Plantation stocks shrug off haze blame

Plantation stocks shrug off haze blame

It is not surprising to see accusatory fingers pointed at giant, listed plantation firms amid the worst haze crisis to envelop Singapore and other parts of the region.

With the blame game in full swing, they make easy targets. But if the mixed performance of their shares this week offers any guide, it is that the controversy is very much a storm in a teacup.

Wilmar International rose 3.83 per cent for the week, while Indofood Agri Resources was up 1 per cent, both outperforming the Straits Times Index (STI), which fell 1.17 per cent.

The underperformers were Golden Agri-Resources, down 3.5 per cent, and First Resources with a 1.1per cent fall.

The accusations started flying on Monday, when Indonesian forestry official Hadi Daryanto claimed that it is not only local farmers who use the slash-and-burn method to clear land, "but also employees of oil-palm producers, including Singaporean and Malaysian companies".

Palm-oil producers make obvious suspects. They own vast plantations in Indonesia - the world's largest producer of palm oil - and are among the biggest companies by market value here. Wilmar and Golden Agri-Resources are also part of the STI.

Palm oil is a very important commodity: It is in many of the goods on our supermarket shelves, including cooking oil, soap and shampoo, and has an annual traded value of US$50 billion (S$64 billion).

When calls were made in Indonesia to release the names of the haze culprits, the big plantation firms - Wilmar, Golden Agri-Resources, Indofood Agri and First Resources - were quick to stress their "zero-burning" policies in clearing land for planting. They also noted that they worked with the local government to monitor and tackle any fires that occurred on or near their vast estates.

Some also added that they monitor contractors and sub-contractors to ensure that they comply with the no-burn policy as well.

They are also likely to be kept on their toes through vigilance by important customers like food giant Nestle and consumer products maker Unilever, which face strong pressure from environmental groups such as Greenpeace to ensure that their supplies of palm oil come from sustainable sources.

But if the major plantation firms are innocent, who is responsible for the fires causing the haze?

To answer that question, one has to question the whereabouts of Mr Rusli Zainal, the governor of Riau, the province across the Strait of Malacca from Singapore where the worst of the forest fires are raging.

Surely, he should be spearheading the drive to put out fires that are causing so much grief, not just to his own people, but also those in Singapore and Malaysia.

But according to The Jakarta Post, Mr Rusli was detained earlier this month by the Indonesian Corruption Eradication Commission as a suspect in a graft case involving the illegal exploitation of forests by logging companies.

That action alone speaks volumes about the difficulties of fighting the haze in Indonesia.

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