This assumes 6 hectares per plantation worker, a lower average than the 9-10 hectare averages in Southeast Asia due to less labor productivity and production skills in modern oil palm production. It also assumes that the companies will build a mill for every 10,000-15,000 hectares that could employ about 150-200 workers each. The FFI advisor was able to review one concession agreement with the Government of Liberia (Sime Darby) and noted that it contained targets but lacked specificity on actual commitments agreed to by the company. The business prospectus for another company (Golden VerOleum/Sime Darby) contained projections of this magnitude.

2) Generation of improved incomes for over 30,000 Liberian smallholder/outgrower families.

Almost any interventions could lead to increased income given the extremely low levels of productivity and maintenance of the aging oil palm plantations. The best results could be achieved if the companies in collaboration with government or NGO extension services provide financial and technical support to smallholders/outgrowers in establishing new plantations or totally replanting existing ones. This could entail implementing improvements such as introduction of higher-yielding clonal varieties, application of good agricultural practices and inputs, and skill development training and extension for the producers. Care needs to be taken that there are adequate provisions for smallholder/outgrowers having adequate income opportunities and meeting food consumption needs during the five-year period prior to the plantations achieving maturity. Some options for smallholders that have been demonstrated in other countries include intercropping with foodcrops such as grains and pulses and integrating livestock into the plantations.

3) Production of about 1.0-1.5 million tons Crude Palm Oil (CPO) per year.

These projections are based on a combined average oil production of 2-3 metric tons of CPO per hectare on the company core plantations plus the smallholder/outgrower schemes. This level is equivalent to about 60-75% of the Indonesian average production yields per hectare. Actually, much higher yields (6-8 tons per hectare or more) have been achieved by the three large established international companies now operating in Liberia in their Southeast Asian operations. This has largely been achieved through best management practices including planting advanced clonal seedling material, streamlining harvesting techniques, and optimizing fertility and nutrient cycling. Another factor that could drive production levels higher would be to install state of the art processing technology in order to achieve optimal oil extraction rates (OER). In any case, if this level of production were in effect today, Liberia would be among the top five largest global producers including Indonesia, Malaysia, Thailand, and Nigeria. Currently, Liberia rates near the bottom of the producer countries and does not have adequate

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production for domestic consumption needs.

4). Company revenues can reach levels of US$750-1,125 MM per year within 7-10 years once plantations are mature and well-managed.

The resulting revenues for the investing companies would make a significant contribution to raising Liberia's Gross National Product (GNP). This assumes export prices remaining at the current level of US$750 per metric ton. This pricing level is not unrealistic as prices have stayed at this level for the last two years. However, achieving this level of revenue increases will take major additional infrastructure investments in roads, ports, housing, and communications systems by the companies, banks, and government financing institutions. Additionally, government and private sector resources will be needed to boost the capacities of educational and training institutions to provide technical, managerial, and skill development.

5) Generate substantial tax revenues and financing for an oil palm development fund. The pending palm oil developments in Liberia could make substantial contributions to national tax revenues and thereby improving Liberia's fragile financial position. International donors and financing agencies such as USAID, IFC, and the World Bank could redirect their funding from balance of payments subsidies towards investments in productive infrastructure and human resource development. The government could earmark a portion of tax revenues or create a special levy to set up an oil palm development fund to benefit smallholders and local communities and promoting sustainable production. However, such a fund needs to be professionally and independently managed with high standards of transparency and accountability.

3. Potential Environmental and Social Issues

The pending oil palm concessions will constitute land use changes on a significant scale. The two largest initiatives of Sime Darby and Golden VerOleum/Sinar Mas will each entail a number of individual production units in multiple locations and counties. For example, Figure 7 contains a map of Sime Darby's new oil palm and residual and renewed rubber plantations totaling over 311,000 hectares in Grand Cape Mount, Bomi, Bong, and Gbarpolu counties. Golden VerOleum's November 2009 Business Concept Presentation (cited in Annex B) contains a map that indicates their 240,000 hectares of core and outgrower oil palm plantations will be established within a 500,000 ha “gross interest area” - which according to the company will exclude protected and potentially biodiverse zones. The areas identified by the company for plantation development appear to abut or potentially overlap with Liberia's only gazetted protected area, Sapo National Park, and with adjacent natural forest areas that have been recommended for designation as conservation forests.

A cursory review of Figure 8, Liberia’s Forest Cover in 2008, and Figure 9, Liberia Land Cover Map indicates potential areas of conflict between the pending oil palm plantation concessions and closed canopy natural forest cover. According to documents reviewed by the advisor, Liberia still contains the largest proportion of intact natural forests in the Guinean Forest Zone which covers several countries in West Africa. Despite major forest

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destruction suffered during the civil war era, and ongoing incidence of wildlife poaching throughout the country, Liberia still contains high levels of biological diversity and endemic species. A number of these species and their habitats are facing increasing pressures and threats to their viability. With the oil palm development experience in Southeast Asia as a frame of reference, there is grounds for concern that rapid and unsustainable expansion of oil palm plantations could exacerbate the situation. Instead of or in addition to the positive scenarios envisioned in the previous section, this rapid expansion could lead to major disruptions of natural forests and dislocations of endangered species in Liberia.

Another area of concern regarding the rapid expansion of oil palm plantations pertains to traditional land tenure and potential conflicts between companies and local communities. This is a major challenge in Indonesia, where customary rights are not officially recognized and frequently lead to difficulties for oil palm development efforts. Identification of traditional land tenure appears to have greater government support in Liberia, although legal status for specific land units may be lacking. Additionally, there are a number of lingering disputes stemming from land seizures and occupations of company facilities both during and after the conflict era. Therefore, effective coordination between the companies and local government and communities will need to be undertaken to identify effective tenurial mapping and compensation mechanisms. During the advisor's visit, he frequently heard from officials that Liberia's forests should be apportioned for “community, commercial, and conservation” uses. This formulation admirably seeks balanced forest development and equitable distribution of social, economic, and environmental benefits. This approach is highly consistent with the best practices of sustainable palm oil as laid out in the Principles and Criteria (P & C) of the Roundtable for Sustainable Palm Oil (RSPO-Annex C).

The RSPO contains several key mechanisms and tools to address land use change and land tenure issues. First, the RSPO requires all of its members to conduct High Conservation Value (HCV) assessments of all concession areas prior to any new plantation establishment. If properly conducted by experienced and objective parties, HCV assessments and management plans can potentially prevent unsustainable practices and widespread forest conversion (Section 5 further elaborates this theme). Second, in January 2010, the RSPO established its global guidelines for responsible and transparent procedures for new plantations. This would apply completely to Liberia since all of its oil palm development would entail new plantings. Third, the RSPO Principles and Criteria (P & C) mandate the use of the Free Prior and Informed Consent (FPIC) framework that can provide effective means to avoid and resolve land use conflicts. Therefore, it was very encouraging to learn that the oil palm concession agreement between the Liberian Government and Sime Darby contained the following clause:

“Investor's obligations with respect to the environment shall be in accordance with the Environmental Protection and Management Law of Liberia or any other law or regulation of Liberia, regulations of the Environmental Protection Agency (EPA) and the Principles of the Roundtable for Sustainable Palm Oil (RSPO)”.

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Figure 9: Liberia Land Cover Map

5. The High Conservation Value Forest (HCVF) Assessment and Management Framework: A Viable Means of Promoting Sustainable Palm Oil in Liberia

The High Conservation Value Forest (HCVF) concept was developed in 1999 by the Forest Stewardship Council, where it was included as Principle 9 in its Principles and Criteria for “sustainable forest management”. It was developed in recognition that certain forest areas have critical biological, ecological, social or cultural values – they may provide basic needs for local people, provide essential ecosystem services, or contain or support threatened or endangered habitats or species. These values may be of importance at the local, national, regional or global scale.

High Conservation Value Areas or Forests (HCVAs or HCVFs) are areas or forests that contain high environmental and social values. With the expansion of its use, the focus on “forest” in HCVF was dropped, recognising that non-forest natural ecosystems can also be

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of high conservation value. The classification system for High Conservation Values (HCV) is based on the revised High Conservation Value Area Toolkit that was produced in 2008, as follows:

HCV1: Forest areas that contain globally, regionally or nationally significant concentrations of biodiversity values (this includes: protected areas, rare or threatened species, endemic species, and seasonal concentrations of species)

HCV2: Globally, regionally or nationally significant large landscape-level forests. HCV3: Forest areas that are in or contain rare, threatened or endangered ecosystems. HCV4: Forest areas that provide basic environmental services in critical situations (this includes: protection of watersheds, and protection against erosion and destructive fire) HCV5: Forest areas fundamental to meeting basic needs of local communities HCV6: Forest areas critical to local communities’ traditional cultural identity

The HCV framework provides a structure where forest and other natural areas with these critical values are identified prior to any changes in land use or development. Once identified, appropriate management options can be developed and implemented to maintain or enhance these important values. The key disciplines required in conducting HCV assessments and management plans include forest ecology (vegetation, hydrology, etc.), wildlife ecology (mammals, aviary and aquatic species, reptiles, etc.), socio-economic, and geographic information systems (GIS) analysis and mapping. The Revised HCV Toolkit of 2008 identifies the following three key steps and procedures for HCV assessment, management, and monitoring in palm oil development:

1. Identification of HCVs present, leading to identification of HCV management areas and proposals of management prescription to maintain or enhance these areas.

2. Development and implementation of an HCV management plan

3. Implementation of a monitoring program to assess the effectiveness of the HCV management plan.

The RSPO has strategically included HCVs in the Principles and Criteria (P&C), especially in regards to new plantings. The requirements for HCV appears twice in Criterion 5.21_{with regards to the requirement for the identification and management of}

rare, threatened or endangered species and high conservation value habitats in existing plantations; and in Criterion 7.32_{, on new plantings since November 2005, where it is} 1 _{Criterion 5.2: The status of rare, threatened or endangered species and high}

conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans.

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stipulated that any primary forest or areas required to maintain or enhance any HCVs are not cleared for new plantings. This is meant to identify areas, in a participatory manner with local communities and other relevant stakeholders, that are suitable for conversion to oil palm development and which areas are not, so that oil palm plantings do not overlap or encroach on lands with critical values as defined in the HCV toolkit. In essence, this provides guidance for plantation management on appropriate land-use and conservation planning and management.

The HCV toolkit does not offer detailed guidelines on HCV management or monitoring. It only provides management recommendation guidelines for each of the six HCVs summarized above in broad generic terms for consideration rather than to impart detailed management requirements. The HCV approach has not yet become part of the legal process in Indonesian, Malaysia, or any of the producing countries. It remains a voluntary procedure adopted by companies operating within the framework of the Forest Stewardship Council and Roundtable on Sustainable Palm Oil’s certification processes or other interests also adopting corporate ‘best practice’ procedures.

HCV assessments are typically conducted by a team of specialists in biological and social science disciplines. The team members may represent some or all of the following areas: - Forest Ecology

- Hydrology

- Wildlife Ecology (Mammals, birds, herpetology, etc.) - Social Economy

- Geographic information systems (GIS) analysis

The HCV teams start their assessments by conducting a review of available data, maps, and literature about the specific concession area and its broader region. Thereafter, the teams proceed to conducting field surveys, data collection, and stakeholder interviews. Thereafter, the individual team members conduct analyses according to the HCV categories summarized above. This leads to delineation and mapping of HCVFs, accompanied by a narrative report containing conclusions and recommendations for management and monitoring of these areas. Prior to completion, HCV assessments require conducting a public consultation with all pertinent stakeholders and a peer review process with independent experts. The completed HCV assessments are advisory in nature, leaving it up to the companies to develop their own means and measures to implement the recommendations.

In Indonesia, FFI works with oil palm companies to help foster a sustainable palm oil industry in key conservation priority areas such as the peat swamp forests of West Kalimantan which are some of the major remaining orang-utan habitats. This means developing public-private partnerships with oil palm companies, primarily by assisting them with high conservation value forest (HVF) assessments & RSPO certification. FFI is also working with selected concessions to develop potential REDD schemes for carbon trading tied to the protection of HCV areas.

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6. Conclusions and Recommendations A. Conclusions of the Field Visit

1. As described in Section 4, current palm oil industry developments in Liberia bring the promise of significant economic benefits in terms of sales and tax revenues, employment opportunities, and expanded investments. If the current targets and projections for oil palm industry expansion are met, Liberia could realize production of 1.0-1.5 million metric tons of Crude Palm Oil Production valued at US$750-1,125 million in sales at current market prices. This development could create up to 90,000 new workplaces as well as opportunities for 30,000 smallholder outgrowers to significantly increasing their incomes. Additionally, the country could increase its tax revenues significantly and create special funds for oil palm development financed by sales.

2. Without coordinated planning and effective land use change policies in the forest and agricultural ministries, there is a substantial risk of forest conversion and biodiversity losses through rapid expansion of oil palm plantations in Liberia, particularly in areas with vulnerable forest ecosystems and protected areas such as Sinoe County. Liberia, which contains the highest percentage of natural forests and levels of biodiversity in the Guinean Forest Region, appears to be particularly vulnerable to the effects of rapid land use change. These impacts include major disruptions of natural forests and dislocations of endangered species. An additional challenge posed by oil palm expansion in Liberia is the potential occurrence of land use conflicts and tenurial disputes involving government, companies, and local communities.

3. Liberia has significant leverage in compelling sustainable practices by incoming concessionaires since all four companies that have secured or are seeking concessions are members of the Roundtable on Sustainable Palm Oil (RSPO). The RSPO contains several key mechanisms and tools to address land use change issues, including the requirements to conduct High Conservation Value (HCV) assessments and follow responsible and transparent procedures for new plantations. The RSPO's standards or its Principles and Criteria (P & C) use the Free Prior and Informed Consent (FPIC) framework that can provide effective means to avoid and resolve land use conflicts. The potential for 100% RSPO certified production in Liberia also creates a significant competitive advantage in selling source-identified Certified Sustainable Palm Oil (CSPO) for premium prices.

4. Given the dramatic and rapid expansion of Liberia’s palm oil industry, there is an urgent need to create a multi-stakeholder sustainable palm oil initiative, with support from the Liberian and international government institutions, conservation NGOs, the major producer companies developing the concessions, and the RSPO’s Secretariat and Ghana National Interpretation working group.

B. Recommendations for Follow-up Actions 1) National Level Recommendations:

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1. Local RSPO members, ie., FFI, CI, Sime Darby, Equatorial Palm Oil, Socfin, and Golden VerOleum/Sinar Mas, should create a national level Sustainable Palm Oil Working Group (SPOWG) with support and active participation of government. This group can receive technical and potentially financial support from the RSPO Secretariat in Kuala Lumpur, Malaysia. Advisor Thomas Fricke has already discussed this with RSPO Secretary General Dr. V. S. Rao during an RSPO Indonesian Annual Public Consultation in Medan, Indonesia on July 6th_{and gotten a positive response. FFI and CI}

should provide expertise as necessary to this initiative through their personnel involved in sustainable palm oil from Southeast Asia and Latin America, especially Indonesia and Brazil.

2. The SPOWG should mobilize additional government, private sector and NGO/civil society participation in the Working Group to address the following key issues:

-Promoting RSPO best production practices and sustainability certification, -Land use/spatial planning,

-Biodiversity conservation,

-Greenhouse gas (GHG) emission reduction, -Smallholder/outgrower integration,

-REDD carbon credit opportunities.

The working group should hire an effective manager who has a strong background in the issues and in facilitating multi-stakeholder processes.

3. After generating optimal participation and creating a concrete work plan, The SPOWG should develop a National Interpretation (NI) of the RSPO Principles and Criteria (P & C) in cooperation with the Ghana National Interpretation Working Group (NIWG) and the RSPO Secretariat in Kuala Lumpur, Malaysia. This process will enable Liberian palm oil production to achieve certified sustainable palm oil (CSPO) certification and marketing.

4. The government of Liberia and the private sector should create the Liberia National Oil Palm Sector Strategy that was proposed during the Liberia Oil Palm Workshop and Trade Fair in Monrovia in January 2010 (Annex B) This initiative should include active participation and support from:

-National government agencies (MOA, EPA, FDA, and IBL)

-International government agencies (IFC, World Bank, USAID, etc.) -Local and international private sector companies and organization such as:

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• Domestic entrepreneurs and service companies,

• Multinational corporations (Sime Darby, Equatorial Palm Oil, Golden VerOleum/Sinar Mas, Socfin/Cavalla).

5. All further concession agreements between the Government of Liberia and oil palm investor companies should include the clause cited on page 16 of this document:

2) County Level Recommendations:

1. Two counties should serve as pilots for developing sustainable palm oil initiatives in Liberia. Based on consultations with key stakeholders, the counties of Siloe and Grand Cape Mount provide good opportunities for promoting conducive policies and practices: Siloe County:

-Siloe County’s Superintendent attended the Governors Climate and Forest Task Force Conference in Aceh, Indonesia and has a strong commitment to sustainable oil palm and forest conservation in his county.

-Two of the four concession holders, Equatorial and Golden VerOleum/Sinar Mas, have existing or pending operations in Siloe County. Equatorial has already indicated a willingness to cooperate in the area of HCV assessments and management plans.

-FFI has an active presence in Sapo National Park and other parts of the county through its new REDD Project with NORAD, which can provide some technical and financial support to the sustainable palm oil initiative.

Grand Cape Mount County:

-One of the major concession holders, Sime Darby, and one of the last remaining local private sector plantations, the Sherman Estate, have their operational bases in this county. -The county contains several thousand traditional smallholder palm oil producers that could be encouraged to partner with the local or international companies to improve their plantations and serve as outgrowers.

2. The national-level SPOWG should foster county-level collaboration between government, private sector, and NGOs in the designated pilot counties. This will entail setting up two county-level SPO working groups, each with their distinct objectives and work plans. Both working groups could establish well-coordinated programs including: -Participatory policy initiatives regarding sustainable agricultural development, forest conservation, equitable land tenure, and food security

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-Spatial planning combined with ground truthing, primarily on the theme of appropriate planning and demarcation of concession boundaries

-Technical assistance and training in the RSPO P & C, particularly covering: • New plantation guidelines and HCV assessment

• Best practices in plantation and mill management • Greenhouse gas (GHG) emission reduction • Free, prior and informed consent (FPIC) • Certification requirements and procedures

• Smallholder/outgrower organizational and technical capacity building.

3. Using their own resources combined with external financing, FFI, CI, and other local collaborators should conduct HCV assessments, management, and monitoring plans at county, landscape, and concession levels. FFI and CI should focus their efforts on areas that are potentially being considered for oil palm plantation development. They should engage in the following:

• HCV assessments

• Threat assessments of key species • Engagement with county government

• Engagement with the FDA and the agricultural ministry Sustainable financing for the protection of forests (REDD mechanisms)

In addition to their local staff, FFI and CI can draw upon their own personnel with HCV expertise in Indonesia and Brazil as well as an organization both are members of, the HCV Network based in Oxford, UK. The latter has a wealth of information and technical materials and frequently conducts short and medium term courses in Oxford for international participants. Liberian participants should be sponsored for courses being held in the next few months to help advance Liberia's sustainable oil palm initiative. Additionally, HCV Network, FFI, and CI should consider organizing a course in Liberia itself within the next six months.

If these assessments can be conducted in collaboration with the oil palm companies, the FDA, and the Ministry of Agriculture, they could provide helpful guidance for the final demarcation of the actual oil palm plantation boundaries. This could serve as a major deterrent to unwanted negative impacts of oil palm development.

4. The national and county-based working groups should facilitate the development of Memoranda of Understanding (MOUs) for specific collaborative activities between new oil palm concessionaires, local government, NGOs, technical service providers, and/or local communities. The scopes of work could include such areas as:

• HCV assessments and management planning

• Concession-specific technical assistance and training efforts

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development

5. The national and county-based working groups should facilitate equitable relationships and partnership models between new concession holders and smallholders/ outgrowers. This work can build upon the efforts of the IFC's Liberian Model Concession Framework Project (Oil Palm and Rubber) cited in Annex B. This initiative will need a great deal of careful planning and coordination given the wide gaps in technology, germ plasm, and agronomic practices between current oil palm smallholders in Liberia and the new concession companies. Some of the key themes to pursue include:

• Appropriate outgrower organizational models (ie.,cooperatives, shareholders, etc.) • Effective smallholder plantation establishment models (loans, grants, land as

collateral, etc.)

• Provision of seedlings, technical assistance, skills and management training.

6. Potential Funding and Program Support Opportunities

During the visit, in consultation with the individuals and organizations indicated in Annex A, the Advisor identified several potential sources of funding and program support for the proposed recommendations:

1. Private Sector

The private sector companies that are negotiating with the Government of Liberia to firm up their oil palm concession agreements can demonstrate their commitments to sustainable oil palm and the RSPO P & C by providing personnel and capital support to the national and county-based initiatives described previously. These companies will be required to contract with independent third-party assessment teams to conduct HCV assessments and management plans of their concessions. In order to meet RSPO guidelines, they will eventually need to finance internationally-accredited certification agencies to conduct the inspections of their operations.

Therefore, it will be in the long-term self interest of these companies to support the national and county-level sustainable oil palm initiatives proposed in this paper. The companies can create positive precedents of multi-stakeholder engagement by developing MOUs and contracts with NGOs and other service providers. Equatorial Palm Oil has indicated that it is prepared to support such collaboration immediately.

2. NORAD Southeast Liberia REDD Initiative

The second traunche of FFI's NORAD Southeast Liberia Reduction of Emissions from Deforestation and Forest Degradation (REDD) initiative can include a modest amount of start up funding for the Sinoe County-based sustainable oil palm pilot initiative described above. NORAD funds could cover salaries, consulting fees, and field assessment costs. 3. Roundtable on Sustainable Palm Oil (RSPO)

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The RSPO Secretariat may have some limited funds available to support the launching of the national-level sustainable oil palm initiative described above. FFI and CI can facilitate this process through their active involvement in the RSPO. FFI's Senior Advisor for Sustainable Palm Oil Thomas Fricke and CI's Senior Scientist Tim Killeen, co-chair of the RSPO GHG Working Group, can take the lead in this effort.

4. World Bank and IFC Liberia Missions

The World Bank and IFC missions in Liberia have been actively engaged in promoting palm oil in Liberia, through initiatives such as the IFC Model Concession Framework Project (Oil Palm and Rubber) and the Review of the Oil Palm Sector in Liberia in 2008. The advisor was unable to meet with World Bank or IFC representatives during his visit as the pertinent people were attending an IFC Palm Oil Consultative Workshop in Ghana at the time. For the time being, the IFC has suspended further investments in the oil palm sector globally, due to environmental concerns about their oil palm lending portfolio in Indonesia. The consultation in Ghana was one in a series of global meetings to revise and realign the IFC's portfolio. However, the IFC is still actively involved in the sector through its Biodiversity and Agricultural Commodities (BACP) Program (see below). There are positive indications that the IFC will resume investments in the oil palm sector by the end of 2010.

5. USAID Global Development Alliance (GDA)

During the field visit, FFI-Liberia, CI-Liberia and the advisor visit USAID-Liberia and met with Donald C. Homer, Team Leader of the Economic Growth Office, and his soon to be successor, Vickie A. Sigman, Agriculture/Enterprise Development Advisor of the Economic Growth Office. They expressed a potential interest in considering a concept for a Global Development Alliance (GDA) Public-Private Partnership project on the theme of sustainable palm oil. This international program of USAID is managed from their headquarters in Washington DC and accessible through the following website: http://www.usaid.gov/our_work/global_partnerships/gda/ The partnerships typically involve one or more private sector companies and one or more NGO or government agencies and require matching funds. The actual projects are administered by the field missions. In order to move forward, FFI and CI should devise a viable concept and approach one or more private sector and/or government agencies to partner with in Liberia.

6. IFC Biodiversity and Agricultural Commodities (BACP) Program

In April 2009, FFI became one of the first grantees of the RSPO-sponsored International Finance Corporations’s (IFC) Biodiversity and Agricultural Commodities Programme (BACP). FFI's project aims to support sustainable palm oil production through landscape-level assessments of High Conservation Value Forest (HCVF) in three districts of Indonesia. FFI has created a multi-stakeholder initiative in West Kalimantan and Papua with additional funding support from the Cargill-FFI Partnership and others. The project mobilizes local government agencies, palm oil companies, NGOs and local communities to identify and assess HCVFs at concession and landscape levels. The project also involves a number of oil palm plantation companies that are members of the RSPO. The

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results will be incorporated into district level spatial plans and policies to create a supportive framework for biodiversity conservation of tropical forests, peatlands, and endangered species habitats.

The BACP is still soliciting proposals for its sustainable palm oil portfolio. However, current guidelines restrict the geographic areas to Ghana, Ivory Coast, and Nigeria in Africa. They indicate a preference to working with existing grantees, so FFI may have an advantage in this matter. It may be possible to persuade BACP that Liberia poses a unique funding opportunity given its substantial forest resources and the large scale of current developments involving several major RSPO members. FFI will make an enquiry in this matter to see if a potential opening may exist for submitting a proposal for Liberia.

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ANNEXES: Annex A: Individuals and Organizations Consulted Annex B: Additional Publications and Resources

Annex C: Latest Developments in Sustainable Palm Oil and the Roundtable on Sustainable Palm Oil (RSPO)

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Annex A:

Individuals and Organizations Consulted

1. Moses Wogbeh, Managing Director, Forestry Development Authority (FDA), Monrovia

2. Hon. Milton Teahjay, Superintendent, Sinoe County, Liberia 3. Fauna and Flora International (FFI) Liberia:

-Letla Mosenene, FFI-Liberia Program Manager, Monrovia -Richard S. Sambolah, Technical Advisor/Community Forestry -Dr. Liz Greengrass, Primatologist/Chief Technical Advisor

-Emmanuel Obot, Consultant/Chairman, Nigerian Conservation Foundation (NCF) -Dr. Nouhou Ndam, Chief Technical Advisor, REDD/Carbon

4. Conservation International (CI) -Alex Peal, Country Director, CI-Liberia

-Jessica Donovan, Technical Programs Director, CI-Liberia -Sean Griffin, Technical Advisor, Spatial Planning, CI-Liberia

-Miguel A. Morales, Protected Areas Management Advisor, Conservation Strategies, CI-USA

5. Tate Munro, Director, Liberia Oil Palm Revitalization Project, SCTP Liberia, Winrock International

6. Haji V. Sherman, Proprietor, Haj International Group of Companies, Brewerville, Liberia

7. Program Director, FACE, Grand Cape Mount County

8. PeterBayliss, Operations Manager, Equatorial Palm Oil plc, Monrovia 9. Dr. Chris Toe, Advisor, Golden VerOleum, Monrovia

10. Stephanie Altman, West Africa Regional Advisor, Forest Law Enforcement, Governance & Trade, VPA, European Union, Monrovia

11. U.S. Agency for International Development (USAID) Liberia Mission: -Mc Donald C. Homer, Team Leader, Economic Growth Office

-Vickie A. Sigman, Agriculture/Enterprise Development Advisor, Economic Growth Office

-Daniel E. Whyner, USDA Forest Service Land and Community Forestry Advisor, Economic Growth Office

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Annex B:

Additional Publications and Resources

During the visit, I compiled the following documents, which are available upon request: 1. Summary Report and Proceedings, Liberia Oil Palm Workshop and Trade Fair, Monrovia, January 21-22, 2010:

-The Oil Palm Industry: Global Trends since 1970 and the Future of the Industry, Peter Bayliss, Equatorial Palm Oil plc

-West Africa Regional Oil Palm Situation, Dr. Ofousu Budu K.G.

-History of the Oil Palm Industry in Liberia 1968-2003, Sumo Z. Lapelleh, Liberian Palm Products Corporation

-Oil Palm Association of Liberia (OPAL), Tupin K. Morgans, Acting President -The Road to Oil Palm Sustainability, Timothy Killeen, Senior Research Scientist, Conservation International/Board Member, RSPO

-Oil Palm: Cash and Food Security Crop, Moses Zinnah, Ministry of Agriculture, Liberia 2. Review of the Oil Palm Sector in Liberia, AIRECTS Consulting, International Finance Corporation (IFC), Monrovia, Liberia, May 2008

3. IFC Model Concession Framework Project (Oil Palm and Rubber): Stakeholder Consultation Workshop, “Future Directions for Agricultural Concessions: The

Framework for Oil Palm and Rubber”, May 2008, Krystal Oceanview Hotel, Monrovia: -Issue Paper No. 1: General Principles, K.W.J. Rochow

-Issue Paper No. 2: Nucleus Estate-cum-Small Landholder Model, K.W.J. Rochow -Issue Paper No. 3: Investment Incentives, K.W.J. Rochow

-Issue Paper No. 4: Community Outreach and Social Development, K.W.J. Rochow -Issue Paper No. 5: Comparison of Oil Palm & Rubber Operations, M.B. Crabb

-The Oil Palm Industry, Options for Plantation Development: Nucleus-cum-Small Holder Model, The Indonesian “Plasma” Model, Lessons and Applications, M.B. Crabb

4. Golden VerOleum, Oil Palm Development: A Long-Term Business Partnership with Liberia, Business Concept, November 2009

5. Final Amended and Restated Concession Agreement between the Government of Liberia and Sime Darby Plantation (Liberia), Inc. 2009

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Annex C:

Latest Developments in Sustainable Palm Oil and the Roundtable on Sustainable Palm Oil (RSPO) A. Introduction

In the almost eight years since its founding in 2002, the Roundtable on Sustainable Palm Oil (RSPO) has grown from a small discussion group of palm industry members and environmental NGOs into a major international force. Concurrently, tropical palm oil has emerged as the world’s largest vegetable oil crop for a variety of food and non-food applications. As of this writing, the RSPO’s membership has expanded to over 300 organizations from the palm oil production and trading industry, manufacturers and retailers, banks and financial institutions, research and development networks, and social and environmental NGOs. The participating companies now constitute well over 40% of global palm oil production. The RSPO’s inclusive and at times unwieldy multi-stake-holder consultative process has produced extensive international performance standards and a sophisticated certification system for sustainable production, processing, and marketing of palm oil.

The RSPO is viewed in many different ways—a genuine effort that has achieved significant breakthroughs on the international scene, a dynamic forum for exchanging views, or a costly and cumbersome process-oriented entity. Its proponents, many of whom are active RSPO participants, see the organization’s promise in promoting best practices and halting past and present destructive patterns in the rapidly growing international palm oil industry. Its critics, including some within the organization, see the RSPO as too prone to compromise and turning a blind eye to the sins of omission and commission of the major industry players and non-members. As with its sister commodity initiatives such as the Forest and Marine Stewardship Councils, the hopeful signs on the horizon posed by the RSPO are often overshadowed by the overwhelming nature of issues such as global warming, tropical forest and peatland destruction, and species extinction.

This review, accompanied by a CD with extensive documentation, provides a brief summary of the current status of the RSPO, with particular emphasis on the supply chain certification process. This report was prepared by Sustainable Trade Consultants (STC), a Vermont and Indonesia-based consulting firm that has extensive experience in supply chain development, sustainability certification, and environmentally and socially-responsible enterprises in developing countries.

B. History and Summary of the Roundtable on Sustainable Palm Oil (RSPO)

The Roundtable on Sustainable Palm Oil (RSPO) originated in 2002 through an informal set of meetings involving the European companies Unilerver, Aarhus, Migros, and Sainsbury, the major Malaysian palm oil producer Golden Hope and the Malaysian Palm Oil Association (MPOA), and the international environmental organization World Wide Fund for Nature (WWF). The group created the groundwork for the formation of the RSPO and organized “Roundtable 1” (RT1), the first annual gathering in Kuala Lumpur, Malaysia in 2003. Over 200 participants from 16 countries attended this gathering and

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signed a Letter of Intent (LOI) which officially launched the RSPO. The LOI proclaimed the vision and mission of the organization as follows:

Vision:

RSPO assures that the production of palm oil contributes to a better world Mission:

RSPO promotes sustainable palm oil production, supply and utilization through the development, implementation, and verification of credible global standards, supported by the interaction and communication between key stakeholders throughout the supply chain.

The basic principles and modus operandi of the fledgling organization were described as follows:

 Multi-stakeholder in nature and membership

 Voluntary and proactive

 Transparency in communications and information-sharing

 Inclusiveness among various stakeholders

 Action-oriented based on tangible results

 Fully committed to the production and utilization of sustainable palm oil The RSPO has followed in the footsteps of several other global commodity initiatives, such as the following:

-Forest Stewardship Council -Marine Stewardship Council

-Common Code for the Coffee Community (4C) -Roundtable on Responsible Soy

-Sustainable Tree Crops Initiative (Cocoa) -Roundtable on Sustainable Biofuels

These organizations were all created in response to major environmental and social issues related to the production, processing, and marketing of the commodity involved. Most of them brought together major industry players with conservation and development NGOs in response to major concerns such as rainforest destruction, overfishing, land rights, and poverty alleviation. The Forest Stewardship Council (FSC), long based in Vermont, was one of the first, and resulted in the internationally-recognized Smartwood certification system for sustainably produced timber and wood products.

The governance of the RSPO is vested in an Executive Board (EB) that includes 17 members representing the various sectors involved in the organization—palm oil producers and manufacturers, social and environmental NGOs, financial institutions, and trade associations. Since the onset, the President of the Executive Board has been Jan-Kees Vis, the Vice President for Sustainability of Unilever, which is also the world’s largest industrial consumer of palm oil products. The second report of this series will

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highlight Unilever’s commitments to sustainable palm oil in greater detail.

In April 2004, the RSPO formally set up a Secretariat in Kuala Lumpur, Malaysia, the capital city of the largest palm oil producer nation at the time. This small office includes an Executive Director, an Activities Coordinator, a Membership Director, and other support staff and consultants as needed. In December 2006, the RSPO set up an Indonesia Liaison Office in Jakarta, the capital city of the neighboring country which has now overtaken Malaysia as the world’s largest palm oil producer. These offices organized and conducted the next three annual Roundtables in Singapore and Kuala Lumpur. The most recent of these events, RT5 held in Kuala Lumpur in November 2007, attracted over 800 participants from over 35 countries. By June 2008, the RSPO contained a total number of 229 ordinary members and 87 affiliate members.

From 2003-2005, the main focus of the RSPO was the creation by consensus of a set of Principles and Criteria (P & C) that could serve as the basis of a credible, comprehensive sustainability certification system. The first draft was completed by October 2005, containing 8 broad principles which incorporated 39 specific criteria (see attachment). Once the draft was confirmed at the RT4 in Singapore, the RSPO organized several National Interpretation (NI) initiatives to review and generate specific indicators and guidances to augment the global P & C with adjustments for local conditions. These initiatives were managed by National Interpretation Working Groups (NIWGs) comprised of leading companies and NGOs in those countries. NIs have now been completed for Malaysia, Indonesia, and Papua New Guinea, and are underway for several other countries in Latin America and Africa.

For example, in Indonesia, the RSPO National Liaison office enlisted four major production companies (Wilmar International, Sinar Mas, Musim Mas, and London Sumatra) to serve as hosts for the field testing of the P & C and the development of indicators, guidances, and trial audits. Working in parallel with open communications and exchanges available to all RSPO members, they conducted RSPO compliance gap analyses, helped develop a road map for the audit process, and field tested RSPO verification and certification protocols. The Liaison Office also worked with key NGOs such as Sawit Watch to develop gap analyses, indicators, and guidances for smallholders. C. RSPO Sustainability Verification and Certification

The RSPO auditing and certification system is intended to be a widely recognized and accredited third-party certification program for producers, processors, food and non-food ingredient producers, manufacturers and retailers around the world. From 2005-2007, the RSPO hired the UK-based consulting organization ProForest and several individual consultants to create the basis for its Certification and Accreditation System. By the RT5 in Kuala Lumpur in November 2007, the protocols for certification and accreditation of third party inspection organizations were generated by committees that met directly in person and indirectly though teleconferencing and e-mail.

At the end of the RT5, the RSPO’s Executive Committee and the General Membership approved the proposed Certification and Accreditation system. Between that time and the present, six companies in Malaysia, Indonesia, and Brazil have been accredited by the

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RSPO to perform certification audits. By May 2008, the first of a number of inspections of RSPO member companies was underway by these accredited inspection bodies in Malaysia and Indonesia. The pace of audits and companies entering the certification process is steadily increasing now, as shown in the attached Power Point document RSPO Update Seventh Generation. The first transactions and shipments of certified sustainable product were on the water in early September 2008, using the Greenpalm Book and Claim system that will be described below. At the moment, only origin-based plantation and processing operations have been included in the RSPO’s certification program.

The RSPO has attempted to create standards and certification for sustainable production, processing, and marketing of palm oil that will be relatively simple, accessible and implemented worldwide on a consistent basis. These standards are meant to be generic globally and contain provisions for specific conditions for separate countries. The standards and certification are intended to be adaptable to new information, as well as efficient and cost-effective to measure and implement. The entire auditing and inspection process will abide by the RSPO’s approach of transparency and multi-stakeholder inputs. RSPO certification aims to ensure that the products are produced in compliance with widely-respected guidelines with social and environmental safeguards that protect the environment, wildlife, workers and local communities. The basic elements of the standards are the Principles and Criteria (P & C) previously mentioned above and contained in the annex and the Resource CD-Rom. As shown, there are 8 general principles within the P & C, which have an aspirational orientation:

Principle 1: Commitment to transparency (2 Criteria, 8 Indicators)

Principle 2: Compliance with applicable laws and regulations (3 Criteria, 9 Indicators) Principle 3: Commitment to long-term economic and financial viability (1 Criterium, 2 Indicators)

Principle 4: Use of appropriate best practices by growers and millers (8 Criteria, 31 Indicators)

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity (6 Criteria, 17 Indicators)

Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills (11 Criteria, 27 Indicators)

Principle 7: Responsible development of new plantings (7 Criteria, 16 Indicators)

Principle 8: Commitment to continuous improvement in key areas of activity (1 Criterium, 5 Indicators)

As noted above, a total of 39 criteria have been developed in accordance with the operational and organizational realities within the supply chains. Audits will be performed against these criteria, using indicators that were developed by the National

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Interpretations (NIs). The overall framework is geared to the concept of continuous improvement rather than immediate full compliance. This may be both a perceived strength and weakness of the RSPO, with proponents lauding the process as flexible and realistic, while detractors criticizing the process as overly compromising and incremental. The RSPO certification of products through the supply chains follows three approved approaches:

1. Source Segregation

This supply chain auditing system allows for complete traceability and tracking for all raw materials through the finished product stage through production, processing, storage, transport, and manufacturing processes. It is currently primarily in place for specialized high value markets such as certified organic products.

2. Mass Balance

This system tracks the volumes of allowable certifiable end products (primarily Crude Palm Oil or Palm Kernel Oil) by correlating these outputs with the raw material inputs produced by plantations and mills in the supply chains being audited. Specific protocols and guidelines for audits under this system have been developed for the RSPO through contracts with Utz Certification Systems and individual consultants.

3. Book and Claim

This system creates a mechanism for issuing certificates equivalent to the calculated volumes of product produced by the plantations and mills that have been audited and certified in the indicated supply chain. This essentially assigns sales quotas for the certified companies, and is not necessarily directly tied to the actual product being shipped. The RSPO has signed a contract with the UK-based data logistics and trading firm Greenpalm, Ltd. to manage this on-line system for both sellers and buyers. For each transaction, Greenpalm provides a financial contribution to RSPO.

These three approaches highlight the complexity and difficulty of creating reliable and cost-effective traceability systems for sustainable palm oil. Only the first track, Total Segregation, provides absolute assurance of traceability and transparency. The other two systems involve aggregation, bulking, and blending at all levels of most conventional palm oil supply chains, making traceability quite difficult. For example, in many parts of the world, the production of a number of local mills and/or refineries, which is often itself the combined production of potentially hundreds or thousands of large and small plantations, is frequently combined in locally-available storage tanks. This is compounded by the ocean vessels which themselves tend to combine product in the most space and cost-advantageous way. The supply chain is further complicated by commercial bulking stations owned by local and international traders and producers in the countries of origin or destination.

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audits is unfolding. The Total Segregation model is considered prohibitively expensive except for special markets with pricing premiums such as organic palm oil and mostly assumed to be impractical in conventional applications except for unusual cases such as in New Britain in Papua New Guinea. In this somewhat isolated region, most operations are in the process of RSPO certification and companies tend to maintain segregated bulking and storage systems.

The mass balance approach appears to offer a more scientific and data-based approach, although it offers opportunities for circumvention or abuse as with many other large-scale certification schemes. The book and claim method is the system most in favor with producers and purchasers now as it appears to potentially offer the most convenient, pragmatic, and cost-effective means to meet market demand for sustainable palm oil products. However, it is also considered suspect by RSPO critics since it may often entail minimal actual product traceability in the supply chain.

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Annex D:

Field Visit Photographs

(Courtesy of Letla Mosenene, FFI-Liberia Country Director) First Page, Top Left:

Typical minimum maintenance smallholder farm in Grand Cape Mount County, with 30-40 year oil palm trees planted before the Conflict Period of 1989-2004, well beyond their productive age.

First Page, Top Right:

Farmer harvesting oil palm fresh fruit bunch (FFB) in Grand Cape Mount County.

First Page, Bottom Left:

Traditional oil palm fruit processing in used oil drums, Grand Cape Mount County. First Page, Bottom Right:

Traditional earthen oil extraction pit, Grand Cape Mount County. Second Page, Left:

Portable mechanical press currently being promoted for small-scale palm oil processing in various locations in rural Liberia by Winrock International through the USAID-funded Liberia Oil Palm Revitalization Project. The project has commercialized over 80 of these mills which cost about US$750 and have a capacity of 250 kgs per hour (Photo Courtesy of Tate Munro, Winrock International)

Second Page, Top Right:

Woman crushing fruit to expel oil in traditional earthen oil extraction pit in rural Liberia. (Photo Courtesy of Tate Munro, Winrock International)

Second Page, Bottom Right:

This steel skeletal structure is all that remains of the Sherman Mill in Grand Cape Mount County, which is located within a 10,000 acre plantation now primarily tended by local share croppers. The mill was imported from Belgium for US$2 million by the West African Agricultural Corporation (WAAC) in the 1980s and produced about 1-3 tons of palm oil per day from 5-15 ton FFBs per day.

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(40)

(41)

(1)

1. Source Segregation

2. Mass Balance

3. Book and Claim

The three approaches above are still in an initial stage as the first generation of RSPO 3

(2)

(3)

Annex D:

Field Visit Photographs

(Courtesy of Letla Mosenene, FFI-Liberia Country Director) First Page, Top Left:

Typical minimum maintenance smallholder farm in Grand Cape Mount County, with 30-40 year oil palm trees planted before the Conflict Period of 1989-2004, well beyond their productive age.

First Page, Top Right:

Farmer harvesting oil palm fresh fruit bunch (FFB) in Grand Cape Mount County.

First Page, Bottom Left:

Traditional oil palm fruit processing in used oil drums, Grand Cape Mount County. First Page, Bottom Right:

Traditional earthen oil extraction pit, Grand Cape Mount County. Second Page, Left:

Second Page, Top Right:

Woman crushing fruit to expel oil in traditional earthen oil extraction pit in rural Liberia. (Photo Courtesy of Tate Munro, Winrock International)

Second Page, Bottom Right:

(4)

(5)

(6)

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Dukungan

Links

Liberia Palm Oil Report

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Dokumen yang terkait

Reaksi Transesterifikasi Degummed Palm Oil (DPO) untuk Menghasilkan Biodiesel Sawit Menggunakan Lipozyme TL IM sebagai Biokatalis

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Analisis Kehilangan Crude Palm Oil pada Pabrik Kelapa Sawit Bah Jambi PT. Perkebunan Nusantara IV

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