THE HUMAN COST
CONFLICT PALM OIL: PEPSICO’S HIDDEN LINKTO WORKER EXPLOITATION IN INDONESIA

THE HUMAN COST
CONFLICT PALM OIL: PEPSICO’S HIDDEN LINKTO WORKER EXPLOITATION IN INDONESIACONTENTS
3

Executive Summary

8

Introduction

9

PepsiCo and Indofood: Partners in Conflict Palm Oil

12

The People Behind Palm Oil: Hidden Costs of Worker Exploitation

17

Investigation Overview: Labor Conditions on Indofood Palm Oil Plantations in North Sumatra, Indonesia

20

Key Findings:

20

Invisible and “Temporary”: How precarious employment practices place workers at risk

23

Nickel and Dimed: How workers are paid unethically low wages

26

Child Workers: How unattainable quotas drive child labor

28

Hazardous and Unsafe: How pesticides and work practices jeopardize workers’ health and safety

32

Yellow Unions and Intimidation: How company-backed unions undermine Freedom of Association

34
34

Indofood

36

PepsiCo and Other Indofood Customers

37

Indofood Financiers

37

The Indonesian Government

38

The Roundtable on Sustainable Palm Oil

39

Consumers

40

2

Recommendations:

References

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

EXECUTIVE SUMMARY

The destruction of rainforests, the stealing of local communities’

associated with the violation of workers’ rights, deforestation,and Indigenous Peoples’ lands, and the massive greenhouse

expansion on carbon-rich peatlands, or the violation of humangas emissions caused by the draining and burning of peatlands

rights. As the largest globally distributed snack food company

for the production of Conflict Palm Oil have all made frequentin the world, and a major purchaser of palm oil, PepsiCo is one

international headlines in the last few years. However, thesuch company to recently adopt a policy.

working and living conditions of laborers on palm oil plantations
are rarely closely examined or discussed.

After much pressure from consumers and civil society alike,
PepsiCo adopted a revised palm oil policy that outlines

Geographically isolated, and with little social or economic

responsible palm oil production practices for its suppliers

mobility, most palm oil workers’ stories stay confined to thein September 2015. On workers’ rights issues, it specifically

remote plantations where they live and work. Increasingly,

states that PepsiCo’s palm oil suppliers must, “Adhere to thea number of recent reports from civil society, independent

Universal Declaration of Human Rights, be in basic complianceresearchers, and journalistic investigations have shed a lightwith applicable laws, prohibit forced, compulsory or childon the concerning conditions faced by palm oil workers. Theselabor, follow ethical recruitment practices, respect freedom ofreports highlight a pattern of egregious labor violations on palm

association, [and] recognize the rights of all workers including

oil plantations across the globe.

temporary, migrant, and contract workers.”3

Conflict Palm Oil is palm oil which has been produced illegally

While the language reads strongly on respecting workers’ rights,

or under conditions associated with labor or human rights

as well as protecting High Carbon Stock Forests and peatlands,

violations, ongoing destruction of rainforests, or expansion

unfortunately PepsiCo’s policy contains a loophole: it does noton carbon-rich peatlands.2 The numerous issues with Conflictrequire its joint venture partner, Indofood — one of the largest

Palm Oil have been increasingly spotlighted, which has spurredpalm oil growers in the world, the biggest food company inmany companies throughout the palm oil supply chain toIndonesia, and the sole maker of PepsiCo products in Indonesia

adopt responsible palm oil policies. These policies outline— to meet the same requirements for the palm oil it uses tocommitments to produce and source palm oil that is notmake PepsiCo’s products.4

1

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

3This omission means that the palm oil produced and sourced by Indofood to make PepsiCo-branded products inIndonesia is not required to meet the same environmental and social safeguards as PepsiCo products made directly by
PepsiCo. In order to understand the impact of this exclusion on palm oil workers, a team of researchers investigated theliving and working conditions of laborers on two palm oil plantations that are owned and operated by PepsiCo’s joint
venture partner Indofood, under its subsidiary plantation company PT PP London Sumatra Tbk‘s (Lonsum), located on
the island of Sumatra in Indonesia.
Investigations were conducted in September and October 2015 by a team of researchers through one-on-one
interviews with workers; examination of workers’ documents such as pay slips, letters and work agreements; and on-site
observation of workers performing their work duties, workers’ living conditions and the plantations’ amenities. Forty-one
Indofood workers were individually interviewed for this investigation.

KEY FINDINGS FROM THE INVESTIGATION INCLUDE:
1. Indofood5 categorized many of its long-time workers as temporary and placed them at heightened risk throughprecarious employment practices.
»» Indofood utilized several kinds of precarious, or non-standard, forms of employment practices to employ workers
who performed core plantation work on Indofood plantations, including harvesting, gathering loose fruits, andapplying pesticides and fertilizers. These workers had no job security, earned as little as half or less the pay thanpermanent workers, sometimes paid for their own safety equipment and health care, and faced increased healthand safety risks.
»» Twenty of 41 workers interviewed (49%) were precariously employed as casual workers, limited-duration contract
workers, or kernet workers — informal workers who help harvesters meet their quotas but have no direct employment
relationship with the company.
2. Indofood paid its workers unethically low wages.
»» Indofood paid permanent and casual workers at one of the plantations below the district’s minimum wage. This
wage was set through a collective bargaining agreement, which workers reported that they had no role innegotiating and was never explained to them by union leadership.
»» Casual daily and kernet workers, who were not provided with written contracts or wage slips, reported regularly
making between 20% to 75% less than the district monthly minimum wage for permanent workers.
3. Children worked on Indofood plantations.
»» Children were observed working on Indofood plantations. One 13 year old worker and two 16 year olds wereinterviewed, as well as one 19 year old who reported working on the plantation since he was 12 years old. All were
working indirectly for the company as kernet workers, or helpers to harvesters.
»» Harvesters reported having to bring kernet workers, who are often children or their wives, to meet their quota andearn bonuses to supplement their low base salaries. Nine harvesters reported choosing to hire children or bring theirwives or family members as kernet.

4

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

4. Indofood did not provide adequate health and safety protection for many workers, and casual maintenanceworkers were exposed to highly hazardous pesticides.
»» Pesticide spraying and fertilizer application were predominantly carried out by casual maintenance workers, manyof whom are women. Most of these workers lacked adequate health and safety equipment and access to healthcare.
»» Three workers at one of the plantations reported having used the pesticide Gramoxone which contains Paraquat, ahighly hazardous herbicide that is banned in the EU and several other countries. Indofood reported using 21,000
liters of Paraquat on its plantations in 2015.6»» All but one casual worker reported only receiving some safety equipment from the company and purchasingother basic equipment such as shoes and gloves at their own expense. None of the kernet workers interviewed were
provided with any equipment at all.7»» All casual and kernet workers reported having no health insurance and limited access to the on-site company clinic.
Two casual workers reported that they did not treat conditions arising from accidents on the job due to a lack ofaccess to health care and insufficient funds to pay for treatment.
5. Indofood undermined Freedom of Association»» Permanent workers at the Indofood plantations visited reported being automatically enrolled in a company-backed“yellow” union and having fees deducted from their salary, without their consent or proper representation. “Yellow”
unions are worker organizations which are dominated or influenced by an employer and are deemed unlawful
under international labor law.
»» Workers who attempted to engage with an independent union reported being intimidated.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

5PepsiCo and Indofood may not be fully aware of the practices

and address the labor violations outlined in this report as welloutlined in this report, nor condone them. Nevertheless, theseas other outstanding Conflict Palm Oil cases.8 Both companies

findings show that the rights of workers on the plantations ofshould adopt and implement truly responsible palm oil

Indofood’s subsidiary are not being upheld in accordance

policies that require the production and sourcing of palm oil inwith international labor norms, the UN “Protect, Respectaccordance with the Free and Fair Labor in Palm Oil Production:

and Remedy” Framework for Business and Human Rights, orPrinciples and Implementation Guidance (Fair Labor Principles).9

PepsiCo’s palm oil procurement policy. Despite any lack of

The Fair Labor Principles, which were developed by a broad

previous knowledge, both Indofood and PepsiCo are responsible

coalition of civil society organizations from Indonesia, Malaysia,

for ensuring human rights are respected in their direct business

Liberia, the United States and Europe, provide a common point

operations as well as in the operations of their business partnersof reference for what constitutes free and fair labor in palm oiland suppliers as outlined in the UN Guiding Principles on

production, based on the International Labor Organization Core

Business and Human Rights.

Conventions and the UN Guiding Principles on Business andHuman Rights.

To begin, PepsiCo must fix the loophole in its current policyby requiring that Indofood comply with the all principles of its
policy. PepsiCo and Indofood must work rapidly to investigate

6

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

INDOFOOD AND PEPSICO WERE GIVEN THE OPPORTUNITY TO RESPOND TO
THE KEY FINDINGS OF THIS REPORT PRIOR TO PUBLICATION.
PepsiCo stated that its 2015 Palm Oil Action Plan demonstrates that it is:“Upholding a commitment that palm oil producers in [its] supply chain must adhere
to the Universal Declaration of Human Rights, must be in basic compliance with allapplicable laws, are prohibited from forced, compulsory or child labor, must respect
freedom of association, and must recognize the rights of all workers.”

PepsiCo said that the company takes these commitments and any labor and human rights concerns raised very seriously and thatthe company has “strong human rights policies in place” and “clearly has a history of appropriately engaging on such matters”.
Indofood declined to comment on the findings of this report. Instead the company stated that:“As far as the IndoAgri is concerned, the IndoAgri has complied with all Indonesianlaws and regulations [sic].”

In its 2015 Annual Report,10 Indofood stated that it “is committed to responsible employment practices, and to develop the skills,
knowledge and welfare of its people.” The company also stated that: “Employee safety and health are key priorities at Indofood,and our commitment to a safe and healthy workplace is outlined in SHE [Safety, Health, Environment] policy, which applies to all
operating units.”
The Annual Report further stated:“Indofood offers equal career development opportunities to all employees. Employees
are hired based on their skills and capabilities, and jobs are assigned regardless ofrace, religion, gender, or any other individual characteristic. We also strive to adhere
to applicable prevailing Indonesian labor laws, such as the elimination of child labor.
Our employees are provided with healthcare benefits. Some health care services, suchas clinics, annual medical check-ups, and lactated nursery rooms, are available.”

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

7

INTRODUCTION

The snack food industry is big business, with many ingredients’closely examined or discussed, as most palm oil workers aresupply chains creating a complex and sometimes confusing web

geographically and socially isolated. What’s more, PepsiCo’sof production and commerce. With perhaps one of the dirtiest

latest palm oil policy language reads strongly, but unfortunately

supply chains and a popular ingredient in processed food,it contains a loophole. The policy does not require PepsiCo’s

Conflict Palm Oil has been increasingly spotlighted in recent

joint venture partner, Indofood, to meet the same requirements

years for its role in rainforest and peatland destruction, land

for the palm oil it uses to make PepsiCo’s products. This means,grabbing and species extinction.

despite producing all PepsiCo-branded products in Indonesia,
Indofood is not required to meet the higher environmental andPepsiCo, the largest globally distributed snack food company

social safeguards outlined in PepsiCo’s palm oil sourcing policy,in the world and a major purchaser of palm oil, partners withand instead can continue with business as usual practices.

Indonesian food giant Indofood to produce all PepsiCobranded snacks in Indonesia. Featured heavily in those snacks is

In order to understand the impact of this exclusion on the palm

the controversial ingredient of Conflict Palm Oil, produced fromoil workers associated with PepsiCo’s snack foods, a teamthe palm oil plantations that stretch across Indonesia.

of researchers investigated the living and working conditionsof laborers on two palm oil plantations that are owned andWhile the issues with Conflict Palm Oil are increasingly

operated by PepsiCo’s joint venture partner Indofood, underhighlighted, reports of egregious labor rights violations on palm

the plantation company PT PP London Sumatra Tbk (Lonsum),oil plantations are just beginning to emerge. The working andlocated on the island of Sumatra in Indonesia.

living conditions of laborers on palm oil plantations are rarely

8

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

PEPSICO AND INDOFOOD:

PARTNERS IN CONFLICT PALM OIL

PepsiCo is the world’s largest globally distributed snack

Indofood is one of the largest palm oil growers in the world

food company and a significant purchaser of palm oil. In

and Indonesia’s largest food company. As such, it is known for2014, it used 470,045 metric tons of palm oil annually in theits snack food products such as Indomie, Chitato, Lay’s anddirect making of its products — products like Doritos, Lay’s

Cheetos. A vertically integrated company, Indofood produces

Potato Chips and Quaker Chewy Bars — and each year its

and processes raw materials (including palm oil), manufactures

consumption of palm oil grows.11

food products, and distributes and sells consumer products.
Indofood’s 2015 revenue amounted to the equivalent of

In September 2015, PepsiCo adopted a new policy that aims

approximately USD 5 billion.13 At the very top of Indofood’s

to halt the destruction of rainforests and peatlands, and end

leadership is Anthoni Salim who controls First Pacific Company

the ongoing violation of human and workers’ rights in its globalLtd., which in turn holds a 50.1% interest in Indofood.14 Salim,palm oil supply chain. This new policy outlines stricter standards

ranked the third richest Indonesian by Forbes magazine, also

for PepsiCo’s direct suppliers, but it does not set the samehas stakes in businesses unrelated to First Pacific and Indofood,requirements for PepsiCo’s joint venture partner Indofood — theincluding other palm oil businesses.

sole maker of PepsiCo products in Indonesia.12 This loopholemeans that the palm oil used in PepsiCo’s products in Indonesia

The palm oil arm of Indofood, Indofood Agri Resources Ltd— the frontline of palm oil expansion, rainforest destruction and(IndoAgri), is the third largest private palm oil company inhuman and workers’ rights abuses — is not mandated to meetIndonesia. Its plantations cover a total area of 246,000 hectares

the requirements of no deforestation, no expansion on carbon-

in Sumatra and Kalimantan and it has been expanding

rich peatlands, and no violation of human or workers’ rights

aggressively over the past eight years by an average of 10,000

outlined in PepsiCo’s latest policy.

hectares of new palm oil plantations annually.15 IndoAgri’s palm

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

9oil business operations are conducted by its subsidiaries PT. PP

depth. Such a policy must apply to all of Indofood’s operations

London Sumatra Indonesia Tbk. (Lonsum) and PT. Salim Ivomas

worldwide including the subsidiaries, refineries, mills andPratama Tbk. (Salim Ivomas). As of 2015, IndoAgri generated theplantations that it owns, manages, or invests in, regardless ofequivalent of approximately USD 1 billion in revenue from large

stake. Additionally, in order to meet the new market standard,scale production and processing of palm oil.

Indofood must require its third party palm oil suppliers to meet16

the same responsible production standard. In addition to theIndofood is the largest private palm oil company in Indonesia

lack of an adequate policy, recent publications have shown thatthat has yet to adopt a responsible palm oil policy. A responsible

Indofood has cleared and burned rainforests, has several long-palm oil policy requires the production and sourcing of palm

standing cases of unresolved social conflict with communities

oil that is fully traceable, legally grown and verified as notand has violated workers’ rights.17 PepsiCo has the opportunity

associated with workers’ rights or other human rights violations,to help transform Indofood into a responsible palm oil company,

deforestation, or expansion on carbon-rich peatlands of any

but it has so far failed to do so.

INDOFOOD’S OTHER CUSTOMERS AND JOINT VENTURE PARTNERS
Indofood must also step up to the highest requirements of its other customers and investors. A number of Indofood’s business
partners and customers, including Nestlé, Unilever and Procter & Gamble — three global brands similar to PepsiCo — andseveral key palm oil traders including Wilmar International, Golden Agri Resources, and Musim Mas Group, have adopted
responsible palm oil commitments to produce and source palm oil that is not associated with the violation of labor rights,
deforestation, expansion on carbon-rich peatlands, or the violation of human rights. These requirements go beyond those set by
the Roundtable on Sustainable Palm Oil (RSPO), which allow for ongoing deforestation and which have a poor track record of
upholding human and workers’ rights.18 Indofood must improve its practices to comply with these higher standards or risk being
terminated as a supplier and business partner.

INDOFOOD’S FINANCIERS
Financial institutions holding shares or providing loans and underwriting to Indofood, its parent company First PacificCompany, or its plantation arm IndoAgri, also share responsibility for the adverse impacts to workers, the environment and to
local communities that they are financing, particularly those related to potential violations of international labor and humanrights agreements, norms and obligations. The Norwegian Government Pension Fund, the world’s largest sovereign wealthfund, recently chose to divest from First Pacific Company, as the controlling entity of Indofood and Indofood Agri Resources,
reportedly due to its poor environmental and social track record in its palm oil plantations.19
More than 200 independent institutional investors are known to hold significant equity positions in Indofood.20 Of these, US based
institutional investors collectively own nearly 25% of Indofood, followed by European institutional investors with a combined 8%
interest.21 Forty-four banks have been identified as providing loans, underwriting or other financial services directly to Indofood.
Among these are Japanese-based banks Sumitomo Mitsui Financial Group, Bank Mizuho and the Bank of Tokyo-Mitsubishi UFJ,
European-based HSBC, Royal Bank of Scotland, Rabobank, Standard Chartered, BNP Paribas and Deutsche Bank, and USbased Citibank and JP Morgan Chase.22 Banks with financial relationships with Indofood should engage meaningfully with its
management to ensure that it takes the actions required to systematically investigate and address the labor and human rights
violations profiled in this report.

10

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

FIGURE 1. INDOFOODS COMPANY STRUCUREANTHONI SALIM
44.8%

FIRST PACIFIC LTD., HONG KONG

50.1%

PT INDOFOOD SUKSES MAKMUR TBKCUT CONFLICT PALM OIL

60.5%

INDOFOOD AGRIRESOURCES LTD.
(INDOAGRI)

73.5%

OWNERSHIP/ OWNED BY

PT SALIM IVOMASPRATAMA TBK(SALIM IVOMAS)

59.5%

PARENT COMPANYPT PP LONDON SUMATR A
INDONESIA TBK(LONSUM)

JOINT VENTURE PARTNERINDOFOOD’SCUSTOMERS AND JOINTVENTURE PARTNERS

garagribusiness and food

INDOFOOD’SFINANCIERS

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

11

THE PEOPLE BEHIND PALM OIL

HIDDEN COSTS OF WORKER EXPLOITATION

Palm oil is an edible vegetable oil, high in saturated fats,stages of harvesting and maintaining existing oil palm trees,

derived from the fruit of the African oil palm tree. Palm oil andand finally to replanting as trees become underproductive. Oil

its derivatives are used in a remarkable array of products soldpalm trees, once planted, continue to produce an economicallyin the United States and around the world, such as cookies,

profitable harvest for up to 20-25 years. During this time,

crackers, chocolate, cereals and breakfast bars, cake mixes,

harvesting the palm fruit and maintaining the trees are key

doughnuts, potato chips, instant noodles, frozen sweets

activities of plantation workers. Large plantations typically haveand meals, baby formula, margarine, detergents, soaps,

oil palm trees of varying ages so that a constant production

and personal care products. It is found in roughly half of all

cycle is maintained, and harvesting and maintenance work arepackaged goods sold in grocery stores.

carried out year-round by workers.

The production process of palm oil begins with the growing

Palm oil is grown commercially in several tropical countries,

and harvesting of African oil palm trees, often on large-scale

but most of the world’s palm oil comes from Indonesia andplantations which cover thousands of acres. Managing a palm

Malaysia, which account for 85% of global palm oil production.

oil plantation for production is labor intensive and requires

In Indonesia, palm oil plantations are a significant employer,

a large workforce from the initial stages of land clearing,

employing millions of people, and further expansion of large-

cultivating and planting new oil palm seedlings, to the ongoing

scale plantations has been strongly supported by government

12

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

policy. There is no official number for workers employed on palma plan to enact a moratorium on the issuance of new palm oil

oil plantations in Indonesia, and different accounts vary wildly.

permits that may stop or limit the legal expansion of palm oil

Palm oil plantations in Indonesia cover at least 10.6 million

plantations.25 However the Indonesian government chooses

hectares and using a rough estimate of one worker hired per

to proceed with palm oil development, the rights of millions

every four hectares of palm oil plantation, at least 2.65 millionof current and potential future workers in the industry must be

currently work on Indonesian palm oil plantations.

protected and upheld and their conditions honestly evaluated.

23

24

Historically palm oil expansion has been supported with claims
The Indonesian government’s 2011 Master Plan for thethat it will reduce poverty and create jobs, but independent

Acceleration and Expansion of Indonesian Economic

research increasingly indicates that good jobs on palm oil

Development (MP3EI) resolutely supports large-scale plantation

plantations have been few and short-lived and instead the trend

development, and the further expansion of palm oil. Recently

has been toward poor quality jobs and more casual positions,however, the President of Indonesia, Joko Widodo, announced

for which women are disproportionately hired.26

Harvesting
Harvesters are a critical part of the workforce on any palm oil

Harvesting is completed year-round, but oil palm trees cycle

plantation. As is clear by their title, they carry out the essential

through high-yield and low-yield seasons. During the low-yieldrole of harvesting fresh fruit bunches. To do so, they use a long

season, when oil palm trees are not producing as much fruit,pole with a sharp, curved knife at the end, called an egrek, toharvesters have to cover a larger area in order to reach their

cut the bunches which can weigh up to 25 kilograms. After the

daily quota. During the high-yield season, when harvesters

fresh fruit bunch falls to the ground, the harvester (or his helper)

collect their weight-based quota relatively faster, they are stillloads it in a wheelbarrow with other fruit bunches and hauls

expected to work a full seven-hour work day collecting fruit

them to a roadside collection point which is often located abunches beyond their quota.

considerable distance away. Harvesters typically need to meeta weight-based quota for each day in order to be paid theHarvesters are also tasked with collecting the individual palm

minimum wage.

fruits that come loose from a ripe bunch when it is cut. This can

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

13be very tedious work because when a fruit bunch is cut, manythorns, snakes, pesticides and other hazards, usually with little toindividual palm fruits scatter over a large area. On Indonesianno protective gear. Workers often do not report these hazards topalm oil plantations, harvesters must typically bring helpers,

management for fear of losing their job or having their pay cut.28

known as kernet, to collect the loose fruit and manage theirworkload. Kernet workers often have no formal employment

Maintenancerelationship with the company, but are instead paid by the

In addition to harvesting the fruit bunches, oil palm trees

harvester directly out of the wage he earns.

and their surrounding environment require a great deal of
maintenance to ensure maximum productivity. Maintenance

Little research exists on the ergonomics of harvesting tasks

jobs include spraying pesticides, pruning, and applying fertilizer,

at palm oil plantations, but it has been found that there isand in Indonesia these jobs are often held by women workers

increased risk of musculoskeletal disorders as a result of this typewho are employed on a casual basis, rather than as full-of work. Cutting fruit bunches with the long egrek is difficult

time permanent employees. Casual workers earn less thanand can cause strain to harvesters’ backs, as can lifting andpermanent workers, lack benefits, and are generally seen as

loading the fruit bunches, which can weigh up to 25 kg, into

“temporary” with little to no employment security.29 Many casual

wheelbarrows and trucks. Kernet workers must stay bent over

employees are never given the opportunity to be promoted toin difficult positions gathering loose fruit and are exposed topermanent status even when they have worked at the plantation27

for decades.

14

On many palm oil plantations there is regular application

Maintenance workers also regularly apply pesticides. Paraquat,of fertilizers and pesticides. When applying fertilizer,a highly hazardous herbicide, is commonly used on oil palm

maintenance workers will carry up to 25 kilograms of fertilizer

plantations for killing weeds, despite the fact that its use has

diagonally on their shoulders with a sack, often bearing the

been banned in numerous Western countries.30 Many workers

weight on their stomachs. In order to cover the large target

applying Paraquat and other pesticides are not provided withareas in a day, the workers will throw the fertilizer with a plastic

proper protection, and those that are, often find the gear

bowl while walking quickly down the line of oil palms. Spreadunreasonably hot and inconvenient and choose not to wear thein this way, the fertilizer flies everywhere and at the end of thegear as it can slow their pace, negatively impacting their ability

day, the workers are left covered in fertilizer. Typically, the only

to meet their work quotas.31 Demanding daily quotas, coupledprotection they have against the chemical dust is a rag thatwith the tropical climate, often means maintenance workers

they wrap around their face. Many workers report that theforego their personal safety in order to make minimum wage.

fertilizers used cause severe skin irritation and eye infections.
Despite the fact that maintenance work is a core part of the
production of palm oil, maintenance jobs are commonly15

misclassified as temporary or casual. In fact, the permanent

work and processing of fresh fruit bunches at the mill. Upkeep

need of maintenance work is reflected in the employment oftasks include fixing roads, clearing weeds, digging holes forcasual workers year-round and continuously up to decades.

replanting, and transporting materials such as fertilizer sacks.

The misclassification of workers as casual or temporary

Transportation workers are responsible for loading the fresh fruit

creates a precarious work environment and allows plantation

bunches that harvesters collect onto trucks and transporting

companies to pay workers cheap wages for extended periods

them to designated mills. Security guards keep watch over theof time without having to provide adequate social benefits andplantation and guard against palm fruit robbers. Mill workers

protection.

manage the mill operations in order to extract the palm oil from
fresh fruit bunches and separate the palm kernels. Not every

Other Jobs on Plantations

plantation is equipped with a mill, but mill workers usually holdIn addition to harvesting and maintenance work, there are many

permanent status and receive higher wages.

other jobs that help sustain the plantation operations including
upkeep tasks, transportation of fresh fruit bunches, security

16

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

INVESTIGATION OVERVIEW:LABOR CONDITIONS ON INDOFOOD PALM OIL
PLANTATIONS IN NORTH SUMATRA, INDONESIA

For this report investigations were conducted in September

fear reprisal from the company for talking to outside parties.

to October 2015 on two of Indofood subsidiary PT. PP London

All workers were informed that they were being interviewed

Sumatra Indonesia Tbk. (Lonsum) plantations in North Sumatra.

for research purposes and gave their informed consent to be

Both plantations are Roundtable on Sustainable Palm Oilinterviewed.

(RSPO) certified. In each of the plantations, the investigation
was conducted through one-on-one interviews with workers;

Indofood and PepsiCo were given the opportunity to report on

on-site examination of workers’ documents such as pay slips,

the key findings of this report prior to publication.

letters and work agreements; and on-site observation of workers
performing their work duties, workers’ living conditions and thePepsiCo stated that its 2015 Palm Oil Action Plan demonstrates

plantations’ amenities. The interviews were carried out on-site orthat it is “upholding a commitment that palm oil producers innearby the plantation area.

[its] supply chain must adhere to the Universal Declaration of
Human Rights, must be in basic compliance with all applicable

A total of 41 laborers were individually interviewed for thislaws, are prohibited from forced, compulsory or child labor, must

investigation — 23 workers from the first plantation and 18

respect freedom of association, and must recognize the rights ofworkers from the second plantation. Workers interviewed

all workers.” The company said that it takes these commitments

included men and women working as harvesters, harvester

and any labor and human rights concerns raised very seriously.

helpers known as kernet, pesticide sprayers, fertilizer

PepsiCo also stated that it has “strong human rights policies in

spreaders, mill operators, security guards, fruit loaders, waterplace” and “clearly have a history of appropriately engaging onpump operators and field foremen. The researchers used asuch matters”.

combination of random sampling and “snowball” sampling
to identify a cross-section of workers of varying job types,

Indofood declined to comment on the findings of this report.

employment statuses and genders. The methodology was

Instead the company stated that, “As far as the IndoAgri ischosen due to the relative isolation and large area of theconcerned, the IndoAgri has complied with all Indonesian laws

plantation, which makes access to workers difficult. It was also

and regulations [sic].”

chosen in order to minimize risk to workers, who commonly
T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

17

Overview of investigation

picking up loose palm fruit kernels and transporting fresh fruit

At each of the two plantations, only roughly half of the workers

bunches to a roadside collection pick-up point — in order tointerviewed had permanent status employment (51%). The rest

help harvesters reach their daily quotas. The kernet workers(49%) were precariously employed as limited duration contract

interviewed had no employment relationship with the company

workers (5%), daily casual workers (27%), and 17% had no

and were hired and paid directly by the harvesters they helped.

employment status (Table 1). According to Indonesian law, all

Four of the seven kernet were boys aged 13, 16, 16 and 19 years

workers, including permanent, contract and casual (includingold. These boys reported that they each had stopped attending

kernet) workers, have the right to work, receive a wage and living

school and started working as kernet to earn money. The otherthat is “fit for humanity”, proper health and safety protection,

three kernet workers interviewed included two women and one

social security and the right to organize.

man.

Out of the 11 workers interviewed with daily casual status, six

Out of the 23 workers interviewed with permanent or limitedof them were women, while five were men. The female casual

duration contract status, 22 were men. Harvesters were

workers were employed in maintenance jobs as either pesticide

exclusively men, eight of whom had permanent status, while

sprayers or fertilizer spreaders, while male casual workers were

the other five were employed as casual or contract workers.

employed as both maintenance workers and harvesters.

As will be later discussed, these different types of work status

32

categories have important impacts on the wages, benefits andOut of the seven workers interviewed with no status, all worked

amenities of workers.

as kernet workers. Kernet workers were indirectly employedby harvesters and carried out supporting tasks — including

TABLE 1. WORK STATUS AND GENDER OF INTERVIEWED PALM OIL WORKERSGENDER

PRECARIOUS
EMPLOYMENT18

CHILDREN

SUBTOTALWORK STATUS

MALE

FEMALEPERMANENT

20

1

0

21

LIMITED DURATION CONTRACT

2

0

0

2

DAILY CASUAL

5

6

0

11

WITHOUT EMPLOYMENT STATUS

2

2

3

7

TOTAL

29

9

3

41

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

Most of the interviewed workers were married (90%) andearliest plantations in Sumatra. These 3rd and 4th generation

almost all of them (85%) had children. This is important to note,

descendants have continued to work in the plantations wellespecially when examining wages and provision of child carebeyond that period and no longer have land in their ancestral

services and education, because the vast majority of workers

home of Java. Most reported having limited formal educationneed to support not only themselves but also their families. The

and training. Sixty-one percent of workers interviewed had

only workers who reported being unmarried were the sameeducation levels of secondary school or lower. Because of thisteenage boys aged 13, 16, 16, and 19 years old, working as

history, these workers have become highly dependent on the

kernet with no status.

plantation for their social and economic livelihoods.

Most of the workers interviewed (85%) are of Javanese descent.
Many of their ancestors were brought from Java during thecolonial era by plantation companies to work on some of the

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

19INVISIBLE AND “TEMPORARY”:
HOW PRECARIOUS EMPLOYMENT PRACTICES PLACE WORKERS AT RISKKey Findings

making it easy for companies to keep workers in precarious

The researchers found that Indofood utilized several kinds of

employment status, and the long-term trend on many

precarious, or non-standard, forms of employment practices

Indonesian palm oil plantations has been toward replacing

to employ workers who performed core plantation work on

permanent workers with casual, contract, and kernet workers.36

Indofood plantations, including harvesting, gathering loose
fruits, and applying pesticides and fertilizers. Workers who

Invisible Workers

are precariously employed often earn less, do not receive

Among the workers interviewed on Indofood’s plantations,

important benefits, and lack the employment security to standthe worst off were those with no status at all. Seven workers

up to workplace abuses. Twenty of 41 workers on Indofood

reported working regularly to assist harvesters but had no directplantations, or 49% of workers interviewed, were precariously

employment relationship with the company. Referred to as

employed as casual workers, limited duration contract workers,

kernet workers, these workers help harvesters with tasks such asor kernet workers with no employment status at all. According

collecting loose palm kernels, loading fresh fruit bunches onto

to Indofood’s own statistics, it employs 50% of its workers on awheelbarrows, hauling the wheelbarrows to the road for pick up,

casual basis and 2% on limited duration contracts; it does notorganizing and chopping the stems of fruit bunches and cutting

report on the presence or number of kernet workers working on

and organizing palm branches. Four of these workers wereits plantations.

teenage boys aged 13, 16, 16 and 19 years old, and the other33

three were adults (two women and one man) who were relatives
Overview of Precarious Workof harvesters. Kernet workers are essentially invisible workers

Precarious work is generally defined as non-standard forms ofas they are not recognized as part of the official plantation

employment (including temporary, casual, contract, outsourced,

workforce, have no legal protections, and are not eligible forand day laborers) and is characterized by low wages, insecure

health care, work-related injury compensation, and other social

employment, lack of benefits, and a lack of job protections.

protections.

Precariously employed workers rarely receive social benefits
and are often denied the right to join a union. Even when they

The indirect employment of kernet workers is driven by thehave the right to unionize, workers are scared to organize ifpressure put on harvesters to meet unreasonably high daily

they know they are easily replaceable. Globally,
women, minorities and migrant workers are much
more likely to fill these kinds of jobs. Permanent
employment across a number of sectors has
shifted to precarious jobs through outsourcing,use of employment agencies, and inappropriateclassification of workers as “short-term” or“independent contractors.”34
In the Indonesian palm oil sector, it is common
to find high percentages of core plantation jobs
filled by precarious workers.35 Women tend tocomprise a disproportionately high percentage
of casual labor and kernet positions, whilerarely being employed on a permanent basis.
Indonesia’s labor law has been criticized for

20

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

quotas as well as their need to supplement low wages
by earning premiums. Six harvesters reported that theywould not be able to meet their assigned quotas without
bringing kernet workers, and five harvesters reported thatthey were instructed to bring kernet workers or they would
be sent home without pay, demoted to casual status orlose their job. This practice predominantly impacts womenand children as many harvesters reported recruiting kernet
workers from their family, close relatives and neighbors,in order to retain more of their earnings. Six harvesters
reported bringing their wives as kernet; three reported
bringing children or young adults from around theneighborhood; and one, his father.

quarter of the workers interviewed on Indofood plantations weredaily casual workers. Three casual workers interviewed worked

Kernet workers’ invisible employment means their pay andas harvesters while the rest worked in maintenance as pesticideconditions are unregulated and unmonitored. Some kernet

sprayers, fertilizer spreaders and performed other upkeep tasks.

workers reported receiving cash payments, paid out of the

In its overall plantation operations, Indofood reported that it

harvesters’ pockets, once or twice a month, while others

employed 50% of its total workforce, or 39,796 people, as casual

worked without pay to help family members meet their quotas.

workers in 2015.38

Out of the kernet workers interviewed, six of seven reported
working for pay and earning between Rp 20,000 to Rp 35,000

In Indonesia, the law states that daily or casual employment

per day, around $1.50 to $2.50 USD — which falls far below

is “for certain works which is changing in terms of time andthe statutory daily rate for a casual worker. The other kernet

volume of work and wages are based on attendance.”39 Workers

worker interviewed reported working without pay in order to help

can only be employed in this arrangement for less than 21

her husband reach his harvesting quota. Kernet workers whodays a month. If they are employed for 21 days (or more) inreceived payment reported having no written agreement or pay

3 consecutive months (or more), by law their status shouldslip, and that pay and working hours are negotiated verbally

become permanent, which would grant them the full benefits

with the harvester.

of a permanent worker. Companies which employ daily casual37

workers are required to have a written contract with these
While not classed as official employees of the plantation,

workers. Indofood reports that “All employees, including casual

kernet workers are clearly needed to help harvesters fulfill theirlabourers, have employment contracts,” but none of the casualquotas and are conducting core plantation work. As such, theseworkers interviewed reported having written contracts.

workers should be recognized as permanent employees, asmany work full-time. PepsiCo and Indofood may not be aware

On Indofood plantations, casual workers reported beingof the indirect employment of kernet workers who work for little

employed as daily casual workers for years without ever being

to no pay, have no legal protections, and are not eligible forpromoted to permanent status. Six workers interviewed reported

health care and other social protections, but both companies

they had been working on the plantation for 10 to 20 years

remain responsible and must address this issue.

but remained casual workers without any path to permanent
status. All of the casual workers reported that they were regular

Indofood’s Casual Workers

employees but were kept working under 21 days so they could

Casual workers are only slightly better off than kernet workers.

not claim the benefits of permanent workers. As with kernet

Casual work status is a form of precarious work as workers lackworkers, many casual workers carry out core plantation work as

job security, are poorly paid and do not have benefits, including

is evidenced by their ongoing employment for decades and thus

access to health care. In the investigation conducted, over ashould be classified as permanent employees.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

21

Indofood’s Limited-duration Contract Workers

A written contract did not promise job security to these workers.

Limited-duration contract workers or Perjanjian Kerja Waktu

Both of the contract workers reported that they took their jobs

Tertentu (PKWT) can only be employed for certain jobs, “which,with the hope of being promoted to permanent status whenbecause of the type and nature of the job will finish in atheir contracts end, but that their desires to be promoted were

specified period of time.” This work agreement cannot be

used by management to pressure them to work longer hours

made for jobs that are permanent in nature and cannot be

and meet higher targets without commensurate pay. One oflonger than two years with an opportunity to renew only once forthe workers reported occasionally taking on additional work to

no longer than one year.

prune after he completed his harvesting duty for an additional40

two hours. This work was intended to bring additional income
Researchers interviewed two limited-duration contract workers

but he felt it was mandatory as refusal would be reprimanded.

who were both working in jobs that are permanent in nature as

His foreman threatened that he would not be promoted toharvesters. Both reported that they had signed a contract withpermanent status with statements like, “How are you ever going

the plantation after a year of working for the company as casualto get promoted if you refuse to do what we tell you?”workers. One of them had not received a copy of their contract
despite being promised one. The same worker reported that he

Despite performing jobs that are permanent in nature andhad initially come on contract to prune, but had been forced

should be entitled to the status and rights of permanent workers,

mid-contract to harvest, despite it being outside of his agreed

these workers only receive limited social benefits, often notcontract. The worker explained, “As a contract worker, I don’t

extended to cover their families. Both contract workers reported

feel secure [about my job], so I couldn’t refuse when the foreman

their wives and children were not covered by health insurance

and assistant ordered me [to harvest instead of prune].”nor provided with a rationing of rice. One of them reported that
paid leave is only allowed when there is not much fruit to harvest.

WHAT INDOFOOD MUST DO TO ADDRESS PRECARIOUS WORK ON ITS PLANTATIONSIndofood must act immediately to address its dangerous reliance on precarious workers to fulfill core plantation work on its
plantations. In order to align its operations with the Fair Labor Principles, Indofood must:»» Ensure that all workers on the plantation, regardless of their position, have a direct employment relationship with thecompany or a legitimate third party. No palm plantation worker should be “invisible” and lack a written contract, pay
slips, and access to health care.
»» Hire all workers who perform core plantation work (including harvesting and regular maintenance tasks) as permanent
workers.
»» Limit casual, temporary, contract, and day labor to jobs that are genuinely temporary or seasonal.
»» Ensure that precariously employed workers account for no more than 20% of Indofood’s workforce as required under thePalm Oil Innovation Group (POIG) standard.41

22

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

NICKEL AND DIMED:HOW WORKERS ARE PAID UNETHICALLY LOW WAGESKey Findings

In Indonesia, the minimum wage is proposed by the district

Researchers found that basic wages for permanent harvesters

and approved by the provincial government.42 The district-wide

at one plantation were below the district’s monthly minimum

minimum wage is based on a survey of 60 basic-needs items,

wage. This wage was set through a collective bargaining

including food, clothing, housing and transportation, for a single

agreement, which workers reported that they had never read

person. However, for plantation workers, who typically have

nor had explained to them. Casual workers at the samefamilies to support and live in remote areas where the cost ofplantation also reported receiving a daily wage rate that was

goods is significantly higher, this wage calculation often falls

similarly below the district’s daily minimum wage. On both

short of what is needed to support a family.

plantations, casual daily workers and kernet workers were notprovided with wage slips and reported making between 20% toIndofood Pays Some Workers Below the

75% less than the monthly minimum wage earned by permanent

District Minimum Wage

workers. Some kernet workers also worked without pay as

The calculation of wages on Indofood plantations is complex

helpers to family members.

and varies for the different jobs and work status categories thatexist. Harvesters, for example, should get a minimum wage for

Overview of Wages for Indofood Workers

harvesting a daily quota weight of fresh fruit bunches, as well as

At the Indofood plantations visited, workers live in a landscapepremiums for additional fruit collected beyond the quota. The

saturated with palm oil plantations. Many workers’ families havequota varies according to the age of the trees being harvested,

lived within the plantations for generations, in an area where

since this affects the amount and weight of fresh fruit bunches

there are few ways to make a living beyond working on thethe tree produces. For harvesters with permanent status, theplantations. This makes employment on palm oil plantations

minimum wage also includes additional non-monetary benefits

extremely important — especially for the majority of workers

like a rationing of rice for a harvester and his family.

who have limited formal
education or training.
Indofood workers rely on
their wages to support
themselves and theirfamilies, but researchers
found that many workers
earned less than themonthly minimum wage
and far from a living
wage.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

23

Only permanent employees received wage slips at the Indofood

Casual and Kernet Workers at Indofood Plantations Make

plantations visited. Wage slips of permanent harvesters

Poverty Wages

interviewed at one of the plantations revealed base wages

The casual laborers and kernet who were interviewed atthat were below the district’s minimum wage. At the time of thisIndofood’s two plantations did not receive written pay slips andinvestigation, the monthly minimum wage was Rp 2.015.000,

reported earning significantly less than the monthly minimum

around $150 USD, while the plantation only provided a basewage entitled to permanent workers.

wage of Rp 1.952.640, around $145 USD, or sometimes less.
The wage slips of five permanent workers revealed a base wage

Under Indonesian labor law, casual workers cannot workof Rp 1,761,037, around $130 USD, in August 2015. Although

for more than 21 days a month, otherwise they must be fullycasual workers interviewed did not receive documented pay

employed as permanent workers. Based on the maximum daily

slips, all the casual workers at the same plantation reported

rate of Rp 78,600, around $6 USD, that casual workers reported

receiving a maximum daily wage of Rp 78,600 (around $6 USD)

being paid, the maximum a casual worker can earn in a month— less than the daily minimum of Rp 80,480 based on the sameis Rp 1,572,000,46 around $116 USD, which is around 20 percent

district-wide minimum wage.43

below the district monthly minimum wage.47 Casual workers
reported working fewer than 21 days — some said between 12

Ironically, Indofood’s sub-minimum wages are set by a

to 15 days a month — and earning even less than $116 USD percollective bargaining agreement that was negotiated between

month. While these workers are classified by the plantation as

an association of Sumatran plantation companies called“temporary” workers, all casual workers reported that their job at

Badan Kerja Sama Perusahaan Perkebunan Sumatra (BKSPPS)

the Indofood plantation was their primary source of income and— to which Indofood’s London Sumatra belongs — and an

many had worked at the plantation for decades.

Indonesian union that claims to represent all the workersof the member plantations.44 However, many of the workers
interviewed stated that they had no rolein negotiating the agreement and theunion leadership has never explained it
to them. This type of union is commonlyreferred to as a “yellow” union, or aunion which is dominated or influenced
by an employer, and is further discussed
later in the report. The agreement
between BKSPPS and the companybacked union has been in place for
decades and has been criticized by
Trade Union Rights Center along with anumber of North Sumatran unions andlocal NGOs.45

24

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

Kernet workers earn even less than casual workers. Even if theykernet out of their wage, while others obtain “free” labor fromwork the full month, the maximum they reported earning wasfamily members. One harvester reported that in order to meet

between Rp 500,000 and Rp 875,000, or between $37 andthe daily quota and earn minimum wage, he must pay up to 35%$65 USD a month, depending on their agreed rate with theirof his wages to his kernet.

harvester. Theses earnings only add up to between 25% to
48

45% of the district monthly minimum wage.49 Meanwhile some

Harvesters with permanent status also reported that various

kernet workers did not make any money at all because they

sanctions and deductions were taken from their wages.

were helping family members meet their quotas. Because

At almost every step of the harvesting process, there were

kernet workers have no direct employment relationship with the

sanctions for various mistakes. For example, it was reported

company nor legal work status, the law does not contemplatethat if a harvester mistakenly harvests fruit that is not yet ripe,them working more than 21 days or being paid the minimum

they will be charged Rp 2,500, around $0.20 USD, per fresh fruit

wage.

bunch. Additional sanctions are applied for not collecting palm
kernels, leaving ripe fruit unharvested, not chopping the stem

Paying for Help and Deductions Erode Permanent Workers’

properly, and leaving a palm oil branch unproperly cut. Often

Already Meager Earnings

these deductions are not clearly recorded on workers’ pay slips,

Under Indofood’s labor scheme, even permanent workers

leaving workers vulnerable to bogus sanctions and other forms

struggle to make a decent wage. In order to meet their dailyof wage theft.

quota and bonus targets, some permanent harvesters pay a

WHAT INDOFOOD MUST DO TO ADDRESS UNETHICALLY LOW WAGES					ON ITS PLANTATIONSIndofood must act immediately to investigate and address the reports of unethically low wages it is paying workers on its
plantations. In order to align its operations with the Fair Labor Principles, Indofood must:»» Ensure that all workers are paid a living wage. A living wage should be determined based on the average costs ofa worker and their family, including commodity prices in plantation areas, and in consultation with workers, worker
organizations, and independent unions. However calculated, a living wage should always be significantly higher than thelegal minimum wage.
»» Eliminate any illegal deductions and financial penalties and offer production incentives and bonuses only up to areasonable limit. Bonuses should not be necessary to earn the legal minimum wage, nor should deductions drop pay
below the minimum wage.
»» Provide written contracts and wage slips to all workers in a language they understand, and reflect all deductions on thewage slip.
»» Hire enough permanent workers to carry out all core plantation activities.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

25

CHILD WORKERS:
HOW UNATTAINABLE QUOTAS DRIVE CHILD LABORKey Findings

yields per worker) without bearing direct legal responsibility forChildren were observed working on Indofood plantations.

the presence of working children.

Researchers interviewed three child workers one aged 13, two
16, as well as one 19 year old who reported working on the

According to Indonesia’s National Action Plan for the Elimination

plantation since he was 12 years old. Beyond the four teenageof the Worst Forms of Child Labor, child labor on large

boys interviewed, two harvesters reported hiring children as

agricultural plantations is considered a “worst form of childkernet to help them meet high quotas and earn premiums.

labor” because it can involve exposure to pesticides, extreme

Indofood states that its “HR policy strictly prohibits the use of

weather, long hours, and carrying heavy loads, and therefore

underage workers [and] each employee’s profile is held inshould not be carried out by any person under the age of[its] HR data system, including information on age, contract

18.50 Palm oil from Indonesia has been on the US Department

term and photocopies of identification papers,” and indeed,of Labor’s “List of Goods Made with Child Labor or Forced

Indofood did not hire any of these children as employees.

Labor” since 2010 for the presence of child labor on palm oil

Instead, all children worked indirectly for the company as kernet

plantations.51

workers helping harvesters collect loose fruits and meet theirhigh quotas. While Indofood may not be aware nor condone

Indofood’s Unrealistically High Quotas

children working on its plantations, the company remains

Workers reported that Indofood uses a quota system in order

responsible.

to calculate workers’ wages. Each day workers are expected tomeet a quota in order to be paid the minimum wage. Workers

Overview of Child Labor on Palm Oil Plantations

can also be subject to deductions for errors made and earnChild labor on palm oil plantations is primarily driven by low

premiums if they exceed their quota. Quotas are set according

wages for adult workers and the need to meet assigned target

to the type of job (harvester, pesticide sprayer, fertilizer

quotas and earn additional premiums. Children are generally

spreader, etc.) and according to the season, but workers report

not employed directly by plantations. In this manner, palm oilthat quotas can vary between the two plantations, and evenplantations directly benefit from child labor (through higher

amongst workers with the same position.
Harvesters reported that they need to meet very
high quotas every day. Two harvesters stated that
their daily quota was 2 tons of fresh fruit bunches
per day. To achieve their quota, harvesters must
often walk long distances, particularly during the
low-yield season, to cut and collect the necessaryamount of fruit bunches. One harvester stated that
he had to collect between 140 to 160 fruit bunches
per day, each weighing 15-20 kilograms, totalingover 3 tons.
The high quotas set for harvesters mean that mostmust bring additional help. One harvester reported
that it is simply “too tiring” to do the job alone,while another reported that if he worked alone, hewould probably not meet the quota.

26

Low Wages and High Quotas Drive Harvesters to Hire
Children or Bring Their Wives as Help
Harvesters reported bringing help to meet their high quotas
and to earn “premiums” — additional income earned fromcollecting extra fruit bunches and palm kernels beyond thebasic quota. Harvesters reported that they needed to pursue
premiums to earn enough to “get by.” With a basic wage of
only Rp 1.952.640, or $145 USD a month, harvesters earn
less than $6 USD a day, which they reported is not enough to
support a harvester and his family.
Although harvesters earn more by bringing help and acquiring
additional premiums, they ultimately have to pay for that help
out of their wages or enlist family members as “free” labor. Ninean early age. The majority of workers interviewed did not have aharvesters reported hiring children or bringing their wives orhigh school education. Parents reported that they did not havefamily members as kernet. Harvesters enlisted wives or family

enough money to keep their kids in school, so many ended up

members as kernet to retain income in the family unit or hired

working at the plantation. One child worker who was interviewed

child workers because it cost them less. One harvester reported

was 13 years old and worked as a kernet collecting loose palm

bringing a 16 year old boy because he could pay him less thankernels and transporting fruit bunches. He reported that hean adult and retain more of the income for him and his family.

no longer went to school and used the money he made (RpThe harvester stated that the standard payment was Rp 20,000,

20,000, or $ 1.50 USD a day, or whatever premium the harvesteror $1.50 USD a day, plus food and cigarettes. The harvester

earned) to support his mother and sister. Indofood reports

explained, “What kind of adult person would want to get paidthat “employees and their dependents enjoy the medical andthat much? [But] that’s how much I can afford.”

educational services free of charge,” but with more than 50%of the workers precariously employed and not entitled to such

During interviews with workers, it was stated that it was common

benefits, many simply cannot afford to send their children towithin these communities for children to drop out of school at

school.52

WHAT INDOFOOD MUST DO TO ADDRESS CHILD LABOR ON ITS PLANTATIONSIndofood must act immediately to investigate and address the reported conditions that have led children to work on its
plantations. In order to align its operations with the Fair Labor Principles, Indofood must:»» Not employ or benefit from the labor of children under the age of 18.
»» Ensure that any production targets or quotas are set based on what can fairly and realistically be achieved by one person
within normal working hours, using relevant data from appropriate time and motion studies, and ensure that adult
workers earn a living wage so that they are not forced to hire or bring children to work in order to earn enough to get by.
»» Ensure that children of adult plantation workers have access to education.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

27

HAZARDOUS AND UNSAFE:HOW PESTICIDES AND WORK PRACTICES JEOPARDIZE WORKERS’ HEALTH AND SAFETY

Key Findings

equipment, lack access to health care and accident insurance,

At the Indofood plantations visited, workers reported working

and are not entitled to sick days.

with highly hazardous pesticides, working without proper
protective gear, performing hazardous work, and not seeking

Workers on Indofood Plantations Handle Highly

treatment for workplace injuries due to a lack of access

Hazardous Pesticides

to health services. Paraquat, a highly hazardous pesticide

At Indofood plantations, maintenance workers reported

that is banned in many Western countries, was in use on theusing Gramoxone, which contains the highly toxic pesticide

plantations, and workers reported leaving workplace injuries

Paraquat.54 Paraquat is banned in several Western countries

untreated due to lack of funds.

and is known to be acutely toxic through swallowing, absorption
through damaged skin, or by inhalation. Documented health

Overview of Health and Safety Hazards on Palm Oil

effects of exposure to the chemical include Parkinsons’s disease,

Plantations

neurological disorders, endocrine disruption, and cancer.

Workers on palm oil plantations face many occupational safety

Thousands have suffered severe acute and chronic effects fromand health hazards, including but not limited to poisoning

occupational use of Paraquat.55 Indofood reported using 21,000

and long term health effects from pesticide use or exposure;liters of Paraquat on its plantations in 2015 and has committed

being hit by falling fruit bunches; musculoskeletal injuries fromto phase out its use by 2018.56

repetitive and forceful movements and lifting and carrying heavy
or awkward loads; injuries from cutting tools ranging from minor

Women workers were disproportionately exposed to Paraquatcuts to severe wounds; skin abrasions due to contact with oil

because they most commonly performed the maintenance jobs

palm fruit and thorns; eye damage from falling palm fronds;of spraying pesticides and spreading fertilizer. Seven of nine

high levels of sun exposure which can result in skin cancer andwomen workers interviewed had these jobs, while the other twoheat exhaustion; long working hours; and snake and insect

women worked as kernet.

bites. These hazards are especially high risk for casual workers
53

or kernet workers, who often do not receive adequate protective

Indofood Workers Lack Access to Adequate Safety Equipment
Due to kernet workers’ indirect employment
relationship with the company, Indofood did notprovide health and safety equipment for theseworkers. It was reported that harvesters occasionallyprovided or lent some protective equipment to thekernet working for them, but the equipment waslimited and often ill-fitting.
Casual workers, depending on their position,
reported that some protective equipment wasprovided by Indofood. Pesticide sprayers reported
being given a suit, helmet, boots and gloves, butmany stated that they often did not wear thembecause they were too hot and slowed them down,
inhibiting their ability to meet their quotas. Fertilizer
spreaders and workers tasked with general upkeep

28

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

reported not being provided with any protective equipment.

the Indofood plantations visited and corroborated by interviews

Women applying fertilizer were observed using a small plastic

with workers. Kernet workers, which included workers under 18,

bowl to throw fertilizer with only a rag wrapped around their facewere observed lifting and transporting heavy fruit bunches,to protect them from the chemical dust.

handling heavy, dangerous tools including axes and gancu (alarge metal hook), and transporting wheelbarrows full of up to

Indofood states that “it is mandatory for all relevant employees

six fruit bunches, which can weigh up to 150 kilograms, or 330

to wear PPE [personal protective equipment] at all times andpounds.58 Kernet workers who picked up loose palm kernels

exercise SOPs…All contractors and casual labourers complete

reported back pain and exhaustion from having to squat ora safety induction before starting work, safety clauses are

bend down for long periods of time while covering a wide area.

written into contracts and five-minute safety briefings kick off

Falling fruit bunches and palm fronds, and thorns also posedeach day.” However, if Indofood does not provide workers withsignificant hazards to workers who did not have proper personal

appropriate safety equipment free-of-charge, requiring themprotective gear.

57

to wear such equipment does not go far enough to adequately
protect their health and safety.

Indofood reported that there were seven deaths on its
plantations in 2015, four of which were casual workers, caused

Other Health and Safety Risks to Workers
A number of other health and safety concerns were observed at

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

29

by falling fruit bunches, a crushing incident during roadclinic. Indofood states that “employees and their dependents

construction, and electrocution. Indofood states that following

enjoy the medical…services free of charge.”60 However, Indofood

the deaths senior management visits the workers’ families tothen goes on to define employees only as permanent workers

explain compensation arrangements via Badan Penyelenggara

and limited duration contract workers, indicating that casual

Jamian Sosial (BPJS, formerly Jamsotek), and that workers notworkers, which comprise 50% of its workforce, are not entitled todirectly employed by Indofood are covered under a different

free medical services. This is corroborated by the stories of twosocial insurance scheme. It is unclear if compensation forfemale casual workers who reported leaving workplace injuries

death on the plantation applies to casual workers (which

untreated due to lack of funds.

59

comprise 50% of Indofood’s reported workers), or to kernet
workers who are not directly employed by Indofood.
All casual and kernet workers interviewed reported having nohealth insurance and limited access to the company’s on-site

At Indofood plantations, maintenance workers reported using Gramoxone,
which contains the highly toxic pesticide Paraquat. Paraquat is bannedin several Western countries and is known to be acutely toxic throughswallowing, absorption through damaged skin, or by inhalation.

WHAT INDOFOOD MUST DO TO ADDRESS HEALTH AND SAFETY CONCERNS					ON ITS PLANTATIONSIndofood must act immediately to investigate and address any health and safety issues on its plantations. In order to align its
operations with the Fair Labor Principles, Indofood must:»» Provide all workers, regardless of their employment status, with adequate protective equipment and tools free of charge
and provide regular training on occupational health and safety practices and policies.
»» Immediately ban the use of all highly hazardous pesticides, including the herbicide Paraquat, and replace these with safe
alternatives, including non-chemical ecosystem solutions.
»» Disclose the ingredients and any associated health risks of any pesticides and fertilizers used by the workers to them andtheir organizations and unions, and obtain their express consent prior to usage.
»» Provide all workers, regardless of their employment status, with appropriate levels of health care, accident insurance andcompensation for all work-related injuries and illnesses, including death.

30

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

T H EH U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

31

YELLOW UNIONS AND INTIMIDATION:HOW COMPANY-BACKED UNIONS UNDERMINE FREEDOM OF ASSOCIATIONKey Findings

automatically deducted from their wages. The workers reported

Permanent workers at the Indofood plantations visited reported

that they were enlisted in the union without their consent or abeing automatically enrolled in a company-backed “yellow”

proper registration procedure.

union and having fees deducted from their salary, without theirconsent or proper representation. Workers who attempted to

One worker explained, “We are not free to establish otherengage with an independent union reported being fearful ofunions. The plantation only allows [the company-backed

reprisal.

union] to organize workers. Others are not allowed. Workers
who have been promoted to permanent status cannot refuse

Overview of the Right to Freedom of Association

to be members of [the company-backed union]. When workers

The right to freely associate and join a union is an internationallybecome permanent employees, that same moment they arerecognized human right found in the ILO Core Conventions, theconsidered to be members and levied membership fees. [TheUniversal Declaration of Human Rights, and the International

company-backed union] never advocates for our labor rights.”

Covenant on Civil and Political Rights. Indonesian law statesthat “Every worker/laborer has the right to form and become

One permanent worker reported that he was initially interested

member of a trade/labor union.”61 When Freedom of Associationin joining an independent union but was questioned by theis respected, workers are able to form unions of their own

management and became fearful that he would be sanctioned

choosing and collectively bargain in order to improve wages

for joining any other union than the company-backed union.

and working conditions.

He said that others, including friends of his, also refrained
from joining due to fear of repercussions from the company.

But workers around the world face systemic barriers toIndonesian academics have noted that anti-union actions byorganizing, including egregious acts of violence andemployers, including the (illegal) refusal to allow workers to form

intimidation. Palm oil companies often fight the presence ofunions and negotiate collective labor agreements, along withindependent unions by intimidating, transferring or firing workers

intimidation and other pressure by employers on union activists,

who attempt to organize independent unions. Some also form

generates fear which discourages non-unionized workers

company-controlled unions, referred to as “yellow” unions,from joining unions, and encourages those who have joined towhich they require employees to join. Yellow unions are deemed

withdraw their membership.65

unlawful under international labor law,62 yet they persist in many
countries, including in Indonesia, prevalently in the palm oil

Indofood self-reports that 59% of its “operational employees”

sector. In Indonesia, these unions may also be referred to as

are unionized. It is unclear, however, if any of these 59% arelegacy unions which are state-backed unions inherited from therepresented by independent unions, or they are all unionizedprevious non-democratic regime that normally maintain theirunder the same yellow union that the interviewed workers were

non-democratic aspects.

enlisted in.66

63

Indofood’s Company-Backed “Yellow” Union
Sixteen permanent workers reported being members of the
agriculture and plantation sector arm of a well-known statecontrolled union, which was formed during the repressive
Suharto government era.64 Eighty percent of them reported that
their membership was mandatory as they entered permanent
status employment and membership dues for the union were

32

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

WHAT INDOFOOD MUST DO TO ALLOW GENUINE FREEDOM OF ASSOCIATION AND					

COLLECTIVE BARGAINING ON ITS PLANTATIONSIndofood must act immediately to ensure that the rights to freely associate and collectively bargain are respected on its
plantations. In order to align its operations with the Fair Labor Principles, Indofood must:»» Respect workers’ right to freely associate and collectively bargain as established by the International Labor Organization(ILO).
»» Engage and bargain in good faith with all legitimate trade unions.
»» Not interfere with the organizing activities of workers, worker representatives, or representatives of trade unions.
»» Not prohibit, restrict or otherwise interfere with lawful strike action.

H I D D E N

W O R K E R

E X P L O I T A T I O N|

R A I N F O R E S T

A C T I O N

N E T W O R K

27

RECOMMENDATIONSWHAT INDOFOOD MUST DO
The findings of the investigation carried out on two Indofoodprovisions and implementation plan with the requirements

plantations is indicative of Indofood’s failing approach tooutlined in Free and Fair Labor in Palm Oil Production: Principles

responsible palm oil production, resulting in ongoing labor rights

and Implementation Guidance, and work to immediately

abuses and other Conflict Palm Oil practices. To demonstrate

investigate and address the reported labor violations outlined inits commitment to stop the exploitation of workers and uphold

this report.

67

workers’ rights, Indofood must align its workers’ rights policy

34

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

INDOFOOD MUST ENSURE:
As articulated in the Fair Labor Principles, Indofood must ensure acrossall its plantations and third party suppliers’ operations that:

1.

The International Labor Organization (ILO) Core Conventions are upheld.

2.

Ethical hiring and responsible employment are practiced.

3.

Reasonable production targets, working hours, and leave entitlements are established.

4.

A living wage is paid.

5.

Worker health and safety and the welfare of workers and their families are prioritized.

6.

Access to remedy is guaranteed; and7.

Meaningful due diligence, transparency, and disclosure of human rights policies, procedures,and data, with a focus on labor and employment, are established.

Specific high risk issues and recommendations for theirand plantations that it owns, manages, or invests in, regardlessremedy, in line with the Fair Labor Principles, are highlighted inof stake. In order to meet the new market standard, Indofood

the key findings section of this report. Indofood should utilize

must require its third party palm oil suppliers to meet the samethe normative standard detailed in the Principles and the set

responsible production standard.

of operational practices articulated in the Guidance to help
guide the development of a stronger palm oil policy and

In order to break its ties to deforestation and reduce its

implementation plan. Effective implementation will require thatcarbon footprint, Indofood must halt further clearance of HighIndofood establish transparent, interim milestones and engage

Conservation Value (HCV) areas and High Carbon Stock (HCS)

in meaningful, ongoing dialogue with key stakeholders, criticallyforests as well as peatlands of any depth, using the High Carbon

including workers and any independent unions with which they

Stock Approach. It must also address other key Conflict Palm

engage.

Oil cases that have been highlighted in the recently released,“Palm Oil Sustainability Assessment of Indofood Agri Resources.”68

Beyond Addressing Labor Abuses

This includes resolving the six land disputes profiled in the

Indofood is currently the largest private palm oil company inIndofood Agri Resources report to the mutual satisfaction of theIndonesia without a responsible palm oil policy. It must adopt

communities through an accountable, mutually agreed upon,and implement a responsible palm oil policy that requires theand documented conflict resolution process.

production and sourcing of palm oil that is fully traceable,
legally grown and verified as not associated with workers’ rights
or other human rights violations, deforestation, or expansion on
carbon-rich peatlands of any depth. This policy must go beyond
achieving Roundtable on Sustainable Palm Oil certification,
which fails to ensure that workers’ rights are upheld, rainforestsand peatlands are left intact, and community conflicts are
avoided and resolved. The policy must apply to all of Indofood’s
operations worldwide including the subsidiaries, refineries, mills

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

35

WHAT PEPSICO AND OTHER INDOFOOD CUSTOMERS MUST DO
PepsiCo has a critical role to play in transforming Indofood. With

partners. Currently the snack food giant only has a goal for

Indofood as its joint venture partner and the sole producer ofachieving 100% RSPO physically certified palm oil by 2020.

PepsiCo products in Indonesia, PepsiCo is uniquely positioned
to ensure Indofood becomes a responsible palm oil company.

Indofood’s other customers and business partners with

PepsiCo must require that Indofood work rapidly to investigate

responsible palm oil sourcing policies — including Wilmar,

and address the labor violations outlined in this report, resolve

Musim Mas, Golden Agri-Resources (GAR), Unilever, Procter &other outstanding Conflict Palm Oil cases, and adopt andGamble, Nestlé and Wilmar — must also require that Indofood

implement a responsible palm oil policy that requires thework rapidly to investigate and address the labor violations

production and sourcing of palm oil that is fully traceable,

outlined in this report, resolve other outstanding Conflict Palm

legally grown and verified as not associated with workers’ rights

Oil cases, and adopt and implement a responsible palm oil

violations, deforestation, expansion on carbon-rich peatlands

policy. If Indofood refuses to do so, then these companiesof any depth, and the violation of human rights. Not changing

must suspend all existing and future contracts with Indofood

Indofood will mean continued reputational risk for PepsiCo

until the company takes concrete and transparent actions toand a failure to comply with the principles of PepsiCo’s newest

resolve existing conflicts and move toward responsible palm oilpalm oil policy. More broadly, PepsiCo must adopt an ambitious

production and sourcing.

deadline for achieving third-party verified compliance with
its policy for all palm oil used in all its products and brands,
including those produced by Indofood and other joint venture

36

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

WHAT INDOFOOD FINANCIERS MUST DO
Investors and financial institutions must engage directly with

Investors and financial institutions must also develop andIndofood and condition any continued or future financing

implement robust safeguard policies and procedures specificon whether or not Indofood works rapidly to investigate andto any high-risk commodity sector in which their clients operate,

address the labor violations outlined in this report, resolves

and disclose sufficient information to enable independent

other outstanding Conflict Palm Oil cases, and adopts andmonitoring and meaningful dialogue with all stakeholders on

implements a responsible palm oil policy, as outlined above.

measures taken to address environmental and social issues
arising throughout the value chain of their clients’ operations.

WHAT THE INDONESIAN GOVERNMENT SHOULD DO
The election of the new Indonesian president Joko Widodo

Such regulation must address:

and the appointment of a new cabinet in 2014 present an
opportunity for national policy review. As demonstrated in this»» Non-discrimination based on ethnicity or gender.

report, current labor laws and enforcement are insufficient to»» Bringing rates of pay for piece work up to the official

uphold and protect the rights of palm oil plantation workers

minimum wage and ensuring that minimum wage is in fact in

who face unique and heightened risks from their geographic

line with a living wage.

isolation. The nature of work on plantations is inherently»» And extending housing, education, health, safety, disability,

different than the manufacturing sector and hence needs to bematernity and pension provisions for casual, contract, andaddressed through a unique set of regulations. The Indonesianstatus-less workers.

government should enact specific labor laws to protect palm oil
plantation workers.

Urgent attention needs to be paid to women workers and childlaborers most at risk and least protected, taking into account

Permanent workers are currently protected by the 2003

the quota system and low wages as primary drivers to their

Manpower Law, but there are problems with complianceprecarious employment and vulnerability. The Indonesianas ambiguous regulations are easily abused by plantation

government should ensure that all current jobs and any

companies. For the increasing number of precariously employed

future jobs truly add to the welfare of workers through strong

workers, including casual, contract, and status-less kernet

protections in line with the Fair Labor Principles.

workers unprotected by the 2003 Manpower Law, further
regulation is needed to protect and regularize these workers.

PepsiCo is uniquely positioned to ensure Indofood becomes a responsible palm
oil company. PepsiCo must require that Indofood work rapidly to investigate andaddress the labor violations outlined in this report, resolve other outstanding
Conflict Palm Oil cases, and adopt and implement a responsible palm oil policy.

IN APRIL 2016 PROTESTERS SCALED AN ICONIC PEPSICO L ANDMARK TO
D E M A N D T H E C O M PA N Y C U T C O N F L I C T PA L M O I L . P H O T O : R A N

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

37

WHAT THE ROUNDTABLE ON SUSTAINABLE PALM OIL MUST DO
Indofood’s plantation businesses are members of the industry

to bargain collectively. Where the right to freedom ofcertification system, the Roundtable on Sustainable Palm Oil

association and collective bargaining are restricted under(RSPO). As a RSPO member, Indofood’s PT. PP London Sumatra

law, the employer facilitates parallel means of independentand free association and bargaining for all such personnel.

Indonesia Tbk. (Lonsum) and PT. Salim Ivomas Pratama Tbk.
(Salim Ivomas) are required to follow the RSPO Principles and»» Principle 6.7 Children are not employed or exploited.

Criteria, which include several principles addressing workers’»» Principle 6.8 Any form of discrimination based on race,rights. Based on the findings of this report, Indofood’s Lonsum iscaste, national origin, religion, disability, gender, sexual

violating at least the following RSPO Principles:orientation, union membership, political affiliation, or age, isprohibited; and»» Principle 2.1 There is compliance with all applicable local,»» Principle 6.13 Growers and millers respect human rights.69

national, and ratified international laws and regulations.
»» Principle 4.6 Pesticides are used in ways that do not

The RSPO should require that Indofood’s London Sumatratransparently investigate the issues outlined in this report andendanger health or the environment.
»» Principle 4.7 An occupational health and safety plan is
documented, effectively communicated and implemented.

rapidly come into compliance with the RSPO Principles &Criteria. If it fails to do so, the RSPO should suspend Lonsum»» Principles 6.5 Pay and conditions for employees and forand its associated Salim Ivomas until transparent actions tocontract workers always meet at least legal or industry

resolve the issues outlined in this report take place. The RSPO

minimum standards and are sufficient to provide decent

should also strengthen the Principles and Criteria, complaints

living wages.

mechanism, and auditing procedures to align with the Fair Labor»» Principle 6.6 The employer respects the rights of all

Principles.

personnel to form and join trade unions of their choice and

WORKERS PROTEST WORKER EXPLOITATION ON RSPO CERTIFIED PL ANTATIONSAT THE BODY’S ANNUAL ROUNDTABLE IN 2013. PHOTO: R AN

38

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

WHAT CONSUMERS CAN DO
PepsiCo cares about what their customers think — they spend millions of dollars a year to gain the trust and loyalty of consumers.
The Power is In Your Palm!
Join Rainforest Action Network, International Labor Rights Forum, OPPUK and organizations from around the world that aresupporting efforts to shine a spotlight on the human suffering behind PepsiCo’s cheap snack food. Send PepsiCo a message today
telling them you stand in solidarity with Indofood’s palm oil workers and demand that PepsiCo require Indofood to uphold workers’
rights and rapidly implement a truly responsible palm
oil policy.
Visit http://www.ran.org/solidarity to take action today
and join the movement working to transform the palm
oil sector at:
http://www.ran.org/join_the_palm_oil_action_team.

39

REFERENCES

1.

“The law of the jungle: Corporate responsibility of Finnish palm oil purchases,” Finnwatch. May 2014.
http://www.finnwatch.org/images/palmoil.pdf Accessed April 5, 2016.
“Labor and Human Rights Risk Analysis of the Guatemalan Palm Oil Sector,” Verite.
http://www.verite.org/sites/default/files/images/RiskAnalysisGuatemalanPalmOilSector.pdf Accessed April 5, 2016.
Al-Mahmood, Syed Zain. “Palm oil Migrant Workers Tell of Abuses on Malaysian Palm Oil Plantations,” The Wall Street Journal. July 26, 2015.
http://www.wsj.com/articles/palm-oil-migrant-workers-tell-of-abuses-on-malaysian-plantations-1437933321

2.

“Conflict Palm Oil: How U.S. Snack Food Brands are Contributing to Orangutan Extinction, Climate Change, and Human Rights Violations,” Rainforest Action Network.
September 12, 2013. http://bit.ly/20VDp61 Accessed April 5, 2016.

3.

“PepsiCo Palm Oil Specific Commitments,” Pepsico. September 2015.
http://www.pepsico.com/docs/album/policies-doc/pwp/pepsico-palm-oil-commitment-3.pdf?sfvrsn=0 Accessed April 5, 2016.

4.

Jacobson, Philip. “PepsiCo’s palm oil pledge should not exempt Indofood, NGOs say,” Mongabay. October 27, 2015.
http://news.mongabay.com/2015/10/pepsicos-palm-oil-pledge-should-not-exempt-indofood-ngos-say/ Accessed March 31, 2016.
“PepsiCo’s Palm Oil Action Plan,” PepsiCo. October 2015. http://bit.ly/20VEbjm Accessed March 31, 2016.

5.

Throughout this report, “Indofood” is used to refer to the Indofood subsidiary PT. PP London Sumatra Indonesia Tbk. (Lonsum) in the North Sumatra area where theinvestigation for this report was conducted. Lonsum is a subsidiary of Indofood Agri Resources Ltd (IndoAgri), the palm oil arm of Indofood.

6.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015. http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

7.

As noted elsewhere in the report, we accept that because kernet workers do not have an employment relationship with the company, Indofood may not always be able
to police the provision of safety equipment or kernet workers’ use of safety equipment. However, Indofood remains responsible for ensuring human rights are respected intheir business operations.

8.

“Palm oil sustainability assessment of Indofood Agri Resources,” Aidenvironment. September 2015. http://bit.ly/23FIBfN Accessed March 15, 2016.

9.

Free and Fair Labor in Palm Oil Production: Principles and Implementation Guidance. Humanity United, March 3, 2015.
https://www.humanityunited.org/wp-content/uploads/2015/03/PalmOilPrinciples_031215.pdf Accessed March 30, 2016.

10.

Indofood 2015 Annual Report: Embracing Challenges Capturing Opportunities.
http://www.indofood.com/uploads/annual/Indofood_AR_2015.pdf Accessed May 4, 2016.

11.

PepsiCo. “RSPO Annual Communications of Progress 2014,” Roundtable on Sustainable Palm Oil.
http://www.rspo.org/file/acop2014b/submissions/pepsico-ACOP2014b.pdf Accessed March 15, 2016.

12.

“Pepsico Palm Oil Specific Commitments.” PepsiCo, September 2015.
http://www.pepsico.com/docs/album/policies-doc/pwp/pepsico-palm-oil-commitment-3.pdf?sfvrsn=0 Accessed March 30, 2016
Jacobson, Philip. “PepsiCo’s palm oil pledge should not exempt Indofood, NGOs say,” Mongabay. October 27, 2015.
http://news.mongabay.com/2015/10/pepsicos-palm-oil-pledge-should-not-exempt-indofood-ngos-say/ Accessed March 31, 2016.
“PepsiCo’s Palm Oil Action Plan,” PepsiCo. October 2015. http://bit.ly/20VEbjm Accessed March 31, 2016.

13.

Indofood 2015 Annual Report: Embracing Challenges Capturing Opportunities.
http://www.indofood.com/uploads/annual/Indofood_AR_2015.pdf Accessed May 4, 2016.

14.

Hong Kong Stock Exchange, First Pacific Co. Ltd., Complete list of substantial shareholders, http://bit.ly/1a2fc8C, viewed 28 April 2015.
Indofood Agri Resources, Annual report 2014, 10 April 2015, page 5, http://bit.ly/1aBzZjUPT Indofood CBP Sukses Makmur, Annual report 2014, page 14, http://bit.ly/1Jv5nzAFirst Pacific Company Limited, Corporate Profile, http://bit.ly/1QsC3vv
First Pacific Company Limited, Business Structure, http://bit.ly/1HCcghR

15.

“IndoAgri Annual Report 2015,” Indofood Agri Resources Ltd.
http://indofoodagri.listedcompany.com/newsroom/20150410_104520_5JS_X76LGBS9BGHIUR0L.1.pdf Accessed March 15, 2016.

16.

Ibid.

17.

“Palm oil sustainability assessment of Indofood Agri Resources,” Aidenvironment. September 2015. http://bit.ly/23FIBfN Accessed March 15, 2016.

18.

Ibid.

40

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

19.

Fogerty, David. “Norway Fund Drops 11 Firms Over Deforestation,” The Straits Times. March 28, 2016.
http://www.straitstimes.com/asia/se-asia/norway-fund-drops-11-firms-over-deforestation Accessed April 1, 2016.

20.

“Indofood Sukses Makmur Tbk public shareholder analysis,” Bloomberg. Accessed March 22, 2016.

21.

Ibid.

22.

“Continuous Growth for Sustainability in Competitive Market: 2014 Annual Report,”page 73. PT Indofood Sukses Makmur.
http://www.indofood.com/uploads/annual/ISM_2014_website.pdf Accessed March 15, 2016.

23.

“Kadin: Sawit Serap 21 Juta Tenaga Kerja,” Antara News. October 15, 2014.
http://www.antarasumbar.com/berita/119323/kadin-sawit-serap-21-juta-tenaga-kerja.html Accessed April 2, 2016.
“Industri Sawit jadi Kunci Kemandirian Ekonomi,” GAPKI. April 28, 2015.
http://www.gapki.or.id/Page/PressReleaseDetail?guid=3a4a17a7-d032-408d-ad1d-fa7cf08a6e8f Accessed April 2, 2016.
“Catatan Singkat Akhir Tahun Perburuhan Sawit Watch 2015,” Sawit Watch. February 9, 2016.
http://sawitwatch.or.id/2016/02/catatan-singkat-akhir-tahun-perburuhan-sawit-watch-2015/ Accessed April 2, 2016.
“Exploitative Labor Practices in the Global Palm Oil Industry,” Accenture. 2012.
http://humanityunited.org/pdfs/Modern_Slavery_in_the_Palm_Oil_Industry.pdf Accessed April 2, 2016.

24.

“Indonesia: Oilseeds and Products Annual Report 2016,” USDA Foreign Agricultural Service. March 15, 2016.
http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Oilseeds%20and%20Products%20Annual_Jakarta_Indonesia_3-15-2016.pdf Accessed April 2, 2016.
Calculation of one worker per 4 hectares taken from http://www.cifor.org/publications/pdf_files/OccPapers/OP-124.pdf

25.

Coordinating Ministry For Economic Affairs: Masterplan - Acceleration and Expansion of Indonesia Economic Development 2011-2025 (MP3EI)
http://www.bappenas.go.id/index.php/download_file/view/11061/3437/
Otto, Ben. “Indonesia Bans New Palm Oil and Mining Operations.” The Wall Street Journal. April 15, 2016.
http://www.wsj.com/articles/indonesia-bans-new-palm-oil-and-mining-operations-1460707310 Accessed April 15, 2016

26.

Li, Tania Murray. “Social impacts of the oil palm in Indonesia: A gendered perspective from West Kalimantan,” Center for International Forestry Research (CIFOR). 2015.
http://www.cifor.org/publications/pdf_files/OccPapers/OP-124.pdf Accessed March 15, 2016.

27.

Ng, Yee Guan et al. “The prevalence of musculoskeletal disorder and association with productivity loss: a preliminary study among labour intensive manual harvesting
activities in oil palm plantation,” Industrial Health. November 29, 2013. http://www.ncbi.nlm.nih.gov/pubmed/24292878 Accessed March 15, 2016.

28.

Ng, Yee Guan et al. “Ergonomics Observation: Harvesting Tasks at Oil Palm Plantation,” Journal of Occupational Health. July 26, 2013.
http://www.ncbi.nlm.nih.gov/pubmed/23892641 Accessed March 15, 2016.

29.

“Losing Ground: The human rights impacts of oil palm plantation expansion in Indonesia,” Friends of the Earth, LifeMosiac, and Sawit Watch. February 2008.
http://www.foei.org/wp-content/uploads/2014/08/losingground.pdf Accessed March 30, 2016.

30.

“Regulatory and voluntary standards,” Berne Declaration.
https://www.bernedeclaration.ch/companiesinstitutions/syngenta/paraquat/regulation/ Accessed March 15, 2016.

31.

“Poisoned and Silenced: A Study of Pesticide Poisoning on the Plantations,” Tenaganita and Pesticide Action Network (PAN) Asia and the Pacific. March 2002.
http://www.panap.net/sites/default/files/Poisoned-and-Silenced.pdf Accessed March 15, 201632.

Ministry of Manpower and Transmigration Act No 13 Year 2003 Chapter 9 Article 59
http://www.ilo.org/dyn/travail/docs/760/Indonesian%20Labour%20Law%20-%20Act%2013%20of%202003.pdf(Unofficial Translations prepared by ILO Jakarta) Accessed March 15, 2016.

33.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015.
http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

34.

“From Precarious to Decent Work,” International Labor Organization. 2012.
http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---actrav/documents/meetingdocument/wcms_179787.pdf Accessed March 30, 2016.

35.

“Partner of Choice Annual Report 2015,” Golden Agri-Resources. 2015.
http://www.goldenagri.com.sg/pdfs/Annual%20Report/GAR07-04-04-2016-AR2015.pdf Accessed March 20, 2016.
“Losing Ground: The human rights impacts of oil palm plantation expansion in Indonesia,” Friends of the Earth, LifeMosiac, and Sawit Watch. February 2008.
http://www.foei.org/wp-content/uploads/2014/08/losingground.pdf Accessed March 30, 2016.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

41

36.

Tjandra, Surya. “Labour law and development in Indonesia,” Meijers Research Institute and Graduate School of Leiden University, Faculty of Law, Leiden University.
https://openaccess.leidenuniv.nl/handle/1887/37576 Accessed March 15, 2016.
Li, Tania Murray. “Social impacts of the oil palm in Indonesia: A gendered perspective from West Kalimantan,” Center for International Forestry Research (CIFOR). 2015.
http://www.cifor.org/publications/pdf_files/OccPapers/OP-124.pdf Accessed March 15, 2016.

37.

A conversion rate of Rp 13,500 (IDR) to $1 (USD) was used for all monetary conversions.

38.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015. http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

39.

Ministerial Decree No 100. Chapter V “Daily or Casual Employment Agreement” Article 10. Ministry of Manpower and Transmigration. 2004.

40.

Ministry of Manpower and Transmigration Act No 13 Year 2003 Chapter 9 Article 59
http://www.ilo.org/dyn/travail/docs/760/Indonesian%20Labour%20Law%20-%20Act%2013%20of%202003.pdf (Unofficial Translations prepared by ILO Jakarta)
Accessed March 15, 2016.

41.

“POIG Verification Indicators,” Palm Oil Innovation Group. http://poig.org/poig-verification-indicators/ Accessed March 15, 2016.

42.

“Minimum Wage in Indonesia - frequently asked questions,” Wage Indicator Foundation.
http://www.wageindicator.org/main/salary/minimum-wage/indonesia/faqs-minimum-wages-in-indonesia Accessed March 30, 2016.

43.

According to Ministry of Manpower and Transmigration Regulation No 7 Year 2013 Article 17 regarding Minimum Wage, the wage for daily casual workers’ working a sixday work week is the monthly minimum wage divided by 25 work days. For the plantation examined, that would mean the district minimum wage of Rp 2,015,000 divided
by 25 work days, which result in a rate of Rp 80,480.

44.

Kesepakatan Bersama Mengenai upah pekerja perkebunan pada Perusahaan Anggota BKS-PPS (kalangan swasta) di Propinsi Sumatera Utara Tahun 2016

45.

Tjandra, Surya. “Kasus 11: Perbuatan Melawan Hukum Dalam Penetapan Upah Minimum,” Bab-Bab Tentang Hukum Perburuhan Indonesia (Bali: Pustaka Larasan, 2012),
123-127. http://media.leidenuniv.nl/legacy/bbrl-labour-law-final.pdf Accessed March 15, 2016.

46.

Based on a maximum daily rate reported of Rp 78,600 times 20 maximum working days (as casual worker).

47.

The district monthly minimum wage referenced is Rp 2,015,000, which is the monthly minimum wage for permanent workers in the district where one of the plantations islocated.

48.

Based on a reported daily rate range of Rp 20,000 to Rp 35,000 times 25 full-time working days following a harvester.

49.

The district monthly minimum wage referenced is Rp 2,015,000, which is the monthly minimum wage for permanent workers in the district where one of the plantations islocated.

50.

“REPORT on the Implementation NAP WFCL Stage One (2002-2007) and the National Action Plan on WFCL Stage Two (2008-2012),” Secretariat of the National Action
Committee on the Elimination of the Worst Forms of Child Labour.
http://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---ilo-jakarta/documents/publication/wcms_124006.pdf Accessed March 15, 2016.

51.

“List of Goods Produced by Child Labor or Forced Labor,” United States Department of Labor. December 1, 2014.
http://www.dol.gov/ilab/reports/pdf/TVPRA_Report2014.pdf Accessed March 15, 2016.

52.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015. http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

53.

“International Programme on the Elimination of Child Labour Safety and Health Fact Sheet Hazardous Child Labour in Agriculture Oil Palm,” International Labor
Organization. March 2004.

54.

“Herbicides - Gramoxone,” Syngenta.
http://www.syngenta.com/global/corporate/en/products-and-innovation/product-brands/crop-protection/herbicides/Pages/gramoxone.aspx Accessed March 31, 2016.

55.

“Paraquat: A PAN AP Factsheet Series: Highly Hazardous Pesticides,” Pesticide Action Network Asia and the Pacific. http://www.panap.net/sites/default/files/pesticidesfactsheet-hhps-paraquat.pdf Accessed March 15, 2016.

56.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015. http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

57.

Ibid.

58.

Each fruit bunch weighs up to 25 kilograms.

59.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015. http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

60.

Ibid.

42

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

61.

Ministry of Manpower and Transmigration Act No 13 Year 2003 Article 104
http://www.ilo.org/dyn/travail/docs/760/Indonesian%20Labour%20Law%20-%20Act%2013%20of%202003.pdf (Unofficial Translations prepared by ILO Jakarta) Accessed
March 15, 2016.

62.

“ILO Convention 98 Right to Organise and Collective Bargaining,” Article 2. International Labor Organization. 1949.
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312243 Accessed March 15, 2016.

63.

Caraway, T., et al. “Working Through The Past: Labor and Authoritarian Legacies in Comparative Perspective,” Cornell University ILR School. 2015.
http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1110&context=books Accessed April 4, 2016.

64.

Tjandra, Surya. “Labour law and development in Indonesia.” Leiden University. April 2, 2016.
https://openaccess.leidenuniv.nl/bitstream/handle/1887/37576/04.pdf?sequence=10 Accessed April 4, 2016.

65.

Ibid.

66.

“Towards Responsible Sourcing and Traceability,” IndoAgri. Sustainability Report 2015. http://www.indofoodagri.com/misc/sr2015.pdf Accessed May 5, 2016.

67.

“Palm oil sustainability assessment of Indofood Agri Resources,” Aidenvironment. September 2015. http://bit.ly/23FIBfN Accessed March 15, 2016.

68.

Ibid.

69.

“Principles and Criteria for the Production of Sustainable Palm Oil 2013,” Roundtable on Sustainable Palm Oil. April 25, 2013.
http://www.rspo.org/file/PnC_RSPO_Rev1.pdf Accessed March 30, 2016.

OPPUK is an Indonesian labor organization founded in 2005 by student activists and workers
concerned about palm oil workers’ working and living conditions in North Sumatra, Indonesia.
OPPUK has three main programs that include organizing and educating workers, conducting
research and advocacy and campaigning for the rights of palm oil workers in North Sumatra
and Indonesia generally.

Rainforest Action Network (RAN) campaigns for the forests, their inhabitants and the natural
systems that sustain life by transforming the global marketplace through education, grassroots
organizing and non-violent direct action.

The International Labor Rights Forum (ILRF) is a human rights advocacy organization dedicatedto achieving just and humane conditions for workers worldwide, founded in 1986 and based in
Washington D.C. ILRF works with trade unions and community- based labor rights advocatesto expose violations of workers’ rights, including child and forced labor, discrimination, andviolations of workers’ rights to organize and bargain collectively.

T H E

H U M A N

C O S TO F

C O N F L I C T

P A L MO I L|

R A I N F O R E S T

A C T I O N

N E T W O R K

43Publication Date: June, 2016

RAN.org