Migros: May Replace Palm Oil Supplier IOI If Alleged Misconduct Proven

Switzerland's largest supermarket chain, Migros, said it will consider replacing its main palm oil supplier, IOI Corp. Bhd. (1961.KU) , if allegations the Malaysian plantation giant acquired land illegally and burned forests are proven.

Environmental group Friends of the Earth International and the Bruno Manser Fund, a human rights group, have said that IOI, the second-largest palm oil producer in Malaysia has committed the breaches in the Malaysian state of Sarawak and in the Indonesian province of West Kalimantan.

Friends of the Earth and Bruno Manser have called for Migros to discontinue its relationship with IOI and to reduce its palm oil purchases in view of widespread unsustainable practices in the sector.

Migros said in a statement that it does not support calls for the boycott of palm oil, but will "examine all the possibilities for replacing (palm oil suppliers) if this brings advantages in social, ecological or health terms."

The company is dismayed to hear of the breaches attributed to IOI, and will submit a request to the Roundtable for Sustainable Palm Oil, a palm oil watchdog, for investigation, said Robert Keller, head of food production at Migros Industries.

If the breaches are verified, then sanctions must be imposed on the company, Keller said.

Migros will also seek an explanation directly from IOI on the matter, he added.

Indonesia and Malaysia, the world's two largest producers of palm oil, have in recent months come under fire from various environmental and human rights groups for alleged misconduct, including the illegal clearing of forests and land seizures from native populations--claims industry participants have denied.

Environmental group Greenpeace recently succeeded in pressuring food giants Nestle (NESN.VX) and Unilever (UN) to stop buying from Indonesia's largest palm oil producer PT Sinar Mas Agro Resources & Technology (SMAR.JK) over allegations of illegal land and peatland clearing.

An independent review of PT Smart's palm oil operations is under way. The results are expected next month.

By Fawziah Selamat, Dow Jones Newswires; [phone]; [e-mail]