MY02619-04 Felda Semenchu 2011 00 Report Felda Palm Industries Sdn Bhd

MY02619

Summary Report against RSPO MYNI Requirement for

Kompleks FELDA Semenchu & estates

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Project Nr: MY02619 Certificate Nr: SGS-RSPOPM-00969

Validity Period: 25/07/2012-24/07/2017

Report Ref #: MY02619-04 Felda Semenchu 2011 00 Report

Client: Felda Palm Industries Sdn Bhd

RSPO membership #: 051-04

Web Page: http://www.ioigroup.com/business/busi_plantoverview.cfm

Address:

Unit Kajian Alam Sekitar, Felda Agricultural Services Sdn Bhd, Tingkat 7, Balai FELDA, 54000 Kuala Lumpur

Contact: Mr. K.Ilanggovan Tel: +603-26987772 Email: [email protected]

Country: Malaysia

Plantation Unit being Evaluated

Semenchu palm oil mill and its supply base plantation in Johor.

Total Plantation Area 17,445.32 ha (as per title) 15,696.43 ha (effective area)

Company Contact Person: Mr. K.Ilanggovan

Address:

SEMENCHU PALM OIL MILL PETI SURAT 63, 81907 KOTA TINGGI, JOHOR, Malaysia

Tel: +603-26987772

Fax

Email: [email protected]

Evaluation dates:

Main Evaluation 6-10 June 2011

Surveillance 1 June 2012

Surveillance 2 June 2013

http://www.ioigroup.com/business/busi_plantoverview.cfm

mailto:[email protected]

mailto:[email protected]

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Table of Contents 1. INTRODUCTION ................................................................................................................ 3

2. BRIEF COMPANY BACKGROUND .................................................................................. 6

3 ASSESSMENT PROCESS ................................................................................................ 8

4. OTHER VERIFICATION REQUIREMENTS ....................................................................... 9

5. FIELD ASSESSMENT PROGRAMME ............................................................................... 9

6. FELDA MANAGEMENT OF SMALLHOLDERS SCHEMES .............................................11

7. ASSESSMENT FINDINGS ................................................................................................12

8. RECORD OF CORRECTIVE ACTION REQUESTS (CARs) .............................................35

9. CERTIFIED ORGANISATIONS ACKNOWLEDGEMENT OF INTERNAL

RESPONSIBILITY ....................................................................................................................53

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1. INTRODUCTION

Federal Land Development Authority (FELDA) is a regular member of the Roundtable on Sustainable Palm Oil (RSPO) and is committed to the sustainable practices of oil palm cultivation. The Group has also been committed to the certification system of RSPO through a time bound plan. As part of the commitment, the FELDA Group has invited SGS (Malaysia) Sdn Bhd (SGS) to certify FELDA Semenchu palm oil mill (FSPOM) and its Fresh Fruit Bunch (FFB) supplying bases in Kota Tinggi through an assessment process. The assessment process was conducted according to the requirements of the QUALIPALM Programme, a SGS verification programme, for compliance to RSPO principles and criteria interpreted nationally as the baseline in April 2008 which also includes the national interpretation for the smallholder released in November 2010.

1.1 CERTIFICATION BODY

SGS Group is the world’s largest auditing, inspection, testing and verification organisation founded in 1878. SGS Group is able to provide its international clientele with a comprehensive range of services in more than 145 countries from a unique international global network of more than 1180 offices, 321 laboratories and 50,000 full time staff. SGS has no manufacturing, trading or financial interests which could compromise its independence and biasness in the audit process. It guarantees independence, its reputation for professionalism, integrity and impartiality.

QUALIPALM programme of SGS Group’s Oil Palm certification programme has been accredited by RSPO to provide certification services both against the RSPO P&C and the RSPO supply chain. To date, SGS has conducted various RSPO related audits in Malaysia, Indonesia, Colombia and Thailand and has issued at least 5 RSPO certificates to three different companies.

1.2 SCOPE OF MAIN ASSESSMENT FOR CERTIFICATION

The scope of the main assessment covers FSPOM managed by FELDA Palm Industries Sdn Bhd and the seven (7) FFB supplying bases hereafter called as “schemes” managed by FELDA Techno-plant Sdn Bhd within the Kota Tinggi District, in State of Johore. The scope for certification in FSPOM is based on its throughput, quantity (t) of FFB processed in 2010, production of crude palm oil (CPO) and palm kernel (PK) produced as given in Table 1. The name of the FFB supplying base or schemes, its geo-positioning co-ordinations, the total land and planted area of each scheme are given in Table 2.

TABLE 1: FELDA SEMENCHU PALM OIL MILL AND SCOPE OF CROP TO BE CERTIFIED

GPS Location and Address

FFB throughput metric tons (MT/hour(hr)

Production MT in 2010

FFB processed (only for 7

CPO PK

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Schemes)

N= 01o34.7’ E=104o6.2’ FELDA Palm Industries Sdn Bhd, Kilang Sawit FELDA Semenchu, 89100, Kota Tinggi, Johor, Malaysia

54 204,788 44,378 8,480

Table 1 shows the FFB produced by the 7 smallholder schemes which are directly managed by FELDA Techno Plantation Sdn Bhd and by the independent smallholders within the 7 scheme as well as CPO and PK produced by FSPOM. The oil mill also accepts crop from external growers which is included in the certification programme within 3 years as per clause 4.2.3 of the RSPO certification system (approved document 26th June 2007). In 2010, the total FFB processed in the oil mill including the external or out growers was 289,059.30 mt, of which 84,271.43mt of FFB (29%) was received by the oil mill from out growers and thus not included within the scope of the RSPO certification It is necessary to take note that the crop from external growers can also be from the independent smallholders within the scheme, who do not wish to be managed by FELDA Technoplant Sdn Bhd.

TABLE 2: FFB SUPPLYING SCHEMES, LOCATIONS, OIL PALM PLANTED AREA, TOTAL LAND AREA AND FFB (MT) PRODUCTION IN 2010

Name of the Scheme and

Address

GPS Co-ordination (Location)

Oil Palm Planted Area

[Hectares (Ha)]

Total Land

area (Ha)

FFB production

2010 (January-

December)

Distance from oil mill (km)

Semenchu, Pejabat FELDA Semenchu, 81900 Kota Tinggi, Johor, Malaysia

N 01o 34.5’ E 104o 5.5’

2,548.04 2,775.72 27,661.58 0.1

Pasak, Pejabat FELDA Pasak, 81960 Kota Tinggi, Johor, Malaysia

N 01o 42.7’ E 103o 57.4’

999.93 1,497.31 11,679.32 25.0

Air Tawar 1, Pejabat FELDA Air Tawar 1, 81920 Kota Tinggi, Johor, Malaysia

N 01o 37.7’ E 104o 2.8’

2,535.49 2,674.29 37,888.62 6.5


N 01o 40.64’ E 104o 1.27’

3,103.96 3,431.37 35,514.51 15.0

Air Tawar 3, Pejabat FELDA Air Tawar 3, 81920 Kota Tinggi,

N 01o 42.22’ E 103o 59.10’

2,273.04 2,449.53 30,940.65 20.0

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Johor, Malaysia


N 01o 37.4’ E 104o 5.4’

2,078.4 2,199.93 21,126.76 5.0


N 01o 35.6’ E 104o 6.3’

2,157.57 2417.17 39,976.43 1.0

Total 15,696.43 17,445.32 204,787.87

Out of the total land area of 17,445.32 Ha, 15,696.43 Ha is planted with oil palm in all of the 7 schemes (Table 2). The difference between oil palm planted and total land area in FELDA Pasak was 33% due to the planting of rubber trees by the smallholders, which was not within the scope of the certification programme. The scope of the crop to be certified covering 44,378 mt of CPO and 8,480 mt of PK produced out of 204,788mt of FFB produced from seven (7) schemes (Table 1). The farthest scheme is Pasak about 25 km from the oil mill, while the rest of the schemes are within the 20 km distance from the oil mill and is accessible by tar sealed State feeder roads. The nearest town from the oil palm mill is Kota Tinggi which is located somewhere 37 km from the palm oil mill. The location map of the overall FELDA schemes in Peninsular Malaysia and the location of the Semenchu complexes are shown in Figure 1.

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Figure1: FELDA Schemes in Peninsular Malaysia and Location of the Semenchu Complexes

1.3 PLANTING PROFILE

The oil palm planting profiles of the 7 schemes are shown in Table 3.

Currently, all oil palm planting profiles in Semenchu schemes are on the second cycle of planting oil palm accept Pasak where 44.49 hectares of oil palm planting are planned to be re-planted in 2012. There are no new plantings within the schemes.

TABLE 3: PLANTING PROFILES OF SEMENCHU SCHEMES

Oil palm planted area

at each Scheme (Ha)

2nd

Cycle

Age & year of Plantings (ha)

2010-2011

2005-2009

2000-2004

1995-1999

1990-1994

Before 1989

Total

Air Tawar 1 - - 2,535.49 - - - 2,535.49

Air Tawar 2 - - 3,103.96 - - - 3,103.96

Air Tawar 3 - 220.65 2,052.39 - - - 2,273.04

Air Tawar 4 - 547.39 1,531.01 - - - 2,078.40

Air Tawar 5 217.81 - 1,939.76 - - 2,157.57

Pasak - 247.33 - 169.28 538.83 44.49 999.93

Semenchu - 2,548.04 2,548.04

GRAND TOTAL 15,696.43

2. BRIEF COMPANY BACKGROUND

Federal Land Development Authority (FELDA) Holdings Berhad is among one of the world’s largest palm oil producer, accounting 8% of the world palm oil production, supporting over 880,000 hectares of land bank and managing over 530,000 hectares of agricultural cultivated land. FELDA Group of companies has their presence in the United States of America, Canada, Australia, Pakistan, China, Sri Lanka, Thailand, South Africa and France.

FELDA was formed under Land Ordinance Act 1956 and incorporated on 6th September 1995 and subsequently became a public company on 3rd October 2003. They employ close to 19,000 employees with a labour force of 46,795 workers. FELDA manage a major portion of the oil palm planted land bank in Malaysia and undertakes substantial downstream activities of palm oil.

The largest shareholder of FELDA Holdings Berhad is the FELDA Investment Co-operative (51%) where the ownership is modeled to include FELDA settlers, own employees and the beneficiaries are institutionalized within the corporate structure. The rest of the equity (49%) is under FELDA Global Ventures Holdings Sdn Bhd, a wholly owned subsidiary of FELDA. In addition, the Ministry of Finance Incorporated has a Golden Share in FELDA Holdings Berhad.

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FELDA Holdings Berhad recognized the sustainability as a key component for their continuous success and is committed to the highest international standards of agricultural practices and environmental guidelines. The group has their own good agricultural and milling practices handbooks. All 70 palm oil mills managed by FELDA are certified to ISO 14001, OHSAS 18001 and ISO 9001 standards.

FELDA is an existing member and actively involve in the Roundtable on Sustainable Palm Oil (RSPO). They have representatives in the RSPO executive board (EB) to look into the interests of the smallholders since 2005. FELDA has participated in 3 RSPO projects namely;

a. Verification for principles and criteria audit b. Participated in National Interpretation Working Group c. Participated in Smallholders Working Group.

FELDA has initiated Clean Development Mechanism (CDM) projects under the United Nations Sponsored Agreement under Kyoto Protocol to reduce global green house gas emission. The CDM project is supervised by an executive board under the guidance of United Nations Framework Convention on Climate Change (UNFCCC). The projects participated under the UNFCCC were in biomass power generation, composting of by-product and biogas capture for power generation which are described below:

A. Biomass Power Plant FELDA has established the country’s first biomass based captive co-generation plant at its premise in Sahabat complex in Sabah. The plant is capable of generating 7.2 MW of electricity by using 250,000 tonnes (t) of empty fruit bunch (EFB) as feed material to drive the central generation of energy. The energy produced is channeled to the commercial and domestic consumers within the Sahabat complex. In 2006, the plant was endorsed as a CDM project.

B. Compost Plant The compost plant was first commissioned in August 2005 in Maokil mill near Labis. The EFB and palm oil mill effluent (POME) were used to produce compost and later used as organic fertilizers.

C. Biogas Plant The pilot biogas plant was developed in Serting Hilir Negeri Sembilan in 2005 to facilitate research and development on biogas generation and recovery to optimize the power generation at 500MW. There is an on-going research in this oil mill on to improve the generation and capture of biogas.

The above programmes initiated at the Group level require monitoring prior to being implemented at all the oil mills. Experience gained from these projects will support the Group to carry on with the continuous improvement plans with respect to the environment.

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2.1 OTHER CERTIFICATIONS

FELDA Semenchu oil mill has following certificates ISO 9001-2000 (Certificate No. AR4096), ISO 14001-2004 (Certificate No. ER0367) and OSHAS18001-2007(Certificate No.SR0243) 3 ASSESSMENT PROCESS

3.1 AUDIT TEAM A brief working experience of the auditors is given in Table 4.

TABLE 4: AUDITOR’S WORKING EXPERIENCE

Audit Team Brief Working Experience

Lead Auditor Abdul Haye Semail, a degree holder in B.Sc. is a forester by profession and has 15 years experience in forest harvesting and plywood industry. As a trained assessor, he has been involved in forest certification and chain of custody for the last 4 years. Trained by RSPO for auditing against RSPO P&C and involved in a number of plantation assessments and inspection of palm oil mill.

Auditor James Ong is a graduate from University of xxx is an agronomist by training. He has many years experience in the agriculture sector in Malaysia having worked as Assistant Plantation Manager in a number of estates in Malaysia. He is well versed with agro chemical and fertiliser applications. Has undergone ISO and RSPO Lead Auditor training and has been involved in a number of audits on oil palm plantations.

Auditor Joshua Mathews holds a Masters degree in Genetics and Plant Breeding. His last 20 years experience covers agronomy, oil palm breeding, quality control and management of oil palm estate. He has a vast experience in developing documents of standard operating procedures, environmental and social impact assessments and implementing sustainability programmes on good agricultural practices, environmental and social management plans for 8 oil mills and 50 estates since 2007. He has many years of experience in managing 200 unionised workers, staffs and executives of one of the biggest plantation in Malaysia. He has undergone trainings on Quality management system auditors/lead auditor and on International standard for carbon certification (ISCC) courses

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3.2 30 DAYS STAKEHOLDER NOTIFICATION

The 30 days stakeholder notification was published in the RSPO website on 26th April 2011. Similarly, FELDA had published the same notification in their website. Until the end of audit there were no stakeholder feedbacks received.

4. OTHER VERIFICATION REQUIREMENTS

4.1 TIME BOUND PLAN

As FELDA has a huge land bank and 70 oil mills, it is required to submit a time bound plan to the auditors prior to the Main Assessment in Semenchu. The time bound plan proposed by FELDA management is tabulated in Appendix 8.

Time bound plan is proposed in accordance with the certification requirement, clause 4.2.4. A total of 70 oil mills and its supplying bases are expected to be certified by 2017.The time bound plan proposed by FELDA is very challenging and is expected to be a time consuming process on FELDA’s part taking into considering the participation of scheme smallholders and independent smallholders. At the time of writing this audit report, 2 of the oil mills were certified and 11 oil mills were audited and the reports are yet to be submitted to the RSPO Secretariat.

4.2 NEW LAND DEVELOPMENT AFTER 2005

FELDA has not developed any new land for oil palm plantation since 2005. However, there are plans to develop 300 hectares of land each in Endau and Mersing for new planting. Work is in progress to conduct HCV and social impact assessments at both areas. FELDA is committed to transparency on the new clearing through new planting procedure (NPP) that came into effect on January 2010. FELDA is currently in the process of buying 10,000 hectares of logged over land in Limbang, Sarawak. Plans are in place to follow up NPP by mid 2012, if the deal is materialized.

5. FIELD ASSESSMENT PROGRAMME

The summary of assessment is shown in Table 5.

TABLE 5: ASSESSMENT ITINERARY

Date Schemes Visited Time Assessment Carried Out

5/6/2011 (Evening)

Travelling to Kota Tinggi

3.30pm to 8.30pm. -

6/6/2011 Opening of Assessment By Lead Auditor and presentation by FELDA Visit to Semenchu Scheme (3

8.30a.m. to 9.30a.m 9.30a.m. to

Understanding the FELDA organization chart and management. Document reviews on licenses, safety and health, environmental impact assessment and management plans, social impact assessment and management plans, Chemical Health Risk Assessment (CHRA) grievance settling mechanism and training documents.

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auditors) Visit to Oil mill (3 auditors)

2.00p.m 3.00p.m.to 7.00p.m

Interviews with scheme smallholders and independent smallholders. Inspection to scheme chemical store, chemical mixing store and fertilizer store, oil mill premise inspections.

7/6/2011 Visit to Air Tawar 5 (3 auditors) Visit to Air Tawar 2 (3 auditors)

7.30a.m. to 12.30p.m 1.30p.m to 5.00p.m.

Document reviews, Field visits and operational interviews of workers and mandores especially on chemical handling. Environmental issues, buffer zones and re-planting areas, boundary stones between the smallholder schemes or land, Document reviews, interviews with scheme and independent smallholders and foreign workers line site visits.

8/6/2011 Visit to Air Tawar 4 (3 auditors)

7.30a.m. to 12.30p.m

Visit to Pekan Penawar land fill and interview with FELDA’s waste management contractor. Document reviews and field visits to verify High Conservation Value (HCV) areas and field practices on road maintenances, harvesting, fertilizer application and social interviews,

9/6/2011 Visit to Pasak (2 auditors) Visit to oil mill (1 auditor) Visit to AirTawar 3 (3 auditors) Discussion between auditors Briefing to scheme managers on the findings

7.30a.m. to 12.30p.m. 7.30a.m. to 12.00 noon 1.00p.m to 3.00p.m 3.00p.m to 4.00p.m 4.30 pm to 6.00 p.m

Document reviews, visiting neighbouring HCVs of forest reserve Panti, checking on boundary markers, Integrated Pest management (IPM) programmes, interviews with the scheme and independent smallholders, harvesting, ground cover maintenance. Documents on FFB purchasing mechanism, payment and its transparency, Union Agreement, schedule waste collection document review, oil mill premise inspection, ramp diesel skid tank, POME ponds, scrap iron storage, safety and health issues in the oil mill, by-product management, Lubricant store, schedule waste store, flow meters, water treatment and visit to Briquette plant under construction. Buffer zones, and interviews with workers and visit to line sites. Overall review of findings. Presented the expected non compliances to the management and given until the following day to clarify, if there are any disputes in the auditor’s findings.

10/6/2011 Closing meeting 10.30a.m to 12.30p.m

Presented the non-compliances to the FELDA management.

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6. FELDA MANAGEMENT OF SMALLHOLDERS SCHEMES

It will be essential to know the hierarchy in order to understand the assessments carried out in the Semenchu Complex. The flow chart of the Management system is given in Figure 2.

FIGURE 2: FELDA ORGANISATION CHART

Semenchu Complex (Regional Manager)

Schemes (Managed by FELDA Technoplant Sdn Bhd) (Managers)

Semenchu,

Air Tawar 1,

Air Tawar 2,

Air Tawar 4,

Air Tawar 5 &

Pasak

Settler Schemes Managed

by FELDA Technoplant Sdn

Bhd directly

Settler Scheme of

Independent

Smallholder

Semenchu Oil Mill

(Managed by FELDA Industries Sdn Bhd)

(Managers)

FELDA HOLDINGS

(Director General)

Deputy Director Generals (Management and Finance) (Estate Management) (Community Management)

FELDA Business Part

FELDA District- Johor Bharu (Regional General Manager)

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7. ASSESSMENT FINDINGS

Principle 1: Commitment to transparency

Criterion 1.1 Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making.

Findings The lists of stakeholder are available in the schemes. The minutes of the monthly meetings between the scheme smallholders and management are viewed. Other meetings between oil mill and scheme representatives are also verified in order to understand the allocation of oil extraction rates, quality of crop and value. The schemes have records of each smallholders land title or grant with land survey map carried out by the Department of Land Survey, Johor. Contracts between oil mill and out-growers, and contracts between foreign workers and scheme management are also viewed. However, not all the stakeholder’s requests and responses were attended by the scheme management. Chemical Health Risk Assessment (CHRA) consultant has requested all the 7 schemes to submit the action plan on CHRA’s findings to Department of Occupational Safety and Health (DOSH) on September 2010. Such a request is also a directive from DOSH to the CHRA consultant. All schemes are yet to respond to the request. Request, complaint and grievance book for the foreign workers are unavailable in most of the schemes but is available for settlers although it is incompletely recorded to verify whether the complainant is satisfied with the reply from the schemes. Format of recording complains varies from scheme to scheme. Air Tawar 4 has a record book “Senarai Lawatan Setiap Hari Rabu Bersama Ketua Blok” where the settlers are allowed to meet block leader every Wednesday to report any complaints. Air Tawar 1 opened a grievance book in 2011 where any complaint is to be recorded. The last complaint recorded in Air Tawar 2 was 14th July 2010, where a scheme smallholder was not satisfied with the yield. Subsequently, Felda Air Tawar 2 Manager has consulted the scheme smallholder and the complainant agreed with the response and sign off the complaint book records.. Nevertheless, a Major CAR01 is issued to standardize the system of request, complain and grievance process and response recording for further verification. Subsequently, FELDA has provided sufficient evidence responding to DOSH on 13/06/2011, document No. (12)88003083/JKKP/DOSH with respect to action plan required for the CHRA recommendations. In view of this development, all actions that have been taken by FELDA, the auditing team is of the view that there is sufficient evidence to address the Major CAR 01. However, the effectiveness of the process is yet to be verified as the management plan only been initiated recently. Hence, instead of closing out the Major CAR, the Major CAR 01 is now being downgraded to Minor CAR 01

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pending the verification of the effectiveness of the process established that will be verified during the Surveillance Audit

Criterion 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes.

Findings The documents viewed at the time of audit are as follows; a. Policies on safety and health, environment, sexual harassment, against

child labour etc., Most of the policies viewed are only available in the office.

b. Land grants c. Environmental Impact Assessment and Action Plans d. Social Impact Assessment and Action Plans e. Safety and Health management Plans f. Chemical Health Risk Assessment. g. Continuous improvement plan for bio-polishing plant to improve BOD

levels. h. Procedures for transfer of land inheritance to the next generation and in

case of a divorce the compensation mechanism. i. Complaints and grievances of settlers. j. Training programmes and training conducted.

The above documents are allowed to be viewed upon request.

Principle 2: Compliance with applicable laws and regulations

Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations

Findings License at oil mill and schemes viewed are as follows; a. Department of Environment (DOE) license (002165) to run the oil mill

with the conditions as follows; Throughput of 54 mt/hr, smoke emission of ringlemann chart 2, effluent release to Sg. Semenchu with the standard of Biological Oxygen Demand (BOD) less than 100 ppm, suspended solid (SS) less than 400 ppm, ammonical nitrogen (AN) less than 150 ppm, total nitrogen (TN) less than 200 ppm, oil and grease less than 50 ppm and temperature less than 45oC. The Quarterly Return Form as per First Schedule of the Environmental Quality (Prescribed Premises) (Crude Palm-Oil) Regulations, 1977, dated 11 January 2011 is made available to the auditor during the audit. However, the auditing team observed that effluent analysis since March 2011 indicates that the BOD and suspended solids in most of the samples were above the permissible limit of the standards stipulated by the DOE. A plan has been submitted to the DOE to reduce the BOD level below 100ppm by building a bio-polishing plant, the approval letter has been viewed and the plan is expected to be commissioned by September 2011.

b. There are other conditions that the oil mill is required to fulfill in the

license, which are 6 monthly stack emission monitoring and ambient air quality analysis surrounding the oil mill. The stack emission report KC2010/R-Environ/286 dated 26/10/2010 indicates that the dust particles

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are within Malaysian Standard of 400ug/m3. The ambient air quality is also within the limit of 260ug/m3.

c. The oil mill also follows the regulation of Environmental Quality Act, 1974

and Environmental Quality (Scheduled Wastes) Regulations, 2005 with regard to the schedule waste. Agents with DOE approved license are used to collect schedule waste like hydraulic and used motor oils, rags, empty chemical and lubricant containers. The license of these agents are found valid at the time of main assessment.

d. Weigh bridges were calibrated on 25/1/2011, according to Weights and

Measures Act 1972, regulations 16, 28A and 45 and receipt nos. 339940 and 339941 are viewed.

e. As per Factory and Machinery Act 1967, licence of pressure vessels are viewed and found to be valid. In addition, license for boiler and diesel generator are seen during the audit and found to be valid. Besides licences the boiler has been inspected in term of safety and cleanliness by JKKP. The boiler commissions date is found posted at the boiler’s metal plate.

Furthermore, Noise Monitoring Report is made available to the auditor during the audit.

f. It is checked, the company has employ four qualified boilermen, one qualified Engineer and two charge men holding valid certificates issued by TNB.

g. However, there are no valid licenses for authorised gas tester (AGT) and authorised entrant, and stand by person for the confined space activities in the oil mill.

h. Most of the legal documents of foreign workers especially Indonesian workers were in order in the scheme. The documents in the progress of processing the expired work permits handled between the scheme management, human resource departments at Johor Bahru, and Kuala Lumpur are viewed.

i. However, there is an issue with the workers from Bangladesh whose passports were lost at the Malaysian Immigration Department Office in Kuala Lumpur. The loss of Bangladesh passports is a publically known issue across Malaysia. There is a procedure to that effect developed between the Immigration Department of Malaysia, Bangladesh Embassy and the oil palm plantations concerned to legalise the workers from Bangladesh, who do not possess the passport. The Human Resource Department of FELDA had prepared the list of the workers and had sent them to the Bangladesh High Commissioner Office to apply for the new passport [letter reference (58) 883084000/7/13]. According to the procedure in obtaining work permit, upon receiving their new passport,

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the workers has to undergo medical tests and if they are found healthy they can proceed to the Malaysian Immigration Department to obtain work permit. The process in obtaining new work permit is arranged by the human Resource Department of FELDA. The processed documents are made available to the auditors and are viewed.

j. Furthermore, all Bangladesh workers are insured under the workmen compensation scheme. E.g. in Air Tawar 2, all the 25 Bangladesh workers were insured (valid cover note no. 047209203) under Etiqa Insurance and the documents are verified.

k. Based on the record, the auditor observed that a worker named Serun who is working for PELADANG has an expired work permit. In addition, 11 illegal contract immigrant workers who employed by a contractor that is managing on behalf of the independent smallholders from neighbouring estate at Air Tawar 1 are also found working in the scheme .

l. Illegal extension of electrical wirings are found in immigrant hostels at Air Tawar 5, Air Tawar 3 and Air Tawar 4.

m. As per Occupational Health and Safety Act, 1994, every year all schemes are expected to conduct safety and health meetings at quarterly intervals. There is an inconsistency in issuing safety meeting notices to committee members. Some instances notices are available, but in most of the cases the agenda did not meet the OSH regulation. The notice serving period for the safety meeting and also the time of releasing the outcome of the meeting in the minutes form are not in accordance with the OSH regulation.

Based on the items (a), (f), (j), (k) and (l) a major non compliance (Major CAR 02) is issued.

However, the FELDA management has provided the following evidences;

a. FELDA has provided evidences on 1st July 2011 on circulars issued to workers to avoid illegal electrical wiring to the quarters. Letter dated 13th June 2011, reference number (07)88003083, is made available to the auditing team and verified.

b. FELDA has submitted the valid licence of authorised gas tester (AGT) on 29th July 2011 (License validity until authorised entrant and standby till 22/06/2012 and authorised gas tester and entry supervision till 10/10/2012).

c. Action plans have been submitted on 29th July 2011 to reduce BOD level of the effluent pond.

d. The worker by name Serun has obtained his work permit with validity till 02nd November 2012. A letter of warning was issued on 13 June 2011 to the contractor reminding them not to engage illegal workers from the neighbouring estates [ref (211)3083/10-2-9].

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e. Safety and health meeting notices issued together with an agenda [e.g. letter dated 8/06/2011 ref (2) JKKP Air Tawar 5 was issued to committee members for the meeting to be held on 23/06/2011].

Taking into consideration all the actions that have been taken by FELDA to address the non-compliances mentioned above with the evidences provided in item (a) to (e) above, the auditing team is of the view that the Major CAR 02 issued can be ratified. However, most of the evidence showed is documented in nature and require field verification for the continuous practice on the ground In the light of this situation, the Major CAR 02 is now being downgrade to Minor CAR 02 where the field verification on the ground practice of all evidences provided by FELDA [item (a) to (e)] shall be conducted during the Surveillance Audit next year.

A documented list of information on legal requirements is viewed. However, the mechanism to ensure that the legal requirements are implemented is inadequate both at the oil mill and plantation schemes. This includes unavailability of appointed personnel to monitor the expiry of the legal documents at the plantation mill and estate offices (Minor CAR 03).

The Minor CAR 03 is closed on 1/7/2011 as FELDA Semenchu schemes have submitted the list of personnel who will be monitoring the legal requirements and licence renewals.

The system of tracking any changes in law is also inadequately addressed (Minor CAR 04).

Following the main assessment, FELDA as a Group has provided evidence of tracking the law from the Headquarters, transmission of such change of information and the implementation of the instructions with regard to law at the scheme levels. Based on this evidence, the Minor CAR 04 is closed.

Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights.

Findings The land titles are viewed. The scheme management has a copy of the land title of each settler. The document review conducted in Air Tawar 2, provided the evidence of the Agreement between the FELDA and the Johor State Government on 28/1/1974 allowing the cultivation of agricultural crop in the allocated land. The individual land title was only issued in 1998, as a leasing for not less than 99 years, where the lease will expire on 2097. The land title allowed the cultivation of oil palm, rubber and other agricultural crops. Every scheme has land survey maps, whereby detailed boundaries of each settler are marked on the map. Based on the mapping, State Mapping and Survey Department is progressively placing boundary stones between the settlers land. Boundary markers are visibly observed at the boundaries of Air Tawar 3 and Pasak that is next to Panti Forest Reserve is visibly marked with boundary markers.

Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent.

Findings The land title for each settler was given according to Group Settlement Areas Act

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1960 (Act 530), where the land is classified as Melayu Reserve Land. Procedures are available to transfer the land title to the next of kin or a landowner’s son in the event of the death of the landowner. As per the procedure, the land is not to be divided, if the owner had more than one child. Among several siblings, only one can inherit the land and can act as the trustee for the rest of the children, where the proceedings derived from that owned land can be equally divided between the children. Clear physical boundary demarcation with legally recognized plan is observed during site visits. In addition there is no dispute/claims by the neighbors on the estate’s land.

Principle 3: Commitment to long-term economic and financial viability

Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability.

Findings Annual crop budget and operation budgets covering harvesting, crop collection and transporting, weeding, roads and drains, pruning and pruned frond piling, circle raking and management fee have been budgeted from 2012 to 2016. Wages of workers are included for each operation. Environmental aspects on road maintenance, silt pits construction as per soil erosion programmes, domestic waste collection, the maintenance of fire belt along the boundaries are budgeted. There is a replanting programme in Pasak where, about 44.49 hectares of rubber planting will be converted to oil palm in 2012. For the remaining 6 schemes there are no plans for re-planting in the next 5 years as stipulated in Executive Director’s letter dated 12th May 2011. The Jawatankuasa Kemajuan Kampong (JKKK) monthly meeting minutes indicates that there was a consultation on the budget with smallholders held on December 2010. Moreover, the expenditures incurred in the operations are also discussed in the monthly JKKK meetings. Similar annual budget is available in the oil mill with capital budgets for environmental improvement programmes like bio-polishing plants to improve BOD and Briquettes plant in collaboration with Japan.

Principle 4: Use of appropriate best practices by growers and millers

Criterion 4.1 Operating procedures are appropriately documented and consistently implemented and monitored.

Findings All FELDA schemes have Group handbook documented as “Manual Operasi Ladang Sawit Lestari” issued by FELDA Agricultural Services Sdn Bhd (FASSB) on 1st October 2007 and is regarded as the Standard Operating Procedure (SOP). The manual describes operational procedure of nursery practices, land preparation, planting practices, ground cover maintenance, roads, immature stage, harvesting, collection of bunches, weeding with type of chemical to be used for target weeds, pests and diseases with type of chemicals to be used.

Likewise, the oil mill has a handbook “Manual Operasi Kilang Sawit” (4 September 2009) covering every station from the security gate at the reception

of FFB until the processed oil storage and POME management. Nevertheless, the operation of the briquettes plant is yet to be seen and it is understood that

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the manual will be ready once the plant is operational or commissioned. The other SOP’s are as follows;

Manual Operasi Makmal (16 October 2009) (Lab operation Manual)

Manual Operasi – Environmental Management System( EMS) (16 October 2009)

Manual Prosedur Kualiti, Keselamatan, Kesihatan Pekerjaan dan Alam Sekitar Kilang Sawit (24 February 2010) (Manual for Quality Procedure, Safety and Health and Environment of Oil Mill)

Prosedur Kerja Selamat, Pengurusan Keselamatan dan Kesihatan Pekerjaan (27 July 2009) (Procedure for Safe Work and Management of Safety and Health for Workers)

However, the following issues are raised at the time of audit;

a. The format to monitor rat census changed by (FASSB) on 28/3/2011 was not formally captured in the handbook as a replacement for the previous format.

b. Documented standard operating procedure with regard to RSPO supply chain has not been established.

c. Moreover, the lengthy documented standard operating procedures has not been translated in concise and simplified manner in the language understood by the operators in many operating stations like in the pre-mixing chemical store of schemes, lubricant and schedule waste store, skid diesel tank, water treatment plant and POME in the oil mill, for workers or store keeper to understand the operations.

In view of the above observations, a Major CAR 05 is issued for this indicator.

However, Felda has reverted to old format of rat census after further discussion and deliberation within the Group. A documented standard operating procedure has been developed for the supply chain and submitted on 1/7/2011. The simplified form of standard operating procedure is in progress in the work areas. Considering the present situation, the Major CAR 05 is now being downgraded to Minor CAR 05 This is to enable the progress of the implementation of simplified procedures at work area be verified during the surveillance audit for full compliance against the requirement of the standard.

The monitoring of records and action taken generally observed at the scheme level where records of the fertilizer store book (number of empty fertilizer bags returned to store), field cost book (e.g. for weeding, contract payment cannot be paid should there is no weed control in the field after spraying), quality control checks (harvested bunch quality) are some of the monitoring records kept in the schemes.

Oil mill has monitoring of SOPs at each station occupied by the station operators. The ramp graders have PDA on FFB quality monitoring and send information directly to the mill which then recorded. Nevertheless, the following observations are made during the Main Assessment and Minor CAR 06 is

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issued for this non-compliance.

a. In Semenchu scheme, the filled rat census forms were not dated and baits were not applied, although the damage is above threshold level.

b. In another instance in Air Tawar 5, as per procedure, workers were expected to bait alternate palms in the 2nd round of baiting, but the auditor observed that the application of baits is on every palm base.

c. There is a need to adopt a control in documentation as well as a list of documents required for the operation.

d. Above all, the records of monitoring actions of SOP among the independent settlers are lacking in most of the schemes.

Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield.

Findings The oil palm fertilizer recommendations for the settler’s schemes managed by FELDA Technoplant Sdn Bhd are provided by the Agronomist from FASSB. The fertilizer recommendations were based on leaf analysis. As leaves are sampled, soil samples are also collected. As for soil sampling, there is one permanent point, where soil is sampled every year and the second point rotates between the planted phases and the samples are collected at the agronomist’s discretion. However, it is uncertain on the monitoring of fertilizer inputs of Independent settlers. FELDA agronomists do not conduct periodic visit to independent smallholders to monitor the application of fertilizers by the smallholders and hence resulting the independent smallholders to purchase their own fertilizers which causing in uncertainty of the FELDA scheme management on the rates and the type of the fertilizer applied by independent smallholders. (Minor CAR 07). FELDA Semenchu has the incineration plant to burn 70% of EFB produced to bunch ash. DOE’s approval letter on incinerator is viewed. The bunch ash is sold as a substitute to Muriate of potash or used for washing and cleaning of other neighboring oil mills which is not necessarily FELDA. Proper storage of bunch ash and records of dispatch are viewed. The balance 30% EFB produced at the oil mill is applied to the immature and young palms in the FELDA schemes. The last replanting carried out in the 7 schemes was in the year 2010. All FELDA schemes in Semenchu practiced the non-burning approach for replanting of oil palm in all their schemes. The 2010 replanting in schemes Air Tawar 5 and Air Tawar 3 land was redeveloped by non-burning method.

Criterion 4.3 Practices to minimise and control erosion and degradation of soils.

Findings FELDA schemes have documented evidences on practices to minimize soil erosion and soil degradation. The soil maps are available in the schemes with slope maps. There is no peat land in the 7 schemes of oil palm cultivation. Contracts are viewed including the work for the construction of terraces at the time of re-planting. Another contract viewed is on the planting of leguminous cover plant and the maintenance of the ground cover for a year in the replanting

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fields. In general, the smallholder’s scheme managed by FELDA Technoplant Sdn. Bhd. maintained a sufficient mix of ground cover plants in the mature oil palm field.

However, there is evident of blanket chemical spraying by independent settlers in their field although the management has instructed not to do so. Similarly during Voluntary oil palm seedlings (VOPs) spraying in immature plantings, the workers tend to spray more than the targeted weeds in Air Tawar 5, Phase 2 (Minor CAR 08).

FELDA scheme management have budgeted for road maintenance programme .The road contract did specify the work scope of diverting water from the road to terracing, the construction of silt pits and so on. However, as observed in Air Tawar 4, Block 3, the plantation road grading is not according to the road specification, where the surface run off causing the formation of gully erosion on the slope resulting in siltation blocking the culverts at the valleys. In another instance, in Pasak, the management is awaiting funds from the settlers to build roads which may result in extra cost should the road maintenance is delayed until the rainy season. Yet in another occasion, in Air Tawar 2 Block 9, road erosion and heavy river flow caused the collapse of the gabions (Minor CAR 09).

Criterion 4.4 Practices to maintain the quality and availability of surface and ground water.

Findings River maps are available in the schemes. FELDA follows Drainage and Irrigation Department (DID) guidelines for the maintenance of buffer zones (reference RSPO Malaysian National Interpretation document approved on 2008 Appendix 3, page 51). However, an official policy on buffer zones is pending for approval from the Director General of FELDA. Nevertheless, scheme managers had issued directives to smallholders with regard to maintaining buffer zones. Training and consultation were given to scheme settlers to maintain buffer zones of waterways. The scheme management has demarcated buffer zones and plans for managing buffer zones are viewed in the environmental impact assessment and the management plans to put signages along buffer zones as described in the SOP for Buffer zones. Bunds, weirs or dams are not constructed across the main rivers and feeder waterways visited. Field visits to the boundary of Panti Forest Reserve of Air Tawar 3 and Pasak Schemes did not show any drainage of water towards the protected areas. Rainfall in every scheme is measured and monitored daily. The incoming and outgoing water of natural waterways are monitored at 3 to 6 monthly intervals depending on the age of palms in the field, whereby immature areas is monitored at 3rd monthly intervals while mature area at 6 monthly intervals in the schemes. The parameters monitored are pH, Biological Oxygen Demand (BOD), Chemical Oxygen Demand (COD), Total Suspension Solid (TSS), Ammonical Nitrogen (AN) and Dissolved Oxygen (DO). These 6 parameters are required to work out the water quality index and to classify the degree of river pollution according to the Interim National River Water Quality Standards (INWQS) developed by DOE in 2006. Oil mill monitors the water usage. As observed, until December 2010, the water

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used over FFB processed ratio is 1.04, which is considered at a reasonable level for oil palm industry standards. Flow meter and data collected from flow meter are verified. Water management plans are available in the oil mill on water extraction, usage in boiler, mill operation, water treatment and cleaning. Procedures to reduce water usage are also available in the oil mill. Despite of the above activities, there are inadequate protection to water courses, including maintaining and restoring appropriate riparian buffer zones along all natural waterways within the estate at replanting time. Recent clearance of existing natural buffer zone of Sg. Seluyut Simpang of Air Tawar 3 and recent planting of oil palm seedlings (GPS coordination N. 01o42’42.1” and E103o 59’13.1” under WGS system) is a sign of ineffective communication between settlers and the scheme management. The training given with regard to the importance of river buffer zone maintenance in the oil palm planted land is observed to be inadequate, for instance spraying, where there is an evidence of spraying conducted along the buffer zones which is prohibited under the requirement of the standard. (Major CAR 10). Action plan have been submitted on 1st July 2011 with a general letter issued to the smallholders regarding the clearing of the buffer zone and that the management has to demarcate the buffer zone for further restoration. Although the evidence showed has addressed the concern raised within the Major CAR 10, the implementation of the details within the letter i.e. restoration progress has yet to be verified. Therefore, taking into consideration all efforts that has been taken by FELDA to address the Major CAR, the Major CAR 10 is now being downgraded to Minor CAR 10 pending verification of the restoration progress that shall be verified during the Surveillance Audit next year. The information on the classification of river water quality and its negative impact at the incoming and outgoing points of main natural waterways in the schemes and mills activities are insufficient. In addition, interpretation of the analytical results of the river water quality and recommendations for further mitigation action plans if there are any negative outcomes in the analytical result is lacking (Minor CAR 11). FELDA Semenchu grouping has produced evidence of reporting system according to Interim National River Water Quality Standards (INRWQS). This method will support the interpretation of river water quality on the pollution status, its classification and the necessary action plan to be taken according to the classification. Therefore, the Minor CAR 11 is changed to observation 01.

Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.

Findings The type of pest, symptoms, enumeration of pest population, its life cycle, threshold level for chemical treatment, control methods and biological control of major pests are provided in the standard operating procedure as part of the IPM programmes. Efforts are observed during field visit on the maintenance of

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beneficial plants like Cassia cobenensis and Turnera subuleta to improve the population of the predators against the pests such as nettle caterpillar and bagworms. A few recently erected barn owl houses are also observed during the field visit. However, the IPM system is inadequately documented. The fundamental step in the IPM procedure is lacking i.e. on the “detection” of pests damage. The mode of detecting the pests and weed damage of the crop and how such information is gathered at the field level and brought to the management’s attention for further action is lacking. In that point of view, a complete step in the procedure is also lacking. Moreover, in Air Tawar 3 and Pasak it was reported that porcupine, elephants, monkeys and wild boars are considered as pests, as evidence through the electric solar fences and elephant trenches observed during the field visit. Nevertheless, no IPM observed at these schemes to manage these pests effectively (Minor CAR 12). Based on the documented evidence submitted following the audit, the evidence of new documents on pests covering porcupine, elephants, monkeys and wild boars has been developed and are verified (Minor CAR 12 is closed). Monitoring the extent of IPM implementation for major pests is inadequate where there are no established monitoring programmes of major oil palm pests such as bagworms, rhinoceros beetle at immature and mature planted fields (Minor CAR13). Scheme management has records of fields, where pesticides/herbicides are applied for the settlers who are directly managed by FELDA Techno plant Sdn Bhd. But the records of pesticides are not recorded based on active ingredient per hectare basis or per tonne of oil. In addition, the scheme management has no mechanism to capture and keep the records of independent smallholder’s usage of pesticides. (Minor CAR 14).

Criterion 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented.

Findings There are SOP for safe working practices and application of pesticides as reflected in Section 19 of Manual Keselamatan dan Kesihatan Pekerjaan. Justification of chemicals used for the standard operating procedure of weed control is too general. The justification does not cover specific justification(s) for each type of chemical used in the schemes for each operation of control of weeds, pests such as rhinoceros beetle damage, leaf eating caterpillars and rats, and diseases such as leaf spots in the nurseries (Major CAR 15). Felda has submitted a new documented justification of use of chemicals on 29/7/2011 and hence, the Major CAR 15 is closed.

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All the pesticides are registered under Pesticide Board of Malaysia. The type of chemicals that is generally used in the schemes with Malaysian pesticide board registration numbers are as follows;

a. Glyphosate isopropyl amine (41%) LRMP.R1/3270 b. Metsulfuron methyl (20%) LRMP.R1/2374 c. Paraquat dichloride (13%) LRMP.R1/7595 d. Triclopyr butoxy ethyl ester (60%) LRMP.R1/3432 e. Chlorophacione (0.005%) LRMP.R1/4203

The use of the above chemicals has been assessed in the schemes managed directly by FELDA Technoplant Sdn Bhd in accordance to the use of safety exposure of chemical health hazard (USECHH) 2000 through engaging CHRA consultant. The report was submitted to DOSH Johor in October 2010. However, there is no mechanism established to obtain information and status on the type of chemical used by the independent smallholders (Major CAR 16). FELDA has submitted the newly initiated documentary evidence of monitoring of chemical usage by the independent smallholders. However, the continuity of monitoring of the chemical usage cannot be verified until the Surveillance Audit conducted next year. In view of these developments, the Major CAR 16 is now downgraded to Minor CAR 16 pending verification of the continuity of the monitoring of the chemical usage to be conducted during the Surveillance Audit next year. In the schemes, the pesticides are appropriately stored and are appropriately labelled and arranged on shelves. Paraquat is kept separately in a special highly toxic pesticide store for each scheme. Sufficient warning signs are hung in front of the classes 2 to 4 and highly toxic chemical stores with adequate ventilation and lighting. Emergency showers and eye wash are placed next to the chemical store in case of accidental spillage. Chemical spillage containment pits are also available. Empty chemical containers are kept in separate store after triple rinsing. However, independent smallholders have no proper store for storing chemicals (Major CAR17). There is a lack of common mechanism for smallholders to implement a safe storage for chemicals in the farms. Adequate training on the understanding of chemicals in general is lacking although the management has provided some basic training to independent smallholders. In some occasions, the chemicals are kept in the dwelling houses without appropriate labels. FELDA Semenchu has submitted documented evidence to address Major CAR 17 as follows: a. Appointment of personnel to co-ordinate the independent smallholder

scheme’s chemical management. b. More meetings and consultation with independent smallholders on safe

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usage of chemical and its containers. Although evidences mentioned above sufficient to address the Major CAR issued, the effectiveness of the implementation on the ground has yet to be verified. Hence, taking into consideration this development, the Major CAR 17 is downgraded to Minor CAR 17 to enable the verification of the effectiveness to be conducted during the Surveillance Audit next year, Material Safety Data Sheets (MSDS) are available in all the stores of the schemes. However, for chemicals like paraquat and Triclopyr butoxy ethyl ester the MSDS are not translated to the local language understood by the store keeper and mandores (Major CAR18). The Major CAR 18 is closed on 29th July 2011 as Felda has produced documental evidences of MSDS for Triclopyr butooxy ethyl ester and Paraquat di chloride. There was a letter issued by the regional head on 1st October 2010 that the paraquat be used to control the Volunteer Oil Palm Seedlings (VOPS) only. However, based on interviews made with the client, FELDA is expected to come up with a pending directive from the Director General with regard to Paraquat usage in the schemes. The expected directive is as follows;

a. Paraquat to be used only for palms of age less than 3 years. b. Special approval to be obtained if paraquat has to be used in mature oil

palm fields and c. Alternative chemical will be sort if such chemical is available in the

Malaysian market.

However, the record of paraquat usage showed an increasing trend.

Example, Air Tawar1 in 2008 used 280 liters

2009 used 300 liters

2010 used 520 liters

2011 till April used 200 liters

Moreover, the usage of paraquat in scheme independent settlers is not captured by the management documents and the complete paraquat usage in the schemes is not fully represented (Minor CAR19). All the schemes have carried out Chemical Health Risk Assessment (CHRA) from 6th to 30th September 2010 and the report was submitted to DOSH on October 2010. The CHRA report identifies the classification of work units that handles the chemicals in the schemes. To have annual medical surveillance, the scheme management has until September 2011, to complete the programme of medical checkup using a DOSH appointed occupational health doctor (OHD). A letter to that effect is observed, with the OHD agreeing to conduct medical surveillance from mid June 2011. The OHD (Dr Bjinder Singh) is registered as a Occupational Health Doctor with DOSH department. Oil mill has conducted

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CHRA on 2nd November 2009. Medical surveillance was conducted and the summary report by OHD dated 29th September 2010 with detailed test results is viewed and found to be fit to carry out the duty. Schemes or independent smallholders do not engage pregnant or breast feeding women for handling chemical or spraying activities. There are no aerial sprayings of chemicals in all of the FELDA schemes in Semenchu. There is no evidence of CPO testing, as the buyers did not request to carry out the test on CPO.

Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and Implemented

Findings Safety and health policy dated 1st July 2010 is displayed in oil mills and schemes. There are evidences through monthly meetings with block leaders of the settlers that the copy of the safety and health policy is distributed to them. Operational risk assessment with risk rating and action plan required to handle higher risk operations are documented. There is a person in charge of safety aspects and designated as safety secretary for the scheme. Safety secretary gets the guidance from the safety officer at the headquarters. FELDA is found to have been certified against the ISO 18001 OHSAS Certification and therefore has developed the SOP for safe working practices in the mill (doc number FPI- PK-037 issued on 14.07.2010). The document is observed and made available to the auditor that includes specific section on the use of PPE’s. Personnel protective equipments (PPEs) are provided by the oil mill and scheme management. Workers observed to wear PPEs at the time of spraying chemical for weeding. The PPE provided to workers for spraying includes rubber gloves, boots, apron and goggles. Workers involved in harvesting are provided with helmets, boots and knife cover. Store-keeper and chemical premixing mandores are also provided with PPE. Workers are aware of the procedure of changing PPEs, when there is tare and ware. Each scheme management and oil mill management formed safety committee with representatives from the workers, settlers, staff and executives. Appointment letters to the safety committee members are available in the respective offices. Safety committee members conduct regular quarterly safety meetings. Safety meeting minutes are available. The meeting minutes of oil mill indicates there is a detailed discussion on operation station by station. However, there are inconsistencies in serving notices for the safety meetings to the committee members especially in the schemes and oil mill. In most of the cases the schemes sent the letter or put notices on the board without agendas (cross referred Major CAR02). Moreover, the mechanism for the participation of the workers in the safety and health meeting and the transfer of information on the decisions made in the meeting is lacking (Refer: Minor CAR 1). Emergency Response Team (ERT) has been established at the mill to prevent fire hazards.

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Training on first aid was provided for every scheme. 2 personnel from each scheme were sent for training on 31st March 2011. Post training questionnaires, training notes and certificates have been viewed. First aid boxes are given to field supervisors, mandores and kept in the office and chemical store. Most of the quarterly safety meetings have not addressed the accident or injury incidences. Safety meeting minute lacks such information in general in all schemes (Minor CAR 20). Minor CAR 20 is closed on June 2011 as the agenda of the safety and health meeting was sent to the committee prior to the meeting and accident related issues were part of the discussion. The safety meeting minutes dated 13/6/2011 also provides the evidence of discussion on accidents. Records of accidents are documented in JKKP 6 and JKKP 8 forms are official forms released from DOSH which is mandatory to report when accidents occur and is to be reported annually. The local workers are covered by SOCSO while the foreign workers are covered by workmen compensation scheme including the worker who has a pending approval for work permit.

Criteria 4.8 All staff, workers, smallholders and contractors are appropriately trained.

Finding There is a matrix for training needs of workers and staff. Training was provided to staff and workers according to the schedule. The trained workers and staff will be subjected to written examination and field work competency tests. If the worker performed below 50% in the written or field work then re-training will be conducted. Training notes are observed.

However in practice, in schemes, the auditing team found that the sprayer mandore did not undergo first aid training. Workers applying Butik S rat bait at Air Tawar 5, Block 1, are observed applying baits for every palm, when they are expected to be applied to alternate palms according to SOP. Lack of training on measuring of chemicals with appropriate measuring cylinders in the field, handling of PPE (especially removal of gloves) while drinking clean water, understanding of MSDS etc is observed. Not all the training notes are available as document. A lack in the complete list of participants in training is observed in Semenchu and Air Tawar 2 Schemes (Major CAR 21).

FELDA Semenchu has submitted documented evidence to address Major CAR 21 as follows:

a. First aid training certificates of the representatives of each scheme.

b. Scheme management consultation

c. Practical training on chemical spraying and its related equipments and PPE usage.

d. Triple rinsing of empty chemical container and container’s safe storage

e. Training on safe fertilizer application.

f. Training on safe harvesting operations.

g. More safety signs.

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h. Training by independent consultant/expertise on safety programmes.

i. Related training notes and participants lists.

Although evidences mentioned above sufficient to address the Major CAR issued, the effectiveness of the implementation on the ground has yet to be verified. Hence, taking into consideration this development, the Major CAR 21 is downgraded to Minor CAR 21 to enable the verification of the effectiveness to be conducted during the Surveillance Audit next year,

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity

Criterion 5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings Environmental impact assessments are available at all the schemes and oil mill. However, not all the impact aspects are assessed in the documents. (Cross referred to 5.1.2) e.g. lack of identifying impact, procedure and guidance on fertilizer application close to waterways, action plan for the spillage of fertilizer on the road while dispensing, lack of control of herbicide spraying up to river banks, domestic waste collection, etc., FELDA Semenchu oil mill and the schemes require to identify all the aspects and its corresponding impact and is required to be documented and updated (Minor CAR 22). Since all the aspects are inadequately addressed, the environmental plan to mitigate the negative impacts and to promote the positive aspects developed, implemented and monitored is also incomplete (Minor CAR 23). The Minor CAR 22 is closed on 29/7/2011 as FELDA has submitted the documents on identifying the impacts and aspects of the environmental impact assessment. Nevertheless, the Minor CAR 23 remained as it is which need to be verified during surveillance audit on the implementation and monitoring of identified impacts.

Criterion 5.2 The status of rare, threatened or endangered species (ERTs) and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations.

Findings FELDA sustainability team has conducted an assessment on the High Conservation Value (HCV) areas within the landholdings and they have interviewed the officers of the neighboring Panti Forest Reserve and Department of Wildlife and National Parks to understand the situation of HCV in the areas to be certified. HCV document dated 4th May 2011 is viewed. The assessment methodology, the classification and type of HCVs available in the schemes, classification of flora and fauna according to IUCN and Wildlife Act 2010 (Act 716), interviews with respective government agencies and management plans are documented. Generally, within the scheme HCV 4 and HCV 6 are reported, while HCV 1 is reported in Panti Forest Reserve. Plans to put signages conducted in June/July 2011 are viewed and progress of placing signages in HCV areas is observed during field visit. However, a minor mistake in identifying

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and assessing HCV habitats and protected areas within landholdings is noticed where Bukit Bunut East of Air Tawar 4 planted with oil palm is wrongly classified as HCV 1 (Observation 2). The scheme management discourages hunting in their own landholdings and neighboring landholdings especially for Pasak and Air Tawar 3. As reported in the HCV assessment report, there is no threatened species under IUCN status. However there are some protected species under National Status (Wildlife Conservation Act 2010) as indicated in page 41 of Semenchu Complex HCV reports dated May 4th 2011. Posters depicting these pictures has been pinned up in the scheme for awareness and measures been taken to regularly (quarterly) to monitor their presence for enhancement.

Criterion 5.3 Waste is reduced, recycled, re-used and disposed off in an environmentally and socially responsible manner.

Findings Oil mill produces by-products like fibre, shells, EFB, POME and boiler ash. Fibre and shells are reused as renewable energy. 70% of EFB is being converted to bunch ash as the oil mill has approval for incinerators. Only 30% of EFB is applied to the field. However, plans are in place to commission Briquette plant in the near future, where the dry EFB in pellet form will be exported to Japan as renewable energy. There is an isolated area for scrap iron with old boiler ash is piled near to scrap iron yard. Ponds are available to retain the POME to reduce BOD although at this juncture it is above DOE’s permissible limit (refer Major CAR02 that is downgraded to Minor CAR 02). Now DOE approved plans are in place to reduce BOD by building a bio-polishing plant which is expected to be commissioned by September 2011. The used hydraulic and engine oil are treated as schedule waste and placed in schedule waste store. The bunch ash produced after incinerating EFB is also stored appropriately in a store. Domestic waste of all FELDA settlers is disposed by appointed contractor at the waste centre in Bandar Penawar. The licensed contractor collects the domestic waste from each scheme at alternate daily basis. i.e. in a week domestic waste is collected 3 times. According to the contractor, each scheme requires 2 trips for domestic waste collection per day and each trip is approximately 5MT of domestic waste which is translated to 30MT waste per week per scheme. The domestic waste is segregated at the waste centre in Bandar Penawar instead of at the source i.e. at settler’s house. It is noted that the domestic waste landfill behind workers quarters and near to waterways of Air Tawar 2 is not properly identified and documented. The sewage system of workers quarters also need to be properly identified and documented. There is a lack in control of solid waste from the household kitchens of most of the settlers. De-sludging of the septic tanks is done by the same contractor who collects the domestic waste. Most of these activities of each scheme are not completely identified and documented (Major CAR 24). Documental plans have been developed and submitted on 8th September 2011 by both oil mill and schemes management on the identification of waste products and its disposal plan that is to be conducted in a responsible manner. Since the waste products in the operations are identified and documented, the Major CAR 24 is closed.

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Since the identification of waste products is incomplete during main assessment, an operational plan to avoid or reduce pollution is not fully developed and implemented (Minor CAR 25).

Criterion 5.4 Efficiency of energy use and use of renewable energy is maximized.

Findings Semenchu oil mill use renewable source of energy mainly from the by-products of mesocarp fibre and kernel shells. The oil mill has monthly records of shells and fibre used in the oil mill and the energy derived in terms of kilo joules (KJ) per mt CPO. In 2010, the average energy derived from shell was 2,085.07KJ/MT CPO and from fibre was 7,171.74 KJ/MT CPO. The direct diesel (fossil fuel) usage was recorded promptly by oil mill. The average diesel used in terms of per ton FFB is 0.81Liters/ton of FFB. Diesel usage if converted to per ton CPO is equivalent to 3.73 liters/ton CPO.

Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN Guidance or other regional best practice

Findings FELDA scheme’s replanting approach is a non-burning method whereby the old trunk is pushed down and chipped into smaller pieces. Another non-burning approach adopted by independent and also scheme settlers is planting of oil palm seedlings under older previous live palm stand, which is commonly called under-planting. Here the smallholders can earn the income from older palm while the young seedlings are at immature stage. Later the older palms are poisoned stage by stage until the immature palms are ready for harvesting. However, there is sufficient evidence in the scheme, where the domestic waste and plastics are burnt by settlers. Moreover, it is also observed that used tyres were burnt by workshop workers in the scheme (Minor CAR 26).

Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

Findings Oil mill and scheme management have documents to identify pollutants and waste products. In FELDA Semenchu oil mill no plans are seen to reduce green house gas, but plans have been implemented in a broader scale at the Group level by building methane capturing system at Serting Hilir in Negeri Sembilan. Such projects conducted elsewhere in other FELDA schemes is considered as part of the long term continuous improvement plan at the Group level. Plans to de-sludge the ponds, dispatch of schedule waste are viewed. Empty fertilizer bags, tyres, glass bottles, plastics, paper and empty chemical containers are identified as pollutants by the FELDA scheme management. Although the contractor’s lorries are not serviced at the office premises, there are workshops owned by settlers outside the scheme office premise but within the landholding, where pollution reduction plan is not documented. In the estates, plan to reduce pollution to waterways upon application of chemicals and fertilizers to the old palms next to waterways are not documented. Currently, the domestic waste is composted in Air Tawar 2, however, in some

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occasions there is evidence that plastic bags are burnt. There are no complete spillage prevention plans of diesel skid tank, empty chemical container storage, lubricants and schedule waste store at the oil mill (Major CAR 27). On 8th September 2011, FELDA has submitted the documented pollution prevention plans with evidence that some of the plans developed are being implemented. Based on this evidence, the Major CAR 27 is therefore closed. Quarterly monitoring being done, and the last done in July 2011 (Reports Reference KC2011/R-Environ/115). The result of parameter TSP 65 microgrammes/m3 LHE-AQ1. For boiler environmental monitoring done twice a year. The last sample was dated 24 October 2011 (Reports Reference: KC2011/R-Environ/212). The existing pollution reduction plans are viewed, but the issues of Major CAR M27 are not completely captured in the reviewed plans (Minor CAR 28).

Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills

Criterion 6.1 Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings Social impact assessment (SIA) document for the 7 schemes and oil mill was released on 15/1/2011. The SIA was conducted with the stakeholder participation within and outside the schemes. Letters [ref (21) 2840/2-1-1-16] dated 2nd August 2011 issued to stakeholders is viewed. Meeting and interviews conducted and the negative and positive impacts discussed are verified. Issues raised by the interviewee are documented. Time plans to mitigate the negative impact and time to review the plans are documented. However, it is uncertain if there are any issues concerning foreign workers (Minor CAR 29). There is no evidence of participation of foreign workers in the stakeholder SIA consultation as reflected in the SIA document where the document did not show any signed participation of foreign workers.

Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties.

Findings There are many documented consultation and communication forums conducted between the FELDA scheme management and the settlers. Women have Gerakan Persatuan Wanita (GPW), monthly meetings with block leaders of settlers through JKKR, JKKK, Jawatan Kuasa Tanam Semula (JKTS) and Jawatankuasa Persepakatan Bersama or Joint consultative committee (between oil mill and schemes) meeting, documents are viewed. There is a appointed person in the management responsible in communication between the management and stakeholders.

Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

Findings There is a documented system of recording the request, complaints and grievances from settlers. There is also a procedure in place to handle the

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inheritance of land within a settler’s family. The procedures were given to the settlers with a 30 days period for further consultation if there is a need for amendments in the procedure. There were no negative responds during the consultation period. Furthermore, throughout the schemes there is a lack of documentation on the process of resolving the dispute of foreign workers. There is no record of mutually agreed documented system to attend complains and grievances between the scheme management and foreign workers (Minor CAR 30). As there is no evidence of a documented system of resolving the issues of foreign workers, the effectiveness and timeline to solve the issues of request, complains and grievances is not clear (Minor CAR 31). In addition, it is unclear, whether the system is open to any affected parties (Minor CAR 32)

Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

Findings Procedure for Identifying Legal and Customary Rights and Identifying People Entitled to Compensation is available (Doc. Ref: RSPO Criterion 6.4 – Ver. 1, dated 1 Oct 2008) is documented. The SOP included identification procedure, calculating and distributing fair compensation procedure and documentation on outcome of compensation. No evidence on dispute on legal and customary rights. No claim on estate land. The nearby communities have the standard Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK), which meets once a month to discuss and act on any issues brought by the members of the community. The estate management maintains close rapport with the leaders and considers issues brought by the JKKK as official complaints for action to be taken.

Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Findings Workers and Settlers are paid in cash. All the pays of workers and settlers are well documented. Every worker is provided with a monthly pay slip with a signed acknowledgement from the workers. Contracts of foreign workers from both Indonesia and Bangladesh are viewed. The auditor observed that the Bangladesh workers has contract in Bangla language prior to arrival in Malaysia. Induction course booklets prepared by Indonesian Embassy (Panduan bagi Tenaga Kerja Indonesia) by BPTKI/Mataram are given to every Indonesian worker prior to arrival. Induction course booklet covers the legal matters to follow up in the country and the worker’s rights in the country while working in Malaysia. Contract covers the type of work, working hours and days, holiday entitlement and pay, work pay, medical entitlement, workmen compensation scheme, accommodation and basic amenities, work related equipment supply and the rights of the worker upon death including the responsibility of the management to the immediate family of a deceased worker. Random check and inspection on the pay slips of the workers revealed that field workers generally receives a salary between RM 600 to RM 1,400 depending on weather condition as well as total tonnage of fruit extraction (for harvester workers). Interview with

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the workers indicates that they are happy with the salary earned, clinical facilities, transport arrangements to the clinic for sick workers and free medical benefits provided by the management. Should there is a dispute raised with regard to the term and agreement of the employment, FELDA has make a commitment to attend all complaints and disputes and documented it. Mutual agreement on the system is demonstrated through the “Surat Perjanjian Kontrak Pekerjaan” (Agreement Letter for Employment Contract). Based on record, the auditing team observed that there are no such incidences whereby the workers are not agreeable with the rate of pays given to them. However, poor conditions of foreign workers hostels are evident at Air Tawar 2, 3 and 4 (Minor CAR 33).

Criterion 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

Workers Union is well established in Semenchu Oil mill (Kesatuan Pekerja Pekerja Felda Palm Industries Sdn Bhd Register number 505) with comprising 62 members. Regular meetings were conducted with appropriate agenda and the lists of participant are available. The minutes of the meeting held on 2nd June 2010 at oil mill is viewed. However, there is no evidence obtained from the schemes with regard to the similar meetings on the employee consultative committee or meeting minutes of foreign worker representatives with their workers and/or FELDA scheme management (Minor CAR 34). In addition, foreign workers are not aware about the union and their right to joining local union. A published statement in local languages recognizing freedom of association is not available during the Main Assessment (Minor CAR 35).

Criterion 6.7Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions

Findings There is a policy on child labour. According to the policy, the minimum age to work is 16 as per Children and Young Persons Employment Act, 1966. FELDA schemes have a good set up of kindergarten and schools. Those children who help their parents are allowed to help them without affecting their studies. Field visits did not show any evidence of children being used. This is due to the fact that FELDA have sufficient foreign workers to work for settlers through FELDA Technoplant Sdn Bhd.

Criterion 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

Findings Equal opportunity policy is available. But most of the women are involved in the cottage industry work within the FELDA scheme.

Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

Findings Sexual harassment policy was issued on 12/2/2007 under Section 22, Code of Etiquette and Duties of Staff which is duly signed by the Director of Human Resource. FELDA schemes have an organization chart for Gender Committee. The Gender Committee Representative is responsible for handling the sexual

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harassment issues in the work places. Gender representative is aware of procedures of handling sexual harassment. The minutes of the meeting of Gender Committee is available and viewed during the Main Assessment.

Criterion 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses.

Findings Semenchu oil mill receives 25% of external crop. Pricing mechanism depends on the declared FFB price daily by Malaysian Palm Oil Board (MPOB) .The payment carried out to growers of external crop is well documented with the cheque number, date of issuing cheque, payment voucher, name of grower and their company’s name and the total amount paid to them. The payment is made on time and FELDA Semenchu has also flexible working hours depending on the need of the growers. A letter of offer valid for 2 years of purchasing FFB from external growers with pricing mechanism reflected in the letter is viewed. Voucher issued to the growers is transparent in terms of declaring the price for FFB per ton, crop weight, quality of crop and OER declaration based on quality of crop. Weigh bridges are also calibrated according to the legislation, Section 16, 28A and 45 of Weight and Measures Act 1972 so that FFB weighed for the out-growers complied to regulations of the country.

Criterion 6.11 Growers and millers contribute to local sustainable development wherever appropriate.

Findings There are considerable contributions made by FELDA for the development of local businesses.

a. The contractors who deliver the FFB to oil mill from the schemes are part of the settlers co-operative scheme. Job opportunity is given within the settler community for transporting the crop.

b. FELDA has licensed the D’mart mini market to settlers. Settlers children are also provided job there.

c. Petrol station enterprises is given to FELDA Settlers children d. Many shop lots were built up and many settlers children are carrying out

small business entrepreneurship there. e. Bank was set up in the Air Tawar 5 with Auto teller machine (ATM)

providing a financial facility to the scheme and other neighboring schemes as well to elevate the local business within FELDA.

f. FELDA allowed the building of primary schools and kindergartens in FELDA’s land with housing facilities for teachers.

g. Special buses are provided to children to go to secondary schools. h. Auxiliary police and police stations in general provide security to the

schemes. i. Development of a community centre for the handicapped children is

almost on the verge of completion. j. Post offices are available in every scheme. k. Clinic was built in every scheme.

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l. Library for settlers and their children.

Principle 7: Responsible development of new plantings

Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.

Findings No new plantings in the schemes

Criterion 7.2 Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations.

Findings (Refer to criterion 7.1)

Criterion 7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.


Criterion 7.4 Extensive planting (to be determined by SEIA) on steep terrain and/or marginal or fragile soils is avoided.


Criterion 7.5 No new plantings are established on local people’s land without free prior informed consent, dealt through a documented system that enables indigenous people, local communities and other stakeholders to express their views through their own representative institutions.


Criterion 7.6 Local people are compensated for any land acquisitions and relinquishment of rights, subject to their free, prior informed consent and negotiated agreement.


Criterion 7.7 Use of fire in the preparation of new planting is avoided other than specific cases as identified in the ASEAN guidance or other regional best practices.


Principle 8: Commitment to continuous improvement in key areas of activity

Criterion 8.1 Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

Findings Plans are in place to reduce class I chemical like Paraquat. However, the implementation of such plans is yet to be seen. At this juncture there is no evidence of reduction of chemical as independent smallholders chemical usage is not recorded (Minor CAR 36) Improvement is required in identifying the aspects within the environmental impact assessment and further improvement through continuous improvement plans is necessary (Minor CAR 37). Mechanisms for collecting schedule waste from the workshops, landfills of the workers quarters, solid wastes disposed from the kitchen utensil washings, segregation of domestic wastes etc., are not adequately addressed and implemented (Minor CAR 38). There is a lack of incorporating foreign workers in social impact assessment (Minor CAR 38). FELDA has a mechanism to capture the social and environmental aspects in their accounting system.

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8. RECORD OF CORRECTIVE ACTION REQUESTS (CARs)

Organisation: Felda Semenchu Project Nr: MY02619

Assessment: Main Assessment of RSPO P & C Date: 6 – 10 June 2011

Lead Assessor:

Haye Semail Auditor: James Ong

Joshua Mathews

CAR #

Indicator

CAR Detail

M01

1.1.1 Date Recorded>

10 June 2011

Due Date>

26 Oct 2011

Date Closed>

1/7/2011

Non-Conformance:

Records of requests and responses are not adequately maintained

Objective Evidence:

1. Records of stakeholder’s requests and responses are not adequately

addressed. E.g. CHRA consultant had requested officially each scheme

management to respond to the DOSH Johor on September 2010 on the action

plans of the recommendation made in CHRA report. There are no records of

response from the scheme management.

2. There are no documents or procedures with regard to grievances, complaints

and requests between scheme management and the foreign workers (cross

referred to indicators 6.3.1, 6.3.2. and 6.3.3).

Close-out evidence:

1. FELDA has provided sufficient evidence responding to DOSH on

13/06/2011, document No. (12)88003083/JKKP/DOSH with respect to

action plan required for the CHRA recommendations.

2. In view of this development, all actions that have been taken by FELDA, the auditing team is of the view that there is sufficient evidence to address the Major CAR 01. However, the effectiveness of the process is yet to be verified as the management plan only been initiated recently. Hence, instead of closing out the Major CAR, the Major CAR 01 is now being downgraded to Minor CAR 01 pending the verification of the effectiveness of the process established that will be verified during the Surveillance Audit

CAR #

Indicator

CAR Detail

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36

CAR #

Indicator

CAR Detail

M02


10 June 2011

Due Date> 26 Oct 2011

Date Closed>

29/7/2011

Non-Conformance:

There are evidences of non-compliance with legal requirements.

Objective Evidence:

1. Most of the results analysed from palm oil mill effluent (POME) released to watercourses showed higher BOD than the DOE permissible level.

2. A worker by name Serun , working for PELADANG is holding an expired visa. In addition, 11 illegal contract immigrant workers who employed by a contractor that is managing on behalf of the independent smallholders from neighbouring estate at Air Tawar 1 are also found working in the scheme.

3. Illegal extension of electrical wirings found in the immigrant hostels at Air Tawar 5, Air Tawar 3 and Air Tawar 4.

4. No valid license for authorised gas tester (AGT) and authorised entrant, and stand by person for confined space activities in the oil mill.

5. Inconsistency in serving safety meeting notices to committee members. In a few instances notices are available however, the notices issued without proper agenda as required by OSH regulation. The notice serving period for safety meeting and also the time taken to release the outcome of the meeting in the minutes form are not in accordance to OSH regulation.(Cross referred to indicators 4.7.1f and 4.7.2)

Close-out evidence:

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CAR #

Indicator

CAR Detail

a. FELDA has provided evidences on 1st July 2011 on circulars issued to workers to avoid illegal wiring to the quarters. Letter dated 13th June 2011, reference number (07)88003083, is made available to the auditing team and verified.

b. FELDA has submitted the valid licence of authorised gas tester (AGT) on 29th July 2011 (License validity until authorised entrant and standby till 22/06/2012 and authorised gas tester and entry supervision till 10/10/2012).

c. Action plans have been submitted on 29th July 2011 to reduce BOD level of effluent pond.

d. The worker by name Serun has obtained his work permit with validity till 02nd

November 2012. A letter of warning was issued on 13 June 2011 to the contractor reminding them no to engage illegal workers from the neighbouring estates [ref (211)3083/10-2-9].

e. Safety and health meeting notices issued together with an agenda [e.g. letter dated 8/06/2011 ref (2) JKKP Air Tawar 5 was issued to committee members for the meeting to be held on 23/06/2011].

Taking into consideration all the actions that have been taken by FELDA to address the non-compliances mentioned above with the evidences provided in item (a) to (e) above, the auditing team is of the view that the Major CAR 02 issued can be ratified. However, most of the evidence showed is documented in nature and require field verification for the continuous practice on the ground In the light of this situation, the Major CAR 02 is now being downgrade to Minor CAR 02 where the field verification on the ground practice of all evidences provided by FELDA [item (a) to (e)] shall be conducted during the Surveillance Audit next year.

03 2.1.3 Date Recorded>

10 June 2011

Due Date> Next

surveillance Date

Closed> 1/7/2011

Non-Conformance:

No mechanism to ensure the compliance with all applicable local, national and ratified international laws and regulations are implemented.

Objective Evidence:

Inadequately documented system explaining the legal requirements needed for the operations in the schemes and plantation mill. This includes unavailability of appointed personnel at the oil mill and plantations schemes to monitor the expiry of the legal documents at the plantation mill and estate offices. (Cross referred to 2.1.1).

Close-out evidence:

The Minor CAR 03 is closed, as FELDA Semenchu scheme has submitted the list of personnel who will be monitoring the legal requirements and licence renewals.

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CAR #

Indicator

CAR Detail


10 June 2011

Due Date> Next

surveillance Date

Closed> 1/7/2011

Non-Conformance:

No system for tracking of any changes in the law.

Objective Evidence:

There is no documented formal appointment and job description for the scheme / unit responsible/person(s) or system in place to track and update changes.

Close-out evidence:

The Minor CAR 4 was closed on 1/7/2011, FELDA as a Group has provided evidence of tracking of law from the Head quarters, transmission of such change of information and the implementation of the instructions with regard to law at the scheme levels.

CAR #

Indicator

CAR Detail

M05


10 June 2011


Date Closed>

1/7/2011

Non-Conformance:

Documented Standard Operating Procedures (SOPs) are not appropriately

documented.

Objective Evidence:

1. Rat Census format is updated, but not formally captured in the Manual Operasi Ladang Sawit Lestari.

2. Documented SOP with regard to RSPO Supply Chain is not established at all.

3. Inadequate or lack of simplified SOP for pre-mixing chemical in the store, water treatment in the oil mill, etc.

Close-out evidence:

Felda has reverted to old format of rat census after further discussion and deliberation within the Group. A documented standard operating procedure has been developed for the supply chain and submitted on 1/7/2011. The simplified form of the standard operating procedure is in progress in the work areas. Considering the present situation, the Major CAR 05 is now being downgraded to Minor CAR 5,. This is to enable the progress of the implementation of the simplified procedures at work area be verified in the surveillance audit for full compliance against the requirement of the standard.


10 June 2011

Due Date> Next

surveillance Date

Closed>

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CAR #

Indicator

CAR Detail

Non-Conformance:

Records of monitoring and the actions taken are inadequate.

Objective Evidence:

a. In Semenchu scheme, the filled census forms were not dated and baits were not applied although the damage has reached above threshold level.

b. In another instance in Air Tawar 5, as per procedure, workers were expected to bait alternate palms in the 2nd round of baiting, but the auditor observed that the application of baits is on every palm base.

c. There is a need to have an adoption of control of documentation as well as a list of documents required for the operation.

d. Records of monitoring actions of SOP in the independent settlers are lacking in most of the schemes.

Close-out evidence:


10 June 2011

Due Date> Next

surveillance Date

Closed>

Non-Conformance:

No monitoring of fertilizer inputs through annual fertilizer recommendations.

Objective Evidence:

FELDA agronomists do not conduct periodic visit to independent smallholders to monitor the application of fertilizers by the smallholders and hence resulting the independent smallholders to purchase their own fertilizers which causing in uncertainty of the FELDA scheme management on the rates and the type of the fertilizer applied by independent smallholders.

Close-out evidence:

To be closed during surveillance audit


10 June 2011

Due Date> Next

surveillance Date

Closed>

Non-Conformance:

No mitigation to minimize bare or exposed soil within estates.

Objective Evidence:

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CAR #

Indicator

CAR Detail

1. There is evidence of blanket chemical spraying by independent settler in their field although the management has instructed not to do so.

2. During Voluntary oil palm seedlings (VOPs) spraying, workers tend to spray more than the targeted weeds as in the young plantings in Air Tawar 5, Pkt 2.

Close-out evidence:


CAR #

Indicator

CAR Detail

09


10 June 2011

Due Date> Next

surveillance Date

Closed>

Non-Conformance:

Insufficient presence of road maintenance programme

Objective Evidence:

1. In Air Tawar 4, Block 3, the plantation road grading is not according to road specification where the surface run off causing gully erosion on the slope resulting in siltation blocking the culverts at the valleys.

2. In Pasak, waiting for funds from the settlers to do roads may result in extra cost especially if delayed until the rainy season.

3. In Air Tawar 2 Block 9, road erosion and heavy river flow caused the gabions to collapse.

Close-out evidence:


M10 4.4.1 Date Recorded>

10 June 2011


Date Closed>

1/7/2011

Non-Conformance:

Inadequate protection to water courses, including maintaining and restoring appropriate riparian buffer zones along all natural waterways within the estate.

Objective Evidence:

Recent clearance of existing buffer zone of Sg. Seluyut Simpang of Air Tawar 3 and planting of oil palm seedlings (GPS coordination N. 01o42’42.1” and E103o 59’13.1” under WGS system) is a sign of ineffective communication between settlers and the scheme management. T training with regard to the importance of river buffer zone maintenance in the oil palm planted land is observed to be inadequate.

Close-out evidence:

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CAR #

Indicator

CAR Detail

Action plan have been submitted on 1st July 2011 with a general letter issued to the

smallholders regarding the clearing of the buffer zone and that the management has to

demarcate the buffer zone for further restoration. Although the evidence showed has

addressed the concern raised within the Major CAR 10, the implementation of the

details within the letter i.e. restoration progress has yet to be verified. Therefore, taking

into consideration all efforts that has been taken by FELDA to address the Major CAR,

the Major CAR 10 is now being downgraded to Minor CAR 10 pending verification of

the restoration progress that shall be verified during the Surveillance Audit next year.


10 June 2011

Due Date> 26 Oct 2011 Date

Closed> 1/7/2011

Non-Conformance:

Insufficient information on the classification of river water quality sampled at incoming and outgoing points of main natural waterways in the schemes and mills activities negative impacts cannot be verified.

Objective Evidence:

Lack of interpretation of analytical results of the river water quality and recommendations for further mitigation action plans, if there are any negative outcomes in the result.

Close-out evidence:

FELDA Semenchu has produced evidence of reporting system according to Interim National River Water Quality Standards (INRWQS). This method will support the interpretation of river water quality on the pollution status, its classification and necessary action plan required to be taken according to classification. Therefore, the Minor CAR 11 is changed to observation 01


10 June 2011

Due Date>

Next surveillance

Date Closed>

1/7/2011

Non-Conformance:

Inadequate documented IPM system.

Objective Evidence:

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IPM documents only show the types of pest, lifecycle and the threshold level to initiate control. It lacks a flowchart on the procedure of the IPM system.

No detection programme to identify the symptom and presence of potential pest.

According to the JKKK at Pasak and Air Tawar 3, there are pests such as porcupine, elephant, wild boar and monkey that destroy young immature palms. However, there is no established SOP in the IPM system to manage such incursions.

Close-out evidence:

New documents on pests covering porcupine, elephants, monkeys and wild boars has

been developed and are verified (Minor CAR 12 is closed).


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Inadequate monitoring the extent of IPM implementation for major pests.

Objective Evidence:

Monitoring programme of major oil palm pest such as bagworms, rhinoceros beetle at immature and mature planted fields is inadequate.

Close-out evidence:



10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

There are no records of area where pesticides have been used.

Objective Evidence:

The records of pesticides are not recorded based on active ingredient per hectare basis or per tonne of oil. In addition, independent settlers do not keep the records of pesticides usage for their area.

Close-out evidence:



10 June 2011

Due Date>

26 Oct 2011 Date

Closed> 11/8/2011

Non-Conformance:

No written justification in Standard Operating Procedures (SOPs) for the use of all agrochemicals used.

Objective Evidence:

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The Scheme do not have documented or written evidence on why the product /agrochemical are being used. Example, the justification for all agro-chemicals e.g. Chlorophacinone, Rat bait.

Close-out evidence:

Felda has now documented justification for the use of chemicals, hence, the Major CAR 15 is closed.


10 June 2011

Due Date>

26 Oct 2011 Date

Closed> 1/7/2011

Non-Conformance:

No list of chemical use.

Objective Evidence:

No list of chemicals being used by independent settlers.

Close-out evidence:

FELDA has submitted the newly initiated documentary evidence of monitoring of chemical usage by the independent smallholders. However, the continuity of monitoring of the chemical usage cannot be verified until the Surveillance Audit conducted next year. In view of these developments, the Major CAR 16 is now downgraded to Minor CAR 16 pending verification of the continuity of the monitoring of the chemical usage to be conducted during the Surveillance Audit next year.


10 June 2011

Due Date>

26 Oct 2011

Date Closed> 14th September

2011

Non-Conformance:

Pesticides are not stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations.

Objective Evidence:

Observed that pesticides in settlers’ house are not stored properly.

Close-out evidence:

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FELDA Semenchu has submitted documented evidence to address Major CAR 17 as follows: a. Appointment of personnel to co-ordinate the independent smallholder scheme’s

chemical management.

b. More meetings and consultation with independent smallholders on safe usage of

chemical and its containers.


CAR #

Indicator

CAR Detail

M18


10 June 2011 Due

Date> 26 Oct 2011

Date Closed>

29/7/2011

Non-Conformance:

All information regarding the chemicals and its usage, hazards, trade and generic names are not available in the local language understood by workers or explained carefully to them by a plantation management official at the operating unit level.

Objective Evidence:

Not all the chemicals Material Safety Data Sheet (MSDS) is translated to the local language which can be understood by the storekeeper or Mandore. E.g. Paraquat and Triclopyr butoxy ethyl ester.

Close-out evidence:

The Major CAR 18 is closed as Felda has produced MSDS evidence for Triclopyr butooxy ethyl ester and Paraquat in local language.

19 4.6.7 Date

Recorded> 10 June 2011

Due Date>

Next surveillanc

e Date Closed>

Non-Conformance:

Lack of records/documentary evidences on the usage of chemicals categorised as type

1A or 1B that is reduced and/or eliminated.

Objective Evidence:

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Record of paraquat showed an increase in useage.

Example, AT1 2008 ( 280lit ) , 2009 ( 300lit) 2010 ( 520 lit) 2011 till Apr ( 200 lit)

Scheme Independent settlers usage of paraquat are not captured.

Close-out evidence:


10 June 2011

Due Date> Next surveillance Date

Closed> 29/7/2011

Non-Conformance:

Accidents are not reviewed at quarterly intervals.

Objective Evidence:

Most of the quarterly safety meetings have not addressed the incidence. Safety meeting minute lacks such information in general in all schemes.

Close-out evidence:

Minor CAR 20 is closed on June 2011 as the agenda of safety and health meeting was sent to the committee prior to the meeting and accident related issues were part of the discussion. The safety meeting minutes dated 13/6/2011 also provides the evidence of discussion on accidents.

CAR #

Indicator

CAR Detail

M21


10 June 2011 Due

Date> 26 Oct 2011

Date Closed> 8/9/2011

Non-Conformance:

Adequate training programme that includes regular assessment of training needs and documentation, including records of training for employees need to be implemented.

Objective Evidence:

It is found that the sprayer mandore (Subakri) did not undergo first aid training.

Workers applying Butik S rat bait at Air Tawar 5, Block 1, are observed applying baits for every palm when they are expected to apply at alternate palms according to SOP.

Lack of training on quantitative measurment of chemicals with appropriate measuring cylinders in the field, handling of PPE (especially removal of gloves) while drinking clean water, understanding of MSDS etc is observed.

Not all the training notes are available as document and also lack of a complete list of the participants involved in the training is observed in Semenchu and Air Tawar 2 Schemes.

Close-out evidence:

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FELDA Semenchu has submitted documented evidence to address Major CAR 21 as follows:

a. First aid training certificates of the representatives of each scheme.

b. Scheme management consultation

c. Practical training on chemical spraying and its related equipments and PPE usage.

d. Triple rinsing of empty chemical container and container’s safe storage

e. Training on safe fertilizer application.

f. Training on safe harvesting operations.

g. More safety signs.

h. Training by independent consultant/expertise on safety programmes.

i. Related training notes and participants lists.


22 5.1.1 Date Record

ed>

10 June 2011

Due Date> Next

surveillance Date Closed> 29/7/2011

Non-Conformance:

Inadequate documented aspects and impacts risk assessment.

Objective Evidence:

Not all the aspects of impacts are assessed in the document. (Cross referred to 5.1.2) e.g. lack of procedure and guidance on fertilizer application close to waterways, action plan for the spillage of fertilizer on the road as dispensed, lack of control of herbicide spraying up to river banks, domestic waste collection, etc.,

Close-out evidence:

The Minor CAR 22 is closed on 29/7/2011 as FELDA has submitted the documents on identifying the impacts and aspects of the environmental impact assessment.


10 June 2011

Due Date> Next surveillance

Date Closed>

Non-Conformance:

Inadequate environmental improvement plan to mitigate the negative impacts and to promote the positive aspects.

Objective Evidence:

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Not all the aspects are adequately addressed. Therefore, the environmental plan to mitigate the negative impacts and to promote the positive aspects developed, implemented and monitored is also found to be incomplete. (Cross referred to indicator 5.1.1.)

Close-out evidence:

M24 5.3.1. Date Recorded>

10 June 2011

Due Date> 26 Oct 2011 Date Closed> 8/9/2011

Non-Conformance:

Not all waste products and sources of pollution were identified and documented.

Objective Evidence:

Domestic waste landfill behind workers quarters and near to waterways of Air Tawar 2 is not properly identified and documented. The sewage system of workers quarters also need to be properly identified and documented. There is a lack in control of solid waste from the household kitchens of most of the settlers. De-sludging of the septic tanks is done by the same contractor who collects the domestic waste.

Close-out evidence:

Documental plans have been developed by both oil mill and schemes management on

the identification of waste products and its disposal plan that is to be conducted in a

responsible manner. Since the waste products in the operations are identified and

documented, the Major CAR 24 is closed.


10 June 2011

Due Date> Next

surveillance Date Closed>

Non-Conformance:

Since the identified wastes and pollutants are incomplete, an operational plan to avoid or reduce pollution is not fully developed and implemented.

Objective Evidence:

Not all waste products and sources of pollution are identified therefore, the operational plans and its implementation are inadequately addressed (Cross reference 5.3.1).

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Sufficient evidences of burning waste (including domestic waste).

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Objective Evidence:

There are evidences of burning domestic waste and tyres.

Close-out evidence:


10 June 2011

Due Date> 26 Oct 2011 Date Closed> 8/9/2011

Non-Conformance:

Insufficient documented plans to mitigate all polluting activities.

Objective Evidence:

There is evidence that plastic bags are burnt. There are no complete spillage prevention plans of diesel skid tank, empty chemical container storage, lubricants and schedule waste store at the oil mill

Close-out evidence:

On 8th September 2011, FELDA has submitted the documented pollution prevention plans with evidence that some of the plans developed are being implemented. Based on this evidence, the Major CAR 27 is closed.


10 June 2011

Due Date> Next


Non-Conformance:

Not all polluting load items are identified and hence plans are not addressed adequately to review it annually.

Objective Evidence:

Cross referred to 5.6.1. Implementation part of it needs to be verified fully during surveillance audit.

Close-out evidence:

CAR #

Indicator

CAR Detail

29


10 June 2011

Due Date> Next


Non-Conformance:

No evidence that the SIA has been done with the participation of affected parties especially foreign workers.

Objective Evidence:

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SIA report “Laporan Penilaian Impak Sosial” has not included the foreign workers and other stakeholders as target of impacts from plantation and mill activities.

Close-out evidence:


10 June 2011

Due Date> Next


Non-Conformance:

Inadequate documentation of the process by which a dispute is resolved and its outcome.

Objective Evidence:

Lack of documentation on the process of resolving dispute of workers (Cross referred to 6.3.2 and 6.3.3). There is no mutually agreed documented system to attend complains and grievances between the scheme management and foreign workers.

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Lack of a system that resolves disputes in an effective, timely and appropriate manner.

Objective Evidence:

Lack of the system for resolving any disputes and grievances with the foreign workers

Close-out evidence:

32 6.3.3. Date Recorded>

10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

The system is not open to any affected parties.

Objective Evidence:

The system to resolve disputes raised is not open to affected parties especially foreign workers.

Close-out evidence:


10 June 2011

Due Date> Next

surveillance Date

Closed>

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50

Non-Conformance:

Poor housing condition for foreign workers.

Objective Evidence:

Poor conditions of hostels are observed at Air Tawar 2, 3 and 4.

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Lack of documented minutes of meetings with main trade unions or workers representatives in schemes.

Objective Evidence:

There is no evidence obtained from the schemes with regard to the similar meetings on the employee consultative committee or meeting minutes of foreign worker representatives with their workers and/or FELDA scheme management.

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

No evidence of a published statement in local languages recognizing freedom of association.

Objective Evidence:

The management lacks a published statement in local languages recognising freedom of association. (Cross referred to 6.6.1)

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Incomplete evidence to minimize use of certain pesticide.

Objective Evidence:

Inadequate record keeping of chemicals from independent smallholders.

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Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Environmental impacts are not completely assessed.

Objective Evidence:

Improvement is required in identifying the aspects within the environmental impact assessment and improving it further through continuous improvement plan

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Not all pollution sources are identified hence, not all plans are fully developed.

Objective Evidence:

Mechanisms for collecting schedule waste from the workshops, landfills of the workers quarters, solid wastes disposed from the kitchen utensil washings, segregation of domestic wastes etc., are not adequately addressed and implemented.

Close-out evidence:


10 June 2011

Due Date>

Next surveillance

Date Closed>

Non-Conformance:

Incorporating of workers in social impact assessment is lacking and not all components of social impacts were assessed.

Objective Evidence:

There is a lack of incorporating foreign workers in social impact assessment.

Close-out evidence:

Obs 1


10 June 2011

Due Date>

Next surveillance Date

Closed>

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Non-Conformance:

The information on the classification of river water quality sampled at incoming and

outgoing points of main natural waterways in the schemes and mills activities which

have negative impact is considered insufficient. Interpretation of the analytical results

of the river water quality and recommendations for further mitigation action plans if

there are any negative outcomes in the analytical result was lacking (Minor CAR 11).

Objective Evidence:

FELDA Semenchu grouping has produced evidence of a reporting system according to Interim National River Water Quality Standards (INRWQS). This method will support the interpretation of river water quality based on the pollution status, its classification and necessary action plan required to take according to classification. Therefore, the Minor CAR 11 is changed to observation 01 to verify further on the continuity of the

reporting system and implementation of the mitigation plans given in the report.

Close-out evidence:

Obs 2


10 June 2011

Due Date>

Next surveillance Date

Closed>

Non-Conformance:

Minor mistake in identifying and assessing HCV habitats and protected areas within landholdings and surrounding landholdings.

Objective Evidence:

Wrong classification of HCV 1 for oil palm planted area in Bukit Bunut East of Air Tawar 4.

Close-out evidence:

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9. CERTIFIED ORGANISATIONS ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

It is acknowledged that the assessments cited in this main assessment report have been carried

out as stipulated and we confirm the acceptance of the assessment report contents including

assessment findings.

Sign on behalf of: