The dairy industry loves to promote itself with image of cows grazing on pristine landscapes, but farmers are showing no sign of shaking off their $500 million-a-year addiction to palm kernel expeller or PKE.

PKE, a cheap supplementary feed which is mostly generated from palm oil plantations in Indonesia, is heavily used by our dairy industry but also linked to deforestation and global warming.

Moreover, some PKE has been linked to human rights abuses. The latest potential embarrassment is that Fonterra's key PKE supplier Wilmar International has acknowledged routinely providing lodgings on its plantations to a "special operations" unit of the Indonesian police.

WIKIPEDIA Brimob's duties include counter-terrorism, riot control, and protecting Indonesian palm oil plantations from pilfering.



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The unit has been accused by non-government organisations (NGOs) in Indonesia of brutality.

Singapore-based Wilmar has a joint venture with Fonterra called International Nutritionals, which is responsible for importing about 30 per cent of the PKE used in New Zealand.

Brimob

Wilmar has acknowledged its relationship with the Mobile Brigade Corp of the Indonesia police, Brimob, when responding to questions from the Sunday Star-Times about a shooting on one of its plantations in Central Kalimantan on December 18.

Two Indonesians, Agus and Abu Saman, were hospitalised after being shot by Brimob officers on Wilmar's PT Bumi Sawit Kencana plantation – with what Wilmar says were rubber bullets.

The incident sparked protests from dozens of NGOs and activists, who described it as the latest in a series of violent clashes stemming from a land dispute.

The Forest Peoples Programme, a London-based human rights organisation, said Agus and Abu Saman were among villagers who claimed their land had been taken by Wilmar without payment or consent.

​Wilmar responded in a written statement that the pair were out-of-towners who were among a group suspected of stealing palm fruits from the plantation, one of whom had earlier slashed one of Wilmar's security officers with a machete.

"This happened even after the Brimob had warned the suspects to stand down," Wilmar's account read.

"The suspects continued to charge at our security officer and the Brimob – in accordance with their standard operating procedure – fired warning shots into the air.

"Ignoring the warning, one of the suspects continued to charge at our security officer, leaving the Brimob's no other option but to fire rubber bullets at the suspect's leg in order to subdue him," the statement said.

Wilmar later confirmed it was, in fact, two people who were shot.

It was in explaining why Brimob officers were so quick on the scene at the remote Indonesian plantation that Wilmar acknowledged it hosted the police unit on the plantation.

STUFF Greenpeace says it feels "let down" by Fonterra.

The theft of palm fruit from its plantations could be rampant, Wilmar spokeswoman Iris Chan Suet Yeng said.

"It is thus a common practice for many companies, such as Wilmar, to provide lodging to these officers in the plantation guest house.

"It is often too far for the officers to return home after their patrolling duty. It is this provision of lodging that is often misperceived externally."

But Forest Peoples Programme adviser Patrick Anderson said the lodgings given to Brimob were a "conflict of interest, even it is legal".

CAMERON BURNELL/STUFF Palm kernel expeller has been used on an industrial scale in New Zealand for just over a decade.

Fellow adviser Dr Marcus Colchester said he was not surprised by the different takes on the shooting incident, as it was common for locals who were resentful of alleged "land grabs" by plantation companies to pilfer fruits from land that they still considered theirs.

"Our sources do claim there is a link between the dispute over fruits and the unresolved land dispute."

Fonterra spokesman Chris Mirams said it had been assured by Wilmar that it was not supplied with PKE from the plantation where the shooting occurred.

Fonterra was concerned by the allegation of police brutality made by the Indonesian NGOs and had "raised these concerns with Wilmar," Mirams said.

But he added that it understood concerns regarding human rights, labour practices and land claims were "not unique to the palm oil industry".

Other incidents

Patrick Anderson said he was familiar with Wilmar subsidiaries in West Sumatra and what he described as their negative impact on indigenous communities.

In one instance, he noted that Wilmar had agreed to resolve a land claim from the Nagari Kapa people after withdrawing an appeal in November against an earlier unfavourable ruling from the Roundtable on Sustainable Palm Oil (RSPO) – a self-regulatory body for the palm industry.

From late 2014, Indonesian police had interrogated a dozen Nagari Kapa community leaders on a weekly basis for a period of months and six were later tried and jailed for "misusing village funds" in a court process riddled with problems, Anderson said.

Anderson said the community leaders had to travel for five hours by bus to a provincial police centre for the interrogations.

SONITA CHANDAR/STUFF Last year, the amount of PKE used on New Zealand farms would have outweighed all the food consumed by Aucklanders.

The same process was now unfolding in the same district of Pasaman Barat, where another indigenous group, Simpang Tigo Koto Baru, was about to file a land claim in relation to another Wilmar plantation, he said.

The day after they decided to file a complaint, "their highest leader" was arrested and held in jail on allegations he misused his position for personal advantage", he said.

Wilmar

Wilmar is widely acknowledged to be at the respectable end of the palm oil industry. It is a member of the RSPO, it led the buy-out of Australian food Goodman Fielder in 2015, and is the company behind such well-known Kiwi brands as Chelsea sugar and Vogels.

Mirams says it was the first plantation owner to implement a "no deforestation, no peat, no exploitation" policy and had led the industry on terms of sustainability.

But it is not the first time Fonterra has found itself explaining a link in the dairy industry supply chain that it might prefer not to highlight.

In 2016, Malaysian plantation owner IOI admitted earlier illegally clearing 141 hectares of land in West Kalimantan in Indonesia that Greenpeace identified as a habitat for endangered orangutans and Bornean gibbons.

IOI was a supplier to Wilmar – and hence, potentially to Fonterra – at the time.

ULET IFANSASTI/GETTY IMAGES Massive forest fires in Indonesia in 2015 put the palm industry under a global spotlight, but New Zealand farmers' consumption of PKE has continued unabated.

More broadly, the Indonesian palm industry is accused by groups such as Greenpeace of contributing to global warming, particularly when peatlands are cleared to make way for plantations.

Peatland forests are an effective carbon sink as, left undisturbed, peat will eventually turn to coal. But, by the same token, if they are drained and burnt, the emissions can be massive.

A study led by scientists at Kings College in London estimated that forest fires in Indonesia in September and October 2015 that were blamed on the palm industry released 11 million tonnes of carbon into the atmosphere each day, more than the total daily emissions of all the countries in the European Union.

Fonterra characterises the dairy industry's use of PKE as "small," saying it accounts for about 4 per cent of all the feed consumed by the country's 10 million-strong cow herd, which otherwise mostly feeds on fresh pasture.

But New Zealand imported 2.1 million tonnes of PKE last year, up from 1.5 million tonnes the previous year, according to the United States Agriculture Department.

For comparison, that was more than the amount of milk powder exported from New Zealand in the same year, which totalled 1.8 million tonnes.

It was probably also more than all the food eaten by the country's 1.4 million Aucklanders last year, given that the US Agriculture Department estimates people eat just under a tonne of food each year on average.

TOM PULLAR-STRECKER/STUFF Some but not all milk sold by "premium" suppliers is PKE-free, so shoppers who want to discourage its use may need to look at the fine print.

PKE pullback

Consumption of PKE has reached the point where it is causing manufacturing issues for Fonterra, as it is the biggest contributor to changes in the ratio of fats in fresh milk.

It is for that reason – rather than anything to do with the environment – that Fonterra will introduce a "demerit" scheme in September to dock payments to farmers who supply milk with fat ratios that are outside its desired parameters.

The fines are likely to reduce the consumption of PKE, but Fonterra accepts there is no guarantee and its existing recommendation that cows can consume up to 3 kilos of PKE per day will remain in place.

If all New Zealand's 10 million cows consumed up to that limit, they would eat more than 10 million tonnes each year – more than the total amount of PKE that is traded globally.

Fonterra is not the only New Zealand importer of PKE, but as the largest buyer of milk from farmers, it is in a strong position to influence practices in the dairy industry.

Greenpeace's Russel Norman and Fonterra's departing chief executive Theo Speiring met to discuss PKE in the wake of the 2015 Indonesian foreign fires and appeared to have a meeting of minds on the issue.

But Greenpeace forests campaigner Grant Rosoman says the environmental group does now feel let down by the company.

ULET IFANSASTI/GETTY IMAGES Six million hectares of peatlands have been approved for palm oil concessions over past years, including lowland areas that are the prime habitat for orangutans.

"It is very disappointing that PKE imports are on the rise and obviously Fonterra and the importers are not doing enough to reduce," he says.

Many farmers defend the use of PKE, arguing it is just a byproduct of palm oil that would otherwise go to waste.

But Rosoman dismisses that. "If it wasn't important for the profitability of plantations, then it wouldn't be traded globally," he says.

PKE retails at about $250 a ton in New Zealand and exports to Kiwi farmers would be worth hundreds of millions to the palm industry.

SUPPLIED PKE is made from the husks of palm fruit, which are mainly grown for palm oil, but environment activities say dismissing it as a "byproduct" doesn't wash.

PKE should be composted and returned to the plantations to provide nutrients that would allow considerably less chemical fertiliser to be used, Rosoman says.

"The reputation of the New Zealand dairy industry is very much at risk as it is still currently linked to deforestation, peatland development and exploitation.

"The simple solution to this is to phase out PKE."

Peter Cullinane, co-founder of premium milk company Lewis Road Creamery, agrees.

About half the milk Lewis Road sells is labelled PKE-free, but it can't make the same claim for its non-organic milk as it buys some raw milk from Fonterra from time to time, and it is impossible to be certain about how all of it has been produced, Cullinane explains.

He argues it is time for the Government to step in with an outright ban.

GREENPEACE Greenpeace forests campaigner Grant Rosoman (second from left), pictured talking with plantation managers in Central Kalimantan, says most companies in the industry have commitments to avoid deforestation, peatland development and exploitation but "even basic transparency" has not yet been achieved.

"PKE is a terrible product for so many different reasons; the only way to solve it is not to have the option available and to ban its importation.

"As a country, we have got to understand there is huge interest in grass-fed dairy, globally, and as soon as we introduce PKE into our system, we can't make the grass-fed claim."

Cullinane argues banning PKE would involve "short term pain, but enormous long-term gain, economically, socially and environmentally".

"There is just nothing good to say about PKE."