Olam, one of the world’s biggest traders of agricultural commodities, has been accused of endangering the forest habitats of African wildlife including gorillas, chimpanzees and forest elephants with widespread deforestation in its concessions in Gabon.
The criticism from a US-based environmental campaign group comes as Asian palm oil businesses are turning to west Africa to make up for a shortage of suitable land in the two main producer countries, Malaysia and Indonesia, and to meet growing demand for the cheapest vegetable oil.
Clearing land to cultivate palm oil — which is used in a range of household goods from ranging from biscuits to shampoo — has been a leading cause of dramatic deforestation in southeast Asia.
Mighty, a group based in Washington DC, has accused Olam of bulldozing rainforest in Gabon to make way for palm oil plantations.
In a report published on Monday, Mighty said: “Olam has cleared mature, high-quality forest. Field investigators saw and filmed bulldozers clearing large trees on a considerable scale.”
The “severely degraded” landscapes of Sumatra and Borneo in Indonesia and Malaysia highlighted the risks of unchecked agricultural expansion, the environmental campaign group said.
Sunny Verghese, Olam’s co-founder and chief executive, said in response to the allegations of bulldozing mature forest on a large scale: “Gabon has a right and an essential need to develop its agriculture sector to diversify its economy, improve food security to feed its people and create new livelihood opportunities.”
Nearly 60 per cent of Olam’s planted palm area in Gabon was originally “highly logged and degraded secondary forests”, Mr Verghese said, while the rest was originally savannah. Secondary forest is an area where the original vegetation has been cut down but the jungle has regrown.
Singapore state investment company Temasek Holdings and Japan’s Mitsubishi Corp are the largest shareholders in Olam, which is the world’s largest supplier of cashews and the second-largest supplier of coffee.
Mighty also accused Olam of failing to disclose the identity of third-party suppliers of palm oil.
The company’s competitors publish the identity of their palm oil suppliers online, enabling independent monitors to check their standards, the campaign group said.
“Olam is the one large company that isn't prioritising transparency. They are the black box of the palm oil industry,” said Glenn Hurowitz, Mighty’s chief executive.
Like other agricultural commodity groups, Olam is both a producer and trader of foodstuffs. It relies heavily on third-party suppliers, as it only began planting oil palms in 2012 and its plantations will not reach full maturity until 2020.
In recent years, concern about the sourcing and traceability of palm oil has spread to large corporate buyers including Nestlé, Unilever and Kellogg, as well as the banks that finance commodity trading.
Companies including Nestlé, Unilever and Kellogg stopped trading with Malaysian palm oil giant IOI after its sustainability certification was suspended in April because of claims by Aidenvironment, an environmental consultancy, that IOI had failed to prevent subsidiaries’ involvement in deforestation.
Some other large palm oil businesses, such as Olam’s Singapore-listed peers Wilmar and Golden Agri-Resources, have committed to sustainable sourcing of the commodity, buying palm oil that has not been linked to the clearing of rainforest.
Olam on Monday published the names of 14 companies that supply it with palm oil. It said it had reduced its number of suppliers from 48 in 2014, after removing companies that were unable to show compliance with Olam’s supplier code that requires commitments to respect the environment.
Asked why it had not previously published the names of the suppliers, Mr Verghese said: “Because we are in the process of vetting and verifying. All of them have signed up to our supplier code . . . but we need to complete verification of their mills.”
Olam entered Gabon in 2010 through joint venture agreements to establish a palm oil plantation and processing business. Gabon’s fertile soil and moist climate make it ideal for palm oil cultivation, while sub-Saharan Africa is also seen as a significant future market for the vegetable oil.
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