Nestlé to scrutinize Indonesia coffee amid wildlife-endangerment fears

By Claire Leow, Bloomberg News

Published: January 19, 2007

JAKARTA: Nestlé, the food and beverage giant that is under pressure from environmental activists, said that it would increase the scrutiny of its coffee purchases in Indonesia to ensure that it did not buy beans grown illegally in a national park on Sumatra.

Farmers in the Bukit Barisan Selatan reserve, a protected area of the island, are planting coffee and endangering wildlife and forests, the World Wildlife Fund, or WWF, said in a report released Wednesday. Illegal beans are mixed with legitimate coffee and sold overseas, including to Nestlé, the world's largest food company, the WWF said.

"Nestlé never willingly purchases coffee from dubious sources," the company, based in Vevey, Switzerland, said in a statement. It said that it was talking to the WWF "on how to avoid purchases of illegally grown coffee, boost production of sustainably grown coffee and restore the wildlife habitat of the park."

Indonesia, one of the world's largest coffee producers and exporters, harvests about 500,000 tons of beans a year, selling about 65 percent of it overseas. The reserve is home to some of the world's rarest creatures, including Sumatran tigers and rhinos.

About half of the beans from the Southeast Asian nation are exported through Lampung port in southern Sumatra, which is next to the national park. Local farmers are using 45,000 hectares, or 111,195 acres, of reserve land to grow more than 19,600 tons of coffee a year, the WWF report said.

Nestlé "realized the gravity of the problem," Nazir Foead, the WWF director for the Indonesian policy and corporate engagement, said, adding that the company should monitor their supplies and not buy illegal coffee.

Exporters should "give assistance to the farmers, and buy from them if they no longer planted inside the park," said Foead, who co-wrote the WWF report.

The Nestlé bean buyers often find it "difficult to determine the precise origin of a coffee bag which has passed through different hands," the report said.

The company buys at least 11,500 tons of beans from the Lampung area each year to make instant coffee, according to Nestlé Indonesia.

Olam International, a food-supplier based in Singapore that exported 13,000 tons of coffee from Lampung between July and December 2006, said it agreed to proposals from the WWF last July to help solve the problems.

"We will preserve the chain of custody, which is to certify that the coffee we buy is from sustainable sources," Vasanth Subramanian, a member of the Olam corporate social responsibility committee, said by phone. "We will relocate the producers from the park to buffer zones outside the park."

The WWF said that there were about 15,000 farmers working illegally inside the park who had removed about 20 percent of its forest cover.

Most coffee from south Sumatra is of the robusta variety. Its price rose 28 percent in the past six months to $1,580 a ton in London.