Trade & Environment Dimensions from Oil Palm Seed to Palm Oil 4/20/2017 Trade & Environment Dimensions from Oil Palm Seed to Palm Oil Tony Liwang Sinar Mas Agro Resources and Technology (SMART) Research Institute Sinar Mas Agribusiness & Food Indonesia Sub Regional Workshop on the Trade and Environment Jakarta, July 26-27, 2006 ASEP/GPP EPI....Ismu

Outline 1. Palm Oil for Food & Non Food Uses 2 Outline 1. Palm Oil for Food & Non Food Uses 2. World Edible Oil Production & Consumption 3. Indonesian Palm Oil & Food Safety Regulations 4. Palm Oil Process Chain Management 4.1. Oil Palm Seed Production 4.2. Oil Palm Plantation 4.3. Palm Oil Mill 4.4. Palm Oil Refinery 5. Today’s Challenge Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Outline 1. Palm Oil for Food & Non Food Uses 2 Outline 1. Palm Oil for Food & Non Food Uses 2. World Edible Oil Production & Consumption 3. Indonesian Palm Oil & Food Safety Regulations 4. Palm Oil Process Chain Management 4.1. Oil Palm Seed Production 4.2. Oil Palm Plantation 4.3. Palm Oil Mill 4.4. Palm Oil Refinery 5. Today’s Challenge Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Food Uses of Palm Oil and Kernel Palm Oil Cooking Oil Deep Frying Oils Margarine & Spreads Bakery Fats (Shortenings) Cocoa Butter Fats Confectionary Fats Ice Cream Fats Infant Nutrition Fats . . . Food Uses of Palm Oil and Kernel Palm Oil Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Surfactants & Lubricants – Grease Soap Tupperware Bio Fuel Cosmetic Candle / Wax Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Outline 1. Palm Oil for Food & Non Food Uses 2 Outline 1. Palm Oil for Food & Non Food Uses 2. World Edible Oil Production & Consumption 3. Indonesian Palm Oil & Food Safety Regulations 4. Palm Oil Process Chain Management 4.1. Oil Palm Seed Production 4.2. Oil Palm Plantation 4.3. Palm Oil Mill 4.4. Palm Oil Refinery 5. Today’s Challenge Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Development of World Palm Oil Production World Edible Oils & Fats Production & Consumption Development of World Palm Oil Production Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Development of World Palm Oil Consumption World Edible Oils & Fats Production & Consumption Development of World Palm Oil Consumption Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Productivity of Edible Oils ( total oil in ton Ha-1) World Edible Oils & Fats Production & Consumption Productivity of Edible Oils ( total oil in ton Ha-1) Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

World Edible Oils & Fats Production & Consumption Some facts : 1. The world production of Oils and Fats in 2004 was around 130 million tons, of which 80% was used for Food and 20% for Non- Food purposes 2. Two oils & fats sources determine the market, i.e. Palm Oil and Soybean Oil, each of which is about 30 million tons per annum 3. Palm Oil supplies at least 22% of the global demand for Oils & Fats 4. About 50% of the global export trade in Oil & Fats depends on Palm Oil Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

World Edible Oils & Fats Production & Consumption Some facts (cont’d) : 5. About 50% of the Palm Oil produced in the world is used by four equally big users: EU 25 countries, China India, and last but not least the Indonesian domestic market 6. Total European Palm Oil consumption is 13% of world consumption 7. The import of Palm Oil (including Palm Kernel Oil) in the EU 25 has increased enormously from 2.7 million MT in 1997 to 4.6 million MT in 2004 (Oil World Annual 2005) 8. The Palm Oil imported by the EU 25 is mainly from Indonesia and Malaysia Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

World Edible Oils & Fats Production & Consumption Some facts (cont’d) : 9. The EU 25 importation of Palm Oil is mainly coming through the Netherlands as the centre for palm oil distribution to other countries in Europe. 10. The highest rate of the consumption of the Palm Oil in Europe is UK, followed by the Netherlands and Germany. These three countries contribute about 60% of the Palm Oil demand in EU 11. Palm Oil as Food and Feed needs to fulfill the EC Regulation 178 / 2002 as basis for the approaches to the Food Safety 12. Palm Oil Business Initiative has formed the Roundtable on Sustainable Palm Oil (RSPO) to promote the sustainable supply chain of palm oil, in relation to Planet – People – Profit (3 P’s) Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

World Edible Oils & Fats Production & Consumption Some facts (cont’d) : 12. The Roundtable on Sustainable Palm Oil (RSPO) was initiated in April 2004 by different stakeholders in palm oil business (producers, consumers, retailers, traders, bankers, NGO’s, etc.). RSPO has grown rapidly in size, complexity, and accomplishments. Now (2 years after, 2006), the number of members of RSPO is more than 140 members. RSPO Priciples & Criteria’s has been developed and carried out by the members : 1. Commitment to transparency 2. Compliance with applicable law and regulations 3. Commitment to long-term economic and financial viability 4. Use of appropriate best practices by growers and millers 5. Environmental responsibility and conservation of natural resources and biodiversity 6. Responsible consideration of employees and of individuals and communities affected by growers and mills 7. Responsible development of new plantings 8. Commitment to continuous improvement in key areas of activity Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Outline 1. Palm Oil for Food & Non Food Uses 2 Outline 1. Palm Oil for Food & Non Food Uses 2. World Edible Oil Production & Consumption 3. Indonesian Palm Oil & Food Safety Regulations 4. Palm Oil Process Chain Management 4.1. Oil Palm Seed Production 4.2. Oil Palm Plantation 4.3. Palm Oil Mill 4.4. Palm Oil Refinery 5. Today’s Challenge Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4/20/2017 Important EU Regulations on Food and Feed Safety   White Paper on Food Safety http://europa.eu.int/comm/dgs/health_consumer/library/pub/pub06_en.pdf   COMMISSION REGULATION (EC) No 466/2001 of 8 March 2001 setting maximum levels for certain contaminants in foodstuffs http://europa.eu.int/eur-lex/pri/en/oj/dat/2001/l_077/l_07720010316en00010013.pdf   REGULATION (EC) No 178/2002 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 28 January2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety http://europa.eu.int/eur-lex/pri/en/oj/dat/2002/l_031/l_03120020201en00010024.pdf   REGULATION (EC) No 852/2004 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004 on the hygiene of foodstuffs http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2004/l_226/l_22620040625en00030021.pdf Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006 ASEP/GPP EPI....Ismu

4/20/2017 Important EU Regulations on Food and Feed Safety (cont‘d) REGULATION (EC) No 853/2004 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004 laying down specific hygiene rules for food of animal origin http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2004/l_226/l_22620040625en00220082.pdf   REGULATION (EC) No 854/2004 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2004/l_226/l_22620040625en00830127.pdf   REGULATION (EC) No 882/2004 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2004/l_191/l_19120040528en00010052.pdf   REGULATION (EC) No 183/2005 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 12 January 2005 laying down requirements for feed hygiene http://europa.eu.int/eur-lex/lex/LexUriServ/site/en/oj/2005/l_035/l_03520050208en00010022.pdf Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006 ASEP/GPP EPI....Ismu

Indonesian Palm Oil & Food Safety Indonesian Laws & Regulations “from Farm to Table” Law UU No. 7/96 for Food Law UU No. 8/99 for Customer Protection Govt. Regulation PP 28/2004 for Food Safety, Quality, and Nutrition Health Ministry Regulation Permenkes RI No. 722/Menkes/Per/IX/88 for Food Additive Materials Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Indonesian Palm Oil & Food Safety Area of Oil Palm Plantations in Indonesia based on the land ownership (in Ha) Year Smallholders Government Private Plantation Total 1998 890 506 556 640 2 113 050 3 560 196 1999 1 401 046 576 999 2 283 757 3 901 802 2000 1 166 758 588 125 2 403 194 4 158 076 2001 1 561 031 609 943 2 542 457 4 713 431 2002 1 808 424 631 566 2 627 068 5 067 058 2003 1 854 394 662 803 2 766 360 5 283 557 2004* 1 904 944 675 090 2 820 525 5 400 559 estimated figure Total Area used for Oil Palm Plantations is equal to approx. 3% of the Total Indonesian Forest land. Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Outline 1. Palm Oil for Food & Non Food Uses 2 Outline 1. Palm Oil for Food & Non Food Uses 2. World Edible Oil Production & Consumption 3. Indonesian Palm Oil & Food Safety Regulations 4. Palm Oil Process Chain Management 4.1. Oil Palm Seed Production 4.2. Oil Palm Plantation 4.3. Palm Oil Mill 4.4. Palm Oil Refinery 5. Today’s Challenge Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Integrated Palm Oil Process Chain Management Integrated Palm Oil Process Chain Management Traceability = Chain of Custody UP-STREAM MID-STREAM DOWN-STREAM Oil Palm Seed Production Oil Palm Plantation Palm Oil Mill Palm Oil Refinery Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4.1. Oil Palm Seed Production Integrated Palm Oil Process Chain Management GMO Free Planting Materials Parents materials used are crossed from the registered pedigree (by the Indonesian Government) Documentation and Certification ISO 9001:2000 Quality Management System for Seed Production ISO 9001:2000 Quality Management System for Research & Development ISO 17025 Accreditation of Laboratory Management System Traceability for Oil Palm Seed Production with the Barcode Management System Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4.2. Oil Palm Plantation GMO Free Planting Materials Integrated Palm Oil Process Chain Management GMO Free Planting Materials High Conservation Value Forest (HCVF) in collaboration with WWF Better Agricultural Practices (BAP) Organic & In-organic Fertilizer Mgmnt Safety Pesticide Use Integrated Pest Management (IPM) Integrated Weed Management (IWM) Waste Management (Recycling, Reuse, Recover – 3R) Environment Impact Assessment (EIA) Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4.2. Oil Palm Plantation Documentation & Certification Integrated Palm Oil Process Chain Management Documentation & Certification ISO 9001:2000 Quality Mgmnt System ISO 14001:2004 Env. Mgmnt System Traceability for Oil Palm Plantation Area Unit Identification (block by block, @ 30 Ha) GIS Map & Information System SAP Data & Information System Harvesting and Transportation Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4.3. Palm Oil Mill Good Manufacturing Practices (GMP) Waste Management Integrated Palm Oil Process Chain Management Good Manufacturing Practices (GMP) Waste Management (Recycling, Reuse, Recover – 3R) Environment Impact Assessment (EIA) Documentation & Certification ISO 9001:2000 Quality Mgmnt System ISO 14001:2004 Env. Mgmnt System Traceability for Palm Oil Mill Area Unit Identification SAP Data & Information System Harvesting and Transportation Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4.4. Oil Palm Refinery Waste Management Integrated Palm Oil Process Chain Management Waste Management (Recycling, Reuse, Recover – 3R) Environment Impact Assessment (EIA) Documentation & Certification ISO 9001:2000 Quality Mgmnt System ISO 14001:2004 Env. Mgmnt System HACCP Codex Alimentarius Traceability for Palm Oil Refinery Area Unit Identification Transportation & Logistic Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Outline 1. Palm Oil for Food & Non Food Uses 2 Outline 1. Palm Oil for Food & Non Food Uses 2. World Edible Oil Production & Consumption 3. Indonesian Palm Oil & Food Safety 4. Palm Oil Process Chain Management 4.1. Oil Palm Seed Production 4.2. Oil Palm Plantation 4.3. Palm Oil Mill 4.4. Palm Oil Refinery 5. Today’s Challenge Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Today’s Challenge Integrated Palm Oil Process Chain Management Food production, including Palm Oil, is expected to grow at least at the same pace as population growth. Therefore it will be an increasing demand for edible oils and agricultural products in the future At the same time, the demand for food safety and security and the awareness towards conservation of the environment and sustainability of the Palm Oil industry get more attention These issues are highlighted in several international forums and meetings Exchange views and information within all stakeholders (producers, consumers, retailers, financial institutions, NGO’s, and governments) are needed to improve the current global trade conditions. Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

Today’s Challenge Integrated Palm Oil Process Chain Management Collaboration of stakelholders in the Roundtable of Sustainable Palm Oil can be applied also to other commodities, e.g. Cacao, Coffee, etc. Smallholders oil palm plantations and their small scale enterprises need more attention and effort to fulfill all requirement needed for food safety and security in each step of palm oil process chain Unfair trade and tax barriers have to be avoided in order to meet the objective of the Millenium Goal, i.e. Poverty Elaviation. Most commodities are produced by smallholders in the developing countries with limited capability and capacity to meet the high food quality required by the consumers in the developed countries. Capacity building on the awareness of food quality and safety and environment to all stakeholders, especially to smallholders, is needed. Intensive Dialogue and Forum of G to G and B to B initiatives for each commodity are needed to bridge the need among the stakeholders. Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006

4/20/2017 Great things are not done by an impulse but by a series of small things brought together Vincent van Gogh Sub Regional Workshop on the Trade and Environment, Jakarta, July 26-27, 2006 ASEP/GPP EPI....Ismu

Thank You Terima Kasih for more information : 4/20/2017 Thank You Terima Kasih for more information : tony_liwang@smart-tbk.com liwang@cbn.net.id ASEP/GPP EPI....Ismu