JAKARTA (Reuters): A palm oil industry body has ordered a unit of one of the world’s major producers to stop buying or developing new plantations in Indonesia, in a dispute seen as a test case on expansion by agribusiness firms versus local land rights.

The subsidiary of Singapore-listed Golden Agri-Resources Ltd was ordered to stop buying or developing new plantation land by the Roundtable on Sustainable Palm Oil (RSPO) after it was found to have breached rules on land acquisition.

Golden Agri-Resources (GAR) is the parent of Indonesian palm company PT Sinar Mas Agro Resources and Technology (SMART), which has plantations spread over 473,000 hectares mostly in Sumatra and Kalimantan on the island of Borneo.

Rights groups accuse a separate subsidiary of taking land from local people without free and informed consent – breaching sustainability guidelines which require residents to approve land deals.

The showdown is just one of an estimated 4,000 land-related conflicts between palm oil producers and local communities recorded by Indonesia’s government in the world’s biggest palm oil producing nation.

The RSPO is a body of consumers, green groups and plantation firms that aims to promote the use of sustainable palm oil products and is used by many European palm oil buyers as the international sustainability benchmark.

In a letter dated 6 May, the RSPO’s complaints panel said Golden Agri-Resouces hadn’t adhered to RSPO rules on conservation assessments and consultation and consent of local people before converting land for planting in West Kalimantan.

Golden Agri-Resources had until 20 May to respond to the panel’s preliminary decision, Stefano Savi, spokesman at the RSPO said on Monday.

Conservation groups welcomed the decision.

“We are greatly encouraged that the RSPO is upholding its standard. We need to eliminate all land-grabbing from the RSPO-endorsed supply chain,” Marcus Colchester, Senior Policy Advisor of the Forest Peoples Programme said in a statement.

The RSPO has the power to withdraw membership, which could potentially lead to lower purchases by Western consumers concerned at sustainability in the industry, although Savi said he was confident a settlement could be reached.

Golden Agri-Resources, which is due to report its first-quarter results on Tuesday, said it had voluntarily put on hold land preparation for all new plantings since early November.

“GAR reiterates that we remain committed to acting responsibly and working with stakeholders to address the outstanding issues raised.”

Golden Agri-Resources has been working with the Indonesian government and green groups to set new environmental standards, following a 2010 deforestation campaign by Greenpeace attacking its Indonesian-listed unit SMART.

Malaysian April palm stocks hit 5-month high as output climbs

KUALA LUMPUR, (Reuters): Malaysian palm oil stocks in April rose to a five-month high as accelerating crude palm oil output in the world’s No.2 producer offset weaker exports, data from industry regulator showed.

Higher inventories could weigh on benchmark palm prices, which have shed nearly 5% this year, although market players say factors such as firm comparative soy and oil markets may lend support to the tropical oil.

Data from the Malaysian Palm Oil Board (MPOB) showed April inventories rose 17.6% from a month ago to 2.19 million tonnes, beating market estimates and the highest since November.

A median forecast in a Reuters poll suggested stocks rose 14.3% to 2.13 million tonnes.

Malaysia’s crude palm oil output rose 13.3% to 1.69 million tonnes, above forecasts for a 11.5% rise, as yields in top palm-growing Borneo states Sabah and Sarawak picked up pace, the data showed on Monday.