Impacts of the Dutch economy on indigenous peoples

The import of soy from Brazil and palm oil and tropical timber from Indonesia and Malaysia

Impacts of the Dutch economy on indigenous peoples

Published by:

NCIV

Authors: Leo van der Vlist and Simche Heringa, Netherlands Centre for Indigenous Peoples

Consultants:AidenvironmentDuvillaGrassrootsThe Indigenous Peoples Network of Malaysia (JOAS)Repórter BrazilTerwel Consultancy

Cover photograph: Community Silat Hulu in Southern Ketapang, West Kalimantan, Indonesia confiscated 2 bulldozers from palm oil companyPhotographer: Krisusandi Gunuy

Layout: Saskia van Diermen Concept & Design

English proofreading: Marie-Christine Ruijs

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December 2010, Netherlands Centre for Indigenous Peoples, Amsterdam

Copyright©Netherlands Centre for Indigenous Peoples (NCIV)All rights reserved. Sections of this report may be reproduced in magazines and newspapers provided that acknowledgment is

made of The Netherlands Centre for Indigenous Peoples.

This report has been made possible through the financial support of IUCN National Committee of the Netherlands and Stichting Doen

The import of soy from Brazil and palm oil and tropical timber from Indonesia and Malaysia

Impacts of the Dutch economy on indigenous peoples

PrefaceIndigenous peoples who still depend largely on their natural environment for their livelihoods are suffering from many of the negative impacts of the increasing exploitation of natural resources, necessary to satisfy rising global economic demands. These impacts include forced evictions from their territories, degradation of their natural environment and violation of their human rights. As a Dutch-based organisation working on the promotion of the rights of indigenous peoples, The Netherlands Centre for Indigenous Peoples (NCIV) considers it relevant to identify what the impact of the Dutch economy is on indigenous peoples.

A survey by the IUCN National Committee of the Netherlands demonstrated that the Dutch economy has a significant impact on the world’s ecology.1 Since indigenous peoples live in areas of high biodiversity, it can be assumed that there is also a significant impact of the Dutch economy on indigenous peoples’ territories and well-being. However, before this study this has not been verified by any systematic research. That is why NCIV took the initiative to identify and research the most relevant sectors of the Dutch economy affecting indigenous peoples. This report is the result of this research.

The research was carried out in two phases. In the first phase (September – December 2009) NCIV identified, through desk research, the most relevant sectors of the Dutch economy affecting indigenous peoples; timber and agribusiness. Within these sectors, importing soy from Brazil and palm oil and tropical timber from Indonesia and Malaysia have been identified as the most relevant economic activities of the Netherlands affecting indigenous peoples. An initial overview of the impact of these activities on indigenous peoples in the selected countries was made, also primarily based on desk research. In the second phase (February – September 2010) NCIV invited national indigenous organisations in Brazil, Indonesia and Malaysia to do additional desk research for this project. The Alliance of Indigenous Peoples in Brazil (Articulação dos Povos Indígenas do Brasil, APIB) and the Indigenous Peoples Alliance of the Archipelago (Aliansi Masyarakat Adat Nusantara, AMAN) were initially interested in doing this, but due to their busy agenda´s and limited organisational capacities, finally decided they would not be able to deliver this within the requested time limits set by NCIV. The Indigenous Peoples Network of Malaysia (Jaringan Orang Asal Se-Malaysia, JOAS) carried out additional desk research in Malaysia. Their report has been used as additional reference information for this final report.

Furthermore, in phase two seven case studies were carried out in cooperation with local consultants, including five field studies; two in Malaysia (one on timber and one on palm oil by Grassroots), two in Indonesia (one on timber and one on palm oil by Aidenvironment), and one in Brazil (on soy by Repórter Brazil). In order to get a better insight into both the challenges and the opportunities for the protection of the livelihoods and well-being of indigenous peoples in relation to the selected economic activities, we tried to identify good and bad practices for the case studies. Finally, the local researchers were asked to produce maps, which indicate both the production areas as well as the indigenous territories.

In chapter 1 of this report the import of timber and palm oil from Indonesia and Malaysia and the import of soy from Brazil are identified as the three most relevant activities of the Dutch economy with a negative impact on indigenous peoples. Chapter 2 to 4 describe the impacts each of these activities has on indigenous peoples in the selected countries, presenting summaries of the case studies and maps.2 These chapters also identify some of the main Dutch companies involved and describe initiatives taken to improve the sustainability of these commodities with a focus on issues related to indigenous peoples. The report ends with a chapter containing conclusions and recommendations.

1. IUCN NL, The Netherlands and the World Ecology, 2002. 2. The full reports of the case studies are published on NCIV´s website www.indigenouspeoples.nl.

Pos Gedung (Malaysia); Cracks

resulting from land slippage of

abandoned logging trail (built in

2003 by logging company)

leading to fears of potential

major landslides

Photo by Andrew Ng, Grassroots

Impacts of the Dutch economy on indigenous peoples 5

List of Abbreviations Content

ABIOVE: The Brasilian Organisation of oilseed crushersADM: Archer Daniels Midland (Company)ADMAL: Environmental Impact AssesmentAMAN: Indigenous Peoples Alliance of the ArchipelagoAMA-JK: Aliansi Masyarakat Adat Jalai Sekayuq-Kendawangan Siakaran, local chapter of AMAN (see above) in southern Ketapang APIB: Articulação dos Povos Indígenas do BrasilBNM: PT Bangun Nusa Mandiri (Company)Bupatiis: Head of the district (autonomous region under province)CBD: Convention on Biological DiversityCBS: Central Office for Statistics (the Netherlands)DPCT: Dutch Procurement Criteria for TimberCONAB: National Supply Company BrasilCPO: Crude Palm OilCU: Credit Union EIA: Environmental Impact AssesmentFAO: The United Nations Food and Agricultural OrganisationFAB: Brazilian Airforce FoundationFPIC: Free, Prior and Informed ConsentFLEGT: Forest Law Enforcement, Governance and TradeFSC: Forest Stewardship Council FUNAI: National Indian FoundationFUNASA: National Health FoundationGAR: Golden Agri Resources Ltd. GDP: Gross Domestic ProductHCV: High Conservation ValueHCVA: High Conservation Value AreaIBAMA: Brazilian Insititute of Environment and Renewable resourcesICCO: Interchurch Organisation for Development CooperationIDH: The Dutch Initiative Sustainable TradeIFG:International Forum on GlobalizationIL: Indigenous LandILO: International Labour OrganisationIOI (group): Palmoil Producer (2nd largest in the world, 2010) IP’s: Indigenous PeoplesIPO’s: Indigenous Peoples’ OrganizationsISA: Social Environmental InstituteIUCN: International Union for Conservation of NatureJHEOA: Orang Asli Affairs DepartmentMOPIC: Mobilization of Cerrado Indigenous PeoplesMT: Mato Grosso State, BrasilMTCS: Malaysian Timber Certification SystemNCIV: Netherlands Centre for Indigenous PeoplesNES: Nucleus Estate SystemP&C: Principles & Criteria

PHAPL: Pengelolaan Hutan Alam Produksi Lestari; a mandatory certification scheme imposed by the Ministry of Forestry to logging companies.PIX: Xingu indigenous ParkPT KCMU: Karya Canggih Mandiri Utama Company LimitedRTRS: Round Table on Responsible SoyRSPO: Round Table on Sustainable Palm OilSIPAM: Amazone protection systemSJM: PT Suka Jaya Makmur (Company)SRSG: Special Representative of the Secretary-General TPAC: Timber Procurement Assessment CommitteeUNDRIP: The United Nations Declaration on the Rights of Indigenous Peoples UNGC: United Nations Global CompactVVNH: Royal Association of Netherlands Timber CompaniesWWF Netherlands: World Nature Foundation, the Netherlands

1. Indigenous Peoples in the Dutch economy page 12• Indigenous peoples • Corporate responsibility to respect human rights • The world economy and its impact on indigenous peoples • The Dutch economy in the world economy

• Selection of the most relevant sectors: high impact on Indigenous peoples combined with high economic value for the Netherlands • Interconnectedness of the three commodities and challenges of this interconnection • Selection of most relevant countries in relation to soy, palm oil and tropical timber

2. Soy in Brazil page 20 • The importance of soy for the Dutch economy • Different impacts • Box 1: Case of Xavante’s Maraiwatsede MT, Mato Grosso, Brazil 20)) • Box 2: Case of Y Ikatu Xingu, Mat Grosso, Brazil • Box 3: Case of Indigenous Lands (IL) of Paresi, Mato Grosso, Brazil • Dutch companies involved in the soy value chain • Initiatives to make the production of soy more sustainable

3. Palm oil in Indonesia and Malaysia page 34 • Production of palm oil • The importance of palm oil for the Dutch economy • Impact of palm oil plantations on indigenous people • Box 4. Free, Prior and Informed Consent. • Box 5. Case of Kg. Sei Lalang and Kg Silat Hulu, West Kalimantan, Indonesia • Box 6. Case of Kg Sungai-Sungai and Kg Tampat, Sabah, Malaysia. • Dutch companies involved in the palm oil value chain • Initiatives to make the production of palm oil more sustainable

4. Tropical timber in Indonesia and Malaysia page 59 • The importance of tropical timber for the Dutch economy • Illegal timber • The impact of tropical timber production on indigenous peoples • Box 7. Case of Bihak, Kayong, Pawan and Krio peoples, West Kalimantan, Indonesia. • Box 8. Case of Orang Asli villages of Pos Jernang and Pos Gedung, Perak, Malaysia • Dutch Companies involved in the tropical timber value chain • Initiatives to make the production of tropical timber more sustainable

5. Conclusions and recommendations page 79

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Impacts of the Dutch economy on indigenous peoples6 Impacts of the Dutch economy on indigenous peoples 7

Executive Summary

Why this study?In recent decades, indigenous peoples have faced the increasing negative impacts of economic globalisation on their natural environment and their well-being. As no systematic research has been done on the impacts of the Dutch economy on indigenous peoples, the Netherlands Centre for Indigenous Peoples took the initiative to identify the most relevant Dutch economic activities affecting indigenous peoples. This report describes these activities and their impacts on indigenous peoples as well as initiatives to protect the rights of indigenous peoples in relation to these economic activities.

Indigenous peoples and the Dutch economyThe Netherlands is an important player in the world economy and has a long tradition as a trading nation, due to its geographical location and open economy. From total Dutch imports, 63 percent originates from outside the EU. The majority of these imports consist of commodities and semi-processed goods. Furthermore, the Netherlands is also an important importer of timber. Matching economic sectors with a high impact on indigenous peoples with these sectors within the Dutch economy determine that it makes sense to focus on the sectors agriculture/agribusiness and tropical timber. From these sectors, in terms of volume, the most relevant commodities for this study are soy, palm oil and tropical timber. Taking into account Dutch import volumes per country, this study focuses on the import of soy from Brazil and the import of palm oil and tropical timber from Indonesia and Malaysia. Within these countries the focus is on the areas where indigenous peoples are most severely affected by the production of the commodities identified: soy in the Cerrado region in Mato Grosso in Brazil and palm oil and timber in Sabah and Sarawak in Malaysia and in West Kalimantan in Indonesia.

Soy in Brazil Between 2006 and 2008 11 percent of the total annual soy production in Brazil was exported to the Netherlands and 54 percent of the soy imported by the Netherlands originated from Brazil. Within the Cerrado region, Mato Grosso (Central), Brazil’s third largest state, is one of the Brazilian states with the fastest expansion of cattle and agribusi-ness. It is also home to the largest number of indigenous people of all Brazilian states. Soybean production is one of the core factors for deforestation in the Cerrado region. Being a major consumer of pesticides, strengthening the monoculture-based model, and having introduced transgenics in the Midwest, soybean has an enormous impact on the environment and on the indigenous peoples living within the area. This impact can roughly be categorised into four clusters:

• Loss of Land Indigenous peoples´ land, initially confiscated for cattle breeding is subsequently used for soy production. This leads to many conflicts between companies and various indigenous communities. • Environmental degradation Severe environmental degradation of Indigenous Lands and surrounding areas as a result of the soy production has a very negative impact on the well-being of the affected indigenous people.• Political and legal pressure The agricultural and cattle farming industries use political and legal pressure against the demarcation of land that has been claimed as traditional indigenous territory.• Smallholders In order to keep up with technological innovations, small farmers, many of whom are indigenous, try to expand their production area, which gets them into a debt cycle or turns them into labourers if they decide to sell their plot. Agricultural partnership contracts with indigenous peoples involve the leasing of traditional lands, which is illegal.

The Maraiwatsede IL case offers a good illustration of the impact of soy farming expansion in Mato Grosso, as well as

of state and private violence against the indigenous peoples. A second case demonstrates the impact of the high pollution of the Xingu Indigenous Reserve including its river as well as new community initiatives to recover degraded primary forests. The third case shows that co-production projects with local indigenous farmers lead to controversies between the involved Paresi people and companies and also within the Paresi communities.

The Dutch marketThe largest Netherlands-based soy importers are Cargill, Archer Daniels Midland (ADM), Bunge and Glencore. Other smaller companies like Cefetra, Incopa and Maggi also play an important role in the soy value chain. ADM and Cargill have large establishments in the Netherlands. Cattle feed manufacturing is by far the most important soy consuming sector in the Netherlands. Nutreco and its Dutch processing entity Hendrix UTD is the largest Dutch company in this sector. No data are available on the exact quantities of soy used by this sector or by individual companies, so it is impossible to state exactly which share of Dutch imports is related to specific companies within this sector.

Sustainability initiativesThe Round Table on Sustainable Soy (RTRS), initiated in 2005, developed into an international platform in which soy producers, soy traders, the producing soy industry, banks and social organisations cooperate to develop sustainabi-lity criteria for the global soy production and to put these criteria into practice. During its conference in June 2010 the RTRS General Assembly approved the ¨Standard for Responsible Soy Production Version 1.0¨.

Many of the Dutch companies involved in the soy chain participate in The Task Force Sustainable Soy, the platform of a group of Dutch companies that wish to make a contribution to the sustainable production of soy. In December 2009 the participants of the Dutch Task Force Sustainable Soy agreed new targets for the years 2010-2015, including the commitment to ensure that at the end of 2015 the amount of sustainable soy needed to satisfy the Dutch market should be produced in accordance with RTRS principles and criteria.

Palm oil in Indonesia and MalaysiaWorldwide, more than 45 million tonnes of palm oil is annually produced. Approximately 90 percent of this production originates from Southeast Asia, the majority from Malaysia and Indonesia. In Malaysia, the total palm oil planted area increased by 4.53 percent to 4.69 million hectares in 2009. The area expansion occurred mainly in Sabah and Sarawak with a combined growth of 5.94 percent. Indonesia accommodated almost 8.5 million hectares of oil palm plantations in July 2009, of which 737,556 million hectares in Central Kalimantan and 525,000 million hectares in West Kalimantan. Oil palm plantation expansion is proceeding rapidly in Kalimantan, with plans for another 5 million hectares of oil palm plantations in the near future. The indigenous population in Sarawak (Malaysia) comprises around 40 percent of the total population of 2,357,500. The indigenous population in Sabah makes up approximately 60 percent of the state’s population of 2.6 million. The indigenous population in Kalimantan consists of an estimated 3 million Dayak people.

Accounting for 5.5 percent of the global palm oil imports, Dutch imports are only surpassed by India and China. The Netherlands is a major importer of Malaysian and Indonesian palm oil: in the period 2006-2008 the Netherlands imported on average 6 percent of the Malaysian palm oil and 4.2 percent of the Indonesian palm oil. Many of the locations of palm oil plantations and logging concessions in these areas overlap the indigenous territories. The unsustainable expansion of Malaysia´s and Indonesia’s palm oil industry is leaving many indigenous communities without land, water or adequate livelihoods. The impact of the palm oil production on indigenous peoples in Indonesia and Malaysia can also be divided into four main categories:

•Loss of land In many cases the lands used for oil palm expansion are customary lands taken from the indigenous inhabitants without free, prior and informed consent and without adequate compensation. Conflicts frequently arise on lands with unclear, ambiguous or competing claims, resulting in protests, resistance and violence, in some cases even with lethal consequences.


•Deforestation and environmental degradation As with soy production, palm oil production also leads to environmental degradation. Huge tracts of rainforest are being destroyed with a very damaging effect on both the environment and the people living within and near the plantation areas. This includes recurrent flooding and increasingly difficult access to water, and toxic run-off from spraying with pesticides and herbicides, creating effluent regularly discharged into rivers, killing fish and contaminating drinking and washing water. •Loss of culture, income and food security Without the forest and with agricultural lands converted into oil palm plantations, many traditions, rituals and ceremonies related to the forest and farming practices risk to be lost. Important sacred sites, such as ancestral burial grounds or sacred trees, may be destroyed and replaced with oil palm. Medicinal plants and the knowledge surrounding their use are lost in the sudden transformation.•Smallholders In Indonesia and Malaysia smallholders represent 37-42 percent of the land cultivated, including indigenous peoples. Many of them are tied into dependency relations with the companies they supply and many smallholders feel insecure on their land.

The case study from West Kalimantan, Indonesia, describes the example from the community of Bayam-Sungai Lalang, which is in favor of the palm oil plantation, and the community of Silat Hulu, which rejects the plantation, leading to a series of impacts, including conflicts at various levels. The case study from Sabah, Malaysia, illustrates the many contrasting views from the villagers on Kg Sungai-Sungai and Kg Tampat with those from the oil palm company on issues such as consultation, customary land claims, water resources and employment.

The Dutch marketThe Anglo-Dutch company Unilever is the world’s biggest consumer of palm oil. Palm oil producers linked to Unilever include IOI, ADM-Kuok-Wilmar, Sime Darby, Musim Mas, Astra Agro and Asian Agri. Every Dutch retailer has hundreds of products with palm oil as an ingredient on its shelves. Furthermore, palm oil is increasingly used as feedstock for biodiesel. Palm oil refineries, such as Nesté oil and IOI Loders Croklaan have large palm oil refineries in the Netherlands. Dutch banks are involved in the financing of palm oil production.

Sustainability initiativesThe Roundtable on Sustainable Palm Oil, a joint business – NGO initiative aims to improve sustainability standards in the palm oil industry. The RSPO has organised 39 sustainability criteria under eight general principles to limit the environmental and social impacts and to ensure legal compliance including criteria to safeguard the rights of indigenous peoples. Through the GreenPalm programme, RSPO certified producers can register their production and receive a certificate for each tonne produced, which can be sold online to manufacturers or retailers.A recently established new Dutch Taskforce for Sustainable Oil Palm aims at the sustainable production of all oil palm for the Dutch market by the end of 2015. The taskforce is a cooperation of Dutch-based chains in the oil palm chain of custody and has started officially on November 2nd 2010. Together the involved companies represent a large portion of the Dutch oil palm market.

Tropical timber in Indonesia and MalaysiaThe Netherlands is one of the largest consumers of tropical timber in the world and most of the tropical timber used in the Netherlands originates from Southeast Asia. In order to analyse the tropical timber sector it is elementary to look into the issue of legal versus illegal logging. For several countries estimates for illegal logging go as high as 50 percent of the total production. The problem with a definition for legality is that in most, if not all cases, the State’s authority to declare what is and is not legally logged takes precedence over any claims for forest rights by the indigenous population. First, there are clear inadequacies in the land and forest related legislation in both Indonesia and Malaysia, which allow logging and plantation licences to be established on indigenous communities’ customary land without their free, prior and informed consent; secondly, the laws hinder to establish mechanisms for resolving conflicts between the industry and indigenous communities; and thirdly there is a lack of transparency and openness in the issuance of such licences. This leads to many conflicts with indigenous peoples. Since palm oil production is closely related to logging in the case of Indonesia and Malaysia, the indigenous territories that are affected by the timber industry are corresponding to the indigenous territories affected by palm oil production.

Although on the decrease, the impact of both legal and illegal logging on indigenous peoples in Indonesia and Malaysia is still devastating and can be categorised into three categories.•Violation of rights and creation of conflicts Existing laws and policies in both Indonesia and Malaysia fail to recognise and protect the rights of indigenous peoples, despite varying degrees of social, cultural and customary rights recognised in state and national legislation. Many indigenous peoples face relocation from their traditional territories for logging activities. The imposition of logging plantations has triggered long-term disputes and, especially in Sarawak, blockades, leading to arrests and criminalisation of community members.•Deforestation Illegal logging has a particular devastating effect on indigenous peoples because this frequently takes place in the remaining high conservation value (HCV) forests, including protected areas, which are often also indigenous territories. Illegal logging also destroys the protective function of forests. Many natural disasters, such as landslides that take place today can also be traced back to illegal logging, thus further threatening the habitat of indigenous peoples.•Economic impacts State losses from illegal logging are high. For Indonesia this is estimated at a third of the total timber export value, including unacknowledged subsidies and transfer pricing. Such revenues could have been spent on much-needed services for Indonesian citizens, including indigenous people.

In the PT Suka Jaya Makmur (SJM) case information is given on the SJM, a company with a concession that lies within the lands of a number of Dayak peoples. PT Suka Jaya Makmur is one of the most important players of the timber industry in Indonesia and probably the biggest in West Kalimantan. The company should come very close in gaining FSC certification. However, the company’s record is tainted with assumptions of illegal logging activities.

In a case on logging impacts of MTCC-certified operations in and around the Orang Asli villages of Pos Jernang and Pos Gedung, Perak, Malaysia, the impact of the logging operations on each of these villages appears to be very negative, with landslides, land erosion and the destruction of ancestral graves and sacred sites.

The Dutch Market The Dutch Timber Trade Association (VVNH) unites some 300 Dutch timber wholesalers, who represent almost the entire branch. Its most recent policy plan (2010-2015) determines that by 2015, 50 percent of the tropical timber imported by their members has to be produced sustainably.

Sustainability initiativesThe Forest Stewardship Council is widely regarded as one of the most important initiatives of the last decade to promote responsible forest management worldwide. In the Netherlands the market share of FSC-certified timber increased from 3 percent in 1999 to 18 percent in 2009.The Dutch government aims to purchase 100 percent sustainable timber by 2010. At the time of writing FSC International and PEFC International (excluding MTCS) are accepted as conforming to the Dutch Procurement Criteria. The European Commission is working on an Action Plan on Forest Law Enforcement, Governance and Trade (FLEGT) to develop and implement measures to address illegal logging and related trade. This includes support for improved governance in wood-producing countries and voluntary partnerships between the EU and wood-producing countries to ensure that only legally sourced timber enters the EU. FLEGT is expected to take effect at the end of 2012 to give the timber operators time to adapt.

Key recommendations •Engage companies, civil society, policy makers and politicians in a dialogue with indigenous peoples about possible initiatives to improve the upholding of the rights of indigenous peoples in relation to the production of soy, palm oil and tropical timber.

•Increase the capacity of indigenous peoples and their organisations in Indonesia, Malaysia and Brazil to map their territories, to monitor the impact of the production of soy, palm oil and tropical timber, and to engage in sustainability initiatives related to soy, palm oil and tropical timber.


For a general understanding, indigenous peoples can be described as the descendants of the earliest inhabitants of a territory, who are subjected by another, dominant culture and are determined to preserve, develop and transmit their culture and territories to future generations.3

It is estimated by the United Nations Permanent Forum on Indigenous Issues that there are 370 million indigenous peoples, living in more than 70 different countries around the world, representing over 5,000 languages and cultures on every continent. This means that indigenous peoples represent 5 to 8 percent of the world’s population and between 70 to 80 percent of the world’s cultural diversity. Many indigenous peoples have preserved a unique way of life, closely connected to their natural environment, which is, therefore, essential for their survival and well-being. Their territories are estimated to cover between 18 and 24 percent of the earth surface and largely overlap with the world’s richest areas in terms of biological diversity. Indigenous peoples have played an important role in the preservation and development of the world´s biological diversity and ecosystems and hold a vast knowledge on their natural environments. Because of this, indigenous peoples are key allies in the protection of biological diversity and in climate change adaptation and mitigation strategies.

On 13 September 2007, the United Nations General Assembly adopted the Declaration on the Rights of Indigenous peoples, which is a landmark in the struggle of indigenous peoples for justice, equal rights and development. However, indigenous peoples are still among the most disadvantaged and vulnerable groups of society. It is widely reported by the United Nations system and through many other independent reports that all over the world the rights of indigenous peoples continue to be seriously violated and their natural habitats conversed, destroyed or polluted, resulting in increasing poverty and health problems.4 Upholding the rights of indigenous peoples remains therefore an important challenge for the international community.

Indigenous peoples

1. Indigenous peoples and the Dutch economy

Corporate responsibility to respect human rightsIn this context it is interesting to note that The United Nations has developed a new framework on corporate responsibility to respect human rights. The Special Representative of the Secretary-General (SRSG) on the issue of human rights and transnational corporations and other business enterprises, John Ruggie developed the Protect, Respect and Remedy Framework for Business and Human Rights which the UN Human Rights Council endorsed unanimously in 2008.5 The framework rests on three pillars: the state duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation, and adjudication; the corporate responsibility to respect human rights, which means to act with due diligence to avoid infringing on the rights of others; and greater access by victims to effective remedy.

According to John Ruggie the corporate responsibility to respect human rights means to avoid infringing on the rights of others, and addressing adverse impacts that may occur. It applies to all companies in all situations. He states that here is where human rights due diligence comes in, comprising of four components: a statement of policy articulating the company’s commitment to respect human rights; periodic assessments of actual and potential human rights impacts of company activities and relationships; integrating these commitments and assessments into internal control and oversight systems; and tracking as well as reporting performance. Guidance points for their implementa-tion, Ruggie says, includes that companies accept that, because human rights concern affected individuals and communities, managing human rights risks needs to involve meaningful engagement and dialogue with them. As to the question why companies should bother about respecting human rights, Ruggie says that, apart from it being the right thing to do, stakeholder-related risks to companies include delays in design, siting, permitting, construction, operation and expected revenues; problematic relations with local labor markets; higher costs for financing, insurance and security; reduced output; collateral impacts such as staff distraction and reputational hits; and possible cancellation, forcing a company to write off its entire investment and forgo the value of its lost reserves, revenues and profits—the last of which can run into the billions of dollars.6

The Human Rights Council has asked Ruggie to “operationalize” the framework—to provide concrete guidance to states, businesses and other social actors on its implementation. Meanwhile Ruggie has drafted guiding principles for the implementation of the framework which are open for public comments until 31 Januari 2011.7 The draft document has two specific references to indigenous peoples. The commentary to draft guiding principle nr. 12 states that: ¨Depending on circumstances, companies [...] should also respect [...] those rights specific to vulnerable and/or marginalized groups, such as indigenous peoples, women, ethnic and religious minorities, and children.¨ And the commentary to draft guiding principle 18 states that: ¨Business enterprises should make particular efforts to track their human rights performance with regard to vulnerable and/or marginalized groups, such as indigenous peoples; women; national, ethnic and religious minorities; and children.¨ In June 2011, the SRSG will present to the UN Human Rights Council his final recommendations, which will include a set of Guiding Principles for the operationalization of the UN “Protect, Respect and Remedy” framework.

Tampat vilage

head

explaining

conflicts

experienced

between his

vilage and

Wilmar’s

Hibumas 2

estate in

Sabah,

Malaysia

Photo by Leo

van der Vlist,

NCIV

3.There is no general agreement on the definition –but there have been many attempts to describe indigenous people. The most common is the “working definition” formulated by Special Rapporteur for the United Nations Sub-Commission on Prevention of Discrimination and Protection of Minorities, José Martinez Cobo in his study of the Problem of Discrimination against indigenous Populations, (1986):“Indigenous communities, people and nations are those which, having a historical continuity with pre-invasion and pre-colonial societies that developed on their territories, consider themselves distinct from other sectors of the societies now prevailing in those territories, or parts of them. They form at present non-dominant sectors of society and are determined to preserve, develop and transmit to future generations their ancestral territories, and their ethnic identity, as the basis of their continued existence as people, in accordance with their own cultural patterns, social institutions and legal systems.”4. See the report of the Special Rapporteur on Indigenous People in UN Document A/60/358 and State of The World’s Indigenous Peoples, United Nations, 2009, or The Indigenous World 2010, in IWGIA’s series of yearbooks. 5.UN Document A/HRC/8/56.Keynote Address by SRSG John Ruggie “Engaging Business: Addressing Respect for Human Rights” Atlanta, 25 February 20107.http://www.srsgconsultation.org/index.php/


The world economy and its impact on indigenous peoplesIn recent decades, indigenous peoples have faced the increasing negative impact of economic globalization on their natural environment and their well-being. The growing global economy has increased the demand for natural resources. In many countries, indigenous peoplesí territories are the last frontiers where such resources are found because they were able to protect their territories from being exploited.8 According to Ms. Tauli-Corpuz, former Chairperson of the UN Permanent Forum on Indigenous Issues, the majority of the worldís remaining natural resources minerals, freshwater, potential energy sources and more are found within indigenous territories.9 The impact of economic activities on indigenous peoples is increasingly being monitored by non-governmental organisations. For instance, in 2003 the US-based organisation International Forum on Globalization (IFG) published a map showing approximately 300 reported cases of negative impacts of various economic activities on indigenous peoples. The map was based on the input of a large number of organisations from all parts of the world and therefore gives a good indication of economic sectors with a negative impact on indigenous peoples. Table 1 shows the most reported sectors, divided by continent.10

In 2007, the Ethical Investment Research Services and the Centre for Australian Ethical Research published a report in which they identified the risks and opportunities for companies to manage issues related to the rights of indigenous peoples.11 In this report they identified the following high-risk sectors:• Agriculture and cattle breeding – including plantations• Forestry – timber and paper companies with forestry operations• Mining – all types of mining• Oil and gas exploration and production

From these two studies it can be concluded that extraction of natural resources (oil and gas, forestry and mining) and agriculture/agribusiness are the sectors with the highest impact on indigenous peoples.

Table 1.

Most reported

economic

sectors with a

negative impact

on indigenous

peoples,

divided by

continent.

Sector South-America Africa Asia Total

Oil and gas 32 14 13 59

Timber 26 11 21 58

Mining 13 7 20 40

Biopiracy 19 4 3 26

Hydropower 12 2 8 22

Industrial agrobusiness 7 2 10 19

Infrastructure 12 2 3 17

Tourism 4 9 3 16

Fishery 5 3 5 13

Cattle 5 0 0 5

Total 135 54 86 275

8.A similar analysis on the causes of poverty among indigenous people can be found in UN document E/C.19/2005/4/Add.13 on page 6 and 7: Structural causes of indigenous people’s poverty¨9.United Nations Permanent Forum on Indigenous Issues, Backgrounder, Indigenous People – Lands, Territories and Natural Resources, 2007; http://www.un.org/esa/socdev/unpfii/documents/6_session_factsheet1.pdf10.Map Globalization: Effects on indigenous People (International Forum on Globalization, 2003)11.See Risk briefing, Indigenous rights, indigenous wrongs,: risks for the resource sectors, p. 11, published by Ethical Investment Research Services and Centre for Australian Ethical Research, October 2007.

The Dutch economy in the world economyThe Netherlands is an important player in the world economy and has a long tradition as a trading nation, due to its geographical location and open economy. The country is in the top five of foreign world investors and ranking 15th in terms of GDP. The Netherlands is the 6th largest exporter of merchandising goods in the world and the 8th largest importer of merchandising goods. The country is an important hub in the European economy as it holds the largest port in Europe, Rotterdam, and the 4th largest airport in Europe, Schiphol. Re-exportation of goods represents 40 percent of the total export value of The Netherlands. In 2008 the value of imported goods was 355 billion euros (in 2009 this became 266, as a result of the world recession).12 From total Dutch imports, 63 percent originates from outside the EU. The majority of these imports consist of commodities (including soy and palm oil) and semi-processed goods.13 Today, the Dutch agricluster occupies a strong position in the international market and produces a wide range of high quality products. It covers all economic activities in production, processing and distribution of agricultural products of domestic and foreign origin. It represents a gross added value of approximately 10 percent of the GDP.14 The Netherlands is also an important importer of timber. Especially for the processing industry timber from Asia, Africa and South-America is being imported both directly and indirectly via neighbouring countries like Belgium and Germany. Between 2001 and 2005 the Netherlands imported 13.2 percent of all tropical timber production directly from Brazil and 2.5 percent of the total annual production from both Malaysia and Indonesia. This is excluding the timber from these three countries imported to the Netherlands via neighbouring countries. In total, the Netherlands imports approximately 10 million tonnes of timber annually, of which 0.7 million is tropical timber.15

Selection of the most relevant sectors: high impact on Indigenous peoples combined with high economic value for the Netherlands

Looking at the identified sectors above with their relevance and traceability within the Dutch economy and their potential impact on indigenous peoples in the developing countries, it makes sense to focus on the sectors agriculture/agribusiness and tropical timber. In terms of volume, the commodities from these sectors most relevant to this study are soy, palm oil and tropical timber.

Worldwide, the Netherlands is the largest importing country of soy. In 2008 the country imported approximately 10 million tonnes of soy, which is 7 percent of the total world soy import consisting of 143 million tonnes a year.16

The Netherlands is the third largest palm oil importing nation worldwide, importing approximately 2 million tonnes in 2009, or 5.5 percent of the total import of palm oil worldwide consisting of 36 million tonnes a year.17

The Netherlands is also one of the world’s largest importers of tropical timber, importing 700,000 m3 annually in the period 2007-2008. Approximately 40 percent of the Dutch tropical timber originates from Indonesia and Malaysia, amounting to 280,000 m3 annually. Twenty percent of the Dutch tropical timber originates from Brazil, amounting to 120,000 m3 in 2008. Per capita, The Netherlands is one of the largest tropical timber importing countries in the world.18 This also includes significant amounts of illegal timber.19

12.See http://statline.cbs.nl/StatWeb/publication/?VW=T&DM=SLEN&PA=70017eng13.See http://www.cbs.nl/nl-NL/menu/home/default.htm14.See http://www.cbs.nl/nl-NL/menu/home/default.htm15.See http://www.fao.org/corp/statistics/en/ 16. See Milieudefensie, Sojahandel en ketenrelaties – Sojaketens in Brazilië, Argentinië en Nederland, 2006. http://www.milieudefensie.nl/landbouw/publicaties/rapporten/LEI%20-%202006%20-%20Sojahandel-%20en%20ketenrelaties%20-%20Sojaketens%20in%20Brazilie%2C%20Argentinie%20en%20Nederland.pdf17. See http://madb.europa.eu/mkaccdb2/indexPubli.htm18. See http://www.fao.org/corp/statistics/en/19. Illegal Logging & The EU. An Analysis of The EU Export & Import Market Of Illegal Wood And Related Products, April 2008; http://assets.wnf.nl/downloads/eu_illegal_logging_april_2008.pdf


Interconnectedness of the three commodities and challenges of this interconnection There is an important link between forest degradation (timber logging) and forest conversion. While logging concessions can only be used for selective logging, a plantation concession allows the entrepreneur to clear the forest completely. Therefore, plantation owners often use timber revenues from old-growth forests to subsidize the initial costs of plantation establishment and maintenance.20 According to a report for Greenpeace from 2007 , out of 10 million ha of allocated palm oil concessions in Indonesia only 5.4 million ha were actually planted with palm oil.21 For those plantations that were actually planted, land-cover data analysis suggested that between 1990 and 2005, 55 to 59 percent of the palm oil production in Malaysia and over 56 percent of the palm oil production in Indonesia was at the expense of forest.22 Because of this clear interconnectedness of logging and plantation concessions for palm oil, it was decided to include both palm oil and timber in Malaysia and Indonesia in this study.

According to the same report for Greenpeace from 2007 rates on deforestation for soy production purposes in Brazil are even more alarming. Soy production has expanded rapidly in the Cerrado region and has increasingly penetrated the Amazon region. Although exact figures are not available a significant share of the annual deforestation of 15.6 million ha over the period 2001-2006 could be traced back to the Cerrado region.23

20. Fitzherbert, E., Struebig, M., Morel, A., Danielsen, F., Brühl, C., Donald, P., and Phalan, B. (2008) How will oil palm expansion affect biodiversity? Trends in Ecology and Evolution 23: 538-545.21.AidEnvironment and International Institute for Environment and Development; The Dutch economic contribution to worldwide deforestation and forest degradation, 2007, p.32.22.Koh, L.P. and Wilcove, D.S. (2008) Oil palm: disinformation enables deforestation. Trends in Ecology and Evolution 24(2): 67-68.23. Ibid 21, p. 97-99

Harbour of

Rotterdam

Selection of most relevant countries in relation to soy, palm oil and tropical timber

The Netherlands imports most of its soy from Brazil (5.5 million tonnes in 2008). A total of 2.6 million tonnes was imported from Argentina. Approximately 85.5 percent of total palm oil production originates from Malaysia and Indonesia. In 2009, 6.5 percent of the Indonesian production (1,364,000 tonnes) and 5.6 percent of the Malaysian palm oil (987,800 tonnes) was exported directly to the Netherlands.25 Malaysia, Indonesia, Brazil and Cameroon are the most important countries from which the Netherlands imports its tropical timber. Approximately 40 percent originates from Malaysia/Indonesia and 20 percent from Brazil. In conclusion, this study will focus on the import of soy from Brazil and the import of palm oil and tropical timber from Indonesia and Malaysia.

24. All import statistics from the Market Access Database of the European Commission; http://madb.europa.eu/mkaccdb2/indexPubli.htm. Specific sources are mentioned in chapters 3-5.25.Oil World Annual 2010

Table 2.

Imports by the

Netherlands

from the most

important

export

countries in

the South for

the selected

commodities.24

Region Country Soy (tonnes) Palm oil (tonnes) Tropical timber (m3)

Southeast Asia Malaysia 987,800 213,240

Indonesia 1,364,000 89,086

Congo region Cameroon 69,132

DRC 19,867

Gabon 28,455

South-America Brazil 5,500,000 123,158

Argentina 2,600,000

Europe Belgium 60,604

Germany 16,477

Total import to the Netherlands 8,100,000 2,351,800 620,019


Matching the main production areas of soy, palm oil and timber in Brazil, Indonesia and Malaysia with the habitat of indigenous peoples in these countries

More than 75 percent of the soy production in Brazil is taking place in the states of Mato Grosso, Mato Grosso do Sul and Parana and Rio Grande do Sul, which are all part of the Cerrado ecological zone. All these districts can be found in the southwest corner of Brazil. One of the areas within the Cerrado most severely affected by the soy production is Mato Grosso (also named Mato Grosso Central). Given its plain geography. Mato Grosso is the province within the Cerrado that is especially highly valued by the cattle industry and the extensive and mechanized agriculture. Being the most important crop in Mato Grosso today, soybean increased its production from 8.8 million tonnes in the early 2000s to 18.2 million tonnes in 2010.26

The indigenous population of the Cerrado consists of approximately 45,000 people.27 In the state of Mato Grosso Central approximately 28,000 indigenous people can be found divided over 38 different groups. The indigenous people living in Mato Grosso Central are highly affected by the soy production. Therefore, we choose to focus our research on the impact of the soy production within this area.

Concerning palm oil, almost 50 percent of the production in Malaysia is taking place in the States of Sabah and Sarawak, which can both be found on the island of Borneo. Already being the two States with the largest areas for palm oil production, the increase in the production areas is also most significant here.28 In Indonesia the main palm oil plantations can be found on Sumatra and West Kalimantan. Especially the increase of plantations in Kalimantan is significant, with expansion plans for another 5 million hectares.29 With deforestation rates accelerating in Kalimantan, the frontier in the next decade is expected to move also to Papua and especially to Central Kalimantan. All these regions are inhabited by indigenous peoples. The indigenous population in Sarawak (Malaysia) comprises around 40 percent of the total population of 2,357,500 based on the 2006 Census.30 The indigenous population in Sabah makes up approximately 60% of the state’s population of the estimated 2.6 million, based on the 2000 Census.31 The indigenous population in Kalimantan consists of an estimated 3 million Dayak people.32

Timber production in Malaysia and Indonesia is mainly taking place on the Island of Borneo/Kalimantan. The fact that this island is shared by both countries makes it difficult to analyse whether timber originates from Indonesia or Malaysia since the transport in timber is strongly interconnected on this island. In Indonesia timber production moved from Sumatra to Kalimantan and also to West Papua. At the moment Kalimantan is the most important island, with a focus on Central, West and East Kalimantan. The south of Kalimantan is already completely cleared.

Summarising, this study will focus on soy in the Cerrado region in Brazil and on palm oil and timber in Sabah and Sarawak in Malaysia and in West Kalimantan, Indonesia.

26.Impact of soybean on Indigenous Territories in the Brazilian state of Mato Grosso, Réporter Brasil & NCIV, August 2010.27.The encyclopedia of Earth, http://www.eoearth.org/article/Biological_diversity_in_the_Cerrado.28. http://econ.mpob.gov.my/economy/annual/stat2009/EID_statistics09.htm29. Sawit Watch Database, July 200930.http://www.minorityrights.org/?lid=4540&tmpl=printpage31.http://www.sabah.net.my/PACOS/people.htm32.http://www.economicexpert.com/a/Dayak.htm

Cerrado

vegetation,

Photo Verena

Glass, Réporter

Brasil.


The importance of soy for the Dutch economySoy is being cultivated in moderate, sub-tropical and tropical climates. It is used for many different food products. Only 6 percent of the world production of soybeans is used for easily recognizable soy products such as soy milk, soy sauce (e.g. ketjap), tofu and other meat replacements. Most soybeans are being crushed into soy meal and soy oil, which is processed in many different food products.33

Brazil is the biggest soy producing country in the world. In 2008, a total of 143 million ton soy was imported worldwide of which more than 30 percent originated from Brazil.34. Soy is an important export product for Brazil. The production of soy is expected to further increase with the growing demand for biofuels in the near future in line with the new European legislation on the usage of biomass as renewable energy.

It appears that the Netherlands is a significant import country for Brazilian soy. As can be seen in Table 3, the Dutch import of soy from Brazil has increased exponentially over the last decade. Between 2006 and 2008 11 percent of the total annual soy production in Brazil was exported to the Netherlands and 54 percent of the soy imported by the Netherlands originated from Brazil. This was a strong increase compared to 2002-2005, when only 6 percent of the Brazilian soy was exported to the Netherlands annually. As a result, the Netherlands is the largest importer of soy among EU member states and the second largest in the world.

The impact of soy production in Brazil on indigenous peoplesMato Grosso, Brazil’s third largest state, with an area of 906,807 km2 (10.59 percent of the country’s territory), is located in the Midwest region, bordering with Bolivia in the west. It is one of the Brazilian states with the fastest expansion of cattle and agribusiness. It is also home to the largest number of indigenous people of all Brazilian states.

Figure 1. Annual

soy export in

million tonnes

from Brazil to

the Netherlands

2002-2008 35.

Map 1.

Indigenous

Territories and

soy plantations in

Mato Grosso,

Brazil.

2. Soy in Brazil

33.Sojabarometer report, Profundo, 200934. Ibid.35. Source:http://madb.europa.eu/mkaccdb2/statistical.htm?from=form&format=0&cb_reporters=0003&cb_partners=0508&list_years=2008&list_years=2007&list_years=2006&list_years=2005&list_years=2004&list_years=2003&list_years=2002&cb_measures=iq&ahscode1=1507

36.Data from Instituto Brasileiro do Meio Ambiente e Recursos Renováveis – IBAMA.37.Impacts of soybean on Indigenous Territories in the Brazilian state of Mato Grosso, Réporter Brasil & NCIV, August 2010.38.Ibid

Mostly consisting of open woods, with twisted short trees (8-12 metres high), natural grass areas and water sources surrounded by thin fields and palm trees (the so-called veredas), Cerrado has an extremely rich biodiversity estimated at about 12,000 vegetal species, 70 mammal species, 840 types of birds, 120 types of reptiles 150 types of amphibians36. Besides being considered the world’s richest savannah in terms of biodiversity, Cerrado is the biome with the least legal protection in the country and, according to IBAMA (Instituto Brasileiro do Meio Ambiente e Recursos Renov·veis), it has already lost over 80 percent of its original vegetal cover.37

By and large, soybean production is one of the core factors for deforestation in Cerrado. Being a major consumer of pesticides, strengthening the monoculture-based model, and having introduced transgenics in the Midwest, soybean has an enormous impact on the environment. The increase in soybean production in Mato Grosso was closely followed by an increase in planted area. According to a survey on national grain production conducted by the Bational Supply Company (CONAB) in June and July 2010, the state’s 2009/2010 soybean harvest covered 6.18 million hectares – 6.1 percent over the previous harvest (5.82 million hectares). Some of the ‘side effects’ of soybean cultivation include degradation, erosion, impoverishment and desertification of soil, destruction of primary forests, contamination of water bodies, dissemination of burnings (that kill thousands of wild animals every year and cause serious respiratory diseases, especially in children), and spraying of poisons on small farmers, indigenous people and their plantations.38


The impact of the soy production on indigenous peoples in the Cerrado ecological zone can roughly be categorized into four clusters: loss of land, environmental degradation, political and legal pressure and stress on small holders and dissensions within small farming communities. There are cases, such as the Maraiwatsede IL in Alto da Boa Vista and Bom Jesus do Araguaia, belonging to the Xavante, where soybean has invaded the indigenous peoples’ land and has led in ranking of fines for deforestation in the region. Other indigenous peoples, such as the Paresi, chose to establish partnerships with farmers, raising a complex legal debate on the legality of the agreement and affecting indigenous communities in several ways. In the province of Xingu campaigns for the rights of the indigenous peoples and their habitat are increasingly popular. Together, several environmental, indigenous, farmers’, business, and government organisations launched the campaign ‘Y Ikatu Xingu’, which is Kamaiurá for ‘Save the good water of Xinguí.39

In this research special attention will be paid to the above-mentioned indigenous communities, providing insight into the various ways in which soy production affects indigenous peoples and their land, with examples of better and worse practices. The main case study is focused on the Maraiwatsede indigenous land.

1. Loss of landAt first, land is confiscated for cattle breeding through occupation of traditional lands of indigenous people, land that was already guaranteed to them by the Brazilian authorities. Subsequently, this land is used for the cultivation of soy.40 In the Cerrado area the confiscation of indigenous land leads to many conflicts between companies and different indigenous communities. During a meeting (organised by NCIV in December 2009 in Amsterdam) with three member organisations of Articulação dos Povos IndÌgenas do Brasil (APIB) - an umbrella organisation of indigenous people in Brazil - and the Dutch Soy Coalition, it was reported that indigenous leaders who resisted against the occupation of their lands and had tried to regain it had been prosecuted, and that 400 to 600 of them were imprisoned and sometimes even killed.41 Not only companies but also government authorities are continuously seeking new fertile land in order to increase the soy production. The Membeca Farm for instance, a large agro-industri-al farm on the river Talunakanali in Mato Grosso, illegally invaded the traditional lands of the indigenous Manoki people. Since 2003, the 8,000 hectare Membeca Farm has increased its soy plantations by at least 20 percent, and the farm has been illegally clearing more rainforest inside Manoki land to make way for further soy production.42

2. Environmental degradationSevere environmental degradation is taking place, of areas surrounding traditional indigenous territories as well as of the Indigenous Land itself. This degradation is caused by a chain of events that include deforestation, replacement of the original vegetation of the area by large soy plantations or cattle ranches, increasing use of pesticides, pollution of soil and water, soil erosion, etc. All of this has a considerable impact on the well-being of the affected indigenous people, as illustrated by the two case studies in Boxes no. 1 and 2.

3. Political and legal pressurePolitical and legal pressure against the demarcation of land that has been claimed as traditional indigenous territory also forms a threat to the indigenous people of Matto Grosso. In some cases, this takes the form of openly violent campaigns against their rights. A striking example is the following: In 2008, Homero Pereira, president of the Federation of Agriculture and Cattle Farming of the state of Mato Grosso and a member of Congress, proposed a bill attempting to cancel Regulation 1429 signed by Justice Minister Tarso Genro in August, which declared the perma-nent ownership by the Irantxe people over the Manoki Indigenous Land.43 If this regulation is cancelled, the indige-nous people will be very poorly protected against agricultural and farming activities in their territories. Up to this date, most farmers are still very anxious to start new projects in the area. Land is cheap, but they fear legal procedures which can change the ownership back to the indigenous peoples.44

4. Small holdersFinally, the soybean’s growing expansion dynamic and its consequences for the land market have a strong impact on small and medium-sized properties, which are often the habitat of indigenous peoples. To keep up with new technologies farmers need more capital. Small farmers, many of whom are indigenous, can not keep up with the technological innovations; they have to keep on buying newer and more sophisticated sprayers, harvesters, sewers and tractors. Faced with this situation, they are left with two options: leasing neighbouring lands and expanding their cultivated area, a very common solution in settlement areas, which allows for optimum investments in technologies, or selling their plot to buy larger areas in more distant regions, a strategy that farmers have often used to expand the scale of their production.45 As a consequence, indigenous people get into a debt cycle or even see themselves forced to work as labourers, permanently serving landowners.46

Although not very common, there are also agricultural partnerships between indigenous peoples and farmers or farming companies. Some communities, among others the Paresi people, made an arrangement with commercial farmers. They seem to be satisfied with this cooperation. In 2008 they harvested 12 hectares of soybeans in Mato Grosso. However, data on mechanised soybean plantations in other indigenous territories indicate that partnership contracts actually involve the leasing of traditional lands, which is illegal.47 And the partnerships also cause a division within the indigenous communities. This is illustrated by a case study in box 3.

39. Impacts of soybean on Indigenous Territories in the Brazilian state of Mato Grosso, Réporter Brasil & NCIV, August 2010.40. Pers. comm. with Paul Wolters, Conselho Indigenista Missionario Brasil (CIMI), 2009.41.Pers. comm. with Romancil Creta, coordinator of ARPIN-Sul and member of the Kaigang people. APIB Delegation visit to the Netherlands, December 2009.42.Greenpeace international, Eating up the Amazon, 2006.43.Reporter Brasil, Impacts on Indigenous People (article), 200944.Information given to NCIV´s Policy and Research officer Simche Heringa, by a leading farmer during field visit in soy production area in Mato Grosso.

45.FASE, Brazil is naked, 2006.46.Information given to NCIV´s Policy and Research officer Simche Heringa, by Réporter Brasil´s Jornalist and Researcher Verena Glass. Soa Paulo, June 2010.47.Reporter Brazil, Brazil of Biofuels, 2009


Box 1: Case of Xavante’s Maraiwatsede MT, Mato Grosso, Brazil 48

Map 2.

Destruction of

Maraiwatsede

Indigenous Land

(IL) territory

Xavante village

on the

Maraiwatsede

Indigenous Land

photo by Verena

Glass

The Maraiwatsede IL is one of the areas with the highest deforestation levels in Mato Grosso. Historically occupied by the Akwe-Xavante Indigenous People, the area of the Maraiwatsede Indigenous Land (IL) was homologated by the federal government in 1998 with 165,000 hectares. Today, 90 percent of its territory is illegally occupied by non-indigenous farmers and squatters, mostly cattle, soybean and rice farmers. Those activities account for one of the highest deforestation cases in protected areas in the state of Mato Grosso: 45 percent of Maraiwatsede’s native forest has already been destroyed, as shown by the 2010 Report of the Special Areas Monitoring Programme (Programa de Monitoramento de Áreas Especiais, ProAE) carried out by the Amazon Protection System (Sistema de Proteção da Amazônia, SIPAM).

The Maraiwatsede IL offers a good illustration of the impact of farming expansion in Mato Grosso, as well as of state and private violence against the indigenous peoples. The following story was retrieved in detail by the Socio-Environmental Institute (ISA), which is active in this area. With the construction of the Belém/Brasília road in the early 1960s, which encouraged settlements in West Brazil, traditional Akwe-Xavante areas suffered their first extensive invasion in 1961. At the time, the Suiá Missu farm was created and was even considered Brazil’s largest rural estate, with almost 1.5 million hectares (As a cattle farm, the Suiá-Missu was established on indigenous land. With the consolidation of the Suiá-Missu, the Xavante were initially used as cheap labour by farmers, but relations started to wear off after conflicts worsened with peons and settlers. In August 1966, the owners of Suiá-Missu and the Indian Protection Service (Serviço de Proteção ao Índio, SPI, a federal agency that later became the National Indian Foundation – FUNAI) reached a deal for the withdrawal of the indigenous people from their lands. Helped by Brazilian Air Force (FAB) airplanes, some 300 indigenous people were taken against their will to the São Marcos Salesian Mission, 400 kilometres from Maraiwatsede.

In the 1990s, the Xavante began to claim back the area occupied by the Suiá-Missu, which already belonged to the Italian state company Agip. Urged by international organisations Agip was forced to announce that the land would be returned. From then on, the federal government started a series of procedures to demarcate the indigenous area, while local farmers supported by local politicians started a strong campaign for occupation and deforestation of the land on the one side and a legal battle against the return of the indigenous people on the other.

After 1998, when the Indigenous Land was finally homologated, this process and the conflict between settlers and indigenous peoples got more intense. Only in 2004, after indigenous people camped by the road for 11 months and in spite of protests from local politicians and cattle breeders, part of the old residents of Maraiwatsede returned to the area and reconstructed their village, occupying about 15,000 of the 165,000 hectares of the Indigenous Land. Nowadays, the Xavante population of Maraiwatsede consists of about 650 people, of whom almost 300 are children.

Current chief of the Xavante community is Damião Pardizane who was twelve when his community was taken away from the area, in 1966. He became the main leader in the struggle for the return of the Xavante to their land. According to Pardizane, soybean plantation has been responsible for most of the deforestation of the IL in recent years.

The Xavante people living in this area report that the destruction of forests has numerous impacts on the village, regarding food habits as well as other production activities.

The Xavante’s basic diet consists of gathered food such as wild roots, nuts, fruits and other vegetables, as well as meat from hunting and fishing. Agriculture, especially corn (their main food item in ceremonial and social-cosmologi-cal terms), beans and pumpkin, plays only a secondary role. With deforestation in Maraiwatsede, village chief Damião Paridzane explains, the population’s diet suffered strong losses, reinforced by the alternative rice crop that has little nutritional value for the indigenous peoples .

48.This case study was done by Repórter Brazil. The field visit took place in July 2010 after a desk study was conducted. The full report of this case study can be found on NCIV´s website: www.indigenouspeoples.nl


Indigenous

chief Damião

Paridzane

Photo by

Verena Glass

Xavante village

on the

Maraiwatsede

Indigenous

Land photo by

Verena Glass

Deforestation

near water

sources in MT

photo André

Villas Boas/ISA

Different impacts for men and women The Xavante sustain that besides the impact on hunting and fishing stocks, deforestation also greatly affected the stocks of raw materials used to build houses (wood and straw), of firewood for cooking, and other materials used to make utensils such as straw baskets. For women, as explained by indigenous teacher Carolina Rewapti, the major problem is the lack of materials used to make their craftwork, like seeds and straws. ‘We no longer have buriti (native palm tree) in our area, and women have to leave the Indigenous Land in search of straw near the surrounding farms.’ Apart from deforestation, the Xavante pointed out other problems caused by soybean plantations, such as the pollution of rivers and the toxination of indigenous people due to the poison used by the plantations. Since the poison is fumigated on soybean by airplanes, all plantations at the IL use transgenic varieties – the wind takes the product to village residents, sustains indigenous chief Paridzane. According to Carolina Rewapti, when fumigations start, in January and February, the population suffers from headaches and stomach problems, vomits and ‘blood diarrhoea’. ‘But that is not all since the rains in those months take the poison to rivers and we get sick often because we drink that water,’ she adds.

In the dry months of July and August, the burnings by nearby farmers are the main problem for the Xavante. Because of the smoke the sky is dark day and night, causing serious respiratory illnesses to children and the elderly, explains teacher Carolina. A look at the village’s surroundings shows the spreading of ‘uncontrolled’ fire over indigenous pastures and plantations. ‘This year we lost part of our rice because the fire of neighboring farmers spread to our plantations’, says Xavante Paulo.


Box 2: Case of Y Ikatu Xingu, Mato Grosso, Brazil 49 Box 3: Case of Indigenous Lands (IL) of Paresi, Mato Grosso, Brazil 51

In the Xingu area - situated between the Cerrado and the Amazon - soy plantations and nearby cattle ranches dump topsoil and toxic chemicals into the Xingu’s headwaters. The pollution flows directly into the Xingu Indigenous Reserve. LetÌcia Yawanawa, an Indigenous organiser with the Committee for the Rights of Women and Children in Brazil, is quoted: ‘The river is huge, filled with fish, but because of the plantations, the fish are dying, and the people who live along the river eat the fish and get sick, and there are not enough fish anymore. Especially the kids get sick, with diarrhoea, fever and some even die.’ The Xingu Indigenous Land Association explains: ‘We indigenous people wish to live and breathe the Xingu River. Its waters are the source of our life and we donít want to die.’ However, big companies refuse to honour the communitiesí call for buffer zones along waterways or to mandate a reduction in the use of harmful chemicals.50

A source of food and a cultural reference, the Xingu River guarantees the survival of 6,125 indigenous people divided over 16 groups living in the Xingu Indigenous Park (PIX), located in northern Mato Grosso. But its continuous degradation has become a source of great concern. It is estimated that 33 percent of the river’s 22,525 sources have lost their original vegetation cover, which is the transition between Cerrado and the Amazon and has been cut to open way for cattle and soybean. Indigenous people living in the park report sedimentation and silting up in the river and reduction of fish available – a crucial asset for this population’s food security.Projects to recover degraded primary forests, which are supported by local producers, started in 2006 and already cover 2,000 hectares. That is not much compared to the 300,000 hectares in need of recovery, but ‘Y Ikatu Xingu coordinators have launched a new initiative to speed up the process, the Xingu Seed Network. With this network they are developing a new recovery model for degraded areas by collecting and using native seeds instead of purchasing seedlings. Through this initiative it has been possible to reduce costs from 6,000 to 2,000 reais on average per recovered hectare, which helps to counter one of the main lines of discourses by local farmers – that they never have the financial means for recovering the degraded land. Apart from supporting farmers with this new technique, the Seed Network has put to work 300 seed collectors from six Indigenous communities such as the Ikpeng and the Kĩsêdjê. By working for the Seed Network these collectors generate an income for themselves and for their communi-ties since a system for selling seeds to farmers has been included in the project.

Between 2004 and 2006, three indigenous peoples from southeastern Mato Grosso, one of the state’s major soybean hubs, implemented a controversial project for the co-production of soybean in a partnership with local farmers. Involved are the Paresi, Manoki, and Nambikwara communities from the Indigenous Lands of Paresi, Rio Formoso, Utiariti (Paresis), Tirekatinga (Nambikwara), and Irantxe (Manoki). Nineteen partnership contracts were signed involving 41 indigenous villages for the co-production of soybean. According to the agreements, made with several local farmers and farming companies, indigenous peoples will provide land and labour; their business partners will provide the necessary input (seeds, pesticides, fertilizers, etc), credit, and machinery. The profits from the sales will be divided among different members or families of the communities.

The Paresi, the Nambikwara and the Irantxe all have a long history of contact with non indigenous people, but the first are most adapted to non-indigenous culture. Their relationship with the liberal (capitalistic) model dates back to the 18th century, when part of the indigenous population was made into slaves by members of inland expeditions into Brazil. Since then, the everyday lives of that indigenous population started to be shaped by the economic cycles that marked southeastern Mato Grosso: they worked in the collection of rubber latex and poaia - and after the 1970s, with the expansion of the agricultural frontier by settlers from southern Brazil, as cheap labourers for established farms.

In the case of the Paresi, notwithstanding some criticism within the community about the distortion in income generation and distribution, soybean has played an important role in the economic development of the three ILs that adopted the grain. In 2010, the Paresi had their fifth soybean harvest since they started the partnership contracts between their Waymaré Association and a local company. Paresi people work the plantations, including machine operation. Labour as well as fertilizers, seeds, pesticides, fuel and leasing farming machinery, are paid by the non-indigenous partner. The net revenue is divided equally between the farm owner and the indigenous association, which deposits half of the money in an account at Banco do Brasil and uses the rest to purchase collective goods and to divide among the families in each village involved with the respective plantation. In Campo Novo dos Parecis, the Waymaré Association has a contract to provide farming inputs regarding a 1,000-hectare area. In the 2008 harvest, 11 families living in the village received 2,000 reais from plantation shared profits. ‘It was enough to build my house,’ says one of the residents, while showing her wooden house with its porch – a house that stands out next to the straw huts used for rituals and, on a smaller scale, for housing.

Map 3.

Hydrographic

Xingu River

map 4

Indigenous

Territories

Paresi, Rio

Formoso,

Utiariti,

Tirekatinga

and Manoki

49.This case study was done by Repórter Brazil. For this study no new field visit took place. Information derived from previous field research was updated by Repórter Brazil through 50. http://ran.org/campaigns/rainforest_agribusiness/spotlight/case_studies/contamination_of_the_xingu_indigenous_reserve/ 51.This case study was done by Repórter Brazil. For this study no new field visit took place. Information derived from previous field research was

updated by Repórter Brazil through desk research. The full report of this case study can be found on NCIV´s website: www.indigenouspeoples.nl


‘People say we no longer hold traditional festivals. We don’t really do it for soybean since it is not in our culture, but we do offer them for corn and rice,’ says plantation head at the Bacaval village Arnaldo Zunizakae, known as Branco. ‘Today we don’t live on hunting and fishing anymore, and that has its costs. To hold a festival these days we need money,’ he argues, adding that thanks to the soybean plantation the 52 residents of Bacaval are planting corn again (but using mechanization during late harvest) which production is also sold. According to Branco, ‘a culture that doesn’t change is that in a museum’. ‘We were starving, eating only cornmeal, flour, game and fish. Today our meals include bovine meat, coffee, bread, fruit – a much more balanced diet,’ he advocates. For less than a year, he has also worked as a health coordinator of the Halitinã Indigenous Association – which has an agreement with the National Health Foundation (Fundação Nacional de Saúde, FUNASA) to serve the 1,584 Paresi living in nine Indigenous Lands in Mato Grosso – all of them demarcated. According to data from FUNAI, there were only 360 Paresi in the 1960s, but now their population grows 7.2 percent per year. In 1997, after having worked as a farm employee for nine years Branco was the first Paresi to work with mechanized farming on the Indigenous Land. ‘When I left, my former employer donated an old planter and lent me a tractor. I would get the fuel from the Sapezal municipal government’. At first, he planted 45 hectares of rice. In the next harvest, it was 60 hectares. In the third year, 1999, when the area of mechanized plantations reached 90 hectares, rice already shared space with soybean and since 2000 soybean has been the main crop on the 150 hectares planted by the Zunizakae family.

However, there is no unanimity among the Paresi as to the benefits of commercial agriculture. The partnership process has been under criticism by indigenous advocates and leaders and by federal prosecutors, who see it as a concealed form of leasing indigenous areas. The Indigenous Movement in Mato Grosso considers the partnership contracts as a way to cheat on the law. ‘They are only a different name for leasing. The tractors belong to whites and so do the profits,’ argues the head of Mobilization of Cerrado Indigenous peoples (MOPIC), Hiparidi-Xavante. By and large, the sharpest criticisms come from older people. ‘I think soybean brought division. As I see it, people got very individualistic, only concerned about one’s own stuff,’ argues Carmindo André Orezu, who lives at the Utiariti IL, in the Salto da Mulher village. The community takes care of 500 hectares of crop. His wife, Emília Zolazokero, still uses ‘slash-and-burn agriculture’, the Paresi’s family agriculture based on tubers (especially manioc). ‘I have a calabash with chicha [traditional beverage], I make beiju (local cornmeal) and smoke meat in the moquém in the middle of the hut. When I was a child, there was no other food and I didn’t miss anything. We would eat it in the morning, for lunch, in the evening, and we were happy. Now the children wake up to go to school and if there is no milk, cookies and cake, they don’t eat anything,’ she says.52

Dutch companies involved in the soy value chainThe largest Netherlands-based soy importers are Cargill, Archer Daniels Midland (ADM), Bunge and Glencore. Apart from these multinationals, other companies like Cefetra, Incopa and Maggi, play a leading role in the soy value chain. Two factories for soy processing (crushing plants) located in the Netherlands are owned by two of the biggest traders of soy in the world: one by ADM in Rotterdam and one by Cargill in Amsterdam.

Reportedly all soybean produced within the Maraiwatsede IL and purchased by the enterprise is stored in a silo in Alto da Boa Vista (main area of investigation for this research). According to the enterprise, the main buyers of its soybean in the Primavera do Leste area are major traders such as Cargill and Louis Dreyfuss, and animal food companies, ranches, and oil producers.53

Cattle feed manufacturing is by far the most important soy consuming sector in the Netherlands. Nutreco and its Dutch processing entity Hendrix UTD is the largest Dutch company in this sector.54 Dutch animal feed manufacturers produce approximately eleven million tonnes of mixed fodder per year, of which it is estimated that half of it is exported. The other half ends up in the Dutch livestock sector, especially at pork and chicken factory farms, which then supply their meat and eggs to butchers and egg packing facilities. No data are available on the exact quantities of soy used by this sector or by individual companies, so it is impossible to state exactly which share of Dutch imports is related to specific companies within this sector.

Initiatives to make the production of soy more sustainable

The Round Table on Responsible Soy (RTRS) was formally established as an organisation in 2006 by Unilever, WWF and ABIOVE, the Brazilian organisation of oilseed crushers. The RTRS developed into an international platform in which soy producers, soy traders, the producing soy industry, banks and social organisations cooperate to develop sustainability criteria for the global soy production and to put the criteria into practice. During its conference in June 2010 the RTRS General Assembly approved the ¨Standard for Responsible Soy Production Version 1.0¨ Each soy producing country will be encouraged to make a national interpretation of the standard which, once endorsed by the RTRS, will become the basis for certification in that country. In December 2009 a delegation of Articulação dos Povos Indígenas do Brasil (APIB), a national body of regional indigenous organisations in Brazil, visited the Netherlands. During this visit NCIV organised a meeting with the Dutch Soy Coalition in which Dutch Civil Society organisations join forces to reduce the negative social and environmental impact of soy production, transport, processing and consumption.55 During this meeting they were invited by Solidaridad, on behalf of the RTRS, to participate in workshops to provide their input into a public consultation on national interpretation guides for Argentina, Brazil and Paraguay. Attention for Indigenous peoples issues was still very limited at that time, and Solidaridad wanted to create possibilities to broaden this attention. APIB informed organisations in the Netherlands that they had not yet been consulted by the RTRS and were interested to consult their constituency about engaging in RTRS. Until the time of writing, APIB did not engage in the RTRS process. A public note of APIB from June 2, 2010 mentions demarcation, protection and eviction of indigenous lands as a priority issue in critical cases such as Mato Grosso South, where extermination of indigenous people and ethnocidal processes take place under the command of farmers and agribusiness representatives.

Another important initiative in the area of sustainable soy is the Amazon Moratorium. In June 2006, Brazilian soy processors and traders, in consultation with the European soy industry and societal organisations such as Greenpeace, agreed on the Amazon Moratorium initiative. This initiative meant that, after 24 July 2006 and for a minimum period of two years, companies would not purchase any soybeans cultivated on land in the Amazonian rainforest that had been subjected to deforestation.56 In August 2010, the moratorium on buying soy from newly deforested areas was extended for another year.57

Soybean

brought

development

to the Paresi,

advocates

Arnaldo

Zunizakae,

alias Branco

– Photo by

Thaís Brianezi

52.Impacts of soybean on Indigenous Territories in the Brazilian state of Mato Grosso, Réporter Brasil & NCIV, August 2010.

53.Impacts of soybean on Indigenous Territories in the Brazilian state of Mato Grosso, Réporter Brasil & NCIV, August 2010.54.Dutch Soy Coalition, Soja barometer, 2009. 55.http://commodityplatform.org/wp/56.http://www.taskforcesustainablesoy.org/index.php?option=com_content&task=view&id=16&Itemid=57.http://commodityplatform.org/wp/


Many of the Dutch companies involved in the soy chain participate in The Task Force Sustainable Soy, the platform of a group of Dutch companies that wish to make a contribution to the sustainable production of soy. In December 2009, the participants of the Dutch Task Force Sustainable Soy agreed new targets for the years 2010-2015. One of the most important things they agreed upon was the commitment to ensure that at the end of 2015 the amount of sustainable soy that is needed to satisfy the Dutch market should be produced in accordance with the RTRS principles and criteria.58

The RTRS is subject to severe critic by a large number of civil society organisations. This critic, as formulated by GM Freeze, includes that there are no organisations representing small and family farmers or indigenous people involved in the RTRS process. They further state that many groups feel the RTRS seeks to legitimise the irresponsible and unsustainable practice of industrial soy production and justify even greater expansion, regardless of the human and environmental costs.59

58.http://www.taskforcesustainablesoy.org/index.php59.GM Freeze, Thirteen Reasons Why the Roundtable On Responsible Soy Will Not Provide Responsible or Sustainable Soya Bean Production, May 201060.RTRS Standard for Responsible Soy Production, Version 1.0, approved by the RTRS Executive Board 12 May 2010 and by the RTRS General Assembly 10 June 2010. Observations by authors of this report: Principle 1 contains no reference to ratified international law and regulations, such as the UN Declaration on the Rights of Indigenous Peoples. The Guidance on Criteria 3.2. makes a reference to Articles 14-18 of ILO Convention 169 on Indigenous Peoples only. Indicator 3.2.2. suggests that the relinquishment of rights as such does not seem to be subject to free, prior, informed and documented consent, which would not be consistent with the UN Declaration on the Rights of Indigenous Peoples (e.g. Article 32).

Table 3. Most

relevant RTRS

principles and

criteria for

indigenous

peoples60

Principle Criterion text Indicators

Principle 1: Legal Compliance and Good Business Practice

1.1 There is awareness of, and compliance with, all applicable local and national legislation.

Principle 3: Responsible Community Relations

3.1 Channels are available for communication and dialogue with the local community on topics related to the activities of the soy farming operation and its impacts.

3.1.3 The communication channels have been made known to the local communities.

3.2 In areas with traditional land users, conflicting land uses are avoided or resolved.

3.2.1 In the case of disputed use rights, a compre-hensive, participatory and documented community rights assessment is carried out.3.2.2 Where rights have been relinquished by traditional land users there is documented evidence that the affected communities are compensated subject to their free, prior, informed and documented consent.

3.3 A mechanism for resolving complaints and grievances is implemented and available to local communities and traditional land users.

3.3.1 The complaints and grievances mechanism has been made known and is accessible to the communities.3.3.2 Documented evidence of complaints and grievances received is maintained.3.3.3 Any complaints and grievances received are dealt with in a timely manner.

3.4 Fair opportunities for employment and provision of goods and services are given to the local population.

3.4.1 Employment opportunities are made known locally.3.4.2 There is collaboration with training programs for the local population.3.4.3 Opportunities for supply of goods and services are offered to the local population

Principle 4: Environmental Responsibility

4.1 On and off site social and environmental impacts of large or high risk new infrastructure have been assessed and appropriate measures taken to minimize and mitigate any negative impacts.

4.1.1 A social and environmental assessment is carried out prior to the establishment of large new infrastructure.4.1.4 Measures to minimize or mitigate the impacts identified by the assessment are documented and are being implemented.

4.2 Pollution is minimized and production waste is managed responsibly.

4.4Expansion of soy cultivation is responsible.

4.4.1 After May 2009 expansion for soy cultivation has not taken place on land cleared of native habitat except under the following conditions:4.4.1.1 It is in line with an RTRS-approved map and system (see Annex 4.) or4.4.1.2 Where no RTRS-approved map and system is available:a) Any area already cleared for agriculture or pasture before May 2009 and used for agriculture or pasture within the past 12 years can be used for soy expansion, unless regenerated vegetation has reached the definition of native forest (see glossary).b) There is no expansion in native forests (see glossary)c) In areas that are not native forest (see glossary), expansion into native habitat only occurs according to one of the following two options:Option 1. Official land-use maps such as ecological-economic zoning are used and expansion only occurs in areas designated for expansion by the zoning. If there are no official land use maps then maps produced by the government under the Convention on Biological Diversity (CBD) are used, and expansion only occurs outside priority areas for conservation shown on these maps.Option 2. An High Conservation Value Area (HCVA) assessment is undertaken prior to clearing and there is no conversion of High Conservation Value Areas.

Note: Where neither official land use maps nor CBD maps exist, Option 2 must be followed.

4.4.2 There is no conversion of land where there is an unresolved land use claim by traditional land users under litigation, without the agreement of both parties.

Principle 5: Good Agricultural Practice

5.1 The quality and supply of surface and ground water is maintained or improved.

5.1.1 Good agricultural practices are implemented to minimize diffuse and localized impacts on surface water quality from chemical residues, fertilizers, erosion or other sources and to promote aquifer recharge.

5.3 Soil quality is maintained orimproved and erosion is avoided by good management practices.


Much of the international concern about the social and environmental impacts of palm oil plantations is focused on Indonesia. So far, less attention has been paid to similar processes taking place in eastern Malaysia.61 For this report NCIV focuses on the palm oil cultivation in both Indonesia and Malaysia since the Netherlands is a significant importer of palm oil from both countries. For Indonesia the main focus is on West Kalimantan because of the large extent of existing and planned plantations threatening indigenous communities; for Malaysia the main focus is on Sabah and Sarawak, being the most important palm oil producing areas in the country and an area where indigenous peoples are highly affected by the production.

Production of palm oil

In Malaysia the total palm oil planted area increased by 4.53 percent to 4.69 million hectares in 2009. The area expansion occurred mainly in Sabah and Sarawak with a combined growth of 5.94 percent compared to 3.31 percent in Peninsular Malaysia. Sabah remained the largest oil palm planted State with 1.36 million hectares or 29 percent of the total planted area.62 In 2008, the production of crude palm oil increased by 12.1 percent to 17.73 million tonnes, from 15.82 million tonnes the previous year. In 2009 there was a slight decline by 1 percent to 17.57 million tonnes. 63

In Malaysia, rapid expansion of oil palm planting is significant in Sabah and especially in Sarawak. As of June 2008, almost 1.4 million ha has been licensed out to oil palm development in Sarawak.64

Indonesia accommodated almost 8.5 million hectares of oil palm plantations in July 2009, of which 737,556 hectares in Central Kalimantan and 525,000 hectares in West Kalimantan.

Estimations of future oil palm expansion in Indonesia differ widely. Wicke et al (2008) present four different projections. In all projections very large increases in land area occupied by oil palm can be seen, ranging from 5.2 million ha to 19.8 million ha or a total land occupied by oil palm between 10.7 million ha and 25.3 million million ha.65 Sawit Watch even identified 26.7 million ha of expansion based on continuous review of newspaper articles and announcements (see table 5). In the past most expansion has taken place in Sumatra, where the first commercial Dutch colonial plantations originated. As available lands became limited, oil palm plantation expansion is proceeding rapidly in Kalimantan, with plans for another 5 million hectares of oil palm plantations in the near future. With much of the original forest cover already lost in Sumatra and Kalimantan, new plantations are also planned for in more remote eastward provinces, such as Papua.

3. Palm oil in Indonesia and Malaysia

Table 4.

Oil palm

plantation area

in Malaysian

States

(Hectares)

Table 5.

Oil palm

plantation area

in Indonesian

provinces

61.Sawit Watch & Forest peoples Programme, Land is life, 2007.62. http://econ.mpob.gov.my/economy/annual/stat2009/EID_statistics09.htm63. Oil world Annual 2010, ISTA Mielke, May 201064. Chung, F. J. 2008. Palm oil – one with nature: challenges and outcome – the Sarawak experience. World Sustainable Palm Oil Conference. London, 15 September 2008.

65.Wicke, B., Sikkema, R., Dornburg, V., Junginger, M., & Faaij, A. (2008) ‘Drivers of Land Use Change and the Role of Palm Oil Production in Indonesia and Malaysia. University of Utrecht, Copernicus Institute

State 2008 2009

Johor 687,906 712,448

Kedah 77,080 78,384

Kelantan 103,636 113,185

Melaka 48,408 51,193

N. Sembilan 171,647 166,501

Pahang 647,879 675,667

P. Pinang 13,001 13,588

Perak 363,022 373,854

Perlis 251 234

Selangor 135,529 139,544

Terengganu 161,660 165,216

Total P. Malaysia 2,410,019 2,489,814

Sabah 1,333,566 1,361,598

Sarawak 744,372 839,748

Sabah/Sarawak 2,077,938 2,201,346

Malaysia 4,487,957 4,691,160

Province Existing (ha) Planned expansion (ha)

Aceh 283,283 1,225,000

Bangka Belitung 171,535

Banten 17,375

Bengkulu 200,000 500,000

Central Kalimantan 737,556 2,401,300

Central Sulawesi 81,307 500,000

East Kalimantan 368,504 1,606,000

Jambi 694,310 1,000,000

Lampung 164,786 500,000

Moluccas 61,590

North Sumatra 1,044,230 1,239,700

Papua 97,000 6,000,000

Riau 2,300,000 3,036,900

Riau Islands 54,700

South Kalimantan 391,671 500,000

South Sulawesi 72,133 500,000

South Sumatra 718,068 1,000,000

Southeast Sulawesi 21,213 1,100,000

West Irian Jaya 30,171

West Java 11,881 20,000

West Kalimantan 525,000 5,081,900

West Sulawesi 117,261

West Sumatra 327,653 500,000

Total 8,491,227 26,710,800


Figure 2:

Annual crude

palm oil export

from Malaysia

and Indonesia

to the

Netherlands in

million tonnes,

2002-200971

Oil palm

seedlings

ready to be

planted near

Sungai Lalang

(Seminggang,

West

Kalimantan,

Indonesia)

Photo by:

Albertus

Pramono,

Map 5. Logging

concessions

and plantations

on customary

lands in West

Kalimantan.

Source: Pusat

Sistem

Informasi

Geografis

PPSDAK

Pontianak,

July 2010.

Impact of palm oil plantations on indigenous peoplesMost indigenous peoples in Indonesia and Malaysia can be found in the tropical rainforest. The total indigenous population in the border area of Kalimantan, Indonesia (where a good number of plantations are located) is estimated at approximately 300,000 inhabitants, mainly from Dayak origin.72 In 2000, the Indonesian ministry of forestry estimated that the livelihoods of 30 million Indonesians depend directly on the forest.73 Others estimate that approximately 40 to 95 million people live in Indonesia’s forests, 40 to 65 million of which are indigenous communi-ties governed by customary law.74 The indigenous population in Sarawak (Malaysia) comprises around 40 percent of the total population of 2,357,50075. Officially, there are 28 indigenous groups identified in Sarawak. However, there are at least 37 known groups and sub-groups, including Iban, Penan, Kenyah, Kayan, Kelabit, Ukit, Sekapan, Lahanan and Punan Bah. Sabah is characterised by ethnic pluralism, with more than 30 different indige-nous groups, including Kadazan, Dusun, Rungus, Murut, Sungai and Lundayeh. They speak more than 50 languages and 80 dialects. The Dusunic, Murutic and Paitanic groups are the larger of the ethnic groups. The indigenous population in Sabah makes up approximately 60 percent of the state’s population and the majority live in the rural areas. The Kadazan-dusuns, who are the most dominant ethnic group, occupy western, northern and central Sabah. The Rungus communities reside on the northern part of Sabah. The Murut communities are found in the south-west interior of Sabah while the Sungai occupy the eastern part of interior Sabah. Lundayeh communities are found in the southern part, near the border with Sarawak and Kalimantan.76

The following map shows over 4 million hectares of plantations and 860,000 hectares of logging concessions, 500,000 hectares of which overlap with indigenous territories in West Kalimantan, Indonesia.

The importance of palm oil for the Dutch economyPalm oil is a very common cooking ingredient in South East Asia and the tropical belt of Africa. It is increasingly used in the processing industry. Palm oil is nowadays an important ingredient of food and non-food products around the world. Sixty percent of all products in the supermarkets in the Netherlands contain palm oil, from cookies to cosmetics to margarine; palm oil in addition is also used to produce biodiesel.66

Worldwide, more than 45 million tonnes of palm oil is annually produced.67 Approximately 90 percent of this production originates from South East Asia, the majority from Malaysia and Indonesia.68 Accounting for 5.5 percent of the global palm oil imports, Dutch imports are only surpassed by India and China. The Netherlands is a major importer of Malaysian and Indonesian palm oil: in the period 2006-2008 the Netherlands imported on average 6 percent of the Malaysian palm oil and 4.2 percent of the Indonesian palm oil.69 In 2009 Dutch import figures rose to 6.5 percent of the Indonesian and 5.6 percent of the Malaysian production.70

As demonstrated in the figure above the volume of Dutch imports from palm oil produced in both Malaysia and Indonesia increased significantly over the last few years. It should be noted that not all palm oil from Malaysia and Indonesia necessarily originates from these countries, as both countries export Crude Palm Oil (CPO) to each other which is then re-exported to third countries like China, Singapore and EU countries. This interstate trade has not been taken into account in this report.

66. http://www.wnf.nl/nl/wat_wnf_doet/thema_s/bossen/bedreigingen/palmolie/index.cfm?hlight=palmolie67.Oil World Annual 201068.Ibid.69. Aid environment, Report The Dutch Economic Contribution to Deforestation, 200970. Oil World Annual 201071. Source: Data for Malaysia:http://madb.europa.eu/mkaccdb2/statistical.htm?from=form&format=0&cb_reporters=0003&cb_partners=07 01&list_years=2008&list_years=2007&list_years=2006&list_years=2005&list_years=2004&list_years=2003&list_years=2002&cb_measures=iq&ahscode1=1511&submit=Search+HS+code Data for Indonesia: http://madb.europa.eu/mkaccdb2/statistical.htm?from=form&format=0&cb_reporters=0003&cb_partners=0700&list_years=2008&list_years=2007&list_years=2006&list_years=2005&list_years=2004&list_years=2003&list_years=2002&cb_measures=iq&ahscode1=1511&submit=Search+HS+code , 2009 data from Oil World Annual. 2010

72.Friends of the Earth Netherlands & the Swedish Society for Nature Conservation, The Kalimantan Border Oil Palm Mega Project, 2006.73. Ministry of Forestry, 2000. http://www.dephut.go.id/files/RENCANA%20%20STRATEJIK%20DEPARTEMEN%20KEHUTANAN%202001%20-%202005.pdf74. Colchester, M., Sirait, M. and Wijardjo, B. 2003 The application of FSC principles 2&3 in Indonesia: obstacles and possibilities. WALHI and AMAN, Jakarta.75. http://www.minorityrights.org/?lid=4540&tmpl=printpage76.International Working Group of Indigenous Affairs, http://www.iwgia.org/sw18358.asp.

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Mid-2010 Sawit Watch has recorded 630 conflicts related to oil palm expansion in Indonesia, most of these occurring in South Sumatra, West Kalimantan and Jambi (Sumatra).77

Most conflicts were related to unwanted conversion of lands, including agricultural lands, such as rice fields, customary forest, and desecration of burial sites.78 Late 2008 the Ketapang Plantations Office reported 20 out of 54 oil palm companies active in the district were involved in land conflicts.79 A lack of transparency, the absence of free, prior, and informed consent (FPIC, see Box 4), unequal benefit sharing and unclear land rights lay the foundations for contested conversion.80

For Sarawak and Sabah we were unable to produce a meaningful map providing an overview of logging and palm oil areas on native customary lands. One of the reasons was that the main partner we were relying on (PACOS) has faced data storage, organisation and sharing challenges, thus hindering any sharing of their information in an efficient manner with others. At present they are reorganising their field data (including maps) and begin managing that information better to allow future sharing. Another reason has been that concerns have been raised about the use and sharing of sensitive information regarding social conflicts and map making for Native Customary Rights land. This follows recent attention by the Malaysian authorities (in particular the police) on indigenous peoples’ groups and activitists. We found that Sarvision from the Netherlands together with BRIMAS and Aonyx consulting are partners in developing a map of Sarawak with overlays of forest areas, oil palm, EIAs of concessions and other inputs. They have completed primary data processing and are in discussion with Google to put the maps online for public consumption. Based on this information it may be possible to produce a meaningful map in the near future. Nevertheless, a recent publication provides an overview of 140 Sarawak Native Customary Rights (NCR) land dispute cases, which demonstrates that most of these cases involve logging or oil palm plantations.83 As a result of NCR being continuously eroded, on 20 February 2008, a memorandum containing land claims from 32,352 natives over a collective area of 339,984 acres from 18 districts in Sabah was submitted to Head of State Tun Ahmadshah Abdullah and Chief Minister Datuk Seri Musa Aman.84 These are clear indications that there is a significant overlap of logging and palm oil areas on native customary lands in Sarawak and Sabah.

The unsustainable expansion of Malaysia and Indonesia’s palm oil industry is leaving many indigenous communities without land, water or adequate livelihoods. Previously self-sufficient communities nowadays have great difficulties to survive with the means left available to them. Traditional customs and culture are being damaged alongside Indonesia and Malaysia’s forests and wildlife. The impact of the palm oil production on indigenous peoples in Indonesia and Malaysia can be divided into four categories:

1. Loss of landLand appropriation for oil palm plantations is the most contentious part of the industry. Land conflicts are rampant and often lead to criminalisation of the villagers. In many cases the lands used for oil palm expansion are customary lands taken from the indigenous inhabitants without free, prior and informed consent and adequate compensation. Land is a fundamental issue for many indigenous peoples, as it forms the very basis of their livelihood. Therefore, the rapid expansion of oil palm plantations have disrupted their lives and created extensive conflicts over land. Research in several villages in Kalimantan concluded that the loss of land and forest was the foremost negative impact for indigenous communities, and that many other negative impacts were related to this.85 A study of relevant literature shows that most social problems relate to land use, land ownership and tenure and how rights are transferred.86

According to the community leader of Rumah Dunggat in Sarawak, the lease or licence of the Pelita Diwangsa Sdn Bhd palm oil company affects more than 3,000 hectares of native customary lands in Rumah Dunggat and Rumah Lampoh, Sarawak. ‘No negotiation or consultation took place with the indigenous people of the Iban Dayaks with regards to the terms and conditions of the companies’ operations on the customary lands or within their traditional territory. Compensation for their native customary rights lands and crops was not given by the company. ´There was no negotiation at all with regards to the terms and conditions of its operations on our customary lands or within our traditional territory. When we learned of the company’s entry into our customary lands, we protested and put up signs to warn against encroachment. But later, the company moved in from another location and bulldozed its way into our customary lands.’87

‘Free, Prior and Informed Consent’ (FPIC) has emerged as a key principle in international law and jurisprudence related to indigenous peoples and has been widely accepted in private sector policies of ‘corporate social responsibi-lity’ in sectors like dam building, extractive industries, forestry, plantations, conservation, bio-prospecting and environmental impact assessment.81 Consultation and participation are crucial components of a consent process. Consultation should be undertaken in good faith. The parties should establish a dialog allowing them to find appropriate solutions in an atmosphere of mutual respect in good faith, and full and equitable participation. Consultation requires time and an effective system for the communication among the interest-holders. Indigenous peoples should be able to participate through their own freely chosen representatives and customary or other institutions. The inclusion of a gender perspective and the participation of indigenous women are essential, as well as participation of children and youth, as appropriate. This process may include the option of withholding consent.82

77.Sawit Watch Database July 201078.Levang P, Riva WF and Orth MG (unpublished) Aiming at the wrong target: NGOs need not confuse oil palm as a crop and large-scale development schemes that exploit it.79. Kompas, Sejengkal Tanah Terakhir di Kalimantan, 22 December 2008. 80.Rist, L, Feintrenie, L.A. and Levang, P. (2010) The livelihood impacts of oil palm: smallholders in Indonesia. Biodiversity and Conservation 19(4): 1009-1024.81. International Workshop on Methodologies regarding free, prior and informed consent and ndigenous peoples, New York, 17-19 January 200582.UN Document E/C.19/2005/3, paragraph 47.

83.Young, Carol, Logging in Sarawak and the Rights of Sarawak´s Indigenous Communities, april 2010.84.Memo on land claims submitted, The Daily Express, 21 February 200885. Orth, M.G. 2009. The Noble Savage Fancies Development. Determinants of community responses to forest conversion plans in Central Kalimantan, Indonesia. Dissertation, Technical University Dresden, Germany.86. Teoh (2010) Key Sustainability Issues in the Palm Oil Sector: A discussion paper for multi-stakeholders consultations. Commissioned by the World Bank Group.87. Sawit Watch & Forest peoples Programme, Land is life, 2007.

Box 4. Free, Prior and Informed Consent.

0

50

100

150

Bangk

a Belitu

ng

Centra

l Kalim

anta

n

East K

alim

anta

n

!Lam

pung

Riau

South

Sulaw

esi

South

east S

ulaw

esi

Wes

t Kalim

anta

n

Wes

t Sum

atra

17 12

41

58 56

79

10

27 40

5 11

129

20 8

98

8 11

Figure 3: Oil

palm related

conflicts.

Source: Sawit

Watch, 2010


Regarding the provided information concerning Karya Canggih Mandiri Utama Company Limited (PT KCMU) and its offers to the indigenous communities in Sarawak, an indigenous farmer replied that the company has never provided any clear information regarding the area that the company planned to acquire and the boundaries of the nucleus and plasma plantations. ‘The company interacted with the adat community on an individual base. In our Pekon, approximately 60 percent of the plasma has been bought by the company informally (without following the legal procedures).’ 88

Another case is from Semunying Jaya (West Kalimantan), a village just a few miles from the 1,000 mile border that separates Indonesian Kalimantan from Malaysia. These borderlands have been targeted for palm oil development by companies eager to open up the vast jungles of the region, leading to large-scale destruction. In 2005, PT Ledo Lestari, a Duta Palma subsidiary, unloaded bulldozers and excavators on the banks of the Kumba River next to Semunying Jaya. ‘They told us they were here to build us a road. But then they started clearing our forest,’ tells Pak Jamaludin, one of the indigenous inhabitants of Semunying Jaya. Unknown to the community, the regional govern-ment had given Duta Palma a 20,000 hectare concession directly on top of all 18,000 hectares of Semunying Jaya’s sacred forest.89

In Indonesia customary lands have a rather weak and disputed status, due to legal ambiguity and lack of definition for customary land.90 This often leads to conflicts between companies and indigenous communities, as well as to horizontal within-community or between-community conflict.

In 2003 the Talang Mamak tribe in Riau province, Sumatra, received the Kalpataru Award from then-President Megawati Sukarnoputri for their efforts in environmental conservation by halting logging in the Bukit Tigapuluh National Park. In 2007 a joint decree signed by the district head confirmed the tribe’s possession of the forest. “Suddenly in 2008, bulldozers started to arrive and began clearing our tribal forest. My opposition was met with death threats” Patih Laman, chief of Talang Mamak tribe, said.91 He decided to return the prestigious environmental award, as he could no longer protect the forest, claiming already 8,000 ha of indigenous forest has been illegally converted into oil palm plantations.92

Plantation concessions are given out by the government, who often do not recognise customary land tenure. As a result, many of these licenses concern land owned by indigenous communities. Those communities informed prior to land clearing are often lured into unfair deals, feeling either forced to join the plantation scheme or not patient enough to wait for the land prices to increase.93 Generally being poorly informed and susceptible to faulty promises, they are often led to believe that oil palms will grow with little maintenance and provide high returns even in unsuitable areas. 94

Regularly communities only become aware of the conversion plans once bulldozers come in.95 They then demand to have their lands returned or be compensated for their loss. Company representatives may announce compensation, participation in a smallholder scheme, renovation of a school, construction of a health clinic or other facilities. Such verbal promises often only communicated to village elites who are given “incentives” to convince their fellow villagers, repeatedly do not materialise or are misunderstood. Having caused even more anger among the commu-nity, the indigenous people may protest against the company and local government, confiscating heavy equipment and vehicles or creating roadblocks. Such protests often result in a criminalisation of the communities. Rather than discussing possible solutions in an open manner, companies often react to this by hiring local police or armed forces to intimidate the local community, causing the conflict to escalate. 96

Conflicts frequently arise on lands with unclear, ambiguous or competing claims, and have resulted in protest, resistance and violence, in some cases even with lethal consequences.97 In June 2010 smallholders protested for recognition of their rights and up keeping of promises from oil palm plantation company PT Tri Bakti Sarimas. This resulted in a bloody clash with the Mobile Brigades (a paramilitary unit within the Indonesian Police), where numerous people were injured and a female smallholder was shot dead. 98

In 2007 PT Bangun Nusa Mandiri announced its plantation development plans to affected communities in Jelai Hulu subdistrict, Ketapang, West Kalimantan. The company made promises of building a road for increased accessibility, schools and health facilities; public services that the State failed to provide. Company representatives would sketch a positive future, suggesting villagers would receive high prices for fresh fruit bunches from the plantation, sufficient to buy modern goods and services. It did not follow the FPIC principle, as only positive prospects were highlighted, and possible negative impacts and risks were ignored. The smallholder scheme and the accompanying loans were also not explained transparently. The company asked for land from the indigenous people, causing a horizontal conflict between those that were willing to sell their land and those that were against plantation development. As lands become scarcer, neighbouring villages got in conflict about the boundaries of their land. (see box 5).

Deforestation and environmental degradationSecondly, similar to soy production, palm oil production also leads to environmental degradation. Huge tracts of rainforest are being destroyed with a very damaging effect both on the environment and the people living within and near the plantation areas.99 The United Nations Food and Agricultural Organisation (FAO) has pointed out oil palm as a main driver of deforestation in the region. 100

The Duta Palma subsidiary PT Ledo Lestari (West Kalimantan), for example, clears and burns the rich rainforest surrounding the indigenous village of Semunying Jaya, destroying an ecosystem of global importance and threate-ning this community’s very survival. There are just 8,000 hectares of rainforest remaining on PT Ledo Lestari’s concession. Clouds of black smoke hang over Semunying Jaya, reminding the villagers that the clearing continues. After the chainsaws and bulldozers, Duta Palma labourers pour diesel fuel over the felled forest and set it afire. 101

According to a survey conducted by Friends of the Earth International (FOEI) the Penans in Sarawak face dwindling revenue and health deterioration due to air and river pollution, exposure to heat and lack of nutricious food resulting from the depleting of forest resources. 102

For a plantation company to commence their activities, a Plantation Business Permit needs to be issued first. Such a permit requires approval of their Environmental Impact Assessment (EIA) prior to land clearing. The Malaysian oil palm company IOI has several plantations in West Kalimantan. IOI’s subsidiaries PT Sukses Karya Sawit, PT Berkat Nabati Sejahtera and PT Bumi Sawit Sejati already started land clearing and planting of oil palms before their EIAs were legally approved, thus violating the regulatory requirements on environmental impact. Based on Landsat imagery in 2009, areas identified as forest cover in the companies’ own EIA reports were being cleared. Almost 90 percent of the concession of PT Berkat Nabati Sejahtera is located on peatland, which require an extensive network of canals to become accessible. Early 2010, a large part of these peatlands had already been cleared, drained and planted with palm oil. 103

88.Forest Peoples Programme, Sawit Watch a.o., Promised land, 2006.89.Rainforest Action Network, Article Duta Palma´s Filthy Supply Chain, 2009.90.Tjondronegoro, S.M.P. (2003) Land policies in Indonesia. Working Paper. World Bank. Jakarta, Indonesia. 91. Jakarta Globe, November 29, 2009. Riau Tribal Elder Cries Betrayal as Bulldozers Move In. http://www.thejakartaglobe.com/home/riau-tribal-elder-cries-betrayal-as-bulldozers-move-in/34448292. Jakarta Globe, 9 February 2010. Ministry to Probe Illegal Forest Cutting As Riau Tribe Spurns Green Award.93. Orth, M.G. (2007) Subsistence Foods to Export Goods: the impact of an oil palm plantation on local food sovereignty. Velp, the Netherlands: Van Hall Larenstein.94.Padmanaba, M. and Sheil, D. (2007) Finding and promoting a local conservation consensus in a globally important tropical forest landscape. Biodiversity and Conservation 16(1): 137-15195. Forest Peoples Programme, Sawit Watch a.o., Promised land, 2006.96. Levang P, Riva WF and Orth MG (unpublished) Aiming at the wrong target: NGOs need not confuse oil palm as a crop and large-scale development schemes that exploit it.

97. Casson, A. (2000) The Hesitant Boom: Indonesia’s palm oil sub-sector in an era of economic crisis and political change. Bogor, Indonesia: Center for International Forestry Research and Wakker, E.J. (2004) Greasy Palms: the social and ecological impacts of large-scale oil palm plantation development in Southeast Asia. London, UK: Friends of the Earth.98. Jakarta Post, 10 June 2010, NGOs demand justice in farmer shooting case. http://www.thejakartapost.com/news/2010/06/10/ngos-demand-justice-farmer-shooting-case.html99. International Working group for Indigenous Affairs, http://www.iwgia.org, 19 nov.09.100. FAO, State of the world’s forests, 2009.101. Rainforest Action Network, Article Duta Palma´s Filthy Supply Chain, 2009.102.Malauysiakini, October 17, 2005103.Milieudefensie and Friends of the Earth Europe. 2010. Too Green to be True. IOI Corporation in Ketapang District, West Kalimantan


Although oil palm plantations in both Malaysia and Indonesia are planted in areas of relatively high rainfall, the communities report that local rivers had far less water than before the plantations existed. There are reports of increased flooding in the rainy season, with plantations affecting the natural drainage patterns. Oil palm plantation development may cause recurrent flooding and make access to water increasingly difficult in places where water sources are now out of bounds because they are on private land.

Plantations are intensively sprayed with pesticides and herbicides, creating toxic run off. Effluent from the milling process is also toxic and should be stored in special ponds. Reports of water pollution incidents are also common, with effluent regularly discharged into rivers, killing fish and contaminating drinking and washing water104 ‘The forest here is gone now. I will be okay. But what about my children, my grandchildren, and their children after them? Where will they be able to grow their food, have their farms, find work? Our river is destroyed. The oil palm trees drink a lot. And the palm oil factory drinks even more’, explained an elder villager living near the oil palm plantation of PT Harapan Sawit Lestari in West Kalimantan. 105

Moreover, fire is frequently used in the land clearing process. The dry season allows the fire to easily spread to surrounding lands outside of the concession area. In March 2007 PT Andalas Patriot (Bakrie Group) set fire to clear land on their concession in Sekadau district, West Kalimantan. The fire spread to the rubber plantations owned by villagers from the neighbouring village Engkuning, who sued the company for compensation. 106 FOEI highlighted the false claim made by the Malaysian palm oil lobby that ¨zero (open) burning is strictly prohibited in Malaysia´s laws¨. It noted that the Sarawak environmental laws allowed plantation companies to practice open burning to clear land for planting even on peat soils. It said that the State´s legislation was independent of the Federal law and ran counter to the spirit of the Asean Transboundary Haze Agreement to which Malaysia is a key signatory. 107

Loss of forest, and fragmentation and degradation of the remaining forest leads to a range of biodiversity impacts and threatens the continuing existence of endangered species.108 Another detrimental impact is caused by the green-house gases emitted during clearing of tropical rainforest and drainage of peat lands for the expansion of large-scale oil palm plantations, which heavily contribute to global warming. 109

104.Friends of the Earth, life Mosaic and Sawit Watch, Losing ground, 2008.105. Rainforest Action Network, 2010. Cargill’s problems with palm oil. 106. Levang P, Riva WF and Orth MG (unpublished) Aiming at the wrong target: NGOs need not confuse oil palm as a crop and large-scale development schemes that exploit it.107.FOEI: Malaysian Palm Oil: Green Gold or Green Wash?, October 2008108.Fitzherbert, E., Struebig, M., Morel, A., Danielsen, F., Brühl, C., Donald, P., and Phalan, B. (2008) How will oil palm expansion affect biodiversity? Trends in Ecology and Evolution 23: 538-545.109. Greenpeace (2007) How the palm oil industry is cooking the climate. Amsterdam: Greenpeace International. Retrieved from http://www.greenpeace.org/international/press/reports/cooking-theclimate-full, accessed on 18 March 2010.

Loss of culture, income and food securityGenerally, the arrival of an oil palm plantation alters the lives of indigenous people. It is not always the plantation as such, but also the new roads and increased access they provide, the transmigrants that come to work on the plantation, and the loss of forest and farming lands. Without the forest and with agricultural lands converted into oil palm plantations, many traditions, rituals and ceremonies related to the forest and farming practices risk to be lost. This is very obvious in the cultures of Dayak peoples whose life cycles and identities centre on the rice farming. A female farmer from Sanggau district in West Kalimantan explained how indigenous culture is embedded in agricul-ture: ‘the people forget about our traditions. If we do not have rice fields because of oil palm, there will be no celebration of the rice harvest any more. We do not have land any more to make a swidden field’. 110 Generally, local communities are not well prepared for the rapid modernisation and transition from basic subsistence agriculture to modern cash crop farming. 111

Important sacred sites, such as ancestral burial grounds, or sacred trees may be destroyed and replaced with oil palm. Newcomers bring along their own culture and a lack of respect for the customs and customary law of the indigenous population may easily lead to a loss of identity related to these customs.

Indigenous culture and language are rarely recorded in written form, and may vanish along with a traditional way of life. As a representative of a local NGO put it: ‘In the context of oil palm, we hold the view that the expansion of [oil palm] plantations besides seizing our Dayak language [...] seizing the rights on land of our adat community, slowly but certainly will destroy the culture of the people in West Kalimantan.’ 112

The advance of monoculture also leads to a loss of other forms of traditional knowledge. Medicinal plants and the knowledge surrounding their use are lost in the sudden transformation as a woman who works on an oil palm smallholding explains: ‘It used to be easy for us to find tree roots used for traditional medicine in the forest. But now the forest is gone, all of that has disappeared. We also used to grow all sorts of crops. Now that has become impossible. The oil palm roots are everywhere and nothing grows.’ Loss of medicinal plants leads to a loss in knowledge of how to use these plants, and a loss of available options for low-cost, locally accessed plant-based remedies. Traditional handicrafts are also hampered by a loss of availability of plants used in their preparation as weaving materials or dyes. 113

Moreover, palm oil production has its negative influence on the economic situation of indigenous communities. ‘Even though the crops, such as pineapples, coconuts and others, were planted there with the assistance from the Agriculture Department, the destruction of these crops has deprived them of their sources of income and food. Two of our rivers are affected, namely, Sungai Lupak and Sungai Mas (Sarawak). The company cleared lands and forests right to the riverbank without leaving any buffer zone. Fish are getting hard to obtain because of the change in the water condition and quality,’ tells the headman of Rumah Dunggat.114 Also in Indonesia the forest provides the indigenous communities with many ways to earn money: fish, honey, saps, resins, oils, game, and rattan vines. But as less forest and land are available, farming and collection of such forest products becomes increasingly limited and more foods have to be bought. Change of land use and increased pressure on land can affect food sovereignty and security. 115

110. Gaiser, N.M. (2009) Perceptions of oil palm cultivation in West Kalimantan—local farmers between development, conservation and indigenous rights discourses. Dissertation, University of Freiburg, Germany.111. Teoh (2010) Key Sustainability Issues in the Palm Oil Sector: A discussion paper for multi-stakeholders consultations. Commissioned by the World Bank Group.112. Gaiser, N.M. (2009) Perceptions of oil palm cultivation in West Kalimantan—local farmers between development, conservation and indigenous rights discourses. Dissertation, University of Freiburg, Germany.113.Friends of the Earth, life Mosaic and Sawit Watch, Losing ground, 2008.114. Sawit Watch & Forest peoples Programme, Land is life, 2007.115. Greenpeace (2007) How the palm oil industry is cooking the climate. Amsterdam: Greenpeace International. Retrieved from http://www.greenpeace.org/international/press/reports/cooking-theclimate-full, accessed on 18 March 2010


SmallholdersTo advance oil palm plantation development, especially during the land acquisition process, local governments have issued regulations regarding partnership schemes for oil palm plantations.116 A part of the indigenous population in Malaysia and Indonesia has been integrated as smallholders into plantation projects. Such smallholders include independent landowners choosing to grow palm oil on their lands, community members contracted by companies to plant palm oil on their own lands and supply the products to the same companies and transmigrants or local communities and indigenous peoples relocated to palm oil areas. Whereas farmers in the first category can choose to whom they sell their produce, typically, smallholders in the last two categories are tied into dependency relations with the companies they supply.

Currently, 1.5 million smallholders contribute to 44 percent of the total area planted with oil palm in Indonesia.117 In Indonesia and Malaysia smallholders represent 37-42 percent of the land cultivated. 118 When it comes to productivity, their mean yield (2.5 t CPO/ha per year) is only half that of large-scale producers (4–6 t CPO/ha per year). 119

In Indonesia, for example, indigenous peoples whose lands were first taken over for the palm oil estates are allocated a two hectare area as oil palm holdings with an additional area ranging from 0.25 to 1 hectare, for housing and subsistence agriculture. Lands allotted to smallholdings are too often far away from infrastructure, the mill or their village and tend to be on less fertile or sandy soils. Those smallholders gain minimal remuneration for their produce, are trapped into debt to the companies, are often defrauded of their lands and suffer health risks from the use of pesticides and human rights abuses when they protest against their circumstances. Furthermore, the smallholders tend to be tied, often by debt and by technical constraints, to large palm oil concerns, limiting their ability to negotiate fair prices or manage their lands according to their own inclinations.

Many smallholders feel insecure on their land. ‘There are many levels of insecurity,’ someone remarks. ‘We don’t have a title. Our smallholdings are sometimes outside our village area, even sometimes in a different sub-district.’ ‘No, we don’t feel secure on our lands, because our customary rights have been robbed from us by the government and the companies.’ Most smallholders have never seen their land title: ‘The funny thing is that the title is with the coopera-tive.’ ‘The problem is that the company is there without our understanding [how they got there].’ ‘The people never get a choice to agree to their presence or not.’ 120

116.Sirait, M.T. (2009) Indigenous People and Oil Palm Plantation Expansion in West Kalimantan. Commissioned by Universiteit van Amsterdam and CordaidMemisa117. IPOC - Indonesian Palm Oil Commission (2009) Directorate General of Estate Crops. In: United States Department of Agriculture. Retrieved from http://www.pecad.fas.usda.gov/highlights/2009/03/Indonesia/, accessed on 31 March 2010.118. http://www.rspo.org/?q=page/514119. Goenadi, D.H. (2008) Perspective on Indonesian palm oil production. Paper presented at the 41st IPC Seminar Food, Fuel, and Forests: A Seminar on Climate Change, Agriculture, and Trade. Bogor, Indonesia, 12 May 2008. International Food and Agricultural Trade Policy Council. Retrieved from http://www.agritrade.org/events/documents/Goenadi2008.pdf, accessed on 29 March 2010.120. Forest Peoples Programme, SawitWatch a.o., Promised land, 2006.

PT Bangun Nusa Mandiri, owned since 2009 by Golden Agri Resources Ltd, (GAR), a Sinar Mas subsidiary in Ketapang, obtained its location permit in December 2004, within a period of three months. Although the first renewal of the location permit in 2008 states that the permit would expire in 12 months and could not be renewed, the Bupati (head of district) of Ketapang issued another renewal. The community members in the concession area stated that the company only introduced its plan to build a plantation and acquired lands in 2007.

Indonesian law requires plantation companies to obtain a number of legal documents before commencement of activities, many of which are prerequisites for other documents. The legal process to gain a plantation permit is as follows: Land Survey Permit (Informasi Lahan) ĩ Plantation Business Permit (Izin Usaha Perkebunan) ĩ Location Permit (Izin Lokasi) ĩ Land Use Right license (Hak Guna Usaha). These permits need to be supported by other documents, such as an approval of the EIA, or, if the concession area is located on forestland, an official forestland release is needed from the Ministry of Forestry. The legal requirements should protect the environment and local communities, and ensure state income from tax revenues and forest conversion. The permitting process usually takes three to five years to complete, although in Ketapang a location permit can be obtained within six months. 122

Between 2005 and 2007 the government of Ketapang district in West Kalimantan issued oil palm permits covering over 40% of the district’s total land territory. In 2009 some 90 oil palm plantation permits had been issued in the district. The short period in which they were issued suggests irregular permitting. In 2008 only 17 out of 90 oil palm plantation companies in Ketapang had an approved EIA report.123 Although the permits are present, their legality is highly questionable.

GAR claims to adopt zero burning policy, environmentally friendly practices (zero waste policies, integrated pest management), compliance of environmental regulation and best practices, protection of high conservation value, and to actively participate in the Roundtable on Sustainable Palm Oil (RSPO) and United Nations Global Compact (UNGC).

The concession area lies on land categorized as Areal Penggunaan Lain (Areas for Other Purposes) that allows agricultural activities. Therefore, the company does not have to obtain an approval of forestland release from the Minister of Forestry. It does, however, need an approval of its AMDAL (environmental impact assessment). At the time of writing this report, the EIA commission of West Kalimantan province has not approved of the document. But land clearing had started as early as in 2008. A large portion of the cleared areas has even been planted at the time of writing.

Box 5. Case of Kg. Sei Lalang and Kg Silat Hulu, West Kalimantan, Indonesia 121

121.This case study was done by AidEnvironment. The field visit took place in August 2010 after a desk study was conducted. The full report of this case study can be found on NCIV´s website: www.indigenouspeoples.nl122. Milieudefensie and WALHI KalBar, 2009. Failing governance - Avoiding responsibilities. European biofuel policies and oil palm plantation expansion in Ketapang District, West Kalimantan (Indonesia)123. ibid


A community member of Sungai Lalang (desa of Biku Sarana, Jelai Hulu subdistrict) mentioned that the first meeting between BNM and the communities from its concession area took place in Riam Kota in 2007. In addition to announce its plan to establish a plantation, the company also expressed its intent to acquire lands from the communities. It is not quite clear when the company exactly started clearing the lands, but an incident of illegal land clearing took place in April 2008. 124

During land appropriation, as in other places, the affected communities are divided into two camps: those who are in favor of the plantation and those who are against it. Due to a strong sense of communality within indigenous communities, the division line usually falls between communities. This case study describes the example from the community of Bayam-Sungai Lalang, which is in favor of the plantation, and the community of Silat Hulu, which rejects the plantation. These communities live next to each other and even consider themselves as siblings as they share the same ancestors as Dayak Sekakai people, a subgroup of Dayak Kendawangan people. 125

After the first contact in Riam, the community of Bayam-Sungai Lalang met the representatives of BNM three times in 2009. Initially they rejected the scheme, but finally agreed to surrender their lands to the company. The company promised to provide a better road and free health services, and to build extra classrooms for the elementary school in the kampung. The households in the kampung then sold their swidden lands (lakau), where they usually grew dry rice, while keeping their rubber gardens and customary forests. Each household received a payment from the company, which issued a receipt and took a picture of the person receiving the money.

BNM adopts a nucleus estate system (NES), in which the company controls 80% of the acquired lands whereas the farmers hold 20% of the lands they sell. A cooperative has been established so that the farmers could sell the produce. However, as a community member of Sungai Lalang mentioned, the community did not have a good understanding as to how much they would get for their fresh fruit bunches in the future and the costs they would bear. A vicious debt circle due to nontransparent credit schemes could be very real. To sustain their livelihood they also rely on rubber, especially until the palm trees are ready to be harvested. However, in the future their time to maintain and tap rubber trees will be reduced significantly as they are required to provide intensive care of oil palm trees.A contrasting relationship with BNM occurs in Silat Hulu. This community is close to Aliansi Masyarakat Adat Jalai Sekayuq-Kendawangan Siakaran (AMA-JK)126, the local chapter of the Aliansi Masayarakat Adat Nusantara (AMAN - The Indigenous People’s Alliance of the Archipelago) in southern Ketapang. In general, they reject oil palm plantation, although their lands are surrounded by three plantations. In addition to BNM, PT Andes Sawit Mas lies in the north, whereas PT Pertiwi Lenggara Agromas (Sampoerna Agro) has a concession area in the west. Moreover, a bauxite mining company, Harita Prima Abadi Mineral (a subsidiary of Indonesian Stock Exchange-listed company PT Cita Mineral Investindo) is trying to acquire their lands as well. Therefore, this community is facing strong pressures to give up their lands, while trying to maintain their lands intact127 Due to this position, they have come face to face with BNM.The conflict with BNM began in April 2008 when a bulldozer came to clear the land that belongs to the commu-nity of Silat.128 The heavy equipment belonged to and was operated by PT Gala Prima Jaya, a local company that BNM contracted for land clearing. Up to September 2009, 350 ha of land had been cleared. The community had demanded a settlement on the encroachment, but the company had never dealt with the matter. Frustrated with the lack of goodwill from BNM, the community confiscated two bulldozers of the land clearing contractor and a theodolite on 29 September 2009. Although a police officer was present during the rally, the report was filed by security chief of the Sinar Mas’s office in Ketapang, who wasn’t present at the site. The police tried to act as a mediator in the conflict, but was very much in favor of BNM. Unknown to the community, the police investigated the criminal charges against the community of Silat Hulu, even though BNM paid the adat fine and the community of Silat Hulu considered the matter settled. The bulldozers were given back. However, criminal investigation continued and led to prosecution. Strangely enough, in February 2010 only two people, Japin (a community leader) and Vitalis Andi (an indigenous activist), were arrested and brought to court. Convinced by an army of lawyers close to the indigenous movement who showed the sloppy works of the police and prosecutors, the court did not accept the prosecution. Again the prosecutors brought the case to the court, which again rejected the prosecution. In early August 2010 it was for the third time the prosecutors requested another court session with the same indictment.

Map 6: PT

Bangun Nusa

Mandiri

Cleared pristine

forest in Bukit

Bayam

Photo by

Albertus

Pramono,

Aidenvironment

124.http://www.kalimantanreview.com/online/2009/004.php, accessed on 14 July 2010125.Johm Bamba (ed.). 2008. Mozaik Dayak: keberagaman subsuku dan bahasa Dayak di Kalimantan Barat. Pontianak: Institut Dayakologi. pp. 188-189.126.The organisation accepts reports from many indigenous communities about their land conflicts with concessions. So it can be considered as a prominent defender of indigenous rights in the area.127. As it is harder to influence the community as a whole, companies have shifted to approach households individually, as Krisusandi Gunuy’ indicates. This method is effective as each household has self interest which does not always in line with the community.


Gender issuesThe women of Silat Hulu participated in the confiscation of the bulldozers by actively guarding the heavy equipment that was kept near the kampung. A concrete example was that when the police’s special force (Brimob) intended to take the bulldozers by force while carrying shotguns, the women surrounded the vehicles to prevent police action. During this collective action the women did not attend their farms or tap rubber for almost two months.

Many of the women in Silat Hulu do not want to work in the plantations as the work is considered too demanding. They prefer to attend rubber gardens. However, many of them also complained that people who are close to the company often approached them during the day to tell them that their families should be willing to sell the lands. This is especially the case with the mining company (PT Harita). In the plantation some female workers were seen spraying pesticides on the young oil palm trees.

Environmental management practicesSince 2008 Greenpeace has been pointing at the Sinar Mas Group for its environmental practices. In a report published in July 2010 Greenpeace claims that Sinar Mas is destructive of the environment. BNM is one of the companies exposed by the international environmental advocacy group, which accuses it of clearing forestland and destructing the orangutan’s habitat.129 Sinar Mas sent out an independent expert team to verify the accusation. In a press conference, the Group announced the result of the verification, which denied Greenpeace’s accusation, while recognising past mistakes.130 This statement also included the compliance of AMDAL for all of its companies in West Kalimantan. However, until the time of report writing BNM has not obtained an approval on the document.

This case study confirms that BNM has set aside high conservation value (HCV) areas such as example Bukit Lambang Batung (photo on p. 48 ). This hill is the traditional boundary marker for the communities of Silat Hulu and Sungai Lalang and thus potentially contentious if converted. However, not far from this hill BNM cleared another hill, Bukit Bayam, which still has a pristine forest.

Impact on economic, social and cultural lives of indigenous peoplesIn the case of Silat Hulu, the neighboring kampungs of Sungai Lalang and Riam questioned the kampung boundaries, even though the district government had agreed upon them. Furthermore, the villagers of Silat Hulu reported that their neighbors logged the trees within the territory of Silat Hulu to be sold to BNM. In response to the increasing conflict, the villagers of Silat Hulu converted their pristine communal forest into new farm lands along the border with its neighbor. With this approach they expect to maintain their boundary while at the same time halting the encroach-ment of the BNM and the neighboring kampungs. The existence of BNM and its operation has also led to the desecration of sacred sites. In Silat Hulu an old burial ground was destroyed.131 The descendants have demanded adat fines from the company, but the matter has not yet been settled. In Sungai Lalang some community members sold a piece of land called Gungguk, which is considered sacred, to the company that turned it into a dump site for nursery ground.

With the arrival of the oil palm plantation, the livelihood of the community will dramatically change, particularly rice farming which is the core of Dayak culture. In the months of July and August the Dayak people prepare new plots for their rice farming. They can either use the fallow lands or clear new plots in the communal forests. In the case of Sei Lalang, the community opened up new forest as they sold their swidden lands. However, they opened new agricultural plots in the forest claimed by their neighboring kampung, Silat Hulu. After this the conflict broadened to a horizontal one, with neighboring kampungs competing to claim lands and thus boundaries.

In the past boundaries were fluid and porous as the Dayak people tended to use such natural markers as hills, forest gardens, and so on. Although certain tree species such as tangir (Koompasia excelsa) or stones were used, the boundaries were more like a belt than a line. Oil palm plantation has brought a new perception of boundaries since people can generate money from land ownership. For this reason, land conflicts began to escalate.

A sign board of

the HCV area in

Bukit Lambang

Batung

Photo by

Albertus

Pramono,

Press coverage

on Andi-Japin

court case

Photo by

Albertus

Pramono,

128.http://www.kalimantanreview.com/online/2009/004.php, accessed on 14 July 2010129. Greenpeace. 2010. How Sinar Mas is expanding its empire of destruction. Amsterdam: Greenpeace International130.http://www.goldenagri.com.sg/pdfs/SGX%20Filings/2010/20100811%20-%20Press%20Release%20-, accessed on 14 August 2010.131.Old graves are generally considered sacred. Dayak people usually leave them untouched, without maintenance. Outsiders may see this as abandoned site.


Wilmar International Ltd is a publicly listed company on the Singapore stock exchange. Wilmar International Ltd (WIL) is the largest processor of palm oil in the world. WIL is also considered the largest palm oil producing company in the world and the size of the company befits its status. According to the company’s Annual Report of 2009133 , it had 235,799 ha land planted on 31 December 2009. These areas are located in Sumatra, West Kalimantan and Central Kalimantan (southern region) for Indonesia (73%), while in Malaysia they are located in the states of Sabah and Sarawak (27%). Wilmar currently holds three member positions in the Palm Oil Processors and Traders category of the Roundtable on Sustainable Palm Oil (RSPO), and one producer Vice President seat on the RSPO Executive Board.

PPBOPPPB Oil Palms is predominantly active in Sabah, where at present the majority of its plantations are located, and to a lesser extent in Sarawak. In 2007 PPB Oil Palms was incorporated into Wilmar. Since RSPO certification for growers commenced, PPB Oil Palms has been actively seeking certification against this standard. The PPB Oil Palms Hibumas 2/ Jebawang (hereafter referred to as Hibumas 2 estate) oil palm estate is one of the last remaining units of the company not audited or certified against the RSPO standard.

Hibumas 2 started in 1997, which was confirmed during discussions with the manager of the estate, David J. Sikuah. According to Mr. Sikuah, the area of the Hibumas 2 estate was uninhabited before the company entered and cleared the land. The only known settlements he remembers were Kg. Pulau and Kg. Sungai-Sungai. Because the area was heavily logged there, says Mr. Sikuah, hardly any other option for local development than to open the area for agriculture.

The origins of the Hibumas 2 estate as related by Mr. Sikuah are as follows:a. In 1997, land was offered to the company by the government to develop Sugut, which was considered as Sabah’s last frontier. b. In the agreement originally tabled by YB Datuk Haji Surady Kayong, State Legislative Councillor for Sugut, 25,000 acres were to be developed by the company. From this land, 20% was to be developed and given back to the community (i.e. 5,000 acres). c. But after the company surveyed the land only 20,000 acres were developed by the company and from this land 4,000 acres were planted with oil palm and given to the community in 2007 under the care of YB Surady.d. At the time foreign workers were unavailable so villagers from Kg. Tampat were the first supply of plantation workers. However, Mr. Sikuah was of the opinion that the hiring of villagers was less than satisfactory. In his view villagers were naturally very slow moving and, as a result, not very productive.

On the matter of the land planted with oil palm for the community through YB Surady, many villagers interviewed were either unaware or unsure of the area and how the community was benefiting from it. In addition, some estimates from interviews at Kg. Tampat said that perhaps only 1,000 acres were given to the community instead of the 5,000 acres promised by YB Surady. Based on Wilmar’s own records and institutional information on the Hibumas venture, the handing over of land that Wilmar asserts was over 1,600 ha, was carried out through a high-level official ceremony through the Chief Minister of Sabah in an official ceremony with full press coverage to the smallholders. In response to the comments from Kg. Tampat, Wilmar added the following: “This initiative between the private sector and the State government to promote entrepreneurship and enhance socio-economic development under the small-holder oil palm cultivation scheme is the first of its kind in the industry in the State of Sabah, Malaysia. PPB Oil Palms has invested about US$6 million to develop the project and it was valued at more than US$15 million at the time when the land was presented to the smallholders.”

Box 6. Case of Kg Sungai-Sungai and Kg Tampat, Sabah, Malaysia. 132

Paitan and Kg. TampatPaitan is a smaller district within the administrative district of Beluran, Sandakan Division of Sabah, Malaysia. Based on meeting and interviewing community members it is likely that the villages affected by oil palm development in the area include Kg. Tampat, Kg. Sungai-Sungai, Kg. Menungan, Kg. Linayukan and Kg. Binsulung (possibly Boustead plantations). Residents interviewed in the area said that the major ethnic group in the Paitan area are Sungai people, a recognised indigenous group in Sabah. However, the presence of other ethnic groups in the area is also mentioned, owing mainly to migrants to the area or those residing there through marriage to local community members. The area visited and villages of Kg. Sungai-Sungai, Kg. Tampat and Hibumas 2 estate are shown in the map above.

Kampung Sungai-SungaiKg. Sungai-Sungai can be considered a major settlement for Mukim Sungai-Sungai. The main village (see location on Map 7) is the hub for approximately four satellite villages. Observations during the field visit noted the ostensible existence of a police station, primary school and health department facility. Residents allege that flooding at the present Kg. Sungai-Sungai site is common during the rainy season or when heavy rains occur in the area. The provision of potable water was another major amenity that is lacking. Wilmar, asked on their views on the problems in the villages, in particular Kg. Sungai-Sungai, stated that in the aftermath of previous flooding, the local government had built new housing for victims and a mosque on an area of about 10 ha on PPB Oil Palms land. No compensation for PPB was provided by the government and today the area has been designated as a form of ‘CSR contribution to the affected local community in Sugut’ by Wilmar.

Kampung TampatKg. Tampat is situated further away from Kg. Sungai-Sungai and was not mentioned as one of the satellite villages by residents. Kg. Tampat was visibly smaller in size and none of the amenities observed at Kg. Sungai-Sungai were present there. According to Kg. Tampat’s village head, Nordin Kuyong Tapah, (Pengerusi JKKK Kg Tampat), the present site of Kg. Tampat was established over 100 years ago, making reference to the fact that the graves of ancestors are still there as well as the surrounding fruit trees planted decades ago by villagers. During the visit, two new houses

Map 7:

Location map

132.This case study was done by Grassroots. The field visit took place in August 2010 after a desk study was conducted. The full report of this case study can be found on NCIV´s website: www.indigenouspeoples.nl133. http://www.wilmar-international.com/investor/annualreports/2009/Wilmar_International_Limited_2009_Annual_Report.pdf


were being built. These are paid for by the government as part of its scheme of building homes for rural hardcore poor people. The location of the houses is in dispute as the team’s observation was that the houses were directly in the area that Hibumas 2 estate claims as legitimately theirs, but Wilmar contends that they lie outside the Hibumas 2 legal estate boundary. At the time of writing, this point of dispute has not been adequately addressed.

Consultation with communitiesResidents in the area, especially those most affected in Kg. Tampat, allege that no consultation of any substance has taken place between the company and residents. Residents also related how lands were often cleared with little prior information to the communities. As a result, Kg. Tampat residents complained that important sites in the area, including graves, orchards and fields for the planting of rice were destroyed and occupied by Hibumas 2 estate. When asked for further comment, Wilmar stated that a few estates share borders with each other and the villages in the area. The company cautioned that boundaries between community land and estate companies needed to be precisely known before any allegations could be substantiated against Hibumas 2. The point is noted and creates potential sources of future relationship challenges between the company and Hibumas 2.

Residents were asked if the company had attempted or was in direct dialogue or discussion with community members over disputes on land. The team was told that relations between the company and Kg. Tampat were not good and that, while there was ad hoc discussion, the company in general did not provide the necessary information or seek dialogue with the community.

In response to these allegations from the community of Kg. Tampat, David J. Sikuah stated that Hibumas 2 was trying to find ways to improve its relations with the communities neighboring the estate. However, he remarked that there was no Standard Operating Procedure for settling disputes at the moment, but that he has plans to develop this for the future. No other disputes have been recorded for the company’s operations in Sabah besides in Hibumas 2, as mentioned by Mr. Sikuah. The company presently has no dedicated personal responsible for dealing with or addressing community relations or consultations.

In reacting to the findings of the field interview with Hibumas 2’s manager, Wilmar sought to clarify its own internal policy for tackling community relations and issues:We (Wilmar) have a clear Standard operating procedure on how to deal with Customary rights in line with RSPO Criteria 6.4. (see table 6). In areas where Customary rights are not clear we follow a precautionary approach to do a participatory mapping out of areas with significant signs of land resource utilizations before we commence operations. As an evidence of this we recognised five longhouses with over 88 households that were established in our project areas in Sarawak in the 1970s, and these communities reside amicably in our properties. Similarly, in and around our Sugut project, we also have sporadic parcels of land that local communities have utilised over the years (before we acquired the project) that we have set aside. Eventually we will have a Memorandum of Understanding on how to use these areas where communities do not have legal rights. This is in line with RSPO Criteria 2.3.

We also developed a Grievance Procedure on how to address disputes in compliance with RSPO criteria 6.3An initiative shared by Mr. Sikuah was that the company has plans in the future to sign MoUs with villagers in the area. According to Wilmar’s management the purpose of these MoUs is as follows:To demonstrate that we (Wilmar) do not have any disputes with the local communities who possibly have some cultural/religious/sustenance interest in our land. The MoUs will stipulate the do’s and don’ts, but not in order to jointly develop oil palm plantations in the area. The do´s and don’ts are to ensure that the community will not carry out any form of illegal activities such as burning, destruction of HCV or EIA sensitive* area making illegal hunting, cock fighting, etc. This is part of attaining compliance under RSPO criteria under 6.3.

Customary or traditional land claimThe Hibumas 2 estate has indicated land that covers the entire area of Kg. Tampat. The residents of Kg. Tampat have been involved in a conflict with the estate concerning the ownership and the use of some of the areas that are claimed by Hibumas 2.

During interviews at Kg. Tampat the following major issues between Kg. Tampat and Hibumas 2 estate were mentioned:• No system for compensation for lost lands, planted areas, important sites or community land is in place to allow for the proper remediation of problems caused by company opening up land.• No permits or land grants were displayed to villagers during land clearing, and information regarding the clearing of land has been poor during the times when Hibumas 2 opened up new areas for planting.• Use of scare tactics and intimidation of the villagers. In 2003, a blockade of 20 villagers was formed to halt company intrusion into village land. As a result, the company brought in the police force to intimidate and scare protestors into abandoning their blockade.• Destruction of community graves and farms occurred during land clearing for new plantings throughout Hibumas 2 presence on the land. • Villagers received a letter from the company in 2005 stating that the company will NOT destroy existing community graves and farms, but nevertheless these areas were cleared in 2008.

Wilmar’s reactions to the allegations made by the community are provided as follows:In compliance with the RSPO requirement under 6.1 and 5.2, we have engaged an Independent HCV and Social Impact Assessor approved by the RSPO to ensure that all impacts are identified, both in terms of biodiversity and social issues. These consultants engaged PACOS – Partners of Community Organizations, which is very familiar with Customary issues in Sabah. Four team members of PACOS came for this exercise and they have visited the project area on several occasions to conduct the field survey. The idea of having a social impact is to be able to assess our social impact and acceptance in the area. As part of the process we had two sessions of Public consultations on 29 of June in our IPAS training School in which representatives of Kg Tampat also attended and participated, and another one on 13 July 2010. The latter was done in Beluran district office and this involved all the relevant government department that includes Forestry, Land office and District Office. Many who came in fact made a positive remark on Hibumas approach of addressing community issues in an open and transparent way.

More recently, in August 2010, the village head of Kg. Tampat was requested to sign a document at the company.Without knowledge of the contents and not receiving adequate explanation or the chance to verify the document, the village head related that he refused to agree and instead requested for a copy of the document in order to study its contents and assess its ramifications. According to him this request was denied by the company.In response to the allegations from the headman, Wilmar responded as follows:

The letter that was mentioned was written in Bahasa Malaysia. This letter is part of our stakeholder engagement to inform all stakeholders of our lists of documents that are made publicly available in our offices. These documents include Land title, Operating Licenses, our area statement, annual report, Milling monthly report, maps, SOPs and Organisation Chart. In fact, we made an attempt to read the content of the letter to the Village headman. This was done in compliance with RSPO 1.1

Kg. Tampat, situated right on the banks of the river, is hemmed in by Hibumas 2 and relies fully upon travel through the estate in order to access the village. Residents complained about restrictions and denial of access by security personnel at the estate’s security gates often, leading to further tensions.The issue of land claims was also raised with Hibumas 2 estate manager David J. Sikuah during a meeting with him. According to Sikuah, Hibumas 2 has already stopped expansion of its planted areas, even though the land is rightfully the company’s. He also expressed that the company deems those local residents on Kg. Tampat as squatting on company land. However, it is worthwhile noting that this claim would seem to be inconsistent with the latent admission of Kg. Tampat’s pre-estate origins under Section 2.2 regarding how Kg. Tampat residents were the first employed by the estate when it began its operations in 1997.


In response to some of the other allegations made by Kg. Tampat residents, Mr. Sikuah stated:•The company will not take any further legal or court actions against the local communities, even though it is well within its right to do so on land that they see as exclusively theirs.• Allegations of destroying community grave sites is baseless and a non-issue because in his opinion there is no tangible proof to substantiate these claims. He feels it is simply opportunism and attempting to extort or coerce the company to give money to the community members.• The need for keeping security gates tightly controlled is due to the need for maintaining security in the estate from outsiders. This measure was also due to previous experience of theft and other disturbances. He felt that the procedures and conditions in place were sensible and reasonable for residents of Kg. Tampat to follow.

Wilmar has commendably been proactive in addressing the issue of social assessments and community issues under the relevant RSPO requirements as a prelude to RSPO certification audits. However, the contradictory respon-ses by those interviewed by the team suggest that the issues may not be as straightforward as pointed out by Wilmar’s response. The inclusion of PACOS as an assessor for HCV and SIA exercises provides a platform for further deliberation should issues arise in the future.

Wilmar also responded to allegations regarding no compensation by the villagers by stressing that Wilmar’s policy was based on recognising Native titles to land as a prerequisite for claims and legitimacy. However, Wilmar also states that set-asides are demarcated where possible prior to project commencement based on legal titles to land.

On the allegations of intimidation, Wilmar stated that use of violence was explicitly avoided under company policies. However, Wilmar justifies its use of employing police presence as a means to “safeguard company assets and to prevent any untoward anarchy incidence from developing.”

Regarding the letter from 2005, Wilmar stated that the last land clearance for Hibumas 2 occurred in 2006. Wilmar also contends that photo 9 was in fact rehabilitation work carried out in 2008 to improve access and address water management in the vicinity.

Wilmar stated that there exists a government gazetted road that connects Kg. Tampat to the main Paitan road through another estate in the area. However, the company claims that villagers utilising the road through Hibumas 2 do so because of its convenience, not out of necessity. Therefore, Wilmar believes as such that the users of the road from Kg. Tampat need to adhere to the rules set by the company for use of the roads.

Water sources and riversThe vicinity around Paitan contains many rivers and tributaries that generally have their heads in the Kinabalu range to the west and flow eastward towards the North-East Coast. Based on general observation, the collection or rain water for use is an important method employed by villages and also the Hibumas 2 estate.

Traditionally, residents in Kg. Sungai-Sungai and Kg. Tampat were presumably heavily reliant on the rivers for water supply and fish to supplement dietary needs. The impacts of logging in the area prior to the opening of land for oil palm estates on water quality are unknown. However, pollution is now an increasingly important concern for the residents. The observation made by residents of both villages interviewed noted that fish stocks were low; fish deaths were commonly observed and even foul smells emanating from the rivers, especially after heavy rains. Because residents can no longer rely on the rivers as a source of clean, potable water, there is a shortage of usable water and at the same time unsanitary water is used. Residents from Kg. Menungan (near Kg. Sungai-Sungai) related that drinking the water had led to health issues, mainly gastrointestinal ones.

During the interview with Mr. Sikuah, the team sought his opinion of the assertion that the company had an obligation to assist in providing potable water to residents, especially those of Kg. Tampat due to its location. While he could understand the situation of residents, he felt that the supply of potable water is the government’s responsibility. not the company’s. To this date, the company has not received any official requests from villagers for potable water, but

the company remains open to discussions on this issue.With regard to the pollution complaint, Mr. Sikuah stated that river pollution sources were many, due to the many plantations straddling rivers in the area, as well as other sources upstream including mining operations in Ranau.

Employment of localsResidents interviewed at both villages were asked if the establishment of oil palm estates in the area had brought along job or business opportunities for locals. Many locals opted to not work for the estates due to the poor working conditions and abysmal remuneration for the work. Those who worked for the estates or had done so in the past felt that the amounts paid were barely enough to cover their personal daily expenses. For instance, in Kg. Sungai-Sungai some residents would be employed by the nearest estate run by Boustead as daily-paid workers. Their work typified that of most estate workers including collecting fruits, gathering loose fruits, weeding, spraying, etc. but was paid only RM10 (EURO2.50) daily. The rate paid by Hibumas 2 estate is RM14 daily.

Those interviewed said that residents with land planted with oil palm could easily earn modest, but adequate income from their land, while taking up less time and effort. In that sense, there appears to be a mismatch between the needs and realities of local communities with the perceptions of the oil palm companies operating in the area.

Mr. David J. Sikuah shared his view that was opposite to that of community members. In his view, local community members were not adequately productive and that a culture of an idle lifestyle made them poor, unproductive workers who were also unreliable (e.g. not consistently reporting for work daily).

Large fruit

trees planted

by Kg Tampat

villagers in the

background

provide

evidence that

the village has

been in

existence for a

long time in the

area. Photo by

Leo van der

Vlist, NCIV


Dutch companies involved in the palm oil value chainPalm oil is used in a lot of food, cosmetic and chemical products. As such, every Dutch retailer has hundreds of products with palm oil as an ingredient on its shelves. Worldwide, palm oil is increasingly used as feedstock for biodiesel. In The Netherlands, Dutch companies ceased to use biodiesel from palm oil after Essent received a lot of negative publicity in 2006 on its claim to produce green energy from palm oil. Nonetheless, in the Port of Rotterdam, the Finish company Nesté Oil is building one of Europe’s largest biodiesel plants which will use oil palm as feedstock.134 The port of Rotterdam hosts several other palm oil refineries, among them a large one from IOI Loders Croklaan.

The Anglo-Dutch company Unilever is the world’s biggest consumer of palm oil. It is using approximately 1.6 million tonnes of palm oil and derivatives per year, or 3.6 % of the global production.135 The company can retrace the suppliers of 80 % of their palm oil, but not necessarily the concession areas from which it originates. Palm oil producers linked to Unilever include IOI, ADM-Kuok-Wilmar, Sime Darby, Musim Mas, Astra Agro and Asian Agri.

In 2001 WWF found that thirteen Dutch banks were involved in the financing of palm oil and pulp and paper in Indonesia.136 Shortly after the report was published ABN Amro, Rabobank, Fortis and ING committed to restrict loans for plantation development at the cost of tropical rainforest.137 In 2006 the investment policies regarding oil palm of a number of prominent Dutch banks, including the four above-mentioned banks, were analysed. Although a first step had been made with creating policies and guidelines concerning the financing of oil palm expansion, Dutch banks were still providing financial services to several unsustainable Indonesian and Malaysian oil palm plantation companies. 138 For example, in 2007 ABN Amro Bank, Fortis Bank, ING and Rabobank financed oil palm plantation company Wilmar. 139 At the time, in June 2007, a joint Milieudefensie / Friends of the Earth Netherlands (FOE), Lembaga Gemawan and KONTAK Rakyat Borneo report was released titled Policy, Practice, Pride and Prejudice140 and a subsequent submission of a grievance by Milieudefensie, Lembaga Gemawan and KONTAK Rakyat Borneo to RSPO. Wilmar then experienced major scrutiny of its practices and policies. The issue brought the International Finance Corporation (IFC) into play as a major funder/financier for Wilmar. After this series of events, Wilmar accepted its role and has taken corrective action in trying to address the cases highlighted by the report and complaint.

An actual track and trace system for imported palm oil by The Netherlands does not yet exist. ‘The problem is that palm oil is often being mixed various times at various locations during its transport to Europe,’ according to Danielle van Ooijen of Milieudefensie.

Initiatives to make the production of palm oil more sustainable.Respect for the rights of local communities and indigenous peoples is seen as fundamental in attempts to develop a more sustainable palm oil industry. Such attempts led to the establishment of the Roundtable on Sustainable Palm Oil, a joint business – NGO initiative that aims to improve sustainability standards in the palm oil industry. RSPO members, many of which are large-scale producers, already account for approximately 35% of the global production of palm oil. 141 The first grower members have achieved RSPO certification and international trade gradually started in 2008 and 2009. 142

The RSPO has organized 39 sustainability criteria under eight general principles to limit the environmental and social impacts and to ensure legal compliance (see table 6 for RSPO criteria with high importance for indigenous peoples. Relevant criteria in relation to indigenous peoples require companies to comply with local, national and international regulations - including the Declaration on the Rights of Indigenous Peoples -, to carry out participatory social impact

assessment, to do stakeholder consultations and to obtain free, prior and informed consent to the development of plantations on their lands, and to give appropriate compensation for loss of land – if landowners voluntarily agree to sell their land. Furthermore, it gives guidance to prevent conflicts with local communities.

With increasing conflicts with oil palm plantations, RSPO established a grievance procedure. NGOs and affected communities have employed this mechanism. In July 2009 a broad network of Indonesian NGOs and indigenous community representatives filed a preliminary complaint against Duta Palma that has been a member of the RSPO since 2007. Their letter stated that “Duta Palma group violates most if not all values that RSPO stands for” and “does not implement the RSPO standards in practice or in spirit”. Duta Palma is not RSPO certified, but as a member it should still comply with the RSPO Code of Conduct. The complaint points out Duta Palma’s non-compliance with the Code of Conduct and accuses the company of illegal activities, such as open burning, deforestation without a prior high conservation value forest assessment and planting on customary land. With the growing number of complaints, in November 2009 a number of organizations established the RSPO Dispute Settlement Facility Working Group which offers support to (among others) indigenous communities in addressing land conflicts. 143 In August 2010, the complaint against Duta Palma has not yet been followed up by the RSPO. It appears that RSPO is re-prioritising its own activities and that dispute settlement, grievance addressing against RSPO members is coming to the fore. The need to address these issues is urgent and therefore RSPO should act more urgently in taking up the cases lodged against RSPO members. Certification for smallholders within the RSPO’s Principles and Criteria are still under debate. 144 A guidance document to the RSPO Principles and Criteria has already been finalized. The Task Force on Smallholders is currently focusing on group certification to share the cost of auditing. 145

Table 6. Most

relevant RSPO

principles and

criteria for

indigenous

people 146

Principles Criterion texts

Principle 2: Compliance with applicable laws and regulations

Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. 147

Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights.Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent.

Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills

Criterion 6.1 Aspects of plantation and mill management that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties.Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

Principle 7: Responsible development of new plantings

Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.Criterion 7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values. Criterion 7.5 No new plantings are established on local people’s land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.Criterion 7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements.

144.Friends of the Earth, life Mosaic and Sawit Watch, Losing ground, 2008.145.RSPO Website. http://www.rspo.org146.RSPO Principles and Criteria for Sustainable Palm Oil Production, Including Indicators and Guidance, October 2007147. Key international laws and conventions set out in Annex 1 to the RSPO Principles and Criteria have been amended to include the UN Declaration on the Rights of Indigenous Peoples.

134. http://www.nesteoil.com/default.asp?path=1,41,540,1259,1261,9663,10465135. http://www.unilever.com/images/es_Unilever_PalmOil_v71_tcm13-126357.pdf136. WWF, 2001. Dutch banks and palm oil and pulp & paper in Indonesia.137.http://www.wnf.nl/nl/wat_wnf_doet/campagnes_wnf/borneo_campagne/wat_is_er_aan_de_hand_op_borneo/feiten___cijfers/138.Milieudefensie, 2006. People, Planet, Palm Oil? A Review of the Oil Palm and Forest Policies adopted by Dutch Banks.139.Gelder, Jan Willem van (Profundo), 2007. Buyers and financiers of the Wilmar Group, a research paper prepared for Milieudefensie.140. Full report can be obtained from FOE Europe, see http://www.foeeurope.org/publications/2007/Wilmar_Palm_Oil_Environmental_Social_Impact.pdf 141.Laurance, W.F., Koh, L.P., Butler, R., Sodhi, N.S., Bradshaw, C.J.A., Neidel, J.D., Consunji, H. and Vega, J.M. (2010) Improving the performance of the Roundtable on Sustainable Palm Oil for nature conservation. Conservation Biology Vol. 24(2): 377–381.142.Verburg, J. (2010) Sustainable palm oil – the breakthrough. Discussion paper. The Hague: Oxfam Novib143. OxfamNovib, internal inform Palmolieoverleg November 10, 2009.


GreenPalm certificatesAs palm oil supplies from different plantations, mills and countries are intermingled in the production and transporta-tion process, it is almost impossible for palm oil buyers to know exactly where their oil has come from and whether it has been produced sustainable or not. To prevent higher costs from segregation of certified and uncertified palm oil, the RSPO has set up the GreenPalm programme. Through this programme, RSPO certified producers can register their production and receive a certificate for each tonne produced, which can be sold online to manufacturers or retailers. Within this certificate trading system, palm oil producers who have invested in sustainable practices can obtain extra revenues by selling certificates. US$2 of the sale goes to GreenPalm, US$1 goes to the RSPO and the remaining funds go to the producer of the sustainable palm oil.

Those retailers and other users who buy the certificates encourage sustainable palm oil production with financial incentives. In practice, this means that the palm oil actually used is still an unknown mixture of sustainable and unsustainable palm oil, but the buyer can ensure that by buying certificates for the amount of palm oil it uses, somewhere in the supply chain at least this amount used is produced sustainable. 148

Market demand for sustainable palm oilUnilever has pledged to buy only from certified sustainable plantations from 2015 onwards for the world market, and specifically for the European market already from 2012 on. In the year 2009 85 % of its palm oil was uncertified. After allegations on deforestation and peat land destruction by Greenpeace, in December 2009, Unilever suspended their US$ 33 million contract with PT SMART, a subsidiary of the Indonesian company Sinar Mas. 149 Unilever declared it was suspending purchases until the Indonesian group could give proof that none of its plantations was contributing to the destruction of rainforests. 150 Following a BBC documentary, in February 2010 Unilever requested its suppliers to not source palm oil from Indonesian planter Duta Palma. 151

Apart from Unilever, other Netherlands-based multinationals are becoming increasingly aware of the need to buy sustainably produced palm oil or palm oil from RSPO certified estates. The Dutch companies Ahold and Etos for instance aim to use only palm oil from certified palm oil plantations by 2015 for products sold under their own brand. Dutch company Verkade promised only to purchase palm oil from RSPO-certified estates. 152

A recently established new Dutch Taskforce for Sustainable Oil Palm aims at sustainable production of all oil palm for the Dutch market by the end of 2015. The taskforce is a cooperation of Dutch based chains in the oil palm chain of custody and has started officially on November 2nd 2010. Together the involved companies represent a large portion of the Dutch oil palm market. 153

148.GreenPalm website http://www.greenpalm.org149. http://www.unilever.com/mediacentre/pressreleases/2009/Unilevertakesstanceagainstdeforestation.aspx150. Business times, http://www.btimes.com.my/Current_News/BTIMES/articles/unilevf/Article/.151. Reuters. 24 February 2010. Unilever stops buying palm oil from Indonesian planter http://www.reuters.com/article/idUSTRE61N1LE20100224152. Consumentengids, januari 2010.153. http://www.taskforceduurzamepalmolie.nl/

Tropical timber is mainly used for outdoor construction applications and housing. The EU is a large importer of tropical timber, with most timber originating from Indonesia, Malaysia, Cameroon and Brazil. In these countries a verifiable chain of custody is lacking, which means that there is little certainty that the timber originates from legal sources. According to studies by WWF Netherlands and FERN, several countries’ estimates for illegal logging go as high as 50 percent of the total production.154 A recent report by Chatham House (Home of Royal Institute of International Affairs) estimated that approximately 40 percent of Indonesia’s and 13 percent of Malaysia’s timber was illegal. In volumes this comes down to almost 700,000 m3 in Indonesia in 2005, and to almost 80,000 m3 in Malaysia in 2007.155 Research in Kalimantan concluded that illegal logging was found in licensed forestry operations that engaged in gross overharvesting and violation of shipping regulations.156

Per capita, the Netherlands is one of the largest consumers of tropical timber in the world.157 Most of the tropical timber used in the Netherlands originates from Southeast Asia (45 percent). This is excluding the tropical timber imported to the Netherlands via neighboring countries. According to the Dutch Initiative for Sustainable Trade (IDH), 600,000 m3 tropical timber (sawn wood, plywood, veneer) was imported by the Netherlands in 2008.158 This figure is in line with FAO and CBS statistics reporting 600,000 m3 average annual imports of tropical timber over the period 2007-2008. About 205,000 m3 of this amount originates from Malaysia, representing 6 percent of the annual Malaysian timber export, while 90,000 m3 originates from Indonesia, representing 3 percent of the annual Indonesian timber export.159

Since 2000 the indirect trade of timber via processing countries has increased. In 2002, 85 percent of the illegal wood products were imported straight from the country of harvest. Nowadays more than half of the amount of illegal timber is estimated to arrive via other tropical countries such as China, Vietnam and Singapore.160 These timber laundering activities have made China the world’s top importer and exporter of illegal timber. The indirect trade makes the supply chain longer and more complex, making it more difficult to trace the tropical timber. The uncertainty of the original source challenges laws and regulations and makes it difficult for consumer countries to guarantee the legality of the timber. Therefore, these indirect trade flows fall outside the scope of this report.

The importance of tropical timber for the Dutch economy

4. Tropical Timber in Indonesia and Malaysia

Table 7.

Annual Timber

Import,

IDH 2009.

154.Cited in: The Dutch economic contribution to worldwide deforestation and forest degradation, (2007) Greenpeace Netherlands.155. Lawson, S. and MacFaul, L. (2010) Illegal Logging and Related Trade: indicators of the global response. London: Chatham House156.Obidzinski, K.; Andrianto, A.; Wijaya, C. 2007. Cross-border timber trade in Indonesia: critical or overstated problem? Forest governance lessons from Kalimantan. International Forestry Review 9(1): 526-535.157.The Netherlands & the world ecology, 2002, IUCN Netherlands158.http://www.duurzamehandel.com/nl/hout-activiteiten159.VVNH jaar overzicht, 2007 & 2008 160. Lawson, S. and MacFaul, L. (2010) Illegal Logging and Related Trade: indicators of the global response. London: Chatham House

2007-2008 annual average Dutch import as % of the export of this country on a worldwide scale.

Dutch timber imports from Indonesia (logs, plywood, sawn wood, veneer (× 1,000 m3)

90.000 3%

Dutch timber imports from Malaysia (logs, plywood, sawn wood, veneer (× 1,000 m3)

205.000 6%


Illegal timberIt is crucial to look into the issue of legal versus illegal logging in order to analyse the tropical timber sector. One of the reasons why illegal logging 161 plays such a big role in the market is that the profit from illegal logging is higher than for legal logging, which is an incentive for agents to ignore costs associated with sustainable forest management. In Indonesia, a large-scale forest concession can get timber to the mill legally at a cost of US$85 per m3, whilst illegally it would only cost US$32 per m3. A small-scale concessionaire can deliver legal timber to the mill for US$46 per m3 and get it out of the forest to the roadside for as little as US$5 per m3. 162

The above-mentioned figures for illegal logging may also include wood harvested by the indigenous communities and other local communities to meet their living requirements. Wood collected by indigenous communities and other local communities mainly comprise firewood, and to a lesser extent construction wood. Much small-scale forest use is difficult to legalise, in particular because of the tedious requirements for community ‘forest management plans’ and cheap competition. 163 A definition for legality may or may not differentiate between a significant offence and a minor transgression, and is affected by differences in customary and formal laws.164 In this respect, it is crucial to define ‘legal’ and ‘illegal’ timber, especially in relation to the State’s definition of the ‘legality’ of tenure, rights and benefits of local communities.

The State of Malaysia defines timber taken without official permission and without rent as illegal. However, the question of legality, as far as indigenous peoples are concerned, should be able to meaningfully resolve issues of their native customary rights at various levels. The problem is that in most, if not all cases, the State’s authority to declare what is and what is not legally logged takes precedence over any claims for forest rights by the indigenous population. First, there are clear inadequacies in the land and forest related legislation in both Indonesia and Malaysia, which allow logging and plantation licences to be established on indigenous communities’ customary land without their free, prior and informed consent; secondly, the laws hinder to establish mechanisms for resolving conflicts between the industry and indigenous communities; and thirdly there is a lack of transparency and openness in the issuance of such licences. Conflicts have emerged, among others for the indigenous peoples of Sabah and Sarawak who wish to defend their livelihood and resources in their traditional territories, while the state has allocated concessions or licenses to corporations and state agencies.165 Logging companies simply encroached into their communal land and forest areas to carry out logging activities, without any consultation and consideration for their source of livelihood.166

The definition of the European Union links with the FLEGT-action plan, which says that illegal timber is timber produced, cut, transported and traded in violation with the legislation of the country of origin.167

Foreign trade data show that three EU member states, Italy, France and the Netherlands, still import substantial amounts of pulp from Indonesia. This trade route probably accounts for half of EU’s illegal pulp imports.168 It should be noted that Malaysian and Indonesian illegal timber activities are difficult to separate since considerable smuggling activities take place on the border of East Kalimantan and Malaysia..169 Twenty percent of timber imports from Indonesia are destined for Italy, 36 percent for France and 16 percent for the Netherlands. The Dutch share can partly be explained by the fact that ships from Indonesia initially dock in Rotterdam and the imports are consequently registered there. 170

The impact of tropical timber production on indigenous peoplesThe indigenous territories in Malaysia and Indonesia that are affected by the timber industry are corresponding to the indigenous territories by palm oil production indicated in chapter 3. This has to do with the fact that palm oil production is closely related to logging in the case of Indonesia and Malaysia, as has been described in the previous chapter.

For the past 40 years, West Kalimantan Province has been among the main sources of timber in Indonesia. During the timber boom up to the mid 1990s the province had 70 logging concessions covering a total area of 6,342,414 hectares or 43 percent of its total area. As a result, the timber stock depleted drastically and in the late 1990s the timber industry made room for flourishing oil palm plantations. Illegal logging was rampant, especially during the first five years of the 21st century, while legal concessions were falling. In 2001 the number of concessions was down to 26 companies, covering 1,993,139 hectares. By May 2010 some 23 companies held the rights to 1,145,000 hectares.

In May 2010 Indonesia’s President Susilo Bambang Yudhoyono announced a two-year moratorium on deforestation to help tackle climate change. This decision is part of a deal reached with Norway, which has agreed to contribute up to $1bn (ϵ733m) to help preserve Indonesia’s forests. Greenpeace welcomed Indonesia’s agreement with Norway to impose a two-year moratorium on deforestation, but urged Jakarta to re-evaluate permits already issued for forest clearance. 171

Although on the decrease, the impact of both legal and illegal logging on indigenous people is still devastating and can be categorised into three categories.

1. Violation of rights and creation of conflictsExisting laws and policies in both Indonesia and Malaysia fail to recognise and protect the rights of indigenous peoples, despite varying degrees of social, cultural and customary rights recognised in state and national legislation. Because of this weak protection, many indigenous people face relocation from their traditional territories for logging activities. Large areas of tribal territories are being converted into palm oil and timber estates. In Sarawak, Malaysia, customary land rights are legally recognised, but these rights have been eroded over the decades. With the exception of the Penan, who have a State Cabinet Committee on Penan Affairs that was set up as a direct result of mass protests and international campaigning, there is no specific ministry or department in Sarawak that handles indigenous rights per se. 172

Consequently, the imposition of logging plantations and palm oil business have triggered long-term disputes and, especially in Sarawak, blockades, leading to arrests and criminalisation of community members.173 In September and October 2009, the Penan Community in Sarawak organised various road blockades near their villages. They wanted to protect the forests against the increasing logging activities of timber cutters and large logging companies. The Penan urged the government to respect and acknowledge their rights. Various protesters have been arrested.174 Ondie anak Jugah, 55, an indigenous Dayak-Iban community member of Sarawak, had also been arrested on suspicion of ‘masterminding’ a blockade at Rh Umping Lepong in Balleh, Kapit. He was taken in by the police after three reports were made by the logging company, Melukun Sdn Bhd, who is logging in the longhouse community’s native land area.175

Currently, Indonesia’s legal framework fails to take into account the rights and interests of indigenous peoples that depend on the forest for their livelihood.176 This is related to the failure of Indonesian law to systematically recognise indigenous land tenure and ownership and the limited resources that local communities have to legalise their forest use.177 The current Forestry Act (No. 41 year 1999) clearly rules that the hutan adat (customary forest) falls within the jurisdiction of State forestland, Illegal logging affects rural communities in both direct and indirect ways. Overharvesting can decrease future employment, illegal loggers may threaten the security of local people, access to forest may be denied, forest product supplies are reduced and customary law is rarely respected.178

171.http://www.hindustantimes.com/Greenpeace-welcomes-Indonesia-s-moratorium-on-deforestation/Article1-549147.aspx172.Human Rights Solidarity, http://www.hrsolidarity.net/mainfile.php/1997vol07no02/255/; FERN, Forest governance in Malaysia, 2006.173.World Forest Centre, Forest People Programme et. al., 2007.174.Press releases by The Bruno Manser Fonds (various news bulletins), 2009.175.News release Sarawak Dayak Iban Association (SADIA) October 23th, 2009.176. Colchester, M., Marco Boscolo, Arnoldo Contreras-Hermosilla, Filippo Del Gatto, Jessica Dempsey, Guillaume Lescuyer, Krystof Obidzinski, Denis Pommier, Michael Richards, Sulaiman N. Sembiring, Luca Tacconi, Maria Teresa Vargas Rios and Adrian Well. 2006. Justice in the forest: Rural livelihoods and forest law enforcement.Bogor, Indonesia: Center for International Forestry Research (CIFOR).177.Kaimowitz, D. 2003 Forest law enforcement and rural livelihoods. International Forestry Review 5(3): 199–210.178.Ibid

161. Illegal logging is the harvest, transportation, sale or purchase of timber in violation of national laws. The harvesting procedure itself may be illegal, including using corrupt means to gain access to forests; extraction without permission or from a protected area; the cutting of protected species; or the extraction of timber in excess of agreed limits. Offences can also occur whilst materials are being transported, such as illegal processing and export; fraudulent declaration to customs; and evasion of tax and other charges. EU Memo/08/633 from 17 October 2008. 162. URS Forestry 2002 Review of formal and informal costs and revenues related to timber harvesting, transporting and trading in Indonesia. Draft. The World Bank, Jakarta.163. Colchester, M., Marco Boscolo, Arnoldo Contreras-Hermosilla, Filippo Del Gatto, Jessica Dempsey, Guillaume Lescuyer, Krystof Obidzinski, Denis Pommier, Michael Richards, Sulaiman N. Sembiring, Luca Tacconi, Maria Teresa Vargas Rios and Adrian Well. 2006. Justice in the forest: Rural livelihoods and forest law enforcement. Bogor, Indonesia: Center for International Forestry Research (CIFOR).164.Dykstra, D.P., Kuru, G., Taylor, R., Nussbaum, R., Magrath, W.B. and Story, J. (2002) Technologies for Wood Tracking: verifying and monitoring the chain of custody and legal compliance in the timber industry. Environment and Social Development, East Asia and Pacific Region, Discussion Paper. Washington, DC: The World Bank.165. FERN, Forest governance in Malaysia, 2006.166.Bruno Manser Fonds, News releases May 2008.167.Netherlands Second Chamber, vergaderjaar 2006–2007, 30 800 XI en 30 196, number. 98168. WWF Germany, Illegal wood for the European market, 2008.169.The Nature Conservancy & CIFOR, Timber smuggling in Indonesia, 2006.170. WWF Germany, Illegal wood for the European market, 2008.


2. DeforestationThe Indonesian Ministry of Forestry claims that in recent years, the country has lost between 1.6 million and 2.8 million hectares of forest per year to illegal logging and land conversion.179 Deforestation and associated environmen-tal degradation in indigenous territories has a negative impact on the livelihoods and well-being of indigenous people.

Illegal logging has a particular devastating effect on indigenous people because this frequently takes place in the remaining high conservation value (HCV) forests, including protected areas, which are often also indigenous territories. These so-called High Conservation Value Area´s (HCVA’s) are targeted for illegal logging because they contain highly valuable hardwood species that have been overexploited elsewhere. The indigenous people who inhabit those areas are directly affected by these illegal logging activities that destroy much of the biodiversity in their forests on which they depend for their livelihood. According to a Friends of the Earth International survey, the Penan people in Malaysia face dwindling revenues and deteriorating health due to air and river pollution, exposure to heat and lack of nutritious food, resulting from the depletion of forest resources.180

Logging company Samling has 1.4 million hectares of forest concessions in Malaysia. Ever since the Hong Kong-listed timber giant started its logging operations in upper Baram area (Sarawak, Malaysia), the indigenous communi-ties living there severely suffer from the environmental impacts of the logging activities. ‘The conservation of our forest is our highest priority. Without the forest, we cannot survive,’ said Jawa Nyipa, chief of Long Ajen, after Samling logged and transported timber from forest areas belonging to indigenous communities. 181 The company deliberately carried out illegal felling of tree species such as Tapang, Menggris, Belian and Engkabang.182 Five indigenous Penan communities of the East state of Sarawak are suing the Sarawak state government and three licensees of timber and planted-forest concessions at the High Court of Sarawak and Sabah, claiming native customary rights to 31,000 hectares of primary rainforest and farmlands. The new land rights’ litigation affects forestry operations by the three Malaysian timber conglomerates of Samling, Interhill. 183

Illegal logging also destroys the protective function of forests. Many natural disasters, such as landslides that take place today can also be traced back to illegal logging, thus further threatening the habitat of indigenous people. In early 2009 a local newspaper reported that indigenous communities from a number of longhouses in the Baram river region had lost almost their complete harvest. Flood streams destroyed their rice fields. ‘Only a couple of farmers who cultivated upland rice this year have survived the devastation,’ a farmer from Long Ikan, one of the worst hit longhouses, said to The Borneo Post. ‘The rest of us saw our crops destroyed before our very eyes.’ 184

179. WALHI, Sawit Watch, Jikalabari, ICW and Friends of the National Park Foundation. 2010. Briefing paper on illegal logging in Indonesia.180. FERN, Forest governance in Malaysia, 2006.181. http://hornbillunleashed.wordpress.com/2010/04/19/6434/182. Various News releases may 2008, Bruno Manser Fonds.183. News release Bruno Manser Fonds, December 10th 2009 http://www.rengah.c2o.org/news/article.php?identifer=de0774t184. http://www.bmf.ch/en/news/?show=136

185.Indonesia Corruption Watch, 2009. Corruption Within Illegal Logging Eradication: Performance Analysis And Alternative Legal Framework186.Human Rights Watch, Wild Money, 2006. 187.Environmental Investigation Agency and Telapak, 2005. The last frontier: illegal logging in Papua and China’s massive timber theft.

3. Economic impactsAccording to Indonesia Corruption Watch, state losses from illegal logging could be as high as US$3.33 billion every year.185 Human Rights Watch estimated that in 2006 the Indonesian government lost at least US$2 billion of revenues, approximately a third of the total timber export value, due to illegal logging, unacknowledged subsidies and transfer pricing.186 This could have been spent on much-needed services for Indonesian citizens, including indige-nous people, such as health, education, roads, electricity, and agricultural extension.

Apart from the government, indigenous communities are also facing significant losses from the timber sector. In Papua local communities were paid an equivalent to US$11 per m3 for merbau logs, which were imported in China for US$240 per m3, leaving most of the profits to a few timber magnates.187


The concession of SJM lies within the lands of a number of Dayak people. They are Bihak, Kayong, Pawan and Krio people. PT Suka Jaya Makmur is one of the logging companies that belong to Alas Kusuma Group, an important player of the timber industry in Indonesia and probably the biggest in West Kalimantan.The company has been praised for its ‘exemplary forest management’ as a FAO study calls. 189

As an FSC certification process is ongoing at the time of this report writing,190 the company should come very close to gaining an FSC certification if the certificate is correct. However, this ‘good’ record is tainted with an illegal logging case and a possible violation of having a logging permit in a protected forest. In 2005 Tony Wong, a local timber businessman, claimed to have a copy of a letter that mentioned Suka Jaya Makmur allowing for illegal logging in its concession and the concessions of PT Sewaka Lahan Sentosa and PT Prima Sawitindo.191 In another case, Rainforest Action Network called for a boycott on the sales of timber produced by the company in the United States, because the organisation believed that the timber originated from a Reduced Impact Logging (RIL) pilot project.192 Finally, a group of NGOs suspected that SJM obtained a permit over a protected forest (hutan lindung), Bukit Kerai Kundang.193 The last logging permit requires the company to:1. develop plantations for upland communities with the value of IDR 7 billion (ϵ 574.000)2. implement silviculture on the remaining stands (including enrichment, planting and maintenance)3. plant empty/unproductive lands in the concession within the first 10 years after the permit was issued (300 ha/year)4. involve local communities in logging activities5. implement community development activities within pembinaan masyarakat desa hutan scheme

The permit required the company to introduce its plan to the communities within and surrounding the concession area. Therefore, it conducted meetings with the representatives of the affected communities (particularly the kampung leaders) in 1980, as an elderly from Dukuh Jurau (Kampung Sekembar, Desa Betenung) recalled. The communities agreed to allow the company to log their forests. Both parties then settled the boundaries of the real logging areas where the limits of swidden farming and logging activities meet. Once the boundaries were agreed, they surveyed the lands and erected boundary posts along the boundaries.

Cultural lossCommunities still have access to non-timber forest products including honey, illipe nuts (tengkawang) and durian fruits. These trees are marked by surveyors, so that they are not cut down. However, if this does happen, the workers who are involved will be fired and subjected to customary fines. In addition, communities are also allowed to hunt wild pigs and deer within the concession. Finally, the company recognises the customary forests within the concession from which the communities are able to collect timber for house construction. This implies that both parties had reached a consensus on the boundaries and the allowed activities within the concession. However, Mr. Yohanes Laway (an informal leader who was our main contact during the investigation) mentioned that during the public consultation for FSC certification in Tanjung Asam in late March 2010 the issue of boundaries was dominant. A specific example on this matter is the destruction of the graveyard of the Sekembar community (desa of Betenung), as reported by Andika Pasti (an activist for Institut Dayakologi). SJM moved quickly by offering to build a rumah adat (a meeting house replacing the function of longhouse).

Box 7. Case of Bihak, Kayong, Pawan and Krio peoples, West Kalimantan, Indonesia. 188

188.This case study was done by AidEnvironment. The field visit took place in August 2010 after a desk study was conducted. The full report of this case study can be found on NCIV´s website: www.indigenouspeoples.nl189. Patrick B. Durst, Chris Brown, Henrylito D. Tacio, and Miyuki Ishikawa. 2005. In Search of Excellence: exemplary forest management in Asia and the Pacific. FAO Regional Office for Asia and the Pacific & RECOFTC. Retrieved from http://www.fao.org/docrep/007/ae542e/ae542e00.htm#Contents, accessed on 2 August 2010.190. SJM is using the service of Control Union Certifications as its certification body. The certifier carried out its field activities on 26 March - 3 April 2010.191. http://paktw.multiply.com/photos/album/14, accessed on 2 August 2010192. http://forum.woodenboat.com/archive/index.php/t-42643.html, posted on 20 August 2003, accessed 02 August 2010193.http://www.antikorupsi.org/antikorupsi/?q=system/files/Pernyataan%20Pers%20 Bersama_MAFIA%20HUTAN%2021%20April%202010.pdf, accessed on 2 August 2010

Access road built

by SJM in

Betenung village.

Photo by

Albertus Pramono,

Aidenvironment

Map 8:

Location map


Community development or bribery?As required by the Ministry of Forestry a logging concessionaire has to have a community development program known as pembinaan masyarakat desa hutan. SJM engages in such a program as well. The Group grants funds and services to surrounding communities that the state is supposed to provide. These include: constructions of schools, a boarding house for school students, houses for school teachers, community health centers, religious service buildings (churches and mosques), rumah adat, access roads for communities (in most cases the roads are also logging roads) scholarships for students (IDR 100.000 per month for junior high school students, IDR 150.000 for high school students, and IDR 200.000 for university students), operational costs for a number of schools (including a junior high school owned by a foundation related to the police, Kemala Bhayangkari, in Tanjung Asam), health centers (including immunisation and family planning supplies), transportation services (for goods and people, including the sick and the dead) payments of salaries for temporary school teachers (guru bantu with IDR 800.000 per month), stipends to teachers at the public schools (IDR 250.000 per month), and honoraria for medical doctors, government officials (up to subdistrict head [camat]), and provision of electricity to the communities of Riam Batu, Tanjung Asam and Batu Bulan (using the excess of the company’s power generation from its Tanjung Asam camp) and financial contribution for religious ceremonies and public adat rituals. From these provisions the payment of honorarium for government officials raises a serious question, as it can be considered as bribery. It is quite plausible if these officials cannot perform proper control over the company or act against the interests of SJM.

SJM gave out clonal rubber seedlings to surrounding communities and assisted in gaining land titles. This scheme is most likely a form of plantation development as stated in the logging permit. Each family receives assistance to plant a plot of 1-2 ha. Such a garden was found in Desa Kayong Hulu (Kecamatan Nanga Tayap). This scheme is most likely a form of enterprise that the concession permit requires in which the company has to build plantations for the upland communities with a value up to IDR 7 billion.

Many villagers around the SJM’s concession work with the company which consists of around 60-70 percent of the workforce. Their positions are generally blue collars such as heads of work groups (mandor), operators, surveyors and security guards. For security guards SJM cooperates with the desa government to recruit villagers as members of Pengamanan Wilayah (Pamwil). Their salaries highly affect the local economy, including credit unions. These workers save and borrow money from the credit unions. Most of them are members of Credit Union (CU) Canaga Antutn, whereas some belong to CU Semandang Jaya and CU Pancur Solidaritas.In short, the economy of the surrounding areas of SJM’s concession and adjacent concessions belongs to the Alas Kusuma Group and depends on the existence of its logging activities. The Group also provides public services that the state lacks to perform.

Environmental conditions including HCVFWith the assistance of The Nature Conservancy, Flora Fauna International and Tropical Forest Foundation, SJM did High Conservation Value (HCV) assessment in its concession area.194 Apart from the importance of the area for conservation, the assessment identified the importance of the area for water catchments and sources of food. It also functions as the source of identity. Many parts of the concession fall within Hutan Lindung (Protected Forest) category which does not allow timber cutting as the area is intended mostly for water catchments.

SJM does implement forest fire prevention. In addition to the sign boards reminding people about the danger of forest fire, the company erects fire guard towers. The surrounding communities are also aware about this danger. In opening lands for swidden farming, a family who burns the felled wood calls the company’s fire brigade to prevent uncontrolled forest fire. This strict measure was implemented after SJM had a large forest fire in 1997.In general it can be concluded that SJM follows the principles and criteria set forth in certification schemes (both FSC and PHAPL, Pengelolaan Hutan Alam Produksi Lestari which is sustainable management of natural production forest, a mandatory certification scheme imposed by the Ministry of Forestry to the logging companies), and implements the requirements contained in the concession permit, particularly on community development. The issue of tenure is, however, still outstanding, although the company has accommodated most of the issues at hand. Another serious issue is that the company provides honoraria to government officials.

194.FFI, TNC, TFF and Suka Jaya Makmur. 2009. Identifikasi Kawasan Bernilai Konservasi Tinggi di Areal Izin Usaha Pemanfaatan Hasil Hutan Kayu PT Suka Jaya Makmur, Kalimantan Barat. (Identification of High Conservation Value Areas in the Logging Concession of PT Suka Jaya Makmur, West Kalimantan).


Pos JernangPos Jernang is located along the foothills of the Main Range (Titiwangsa), forming the central forest/mountain spine of West Malaysia running the length of the Peninsula. Jernang is the collectivisation of five previously close-knit villages in the area. These five villages of Kg. Tidang, Kg. Ganeg, Kg. Ras, Kg. Kejan and Kg. Sat traditionally were independent village units with fully functioning communities; i.e. they each had their own traditional lands/territories and community hierarchy/governance. The five villages still remain, in their consolidated position, close to their customary lands, and maintain many traditions, including livelihoods, customs and governance.

Pos GedungPos Gedung is situated within the boundaries of Bukit Tapah PRF. The traditional territory and customary lands of the residents at present day Pos Gedung encompass the forest area directly adjacent to the North of Pos Jernang, specifically Kg. Ras.

The customary lands of the Jernang community lie within Bukit Tapah Permanent Reserve Forest (PRF) 196 . According to Malaysian Timber Certification Council (MTCC), the PRF area of Perak is certified under the Malaysian Timber Certification Scheme (MTCS).

The present Pos Jernang was set up under the RPS programme, consolidating each of the original villages into one single area. Community members stated that logging operations in their customary lands were ongoing from 1986 to 2004. Confrontations between loggers, the Perak State Forestry Department and government intensified during 2003-2004 due to the serious negative impact that operations had on the safety and livelihood of Pos Jernang residents. After repeated attempts to seek protection, redress and help from authorities were ignored, residents took critical action by setting up physical barricades from the village up into the forests where the logging operations were carried out. In addition, in 2004 there was a flood caused by the extensive logging. Water sources were polluted beyond the point of being potable, in addition to the loss of forest plants, subsistence plantings, sacred sites and graves. The events of 2003-2004 were documented and publicised extensively in national media. This intensive negative publicity as well as the blockade and barricade set-up by Pos Jernang stopped logging operations. During all previous logging, including the last operation that began in 2003 and was stopped by Pos Jernang residents in 2004, the community of Pos Jernang was never consulted and the customary lands, agricultural areas, water catchments, graves and other key sites were not protected. Instead, many of these sites were systematically destroyed through logging operations.

Pos Gedung was the scene of a tragic landslide that killed five people in 1986 due to massive erosion caused by logging operations in the Pos Gedung catchment area of Bukit Tapah PRF. The event was also subject to media attention and publicity. This subsequently led to the withdrawal of logging operations. In the aftermath of the fatal landslide, the communities disputed claims by authorities that full consent was given by the village head. In fact, when new operations commenced in 2003, no consultation had been done with residents of Pos Gedung. In addition, promises of assistance in the aftermath of the landslide, especially that of providing basic and social amenities, were never fulfilled. It was only through the persistent efforts of community members to write to relevant government agencies before Pos Gedung received solar panels for generating electricity. Areas that were used by the community for swidden or rotational crops (selai), i.e. growing subsistence crops like padi, tapioca and corn, were destroyed and from that moment on the community lacks adequate and suitable areas for cultivation of such crops.Any type of compensation received by residents was only as a result of confrontation and persistence to pursue the issue with the logging company. Even then, the company would only compensate for lost fruit trees, only to those who complained persistently and the amount was arbitrary and done without transparency or due consultation with affected community members.

Box 8. Case of Orang Asli villages of Pos Jernang and Pos Gedung, Perak, Malaysia.195

Map 9:

Location map

Pos Jernang

residents

voicing

discontent and

despair with

past logging

activities

195.This case study was conducted by Grassroots in co-operation with Sinuai Pai Nanek Sengik (SPNS). The field visit took place in June 2010 after a desk study was conducted. The full report of this case study can be found on NCIV´s website: www.indigenouspeoples.nl196. The five villages were originally spread over a wider area near the present site, and potentially some of the traditional customary lands of some communities lay South of Sg. Sungkai. That area would likely be within the boundaries for Bukit Slim PRF.


In February 2010, according to village members, a team from the Perak State Forestry Department together with an individual from Forest Research Institute Malaysia (FRIM) visited the village with the intention of getting the community to accede to new logging operations. During this visit, the village residents were shown a certificate and were informed that the certificate was to approve logging in the area. The residents were asked to identify areas of importance on an impromptu basis. Such a demand requires careful and detailed preparation, but this was not provided for. The residents were unable to show these important areas since no maps of the area to be logged were forthcoming. The residents were also told that the certificate brandished meant that logging was to go ahead in the area and the village could not disagree with that decision. They were then asked to show the areas of good forest. Based on previous experiences of speaking with outsiders from the Forestry Department, logging companies or government officials regarding logging, community members decided not to provide any further answers without first getting explained the reasons of the visit by the Forestry Department and the FRIM personnel. In particular, the community sought clarification of what the certificate was in specific terms and demonstrate how further logging would benefit the community of Pos Gedung. Upon such questioning, the Forestry Department and FRIM party said that they lacked time to discuss further and proceeded to leave, promising to revert to the concerns of the community. At the time of writing, no follow-up has been forthcoming.In April 2010, community members were approached by a logging company about entering what is Pos Gedung’s customary land to commence logging. The person in question was turned away by community members who said that the village would never accept further logging on its customary lands and territories.

No access to ancestral landsForestry Department signboard seen along roads leading to Pos Jernang and Pos Gedung declaring the PRF and the rules. Translation of the signboard is provided below.

Massive

hillside erosion

during logging

operations in

2003-2004 at

Pos Jernang.

Photo by SPNS

Pos Gedung

residents

voicing their

fears over

continuing

hillside erosion

and landslides

in their village

Photo by

Si-Siew Lim,

Grassroots

Forestry Dept

signboard

Bukit Tapah

Permanent

Reserve Forest

Photo by

Si-Siew Lim,

Grassroots


1. Reside or carry out any activities without permission Fine not exceeding RM50,000 or jail term not exceeding 5-years or both fine and jail term.2. Enter Reserve Forest without permission Fine not exceeding RM10,000 or jail term not exceeding 3-years or both fine and jail term.3. Other prohibited activities are:a) Clearing or ploughing any land for planting or any other purposeb)Trespass in any manner Fine not exceeding RM10,000 or jail term not exceeding 3-years or both fine and jail term.4. Take forest produce/resources (plants, trees and others) without license or permission Fine not exceeding RM500,000 and jail term of at least 1-year but not exceeding 20-years.

Loss of livelihoodThe OA community’s main livelihood sources were collecting rattan, gaharu, medicinal plants like kacik fatimah, tongkat ali, freshwater fishing (fish, frogs, turtles) and subsistence/small-scale agriculture (either through swidden or fixed plots) planting rice, tapioca, corn, rubber, petai, fruits and other tree species. The areas were carefully mapped out through a community exercise assisted by SPNS in 2007. The map highlights areas of sacred sites, graves, agriculture, water catchment, residence, roads, rivers and logged-over areas.

The community of Pos Jernang has lost the majority of its traditional sources of livelihood. Forest produce has sharply declined, especially after the 2003-2004 logging. Previously abundant species like wild pigs, deer, fish, frogs, monkeys and others are now almost impossible to source from within the customary forests. In addition, populations of riverine fauna have not recovered. While some regeneration of flora is noticeable after six years, it is evident that extensive clear-felling has left many areas permanently altered.

Destruction of ancestral graves and sacred sitesSince logging operations were carried out within the customary lands of Pos Jernang and Pos Gedung communities without due consultation or any effort to avoid destroying sites of cultural importance, many sacred sites and ancestral graves were destroyed.

Soil erosion and landslidesResidents of Pos Jernang complain that since the last logging operations, soil erosion has been extensive and fears remain with the community that another calamitous event would occur during heavy rain. The Pos Gedung community also expressed ongoing concerns regarding the stability of the soils in their area. Land slips were occurring on the logging trail abandoned after the 2005 logging and landslides directly above the village. Pos Gedung residents also showed areas where recent landslides have occurred. All were linked to extensive rain and logging upstream of the village area. Minor landslides are ongoing, although the area has not been logged since 2005.

Broken promisesThe residents of Pos Jernang related how the oil palm area (planted on their customary lands by authorities without their permission) at the lower end of Bukit Tapah PRF have not helped communities. For instance, community members working to collect oil palm fruit bunches in the fields are only paid RM0.20 (EU0.05) per fresh fruit bunch (FFB). This is an increase from RM0.10 initially paid out by RISDA during the initial phase in the 1980s after numerous appeals and demands. Despite promises by JHEOA (Orang Asli Affairs Department) that Pos Jernang residents would be receiving dividends (since the oil palms were planted on customary lands), they received only RM25 after the first 10 months of operations. Once again, community pressure and demands were needed in seeking transparency of how calculations were made for dividends in order for changes to occur. As a result, each household now receives RM300 per month on average, based on an aggregated production of 7 acres. Pos Jernang has never received explanations from relevant authorities regarding calculations for dividends to date.

ConclusionThe cases presented here definitely show that MTCS certified operations do not meet the requirements of the Netherlands timber procurement policy (see table 8).

Pos Jernang

residents

explaining their

community

map and

highlighting

livelihood,

agricultural

and cultural

sites

destroyed by

logging

operations in

the past

Photo by

Si-Siew Lim,

Grassroots

Pos Jernang residents showing the

area that was previously an

ancestral grave site (holding at

least 100 individual graves), which

was destroyed by loggers in 2004.

The area was used as a staging

area for logs. Senior community

members lamented that future

generations of Pos Jernang

residents will be deprived of

understanding the traditions of

their culture

Photo by Si-Siew Lim, Grassroots


Dutch Companies involved in the tropical timber value chain.

The Dutch Timber Trade Association (VVNH) unites some 300 Dutch timber wholesalers, who represent almost the entire branch. Approximately 95 percent of the total Dutch timber import is imported and traded by the 270 members of VVNH.197 Its most recent policy plan (2010-2015) determines that by 2015, 50 percent of the tropical timber imported by their members has to be produced sustainably. Some of the largest Dutch companies importing tropical timber include Jongeneel, Pontmeyer and Stiho. Figures on the share of tropical timber imported by these companies are not available. Little information is available on non-VVNH members involved in the tropical timber industry.

Initiatives to make the production of tropical timber more sustainable Forest Stewardship CouncilEstablished in 1993 as a response to concerns over global deforestation, the Forest Stewardship Council (FSC) is widely regarded as one of the most important initiatives of the last decade to promote responsible forest manage-ment worldwide. FSC is a certification system that provides internationally recognised standard-setting, trademark assurance and accreditation services to companies, organisations, and communities interested in responsible forestry.198 The FSC principles and criteria include important safeguards for the rights of indigenous peoples, including provisions that require that no new plantings on indigenous peoples’ customary lands can be developed without their free prior and informed consent (FPIC). A fair compensation of indigenous peoples and local communi-ties is required for land acquisitions and extinguishing of rights, subject to FPIC and negotiated agreements. In 2001 PT Intracawood was the first natural forest concession to become FSC-certified in Indonesia.199 By June 2010, eight companies covering 1,105,449 ha in Indonesia, and five companies covering 203,842 ha in Malaysia were FSC-certified. 200 In 2010 thirteen concessionaires signed an agreement with The Borneo Initiative, aiming for another 1,400,000 ha of FSC-certified forests in Indonesia. 201 FSC aims to work together more closely with the Indonesian certification system Lembaga Ekolabel Indonesia (LEI). Currently, LEI has certified 1,578,000 ha of natural forests and plantations, including 25,000 ha of community forests. 202

The market share of FSC-certified timber in the Netherlands increased from 3 percent in 1999 to 18 percent in 2009.203 By August 2010 FSC Netherlands had 245 participants, including 10 large construction firms, 60 timber merchants, 14 retailers and 11 paper companies. 204 939 Dutch companies have the FSC Chain of Custody certificate, which guarantees the customer that FSC-certified products originate from FSC-certified forests. 205 More than 250 Dutch contractors possess an FSC certificate. 206 The Dutch Initiative Sustainable Trade (IDH) works in cooperation with the main parties in the timber sector to increase the acreage of FSC-certificated concessions in the Amazon by 4 million hectares and in Indonesia (Borneo) by 2,7 million hectares. Furthermore, they work to increase the market share for FSC-certified tropical timber in the Netherlands to a minimum of 33 percent. 207

Dutch Timber Procurement The Dutch government aims to purchase 100 percent sustainable timber by 2010.208 For this purpose the Dutch government determined in June 2008 the Dutch Procurement Criteria for Timber (DPCT, see table 8.) and created the Timber Procurement Assessment Committee (TPAC) to assess if certification systems fulfil the sustainability criteria of DPCT. In November 2008 TPAC assessed FSC International as conforming to the DPCT. In March 2010 TPAC had also assessed the Malaysian Timber Certification System (MTCS) as being ‘in conformity with’ the standards. This decision has been much contested and formally objected by NCIV, Greenpeace Netherlands, Friends of the Earth Netherlands (Milieudefensie), WWF Netherlands and ICCO (interchurch organisation for development cooperation) for its many shortcomings, especially related to the rights of indigenous peoples in Malaysia. Indigenous peoples in Malaysia withdraw from the consultation process set up by the MTCS because they felt that their concerns were not genuinely taken into account.209 In October 2010 TPAC revised its judgment on MTCS as being not in conformity with the DPCT standards. At the time of writing, the Dutch government still has to decide if MTCS will be accepted or not in the procurement policy. In June 2010 TPAC has assessed PEFC International as being in conformity with the DPCT standards, but this is currently excluding MTCS (which is accepted by PEFC International). On July 23rd, TPAC also received an objection against its Final Judgement on PEFC International. The objection was filed by Greenpeace Netherlands, Milieudefensie, WWF Netherlands, ICCO and NCIV. TPAC will deal with this objection after the objection procedure for MTCS has been completed. Table 9 summarises the state of affairs.210

197.http/://www.vvnh.nl/files198.http://www.fsc.org/about-fsc.html?&L=crtvjrnbsoj199. WWF Indonesia press release http://www.wwf.or.id/en/news_facts/press_release/?19660/Forest-certification-catching-on-in-Indonesia200. FSC Netherlands, June 2010. http://www.fsc.nl/documents/docs/publications/Global-FSC-Certificates-2010-06-15-EN.pdf201. The Jakarta Post, 29 June 2010. Forest concessions get help for certification. http://www.thejakartapost.com/news/2010/06/29/forest-concessi-ons-get-help-certification.html202. LEI website http://www.lei.or.id, accessed 13 August 2010203.http://www.duurzamehandel.com/nl/nieuws/fsc-nederland-jaar-10-jaar204. FSC Netherlands, August 2010. http://www.fsc.nl/documents/docs/publications/Partners%20per%20categorie%20Informatieblad.pdf205. FSC Netherlands, June 2010. http://www.fsc.nl/documents/docs/publications/Global-FSC-Certificates-2010-06-15-EN.pdf206. FSC Netherlands, 2010. http://www.fsc.nl/nl/doc.phtml?p=Nieuwsoverzicht&item=257207.http://www.duurzamehandel.com/nl/hout

Table 8. Most

relevant DPCT

principles and

criteria for

indigenous

peoples 211

Principle Criteria Guidance

Sustainable Forest Management (SFM)

P 2. The interests of directly and indirectly involved stakeholders shall be taken into account. To that end the system requires that:

C 2.1. The legal status of the management of the forest management unit and claims of the local population, including indigenous peoples, in the property/tenure or use rights regarding the forest management unit or a portion thereof have been inventoried and are respected.

C 2.2. Effective communication with and consultation and participation of stakeholders take place regarding the management of the forests.

Guidance: A plan and reports on how and when communication with stakeholders takes place are considered to be indicators of effective communication.

C 2.3. The local population and indigenous peoples have a say in forest management on the basis of free and informed consent, and hold the right to grant or withhold permission and, if relevant, receive compensation where their property/use rights are at stake.

Guidance: Free and informed consent is interpreted in the sense that the activity will not be undertaken before the relevant consent is given.Guidance: The local population and indigenous peoples can only prevent activities through withholding their consent where their property/use rights are at stake

C 2.5. Adequate mechanisms are in place for resolving disputes regarding forest manage-ment, property/usage rights, work conditions, or social sevices

Guidance: In case of a conflict of significant dimension, the FMU will not be certified.

C 2.6. Objects of cultural and traditional economic value are identified and inventoried in consultation with the stakeholders and are respected.

208.Stichting Probos, Duurzaam inkoopbeleid van de overheid t.a.v. hout en houten producten, November 2009209.Malaysia: Indigenous communities reject timber certification http://www.wrm.org.uy/bulletin/80/Malaysia.html210. http://www.tpac.smk.nl/ (as of 19 November 2010)211.Dutch Procurement Criteria for Timber, October 2008. Criteria 1.3. stipulates that legal and regulatory obligations that apply to the forest management unit, including international agreements, are fulfilled. According to the guidance this includes the UN Declaration on the Rights of Indigenous Peoples and ILO agreement.


FLEGTIn May 2003 the European Commission presented an Action Plan on Forest Law Enforcement, Governance and Trade (FLEGT). This marked the beginning of a long process in which the EU claims to develop and implement measures to address illegal logging and related trade. Measures proposed in the FLEGT Action Plan include support for improved governance in wood-producing countries and voluntary partnerships between the EU and wood producing countries to ensure that only legally sourced timber enters the EU. The FLEGT Action Plan also puts emphasis on the demand-side measures to reduce the consumption of illegally harvested timber.212 In October 2009 the Dutch Minister of Agriculture promised to maximise the Dutch support for the implementation of the FLEGT-process within the following two years. 213

In July 2010, the European parliament voted a ban on the sale of illegally harvested timber, along with traceability measures and sanctions. The new law aims to reduce illegal deforestation and give consumers better assurances about the products they buy. The European Council has already informally agreed with the terms of this draft legislation, but will need to rubber-stamp it before it can pass into law. The rules are expected to take effect at the end of 2012 to give the timber operators time to adapt.214

212. WWF UK, http://barometer.wwf.org.uk/flegt-0000003830.asp213. MINNLV, www.nieuwsbank.nl/inp/2-009/10/H082.htm214. http://www.europarl.europa.eu/news/expert/infopress_page/064-77921-186-07-28-911-20100706IPR77920-05-07-2010-2010-false/default_en.htm

Table 9.

Certification

systems

assessed by

TPAC

P 4. Biodiversity shall be maintained and where possible enhanced. To that end the system requires that:

C 4.6. The exploitation of non-timber forest products, including hunting and fishing, are regulated, monitored and controlled. Insofar as relevant, knowledge of the local population, indigenous peoples, and locally active environ-mental organisations is utilised in monitoring commercial exploitation.

P 7. Forest management shall contribute to the local economy and employment. Tothat end the system

C 7.1. Forest management stimulates employ-ment of the local population, including indigenous peoples, as well as the local processing of timber and non-timber forest products.

Guidance: The employment of local people, including indigenous peoples, shall be stimulated, for example through training.

C 7.2. Insofar as not provided for otherwise, a contribution is made to the development of local physical infrastructure and of social services and programmes for the local population, including indigenous peoples. This contribution is made in agreement with the local population.

Development, Application and Management of Certification Systems (DAM)

P 1. The process of standard develop-ment and the standard itself shall fulfill the require-ments as establis-hed by international umbrella organisati-ons (such as ISO and ISEAL). To that end the system requires that:

C 1.2. The standard development body comprises the relevant interested groups that serve the economic, social and environmental interests without undue dominance of one interest.

C 1.4. The development of the standard takes place with input of the relevant stakeholders. Potential limitations for certain groups such as indigenous peoples and small forest owners to contribute directly are taken into account.

P 3. Decision-making bodies shall reflect the interests of stakeholders and shall provide for adequate procedu-res for objection and appeal regarding the decisions made and the functioning of the decision-making bodies. To that end the system requires that:

C 3.1. The decision-making and advisory bodies comprise the relevant interested groups without undue dominance of one interest.

Guidance: In case certain interest groups are not represented, TPAC will examine why this is the case. In addition, it will be examined whether the interest is represented through other means. If TPAC holds the opinion that given interests are unjustifiably absent, this will be taken into account in theassessment of the criterion.

Certification system In conformity with Dutch Procurement Criteria

Date Final Judgment System accepted in procurement policy

FSC International yes November 2008 yes

PEFC International yes* June 2010 yes**

MTCS no October 2010 Decision not yet made


5. Conclusions and Recommendations

Conclusions

1. In recent decades, indigenous peoples have faced the increasing negative impact of economic globalisation on their natural environment and their well-being. Extraction of natural resources (oil and gas, forestry and mining) and agriculture/agribusiness are the sectors with the highest impact on indigenous peoples.2. The Netherlands is an important player in the world economy, including the sectors agriculture/agribusiness and tropical timber. Within these sectors, the Netherlands is the largest importing country of soy, the third largest palm oil importing nation and one of the world’s largest importers of tropical timber.3. The production of soy and palm oil are highly interconnected with the production of tropical timber and related deforestation. 4. The Netherlands imports most of its soy from Brazil and most of its palm oil and tropical timber from Indonesia and Malaysia.5. Mato Grosso in Brazil, Sabah and Sarawak in Malaysia and West Kalimantan in Indonesia are areas where the production of the selected commodities is concentrated. These are also areas with a significant indigenous population.6. Desk research and case studies demonstrate that the production of soy in Brazil and tropical timber and palm oil in Malaysia and Indonesia has significant negative impacts on indigenous peoples living in these countries. These impacts include loss of land, environmental degradation, political and legal pressures, marginalisation of smallholders, loss of culture, income and food security and violation of rights and creation of conflicts.7. There is a lack of sufficient data to quantify the impacts or to make an inclusive description of the impacts. Indigenous peoples’ organisations lack the capacities to monitor and document the impacts systematically.8. The direct involvement of Dutch companies in the actual production or harvesting activities is limited. However, as processor, trader or retailer, Dutch companies have an important stake in these commodities. Besides, Dutch financial institutions finance companies active all over the supply chain, including production.9. The lack of traceability in most supply cases makes it difficult to link consumption directly to production. 10. Despite the lack of traceability (or transparency), the negative impacts on indigenous peoples as a result of the exploitation of these commodities may be perceived within the sphere of influence and responsibility of the Dutch companies involved.11. Increasingly, more sustainable alternatives are developed in each commodity sector, including safeguards for the rights of indigenous peoples. However, the market share of these initiatives and the involvement of indigenous peoples in the management and implementation processes of these initiatives is still very limited and the implementation of the safeguards of their rights can be improved.

Recommendations 1. To inform Dutch companies, civil society, policy makers and politicians as well as relevant international stakeholders about the findings of this research and engage them in a dialogue with indigenous peoples about possible initiatives to improve the upholding of their rights in economic activities related to soy, palm oil and tropical timber.2. To support indigenous peoples to do community mapping activities and make databases of relevant maps and information, in order to get a more comprehensive and detailed overview of indigenous territories and areas where production takes place.3. To increase the capacity of indigenous peoples and their organisations in Indonesia, Malaysia and Brazil to monitor the impact of the production of soy in Brazil and palm oil and timber in Malaysia and Indonesia in a more comprehensive and systematical way and to be able to effectively uphold their rights in the researched sectors.4. To increase efforts to involve indigenous peoples in sustainability initiatives and their implementation, to ensure upholding of their rights, and provide them with the means to do so.

Villagers from Kg. Menungan (Sabah, Malaysia) complain

about the need for piped fresh water supply to their village

since the rivers they used to depend on have deteriorated

over the years since the arrival of oil palm developments.



Main references

Aidenvironment (2010), Case study Bangun Nusa Mandiri.

Aidenvironment (2010), Case study on logging concession PT Suka Jaya Makmur.

Colchester, M. et al. (2006), Justice in the forest: Rural livelihoods and forest law enforcement.

Dutch Soy Coalition (2009), Soja barometer.

Ethical Investment Research Services and Centre for Australian Ethical Research (2007), Risk briefing, Indigenous rights, indigenous wrongs: risks for the resource sectors.

FAO (2009), State of the world’s forests.

FERN (2006), Forest governance in Malaysia.

Forest Peoples Programme, Sawit Watch, a.o. (2006), Promised land.

Friends of the Earth, life Mosaic and Sawit Watch (2008), Losing ground.

Friends of the Earth International (2008), Malaysian Palm Oil: Green Gold or Green Wash?

Gaiser, N.M. (2009) Perceptions of oil palm cultivation in West Kalimantan—local farmers between development, conservation and indigenous rights discourses.

Grassoots (2010), Case study A Rapid assessment of Wilmar/PPB Oil Palms Bhd Hibumas 2 Estate in Paitan.

Grassroots (2010), Case study An Unfair Burden.

Greenpeace (2007), How the palm oil industry is cooking the climate.

Greenpeace international, (2006) Eating up the Amazon.

IUCN Netherlands Committee (2002), The Netherlands and the World Ecology.

IWGIA (2010), The Indigenous World 2010.

Lawson, S. and MacFaul, L.(2010), Illegal Logging and Related Trade: indicators of the global response. London: Chatham House.

Milieudefensie and Friends of the Earth Europe(2010) Too Green to be True.

Réporter Brasil (2009), Brazil of Biofuels.

Réporter Brasil (2009), Impacts on Indigenous People.

Réporter Brasil & NCIV (2010) Impact of soybean on Indigenous Territories in the Brazilian state of Mato Grosso.

Round Table on Responsible Soy (2010), Standard for Responsible Soy Production Version 1.0

Round Table on Sustainable Palmoil (2007), Principles and Criteria for Sustainable Palm Oil Production, Including Indicators and Guidance.

Ruggie, John (2010), Engaging Business: Addressing Respect for Human Rights.

Sirait, M.T. (2009) Indigenous People and Oil Palm Plantation Expansion in West Kalimantan.

Sawit Watch & Forest peoples Programme (2007), Land is life.

Teoh (2010) Key Sustainability Issues in the Palm Oil Sector: A discussion paper for multi-stakeholders consultations.

Timber Procurement Assessment Committee (2008), Dutch Procurement Criteria for Timber.

United Nations (2007), UN Declaration on the Rights of indigenous Peoples.

United Nations Permanent Forum on Indigenous Issues (2007), Backgrounder Indigenous People – Lands, Territories and Natural Resources.

WALHI, Sawit Watch, Jikalabari, ICW and Friends of the National Park Foundation (2010), Briefing paper on illegal logging in Indonesia.

Wicke, B., Sikkema, R., Dornburg, V., Junginger, M., & Faaij, A (2008), Drivers of Land Use Change and the Role of Palm Oil Production in Indonesia and Malaysia.

WWF Germany (2008), Illegal wood for the European market.

Close up of a previously destroyed

grave site, showing burial artifacts

that were unearthed due to logging

in Pos Jernang. Malaysia.



Impacts of the Dutch economy on indigenous peoples

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