Eco-woes Weigh on Indonesia Palm Business

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Controversy is brewing over the export of palm oil from Indonesia. Activists say rain-forests are being cleared of trees, ruining soil and the habitat for many animals. Here's that story.

The oil squeezed out of palm fruit is a base ingredient for everything from soap to cooking oil.

But not many consumers are aware of the controversy the industry is stirring, even in Indonesia, which is the world's biggest producer.

Companies are clearing bulldozing rain forests, adding on to the 7.9 million hectares of palm trees which already cover the country.

And environmentalists are concerned.

[Bustar Maitar, Forest Campaigner, Greenpeace Indonesia]:
"If the government does nothing, it is really not good for the public, which is, we can say that this country is controlled by companies."

Greenpeace recently released a report accusing multi-billion dollar PT SMART Tbk, a major palm oil producer, of wrecking forests and planting on carbon-rich peatland.

As a result, companies like Unilever and Nestle dropped the company as a supplier.

SMART conducted an audit of its operations and said they found evidence of planting but not of deforestation.

[Pt Smart Tbk, President / Director, Daud Dharsono ]:
"Greenpeace accusations were exaggerated or wrong. SMART is not responsible for clearing primary and rain forests and we are not the cause of orangutan habitat damage."

Indonesia produces about 23 million tons of palm oil annually and it is one of the country's biggest exports.

The government is planning a two-year moratorium on new permits to clear natural forests. But skeptics say this is not enough.

The environmental dispute has broader implications.

Indonesia wants to boost economic growth but has also promised to cut greenhouse emissions by as much as 41 percent by 2020, largely through curbing deforestation.

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