Agribusiness giant Cargill Inc. has denied claims made by environmental groups that it has cleared rainforest and destroyed peatlands to develop oil palm plantations in west Kalimantan.

"We want to set the record straight on the false allegations...We do not operate any undisclosed oil palm properties," the company said in a statement Thursday, after environmental group Rainforest Action Network ran a report claiming it was operating two undisclosed palm oil plantations in the Indonesian region of the Island of Borneo.

RAN alleged that Cargill's plantations had violated criteria under the Roundtable on Sustainable Palm Oil (RSPO), a multi-stakeholder group that is working toward setting sustainable guidelines for the palm oil industry. Cargill has been a member of the RSPO since 2004.

The environmental group said the two palm oil estates were "actively burning and clearing rainforest, causing conflict with local communities, destroying peatlands and operating in violation of the RSPO principles and criteria."

"RAN claims Cargill has cleared rainforest and primary forests. This is categorically untrue. We have not cleared or developed any land that can be categorized as rainforest or primary forest. The entire area where our properties are located in Kalimantan were deforested by loggers over ten years ago, which was before we acquired the plantations. The land was logged and then converted to oil palm plantations. There is no rainforest or primary forest in, or anywhere in the vicinity, of our plantation," the privately held firm said on its company website.

Cargill, who's key customers include Nestle SA (NESN.VX) and Kraft Foods Inc. (KFT), also said it would buy 60% of its palm oil needs from palm oil producers who are members of the RSPO.

The allegations that Cargill has been involved in deforestation were the latest in a series of environmental issues and supply suspensions that have hit the palm oil industry.

Just last week another environmental group, Greenpeace, alleged that Indonesia's biggest palm oil producer, PT Sinar Mas Agro Resources and Technology Tbk (SMAR.JK), also known as PT SMART, and the Singapore-listed Golden Agri-Resources Ltd.(E5H.SG) have failed to follow the sustainable plantation practices required by the RSPO.

The group alleged that SMART was also widely involved in clearing rain forests and draining peatlands for palm oil cultivation, a charge that was denied by the companies.

SMART and Golden Agri, both owned by the Sinar Mas Group, have said they won't cultivate oil palms on land with high conservation value, and that they remain committed to following sustainable practices in the production of palm oil.

Consumer giants Unilever PLC (UL) and Nestle have suspended their purchases of palm oil from the group, while Cargill said it may review its supply contract with Sinar Mas if the allegations of deforestation are confirmed.

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com