Smart: Indonesia Palm Plantings Since Late 2005 Not In Primary Forests

PT Smart (SMAR.JK), an Indonesian subsidiary of Golden Agri Resources Ltd. (E5H.SG), said a research team has determined that land preparation for palm oil plantation expansion in West and Central Kalimantan provinces since November 2005 wasn't carried out on primary forest lands, refuting some of the allegations made last year by Greenpeace and other environmental groups.

The environmental activists also accused the company of violating land rights and draining peatlands. Smart said it will review the findings and recommendations of the team and develop an action plan to incorporate those recommendations into its standard operating procedures.

Following the accusations last year, major palm oil consumers such as Unilever NV (UN), Nestle SA (NESN.VX) and Burger King stopped buying from Smart, helping to push the company toward compliance with principles laid down by the Roundtable on Sustainable Palm Oil, an industry body of consumers, green groups and plantation companies that aims to promote use of sustainable oil palm products.

GAR was admitted as a member of the RSPO in April after it committed to sustainable palm oil production.

However, some of its customers haven't resumed purchases as they are waiting for more concerted efforts by the company to allay environmental and social concerns.

A social research team engaged by Smart, the manager of GAR plantations, said this week that land acquisitions by the company did not diminish the legal or customary rights of other users without their free, prior and informed consent.

However, the final settlement between land owners and the concession owners wasn't well documented, and was recorded in a land relinquishment statement kept by the concession owners but not provided to land owners and other parties.

The plantations, especially those in West Kalimantan, were located in lands designated "Area for Other Uses," and did not cover primary forest land.

However, part of the land preparation and oil palm planting was conducted prior to high-conservation-value assessments, and to the RSPO's requirement to identify HCV areas, so these areas weren't clearly defined by the company, the team said.

HCV areas include areas of high bio-diversity, natural landscapes, rare and endangered ecosystems, environmental services, and areas to meet basic physical and cultural needs.

HCVs vital to the local community's livelihood weren't found in the majority of the concession areas, and where found, management and monitoring plans were already in place.

Trespassing in sacred places and burial sites was alleged to have taken place in some of the HCVs, but all had been reconstructed and reinstated, the team said.

-By Surabhi Choudhary, Dow Jones Newswires; [phone]; [e-mail]