Ag Commodities Giant Agrees to Stop Deforestation in Africa

Olam International isn't exactly a household name to many Americans. But this US$10 billion company based in Singapore invests in just about every agricultural product found in our kitchens. Olam has businesses in coffee, rubber, almonds, cacao, peanuts, rice and, of course, palm oil. The company recently announced its intention to build the largest palm oil plantation in Gabon.

NGOs, including WWF and Mighty, responded in kind. Last year, Mighty issued a report accusing Olam of fueling deforestation worldwide from Indonesia to Gabon. The Washington, D.C.-based NGO insisted that despite Olam’s commitment to RSPO-certified palm oil, the company shunned transparency as it emerged from a minor palm oil player to one that has grown this particular business 20-fold since 2011.

Criticism of the company came from all fronts: Last December, the Financial Times highlighted allegations that Olam cleared land at an excessive rate while endangering Gabon's rich wildlife.

But this week, Mighty said it reached an agreement with Olam to stop deforestation for palm oil and rubber development across its land concessions in Gabon.

Former U.S. Rep. Henry Waxman, who is the chairman of Waxman Strategies, a communication firm that in part staffs Mighty, came together with Olam CEO Sunny Verghese on the compromise.

For Mighty, this agreement is especially critical to preserve forests in Gabon, one of the last few countries on earth with most of its high forest cover still intact. The country of 1.7 million is home to rich wildlife ecosystems that house endangered species such as gorillas and chimpanzees.

The conversion of land for palm oil development in Africa comes at a time when more consumers are aware of the environmental and human rights impacts the commodity had across Indonesia and Malaysia, the world’s two largest producers of palm oil.

Many Asia-based companies have responded to the increased attention from NGOs, journalists and local authorities on their operations in Southeast Asia by looking to Africa as the next frontier for the global palm oil production.

“There has been a huge shift in awareness across Southeast Asia the last five to 10 years about palm oil’s impact,” Etelle Higonnet, campaign and legal director for Waxman Strategies, told TriplePundit on Tuesday. “So these companies are moving to central Africa where there is often no free press, no opposition and corrupt enforcement, so they can do whatever they want.”

The agreement between Olam and Mighty, which was moderated by the World Resources Institute, resulted in several concessions from Olam.

The company agreed it would not clear any forest land in Gabon for at least one year while both parties work on a framework for responsible agricultural development in countries that are still mostly covered by forests.

Olam also agreed to disclose more information about its third-party palm oil suppliers in Asia and will require them to follow the High Carbon Stock Approach guidelines for sourcing. Olam’s prior refusal to disclose many of its suppliers led Higonnet, the author of last year’s Mighty report, to describe the company’s supply chain as a “black box.”

The company also promised to publish any procedures related to its supply chain risks, committed to protecting peatlands, and pledged to ensure that workers within its operations and supply chain are not exploited.

In return, Mighty agreed to suspend any campaigns that target Olam’s palm oil and rubber plantations for one year. The organization also said its representatives would work with NGOs and government officials in Gabon to push for more land conservation efforts and create sustainable development policies.

With the world expected to reach 9 billion people by 2050, the push to grow more food has led companies and governments, from the Middle East to China, to view Africa as the key to increase global food security.

The promises of economic development are tantalizing to countries like Gabon. While its per-capita income of $17,000 to $19,000 (depending on the source) positions Gabon as a middle-income economy, the country still suffers from income inequality with anywhere from 10 to 15 percent of its people living in severe poverty.

Gabon’s president, Ali Bongo Ondimba, sees a more robust agriculture sector as a means to create jobs and stop leaning on its oil reserves – which critics say were squandered by his predecessor and father, Omar.

The challenge, however, is ensuring that any investment in Gabon reaches the people who need the work the most. The NGO Freedom House has already accused Olam of land grabbing and environmental destruction in Gabon. And details about the company’s operations in Gabon are still murky. Olam did mention to Mighty that 17 percent of the hires in Gabon were Asian, most of whom the NGO assumes are in mid-level and management roles. An additional percentage of employees are non-Gabonese African, the company told Mighty.

When asked about the company’s employment and economic impact in Gabon, Higonnet of Mighty replied: “We still don’t have clear numbers from Olam about how many people they employed in palm oil in Gabon -- though they are the biggest and more or less the only player in that space.”

This week's agreement came as NGOs continue to ratchet up their criticism of the global palm oil industry. Recent reports indicate that the sector's human rights abuses and environmental degradation are still rampant. And while the Roundtable on Responsible Palm Oil (RSPO) is making progress on ensuring a steady global supply of more responsible palm oil, those efforts are akin to taking a slingshot into a gun fight.

Image credit: Thomas Breuer/Wiki Commons