Thursday, September 24, 2020

The Palm Oil Industry

 An Associated Press investigation found  in Malaysia and neighboring Indonesia – an invisible workforce consisting of millions of laborers from some of the poorest corners of Asia, many of them enduring various forms of exploitation, with the most serious abuses including child labor, outright slavery and allegations of rape. Together, the two countries produce about 85 percent of the world’s estimated $65 billion palm oil supply  which its way into the supply chains of the planet’s most iconic food and cosmetics companies like Unilever, L’Oreal, Nestle and Procter & Gamble.

Palm oil is virtually impossible to avoid. Often disguised on labels as an ingredient listed by more than 200 names, it can be found in roughly half the products on supermarket shelves and in most cosmetic brands. It’s in paints, plywood, pesticides and pills. It’s also present in animal feed, biofuels and even hand sanitizer. A half-century ago, palm oil was just another commodity that thrived in the tropics. Many Western countries relied on their own crops like soybean and corn for cooking, until major retailers discovered the cheap oil from Southeast Asia had almost magical qualities. It had a long shelf life, remained nearly solid at room temperature and didn’t smoke up kitchens, even when used for deep-frying. When researchers started warning that trans fats like those found in margarine posed serious health risks, demand for palm oil soared even higher. Just about every part of the fruit is used in manufacturing, from the outer flesh to the inner kernel, and the versatility of the oil itself and its derivatives seem endless. It helps keep oily substances from separating and turns instant noodles into steaming cups of soup, just by adding hot water. It’s used in baby formula, non-dairy creamers and supplements and is listed on the labels of everything from Jif Natural peanut butter to Kit-Kat candy bars. Often hidden amid a list of scientific names on labels, it’s equally useful in a host of cleansers and makeup products. It bubbles in shampoo, foams in Colgate toothpaste, moisturizes Dove soap and helps keep lipstick from melting. But the convenience comes with a cost: For workers, harvesting the fruit can be brutal.

Crops like rapeseed, sesame and corn require a lot more land while producing far less oil. Malaysia and Indonesia started ramping up commercial production in the 1960s and ’70s, supported by the World Bank and the International Monetary Fund, which saw palm oil as an engine for economic growth in the developing world. Today, following advances in transportation and capabilities in refining, the two countries have a near-monopoly on the global supply, even as production expands across Africa and Latin America, where a litany of labor abuses also have been reported. China and India have become major customers, and the crop now is being eyed as a potential energy source for power plants, ships and airplanes, which would create even more demand.

“If the whole Western world would stop using palm oil, I don’t think that would make any difference,” said Gerrit van Duijn, a former refineries manager at Unilever, one of the world’s largest palm oil buyers for food and personal care products. The trees take only three or four years to mature and then bear fruit year-round for up to three decades. But most companies can’t maintain the pace of expansion without outside funding. Every 10,000 acres of new planting requires up to $50 million, van Duijn estimates.

AP interviewed  current and former workers from two dozen palm oil companies who came from eight countries and labored on plantations across wide swaths of Malaysia and Indonesia. Almost all had complaints about their treatment, with some saying they were cheated, threatened, held against their will or forced to work off unsurmountable debts. Others said they were regularly harassed by authorities, swept up in raids and detained in government facilities.

They included members of Myanmar’s long-persecuted Rohingya minority, who fled ethnic cleansing in their homeland only to be sold into the palm oil industry. Fishermen who escaped years of slavery on boats also described coming ashore in search of help, but instead ending up being trafficked onto plantations -- sometimes with police involvement.

Though labor issues have largely been ignored, the punishing effects of palm oil on the environment have been decried for years. Still, giant Western financial institutions like Deutsche Bank, BNY Mellon, Citigroup, HSBC and the Vanguard Group have continued to help fuel a crop that has exploded globally, soaring from just 5 million tons in 1999 to 72 million today, according to the U.S. Department of Agriculture. The U.S. alone has seen a 900 percent spike in demand during that same time.

Sometimes they invest directly but, increasingly, third parties are used like Malaysia-based Maybank, one of the world’s biggest palm oil financiers, which not only provides capital to growers but, in some cases, processes the plantations’ payrolls. Financial crimes experts say that in an industry rife with a history of problems, banks should flag arbitrary and inconsistent wage deductions as potential indicators of forced labor. 

“This has been the industry’s hidden secret for decades,” said Gemma Tillack of the U.S.-based Rainforest Action Network, which has exposed labor abuses on palm oil plantations. “The buck stops with the banks. It is their funding that makes this system of exploitation possible.”

 As global demand for palm oil surges, plantations are struggling to find enough laborers, frequently relying on brokers who prey on the most at-risk people. Many foreign workers end up fleeced by a syndicate of recruiters and corrupt officials and often are unable to speak the local language, rendering them especially susceptible to trafficking and other abuses. They sometimes pay up to $5,000 just to get their jobs, an amount that could take years to earn in their home countries, often showing up for work already crushed by debt. Many have their passports seized by company officials to keep them from running away, which the United Nations recognizes as a potential flag of forced labor. Countless others remain off the books and are especially scared of speaking out. They include migrants working without documentation and children who AP reporters witnessed squatting in the fields like crabs, picking up loose fruit alongside their parents. Many women also work for free or on a day-to-day basis, earning the equivalent of as little as $2 a day, sometimes for decades.

The uneven jungle terrain is rough and sometimes flooded. The palms themselves serve as a wind barrier, creating sauna-like conditions, and harvesters need incredible strength to hoist long poles with sickles into the towering trees. Each day, they must balance the tool while carefully slicing down spiky fruit bunches heavy enough to maim or kill, tending hundreds of trees over expanses that can stretch beyond 10 football fields. Those who fail to meet impossibly high quotas can see their wages reduced, sometimes forcing entire families into the fields to make the daily number.

“I work as a helper with my husband to pick up loose fruit. I do not get paid,” said Yuliana, who labors on a plantation owned by London Sumatra, which has a history of labor issues and is owned by one of the world’s largest instant-noodle makers.

Female workers from other companies who said they were sexually harassed and even raped in the fields, including some minors. Workers also complained about a lack of access to medical care or clean water, sometimes collecting rain runoff to wash the residue from their bodies after spraying dangerous pesticides or scattering fertilizer.

While previous media reports have mostly focused on a single company or plantation, the AP investigation is the most comprehensive dive into labor abuses industrywide. It found widespread problems on plantations big and small, including some that meet certification standards set by the global Roundtable on Sustainable Palm Oil, an association that promotes ethical production -- including the treatment of workers -- and whose members include growers, buyers, traders and environmental watchdogs. Some of the same companies that display the RSPO’s green palm logo signifying its seal of approval are accused of continuing to grab land from indigenous people and destroying virgin rainforests that are home to orangutans and other critically endangered species. They contribute to climate change by cutting down trees, draining carbon-rich peatlands and using illegal slash-and-burn clearing that routinely blankets parts of Southeast Asia in a thick haze. 

While some companies, such as Ikea, Colgate-Palmolive and Unilever, directly confirmed the use of palm oil or its derivatives in their products, others refused to say or provided minimal information, sometimes even when “palm oil” was clearly listed on labels. Others said it was difficult to know if their products contained the ingredient because, in items such as cosmetics and cleaning supplies, some names listed on labels could instead be derived from coconut oil or a synthetic form.

“I understand why companies are struggling because palm oil has such a bad reputation,” said said Didier Bergeret, director of social sustainability at the Consumer Goods Forum, a global industry group. “Even if it’s sustainable, they don’t feel like talking about it whatsoever.” 

Malaysia and Indonesia have long touted the golden crop as vital to alleviating poverty, saying small-time farmers are able to grow their own palm oil and large industrial estates provide much-needed jobs to workers from poor areas. 

Soes Hindharno, spokesman for the Indonesian Ministry of Manpower and Transmigration, told the AP that many Indonesian workers who cross over to Malaysia illegally to work on plantations “are easily intimidated, their wages are cut or they are threatened with reporting and deportation.” Some have their passports seized by their employers, he said. 

The workers AP interviewed came from Indonesia, Malaysia, Bangladesh, India, Nepal, the Philippines and Cambodia, along with Myanmar, which represents the newest army of exploited laborers. Among the latter are stateless Rohingya Muslims. Decades of oppression and outbreaks of violence have sent nearly a million Rohingya fleeing Myanmar in the last five years. Sayed was among those who escaped by boat -- only to be held hostage, he said, and tortured by human traffickers in a jungle camp in Thailand. After his relatives paid a ransom, Sayed said he was sent to Muslim-majority Malaysia, where thousands of Rohingya have sought refuge. He heard about a job paying workers without permits the equivalent of $14 a day, so he jumped into the back of a truck with eight other men and watched for hours as the busy highways narrowed to a dirt mountain track surrounded by an endless green carpet of palm oil trees. Once on the plantation, Sayed said he lived in an isolated lean-to, dependent on his boss to bring what little rice and dried fish he was given to eat. He said he escaped after working a month and was later arrested, spending a year and a half in an immigration detention center, where guards beat him.

“There is no justice,” he said. “People here say, ‘This is not your country, we will do whatever we want.’”

Rights groups confirmed being double-trafficked is not uncommon, especially five to 10 years ago, when recruiters and human traffickers would wait along the coast for runaway fishermen. Last year in Malaysia, another Cambodian man who said he spent five years enslaved at sea and four more on plantations was among those who surfaced. Instead of being repatriated as a victim of human trafficking, rights groups said he was jailed for months for being in the country illegally. 

“We gave our sweat and blood for palm oil,” Ko Htwe said. “We were forced to work and were abused.” When Americans and Europeans see palm oil is listed as an ingredient in their snacks, he said, they should know “it’s the same as consuming our sweat and blood.” 

Asian banks are by far the most robust financiers of the plantations, but Western lenders and investment companies have poured almost $12 billion into palm oil plantations in the last five years alone, allowing for the razing and replanting of ever-expanding tracts of land, according to Forest and Finance, a database run by six nonprofit organizations that track money flowing to palm oil companies. The U.S institutions BNY Mellon, Charles Schwab Corp., Bank of America, JPMorgan Chase & Co., and Citigroup Inc., along with Europe’s HSBC, Standard Chartered, Deutsche Bank, Credit Suisse and Prudential, together account for $3.5 billion of that, according to the data. Other contributors include U.S. state pensions and teachers’ unions, including CalPERS, California’s massive public employees fund, and insurance companies such as State Farm, meaning that even conscientious consumers many unwittingly be supporting the industry just by visiting ATMs, mortgaging homes, insuring cars or investing in 401K retirement accounts. Bank of America, HSBC, Standard Chartered, Deutsche Bank, Credit Suisse, CalPERS and State Farm responded by noting their policies vowing to support sustainability practices in the palm oil industry, with many also incorporating human rights into their guidelines. JPMorgan Chase declined comment, and BNY Mellon, Citigroup and Prudential did not respond. Charles Schwab called its investment “small.” Malaysia’s biggest bank, Malayan Banking Berhad. More commonly known as Maybank, it has provided almost $4 billion in financing to Southeast Asia’s palm oil industry between 2015 and 2020, or about 10 percent of all loans and underwriting services, according to Forests and Finance. Maybank has some of the loosest social and environmental assessment policies in the industry, its shareholders include institutions such as the Vanguard Group, BlackRock and State Street Corp. 

The biggest gains for banks affiliated with palm oil come from big-ticket financial services, such as corporate loans. But some of the same institutions also offer banking services for workers, handling payrolls and installing ATM machines inside plantations.

“And this is where banks, such as Maybank, may find themselves at the heart of a forced-labor problem,” said Duncan Jepson, managing director of the global anti-trafficking nonprofit group Liberty Shared. “Financial institutions have ethical and contractual obligations to all their clients, as set out in the customer charters. In this case, that means both the palm oil company and its workers.” Jepson said abnormal paycheck deductions are commonplace industry-wide, which should trigger investigations by the banks’ risk management teams into possible money-laundering. 

FGV Holdings, which employs nearly 30,000 foreign workers and manages about 1 million acres, has a 50/50 joint-venture with American consumer goods giant Procter & Gamble Company. FGV Holdings has been under fire for labor abuses and was sanctioned by the RSPO certification group two years ago. The U.S. State Department has long linked the palm oil industry in Malaysia and Indonesia to exploitation and trafficking. And a 2018 report released by the Consumer Goods Forum found indicators of forced labor on estates in both countries -- essentially putting the network’s 400 CEOs on alert. Its members include palm oil customers like Nestle, General Mills Inc., PepsiCo Inc., Colgate-Palmolive Company and Johnson & Johnson.

No comments: