Record high deforestation hits Sumatra’s ‘orangutan capital’ as palm oil industry expands

Deforestation associated with oil palm cultivation has declined in recent years in Indonesia, but in a biodiversity haven at the northern tip of Sumatra, the forest is being cleared at record pace, a report shows.

Using Sentinel-2 and Planet/NICFI satellite imagery, forest loss monitoring platform TheTreeMap found that the Rawa Singkil Wildlife Reserve on the western coast of Indonesia’s Aceh province lost 700 hectares (1,730 acres) of primary peat-swamp forest in 2022 — an area twice the size of New York’s Central Park.

Last year’s deforestation is 12 times greater than in 2021, making it the highest level of forest loss recorded in the ecosystem since 2001.

Separate satellite imagery analysis by Aceh-based environmental NGO Forest, Nature and Environment Aceh (HAkA) also showed an almost identical amount of forest loss in 2022: 716 hectares (1,770 acres).

“The 2022 deforestation is more than the deforestation of the previous four years combined,” Lukmanul Hakim, the geographical information system (GIS) manager at HAkA, told Mongabay.

The Rawa Singkil Wildlife Reserve has been described as the “orangutan capital of the world” because it’s home to the densest population of critically endangered Sumatran orangutans (Pongo abelii) anywhere on the island: 1,500 recorded individuals, or 10 per cent of the species’ total population.

The reserve is also home to some of the last remaining intact habitat for critically endangered Sumatran tigers (Panthera tigris sumatrae), rhinos (Dicerorhinus sumatrensis) and elephants (Elephas maximus sumatranus), and is among the top priority landscapes for conservation in the world because of its carbon-rich peat soils.

Yet despite the reserve’s critical importance, large swaths of it continue to be destroyed for industrial agriculture, primarily oil palms. Much of this is driven by well-connected local elites, mirroring the larger trend across Indonesia, according to US-based NGO Rainforest Action Network (RAN), which monitors the Leuser Ecosystem, of which Rawa Singkil is a part.

And illegal palm oil from this nationally protected ecosystem ends up in the supply chains of the world’s biggest traders of the commodity, like Musim Mas and Wilmar, as well as global brands like Procter & Gamble (P&G), Nestlé, PepsiCo and Unilever, according to RAN.

HAkA’s Lukmanul said the deforestation trend in Rawa Singkil is an outlier, as forest loss is declining elsewhere in the Leuser Ecosystem. He pointed to the UNESCO-listed Gunung Leuser National Park, another conservation area inside the Leuser Ecosystem that, like Rawa Singkil, has protected status. In 2022, the national park lost 179 hectares (442 acres) of forest, the lowest rate since HAkA began monitoring deforestation in the Leuser Ecosystem in 2015.

RAN forest policy director Gemma Tillack called the increase in forest loss in Rawa Singkil “alarming.”

“This continued destruction places critically endangered species like the Sumatran orangutan at risk of extinction in the wild,” she told Mongabay.

Agus Arianto, the head of Aceh provincial conservation agency, which manages protected areas in the province, previously attributed deforestation in Rawa Singkil to illegal encroachment and logging.

“In some cases, we found these encroachers burn areas that have non-forest status, but they also burn [land] in the wildlife reserve,” he said last September. “We often have difficulty extinguishing the fires [in the reserve] because of the fires on the non-forest lands.”

Agus suggested providing alternative forms of livelihoods to the people living near the reserve, to make it less lucrative for them to encroaching into Rawa Singkil.

However, Tillack said the deforestation within the reserve is driven by local elites, rather than smallholders. These locally influential individuals wield power and have access to the resources needed to establish significant oil palm plantations, according to RAN.

Often this power stems from a position afforded to them, or their families, through their current or past work in government-related institutions, the NGO says. In the case of Rawa Singkil, RAN says it has identified two local businesspeople who are allegedly behind some of the deforestation.

It identified them as Mahmudin and Nasti. Mahmudin is reported to control 4.5 hectares (11 acres) of illegal plantations inside the wildlife reserve, while Nasti allegedly controls 8 hectares (20 acres).

Tillack said RAN last year noticed an increase in deforestation within the reserve from satellite monitoring, and thus sent investigators to the field. They found a substantive amount of forest clearing around the two illegal plantations.

“[The deforestation is] presented as a smallholder problem, that it’s the community doing it,” Tillack said. “But it’s not, it’s the local elites that are these influential individuals that are behind this clearing.”

She said the case of these two plantations is only the tip of the iceberg, as there are an estimated 300 hectares (740 acres) of illegal plantations within Rawa Singkil.

RAN’s investigation also revealed that palm oil from the two plantations ended up in the supply chains of major brands like P&G, Mondelēz, Nestlé, PepsiCo, Nissin Foods, Unilever, Ferrero and Colgate-Palmolive.

These brands are exposed to the illegal palm oil as they reportedly source from traders and mills that buy palm fruit from the two plantations. For example, fruit from Nasti’s plantation were found to be collected and transported to a processing mill, PT Bangun Sempurna Lestari, that’s known to supply Musim Mas — a major refinery operator that’s also a supplier to the likes of P&G, Mondelēz, Nissin Foods, Nestlé, PepsiCo and Unilever.

Tillack said these major brands have adopted “no deforestation” policies that should prohibit them from buying palm oil that comes from forestland that was cleared after a certain cutoff date, typically Dec. 31, 2015. These same brands have also pledged to end deforestation in their supply chains by 2020, as members of the Consumer Goods Forum. And some are also members of the Forest Positive Coalition of Action — a so-called leading initiative of consumer goods brands and retailers taking collective action to end commodity-driven deforestation.

Yet their continued sourcing from illegal plantations renders all these commitments hollow, Tillack said.

“There has been continual deforestation since [the] companies’ adopted cutoff date [of 2015],” she said. “So it has been seven years of failure to implement no-deforestation policies and impose [a forest-clearing] moratorium in this area, which is the most important habitat left for the Sumatran orangutan, and it’s literally disappearing under the watch of major brands and traders which claim they have been monitoring it.”

RAN also highlighted the role of traders like Apical (part of the Royal Golden Eagle Group, or RGE), Golden Agri Resources (GAR), Musim Mas, and Wilmar, accusing them of tainting the global supply chain with illegal palm oil from Rawa Singkil.

According to RAN, these companies operate the refineries that buy palm fruit from the illegal plantations and process it into the various forms of palm oil that then go into consumer goods like snack foods, personal care products and instant noodles.

RGE, Musim Mas and GAR previously denied the allegation that their supply chain was tainted with illegal palm oil. They acknowledged at the time that they sourced palm fruit from Mahmudin, but only from his legal plantations located outside the Rawa Singkil Wildlife Reserve.

But in January, Musim Mas, GAR and Wilmar confirmed that they’d indirectly sourced from illegal plantations within the wildlife reserve. This about-turn came after the three largest palm oil traders in Indonesia sent field verification teams into the wildlife reserve.

GAR and Wilmar together carried out field verification in November 2022. They found that Mahmudin was only licensed to operate 29 hectares (72 acres) of plantations outside the reserve, and not the 4.5-hectare plantation inside it.

Mahmudin told the verification team that he wasn’t aware of the boundaries of the wildlife reserve, and the team didn’t find any boundary markers such as demarcation pegs, ditches or signboards around Mahmudin’s illegal plantation.

Musim Mas sent its own verification team to the field in November 2022. It said illegal palm oil from Rawa Singkil could still end up in its supply chain despite its no-deforestation policies because of the difficulty of tracing the provenance of palm oil back to the plantation level. In many cases, palm fruit from restricted areas is mixed with fruit from acceptable sources in small quantities so as not to be noticeable.

“Usually, this type of issues can be captured through traceability to plantation implementation at the suppliers’ mill level, but no system can guarantee 100 per cent assurance,” Musim Mas told Mongabay in an email. “Maintaining constant traceability to plantation at all time is challenging.”

Even when a mill says it can trace 100 per cent of the palm fruit that it processes down to the plantation level, in reality there are still problems on the ground. In the case of Mahmudin, all three traders — GAR, Wilmar and Musim Mas — bought palm oil from a smaller mill called PT Runding Putra Persada (RPP), which made the 100 per cent traceability claim in a 2021 report.

However, upon checking the mill’s list of palm fruit suppliers, GAR and Wilmar’s verification team found that RPP hadn’t been implementing the traceability system properly.

“There is no mechanism for assessing potential suppliers (Due Diligence); no dedicated team running and monitoring the TTP process; and its data collection of [palm fruit] suppliers is patchy and inconsistent,” GAR and Wilmar concluded in their report on the case.

Tillack said this shows how no brands or traders have been able to achieve 100 per cent traceability.

“So there’s still a traceability crisis,” she said.

Following the verification process, the traders secured a commitment from Mahmudin to relinquish all of his illegal plantation inside the wildlife reserve to the authorities.

GAR and Wilmar said Mahmudin had to show evidence of this in the form of a letter of handover and a receipt of the land release by the end of June this year, with an audit to confirm that this was actually done. Musim Mas said this land release is its current main goal in the case.

“This is still an ongoing project we are working on with our supplier,” the company said.

As for the case of Nasti, the other illegal plantation operator, Musim Mas and P&G said they had stop sourcing from her plantations. P&G has also vowed to take action as it sources palm oil from Musim Mas, and thus is exposed to illegal palm oil from Rawa Singkil. It said it would collaborate with Mahmudin to return the illegally cleared lands to the authorities and to remediate the damage done. RAN said this is “a first for a major global brand.”

But P&G also said it had decided not to suspend Mahmudin because he had committed to remedying the harm that his illegal plantation had caused. This is pending further progress and it’s still possible P&G may suspend Mahmudin, the company said.

Tillack criticised P&G’s decision to continue sourcing from Mahmudin, saying it shows the company isn’t complying with its own palm oil sourcing policy.

The policy states that “If our supplier does not acknowledge and take action to remediate the incident, we will suspend or eliminate palm purchases from that supplier. A supplier would need to have a documented action plan and demonstrate meaningful progress to be considered for reinstating supply agreements.”

Furthermore, “If the land in question is already producing Fresh Fruit Bunches (‘FFB’), supplier will ensure no FFB or palm from the area is supplied to P&G.”

That should give brands like P&G and traders like Musim Mas every reason to stop sourcing from Mahmudin and other illegal plantation operators until an action plan to remedy the harm is carried out, Tillack said.

These big companies also need to invest and work collectively in monitoring and protecting the Rawa Singkil Wildlife Reserve from further destruction, she said.

The fact that illegal palm oil from protected areas like a wildlife reserve can still make its way into the supply chains of major traders and global brands that have adopted no-deforestation policies for years means that the current system to trace palm oil to the plantation level and protect forests is failing, Tillack said.

This case should spur them into working together on a collective monitoring and traceability system as well as a compliance system to protect Rawa Singkil and the greater Leuser Ecosystem from further destruction, she added.

“[It] shows that the individual effort to monitor deforestation in Rawa Singkil is failing, and we need a scale-up of response from the industry to stop and reverse this worrying trend,” Tillack said.

This is especially important as more markets demand sustainable palm oil, with the European Union set to adopt a law that will ban the trading of goods that come from deforestation and illegal sources. The law will cover palm oil, beef, soy, coffee, cocoa, rubber, charcoal and paper. It will require firms working in deforestation hotspots to certify that their goods don’t come from the clearing of forests after the cutoff date Dec. 31, 2020.

To prove this, companies would have to trace their commodities back to where they were produced, down to the precise geographical information for the plantations where the raw crops were grown.

“So for palm oil to come in the EU, there has to be geolocation data,” Tillack said. “But it’s clear from our report that there’s no brand and trader that could achieve that [at the moment]. There needs to be investment so that these [traceability and monitoring] systems are adequate enough.”

Tags: palm oil, deforestation, oil palm, forest, cultivation, Plantations, Sumatra, Indonesia