San Francisco-based environmental organization Rainforest Action Network (RAN) released a report last week that claims Indonesian workers - including children - at North Sumatran palm oil plantations are being exploited. On two palm oil plantations owned by PP London Sumatra Indonesia, a unit of the Indonesian Indofood Group, researchers of RAN found evidence of child labor, unethically low wages, as well as other forms of worker exploitation. The report also links American multinational food and beverage firm PepsiCo Inc's products to the exploitation.
Besides RAN, an Indonesian labor organization (OPPUK) and the human rights advocacy group International Labor Rights Forum also participated in the research.
Through a joint venture (JV) with Indofood, PepsiCo Inc consumes nearly 500,000 tons of palm oil for the making of its products, which include the brands Doritos, Lay's Potato chips, and Quaker Chewy Bars. However, the report from RAN, titled "The Human Cost of Conflict Palm Oil: Indofood, PepsiCo’s Hidden Link to Worker Exploitation in Indonesia", claims that on the two palm oil plantations unethical treatment occurs, while the management turns a blind eye to child labor. In the report RAN states that both Indofood and PepsiCo Inc may not be aware of these issues. However, Robin Averbeck, Senior Campaigner at RAN, says the report reveals that Indofood is violating the fundamental rights of its workers while PepsiCo watches on.
Averbeck added that the findings in this report are actually not shocking. In fact, they represent only the tip of the iceberg of widespread and systemic exploitation and labor rights violations that take place throughout Indonesia's and Malaysia's palm oil sector.
Although in September 2015 PepsiCo Inc adopted new policies (the so-called "Palm Oil Action Plan") that aim to safeguard the environment and protect local workers, it did not require its JV partner (Indofood) to follow suit.
Key findings related to workers of Indofood at these palm oil plantations include:
- Long-time workers on these plantations are categorized as temporary workers, implying they lack job security and work for half the salary that is set for permanent workers. Moreover, these workers have to face health and safety risks
- Workers are paid unethically low wages (below the local minimum wage)
- A handful of teenagers (12-16 years) were spotted working at Indofood plantations, implying the existence of child labor
- Workers do not have adequate health and safety equipment. For tasks such as pesticide spraying or fertilizer application it implies health risks. Workers also do not have health insurance nor have easy access to the on-site company clinic
- The freedom of association is being undermined as workers who attempt to join an independent worker union are being intimated
Through its subsidiaries, Indofood is one of Indonesia’s leading food companies and is also among the world's largest palm oil growers. Its palm oil units are certified by the Roundtable on Sustainable Palm Oil (RSPO) - implying they meet a set of environmental and social criteria and should therefore produce palm oil in a responsible manner.
Read more: Indonesia's Palm Oil Industry
Indonesia is the world's largest palm oil producer, accounting for nearly half of total global palm oil output, hence the commodity is an important foreign exchange earner for Southeast Asia's largest economy. Most of Indonesia's palm oil plantations can be found on the islands Kalimantan and Sumatra.