Global consumer food giants PepsiCo and Nestlé are cutting links with Indofood, Indonesia’s largest food and palm oil production company, reported Eco-Business on 5 October.

The two companies said they were ending direct and indirect sourcing of palm oil from IndoAgri, a Singapore-listed subsidiary of Indofood, because of concerns over ongoing deforestation and human rights abuses.

In an updated statement on its palm oil policy in Indonesia, PepsiCo said that it had taken steps to ensure that its direct suppliers placed a moratorium on sourcing from IndoAgri but would continue to review this decision on a regular basis, taking into consideration developments in the Roundtable on Sustainable Palm Oil (RSPO) complaints process and actions taken by IndoAgri.

PepsiCo said that in 2016, it bought approximately 480,000 tonnes of palm oil globally, representing less than 0.8% of global supply, from 60 direct palm oil suppliers, supplied by approximately 1,500 mills.

“As of July 2017, we estimated that approximately 92% of the palm oil we used during 2017 would have been traced to specific mills, up from 65% in 2015."

Eco-Business said PepsiCo remained in business with Indofood through Indofood Fritolay Makamur, which produced snacks in Indonesia under the Lays brand.

Nestlé said that it had bought around 460,000 tonnes of palm oil in 2016.

In December 2016, it agreed with Indofood to take over palm oil sourcing for Nestlé products manufactured under its joint venture with Indofood, a process that was completed early this year.

On its website, Nestlé said the two companies had “agreed to close the joint venture in September 2018 for commercial reasons”.

Nestlé said its ambition was to achieve 100% responsibly sourced palm oil by 2020 and it could now trace over 90% of the palm oil it sourced back to the mill of origin and almost half back to the plantation level.

Indofood is one of the largest agribusiness groups in Indonesia and is involved in seed breeding, oil palm cultivation and milling, and the manufacture and marketing of cooking oils, margarine and shortening.

It has a total oil palm planted area of over 301,000ha, mainly in Sumatra and Kalimantan, and operates 26 palm oil mills and five edible oil refineries.

Eco-Business said that in 2017, IndoAgri revised its policy on sustainable palm oil, but was criticised by NGOs as falling short of demands.

It quoted IndoAgri’s chief executive officer Mark Wakefield as saying that the company had done its bit by working with the RSPO to address allegations of deforestation and human rights abuses.

“We’ve done 18 RSPO audits for recertification and we’ve had some corrective actions to do but we haven’t been sanctioned. We’ve done everything we can do with RSPO,” Wakefield had said in an interview in May.