The scrutiny on Indonesia's practices was highlighted last week, when Greenpeace announced that the country was on track to join the great, the good and the weird in the Guinness World Records, though for all the wrong reasons.
The issue highlights the growing power of environmental lobby groups and activist consumers who pressurize food companies into more sustainable sourcing for their ingredients and products.
In turn the companies are demanding that sectors such as the palm oil industry do as much as they can to prevent environmental damage.
At a press conference last week, Greenpeace revealed that the level of deforestation being caused in part by palm oil was so great that it merited inclusion in the 2008 Guinness World Records.
The annual publication is expected to carry the following citation when it is published later this year, according to Greenpeace.
"Of the 44 countries which collectively account for 90 percent of the world's forests, the country which pursues the highest annual rate of desforestation is Indonesia with 1.8 million hectares of forest destroyed each year between 2000-2005," the citation reads.
The organisation directly blamed much of the rapid deforestation on the rampant demand for the country's palm oil supply.
Palm oil is currently enjoying strong appeal as an ingredient because it is free of artery-clogging trans fats, formed when fats are hydrogenated to make them more solid and extend their shelf life. The product is found in a diverse range of products including bread, crisps and margarine.
Environmental organisations such as Greenpeace are increasingly concerned that the reported health benefits are overshadowing the environmental damage due to increasing the palm oil supply.
However, Si-Siew Lim, Secretariat for the Roundtable on Sustainable Palm Oil (RSPO), believes that many within Indonesia's palm oil industry share Greenpeace's concerns over the deforestation.
"Personally, I think efforts by the Indonesian palm oil industry are encouraging," he told AP-FoodTechnology.com. "There is a lot of good work currently being done in terms of carrying out national interpretation of the principles and criteria for sustainable palm oil production among Indonesian producers and smallholders."
While palm oil has its part to play in protecting forests, Si-Siew Lim was keen to stress that other industries and organisations also had their responsibilities to the environment.
"There are many other factors driving deforestation in Indonesia," he said. "We believe that we are making progress in ensuring that palm oil production does not further deteriorate the state of forests in Indonesia."
Nonetheless, Si-Siew Lim conceded that with the ever increasing demand for palm oil, the industry must remain committed to protecting the environment.
"RSPO members in the food and edible oils industry are doing their bit in terms of promoting sustainable palm oil in the market, but there is always room for improvement," he said.
According to figures from the US Department of Agriculture (USDA), global palm oil consumption in 2006 increased by 6.6 per cent to 35.3m tonnes. This trend is expected to continue in 2007 with an estimated 5.5 per cent consumption rise.
The increased demand is already stepping up the burden on Indonesia's resources as rival producer Malaysia has seen difficulties in keeping up with demand.
Last month, Malaysian palm oil futures hit an eight year high as rampant demand by food and biofuels processors further depleted its stocks. On 12 April the futures market for palm oil hit 2,205 Malaysian ringgit (€473) a tonne, as an industry body warned that the country's stocks were at a 19 month low.
