Cargill Says Sime Didn’t Adequately Address Forced Labor Reports

(Bloomberg) -- Cargill Inc. said Sime Darby Plantation Bhd. hasn’t presented sufficient information to address forced labor allegations by the U.S., which prompted the trader to halt palm oil purchases from the Malaysian company.

U.S.-based Cargill urged Sime, the world’s biggest palm oil grower, to provide details on how it has addressed the U.S. Customs and Border Protection’s findings of forced labor in its products. Sime has not yet come forward with that information, Cargill said in an emailed response to questions Friday.

Some of Malaysia’s largest palm and rubber-glove producers have been under scrutiny in recent years over allegations of migrant worker abuse. The U.S. CBP in late January said it would seize Sime’s palm oil and related goods as it has sufficient information to determine that the company’s products were made using convicts, forced or indentured labor.

Cargill has suspended all new sourcing of palm oil and derivative products from Sime since Feb. 25. “Cargill does not tolerate human trafficking, forced labor or child labor in our operations or supply chains,” the company said. It will review its decision when more information becomes available.

Sime said Thursday that it will submit a report on its labor practices to the U.S. by the end of the month, conforming to a request for an independent assessment. The company had taken steps to improve working conditions in previous years but said those efforts “may not be good enough,” according to Group Managing Director Mohamad Helmy Othman Basha. 

‘Bury Our Heads’

“We cannot bury our heads in the sand. It’s an issue that needs to be tackled,” he said in a webinar. “There’ll be a lot more attention on this.” 

The U.S. CBP did not provide specific details to support its findings of forced labor, nor did it offer guidance for the ban to be lifted, other than for Sime to submit an assessment of its labor practices, Mohamad Helmy said.

The CBP first announced an import ban on Sime Darby’s products in December 2020. Since then, the company has undertaken audits internally and with independent organizations, and will be ready to submit the report by end-April.

Sime Darby’s estates and mills in Malaysia spread across 342,000 hectares, roughly four times the size of Singapore. It has about 24,000 workers in its plantations, including 15,000 migrant employees from nine countries. The U.S. ban has far-reaching impact on the company, including to its reputation, customers, and its license to operate. 

Sime said it has taken measures to improve its labor rights in the past several months, such as revamping its grievance channel to guarantee worker confidentiality and introducing new mobile apps to help staff raise complaints on housing. It will also give employees more freedom of movement and better access to medical amenities, prevent workers from bringing their children to work, and reimbursing recruitment fees. 

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