INDONESIA: Burger King drops Indonesian palm oil supplier

Burger King will stop using palm oil from a leading Indonesian supplier due to concerns about environmental damage.

The US fast-food chain's decision to break off ties with the companies, which are controlled by Indonesia's Widjaja family and loosely grouped under the name Sinar Mas, contrasts with that of Cargill, the world's largest trader of agricultural commodities, which endorsed the palm producers' pledges to improve operations.

The purchasing decisions follow Greenpeace allegations of rainforest destruction, which prompted Singapore-listed Golden Agri-Resources, one of the Sinar Mas holding companies, to commission an external audit of its practices. While reaching contrasting conclusions, both Burger King and Cargill cited the audit's findings in their decisions.

The varying attitudes show the complexity of defining and implementing sustainable farming practices in a vast nation with weak law enforcement over 17,000 scattered islands and unregulated planting of the profitable cash crop. Indonesia is the world's largest producer of palm oil, a cheap commodity used to manufacture cooking oil, margarine, cosmetics and bio fuel.

Only 10 out of thousands of oil palm growers in Indonesia are certified by the Roundtable for Sustainable Palm Oil, a widely-recognised industry standard. PT Smart and PT Ivo Mas Tunggal, subsidiaries of Golden Agri, are not among them.

Franky Widjaja, Golden Agri's chairman and chief executive, told the Financial Times in July that the company had been following RSPO standards and Cargill noted the company's commitment to join the RSPO and obtain RSPO certification for all its palm operations by 2015.

A series of Greenpeace reports have accused the Sinar Mas companies of endangering orang-utan habitat and tearing down valuable tropical forest for plantations. The Sinar Mas audit, which was conducted by verification companies BSI Group, Control Union Certifications and the Bogor Agricultural Institute, confirmed some violations of environmental regulations, such as a small amount of planting in peat swamps.

"We believe the [audit] report has raised valid concerns about some of the sustainability practices of Sinar Mas' palm oil production and its impact on the rainforest," Burger King said in its statement on Facebook. "These practices are inconsistent with our corporate responsibility commitments."

In joining companies such as Unilever, Nestlé and Kraft Foods in breaking off ties with Sinar Mas, Burger King said it would find new suppliers for palm oil used at 176 restaurants and alert its other suppliers of its "intent to discontinue the use of palm oil supplied by Sinar Mas in the manufacturing of our products."

Cargill by contrast said it was encouraged by PT Smart's commitment "to taking corrective actions" to address problems cited by the audit. Cargill has set a goal of sourcing 60 per cent of its palm oil from RSPO members by year end.

Sinar Mas said it was disappointed with Burger King's move and believes it does not reflect the view of the majority of customers. "We are confident in the way with which we have acted in safeguarding the environment," it said.