Norway Confirms Indonesia on Right Track; 3-MCPD Update 

Norway’s Double Speak

Recently, Norway announced its latest payment to Indonesia of around USD56 million as part of the country’s commitment to reducing the country’s greenhouse emissions linked to forest loss.

The payment comes around a decade after the two countries reached a historic deal that Norway would hand Indonesia up to USD1 billion for reducing deforestation.

The USD56 million is linked to Indonesia’s progress on deforestation reductions that took place in 2017, following a similar, much smaller payment for emissions reductions in 2016. The payment is roughly equivalent to USD10 for every smallholder famer in Indonesia, or around 20 cents for every Indonesian citizen.

Yet, Norway’s new payment to Indonesia comes on the heels of a bizarre attack by the Rainforest Foundation Norway (RFN) against the Indonesian palm biofuel industry. The timing of that report now appears to have been intended to block the new payment; in addition to halting the signing of the Indonesia-EFTA free trade agreement, (EFTA represents Norway, Switzerland, Iceland and Liechtenstein)

According to our sources in Jakarta, GAPKI (the Indonesian Palm Oil Association) sent an official protest to the Norwegian Ambassador to Indonesia following the RFN attack. We understand that GAPKI highlighted RFN’s funding from Norway’s development agency, and questioned whether this was an official action of the Norwegian Government.

Norway’s response, seen by POM, states unequivocally, “During our partnership, Indonesia has implemented a number of policy reforms to improve its forest and land use practices. Indonesia has now delivered results in reducing deforestation… Our partnership appears to be on the right track.”

Black Campaign Funds Continue to Flow

Despite this official acknowledgement of Indonesian progress, the Norwegian Government continues to fund a black campaign against the Indonesia’s palm oil sector.

The charge is led by Norway’s development agency, NORAD. Many of the NGOs that receive funding are based in the US and the EU. In the EU, they include the European Federation for Transport and Environment (T&E), which has arguably been the biggest anti-palm oil biofuel group in the EU, as well as Aidenvironment. In the US, Norway’s funding extends to groups including Waxman Strategies and Mighty Earth.

Waxman Strategies and Mighty Earth were most likely the sources for a high-profile piece in the New York Times that lobbied for continuing to exclude palm-based biofuels from the US Renewable Fuel Standard. Waxman Strategies and Mighty Earth are also funded by Norway to operate the ‘Rapid Response’ system to influence opinions of U.S. consumers, political parties and public policy.

‘Foreign [Norway] Government’ Secretly Influencing U.S. Policy

Palm Oil Monitor has learned of correspondence between the US Department of Justice and several NGOs across the US that appears to put Norway’s palm oil lobbying approach under US legal scrutiny.  

Readers will recall that POM lifted the lid on FARA (Foreign Agents Registration Act) correspondence with Waxman Associates, which was being funded by the Norwegian Government to influence public policy against Indonesian palm oil use in the United States. Part of the lobbying was a major feature in the New York Times that contained a vast number of inaccurate statements about palm oil in Indonesia and its relationship with customers in the United States.

The funding of activities in U.S. by the Norwegian government with Waxman (and [Mighty Earth]), was not known until Waxman was forced to register as a Foreign Agent for Norway under the U.S. Foreign Agent Registration Act. This activity is best illustrated with Waxman’s proxy, Mighty Earth, shaking down – or greenmailing – an iconic American company, Procter & Gamble, for its relationship with KLK, the large Malaysian conglomerate. This is incredible, and done with the blessing of the Norwegian government. 

Norwegian Agency for Development Cooperation (Norad)’s anti-palm funding amounted to around USD150 million for the period between 2016 and 2020. There were around 39 organisations that ended up receiving funding during this period. Some of them are high-profile “blue chip’’ NGOs – Conservation International, WWF, The Nature Conservancy. Others, however, are simply campaign lobby groups such as Mongabay, Rainforest Foundation and Forest Trends.

A deeper look at Norad’s grants to see what might be considered under FARA reveals a large number of grants that are – in short – lobbying. This includes the Governors’ Climate and Forests Task Force, which includes advocacy efforts in California and Illinois. It includes NGOs such as CERES, which have aimed to change the investment decisions of pension funds on palm oil. We have yet to see these entities register under FARA or these entities disclose their relationship with foreign governments to the U.S. Department of Justice.

The last time we highlighted Norway’s funding of Rainforest Foundation Norway (RFN) to lobby against palm oil, Norwegian government officials went on the defensive, arguing that RFN did not express the views of the Norwegian government.

Norwegian officials might try to play the ‘does not express our views’ card again, but that is disingenuous at best given the huge sums directed to anti-palm oil lobbyists.

Norway is currently assessing its next round of anti-palm oil funding. It might need to consider its funding a bit more closely this time around.

3-MCPD Update 

Recently, we revealed that Malaysia had walked back their position on new rules for 3-MCPD in Europe; Malaysia told Indonesia it would not join other CPOPC members in calling out new EU rules on 3-MCPD as discriminatory. This generated significant concern in other producing countries that Malaysia had decided to accept EU demands on 3-MCPD. 

However, it now appears that some Malaysian stakeholders are equally unhappy with the decision.

Recently, Reuters reported the Palm Oil Refiners Association of Malaysia (PORAM) raised objections about the approach. It complained that the EU – which accounts for 11% of Malaysia’s export markets – is the only country to introduce the new 3-MCPD limit. Other countries – such as Australia and the US – have chosen not to introduce any limits.

The letter states, “With higher costs and minimal offtake, this will have an adverse impact on the entire export of refined palm oil products out of Malaysia.” In other words, the decision to sign up to the EU standard would be extremely costly across the board, but would gain marginal benefit in only one market.

This letter confirms our earlier analysis: the decision to abandon the CPOPC position on 3-MPCD did not have consensus within Kuala Lumpur. The Malaysian palm oil sector has, for many years, operated on the basis of consensus among the various interests (plantation owners, refiners, small farmers, regulators, officials, etc.). The decision to abandon CPOPC strikes at the heart of that long-term governing philosophy.

It’s still possible for CPOPC to maintain a producer-wide consensus when dealing with the EU going forward. This matter is far from settled at the WTO or any bilateral and multilateral forums. Stakeholders that consider ‘negotiation’ with the EU to be a way of mitigating potential losses need to remember that there are a large number of industry, NGO and political players that want palm oil out of the European market – and ‘negotiating’ won’t make a difference.

Swiss anti-Palm Oil Referendum Moves Ahead

The ‘Stop Palm Oil’ campaigners in Switzerland have upped the stakes in their battle with Indonesia’s farmers by reaching the required petition signatures to force a referendum to have palm oil removed from the Indonesia-EFTA Comprehensive Economic Partnership Agreement (IE-CEPA).

A little over 61,000 signatures were delivered to Swiss parliament before the 22nd June deadline. 50,000 signatures are required to file for a Referendum but here the ‘Stop Palm Oil’ campaigners gathered more as the signature collection lasted longer due to the COVID-19 pandemic.

As the Swiss Federal Chancellery is processing and reviewing the signatures, it is expected that the Referendum will take place in March 2021. It could possibly happen sooner in November 2020, but it has been reported that due to other Referendum issues in Switzerland, as well as a possible second wave of the COVID pandemic, the Referendum will be very likely pushed to early 2021.

The ‘Stop Palm Oil’ campaigners are led by Uniterre, the Swiss NGO that organised the petition, is a Swiss farrmers’ group that represents many of the dairy and rapeseed farmers that compete with imported palm oil. Tellingly, Greenpeace Switzerland did not support the petition following a split with the organization after Greenpeace Indonesia announcement opposition to the referendum. Palm oil is often used as a replacement for dairy fats in foods, and rapeseed competes directly with palm-based biodiesel in European biofuel markets.

Despite having some support from environmental NGOs, the petition is clearly a protectionist play by Swiss farmers. Swiss dairy farmers have struggled with a deregulation process that commenced in 2015 and exposed the sector to higher levels of competition from cheese from the European Union and other countries. Despite this, Swiss farmers still receive a number of large subsidies from Swiss authorities of around USD21 billion annually.  These farmers will face even greater competition from Indonesian palm oil farmers, who produce the most efficient oilcrop in the world.

One of the claims made by Uniterre is that the EFTA will not have ‘devastating consequences’ on Indonesia’s farmers. The average Swiss farmer income is around USD42,000. The average Indonesian family farmer takes in around USD1200. It’s also worth noting that on a GDP per capita basis, Swiss citizens are the second richest people in the world, sitting at USD83,000 annually, 20 times more than the USD4000 of Indonesia’s citizens. We’re not convinced that blocking the export of Indonesia’s largest farm product will close this gap.