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The Jakarta Post
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Haze, a test of palm oil dominance

  • Adisti Sukma Sawitri

    The Jakarta Post

Jakarta | Tue, November 24, 2015 | 04:40 pm

The forest fire predicament has receded as rain started to fall in many regions in recent weeks. Will the government'€™s sense of urgency in tackling the annual problem also recede? One may fear so.

Despite months of serious efforts to address the fires, President Joko '€œJokowi'€ Widodo'€™s administration hasn'€™t established concrete measures to stop the expansion of oil palm plantations through slash-and-burn practices, the main cause of the problem.

It is not rocket science to understand why that is.

Indonesia is home to the world'€™s greatest extent of oil palm plantations, covering 11 million hectares of land and producing more than 33 million tons of palm oil last year, and generating jobs for millions of people.

But as the industry grows, it has become too large to allow arbitrary expansion; damaging business practices, such as the burning method, contribute heavily to the haze that has brought suffering to entire provinces and neighboring countries.

Consumer countries are stepping up action to encourage palm oil producers, including Indonesia, to address the environmental concerns of expansion, and the European Union has pledged to stop buying palm oil resulting from deforestation by 2020.

The Roundtable on Sustainable Palm Oil, a global body of plantation companies, refiners, consumers and environmental groups, has also set higher sustainability standards, including requirements of no deforestation, no peatland development and guarantees of indigenous people'€™s rights.

There have been attempts to resist this pressure. The newly established Council of Palm Oil Producing Countries, which the Indonesian government initiated along with its Malaysian counterpart, aims to regulate production and prices and create standards that take into account the economic goals of producers. As its first move, the council has demanded that palm oil companies cancel their no-deforestation pledge, also known as the Indonesian Palm Oil Pledge.

But for how long can Indonesia and Malaysia exclude themselves from the global trade? In the case of Indonesia, despite plans to boost domestic consumption through biofuel production, it will take some time before the domestic market is developed enough to fully absorb the export volume should the EU and other consumer countries cease imports immediately.

Amid other uncertainties, such as domestic dynamics, the price of alternatives and the global economy, making the products competitive is the only way to survive.

The Indonesian government should also consider that it has committed to emission cuts of 29 percent for a foreseen global pledge on climate change in Paris next week. This commitment will be dismissed as a formality if, in fact, the country still turns a blind eye to reckless expansion; this may lead to reluctance to award funding to the country for its fight against climate change.

Regulating plantation expansion is actually not a major trade-off for the industry; in fact, it is quite timely, given the overcapacity that has driven down the price of palm oil since last year.

As many plants mature in Indonesia and Malaysia, supply has reached record highs in recent years. Palm oil inventories reached a near 15-year high of 2.83 million tons in October, while export demand remains slow, according to reports last week.

To anticipate annual forest fires, the government should boldly announce that it will stop opening forests and peatland for expansion for a period of time.

This does not mean canceling concessions, but postponing further opening of forests for every company, including those who have attained permits. While doing so, the government can also review whether concession permits have been issued in accordance with the procedures. It should also set up a blue print on how to plan expansion and develop downstream activities for palm oil.

The new palm oil board will help the country, along with other producing regions, to coordinate future stocks and plan better for production and exports.

Completely stopping expansion will be more effective that the current ban on the issuance of new permits to open primary forests and peatland, which is easily dodged in backroom deals between companies and local administrations.

The government and palm oil companies should stop perceiving sustainability efforts as barriers to growth. On the contrary, prioritizing people'€™s welfare in economic activities will preserve economic activities in the long term.

To take an example from history, early on in the industrialization of Germany, first chancellor Otto von Bismarck initiated social programs, including health insurance and old-age pensions, to improve productivity and deter workers from uprisings in favor of socialism.

The social programs were replicated in other countries in Europe for similar reasons, improving welfare amid poor living conditions during industrialization.

In the 1930s in the US, meanwhile, then Democratic presidential candidate Franklin Delano Roosevelt promised social protection programs '€” later known as the New Deal '€” for farmers and factory workers to ease the impact of the Great Depression. He made the pledge after the Ford March, in which 4,000 unemployed workers led a hunger march that turned fatal in front of Ford auto factories.

In the case of our forest fires, it will take more than social programs to ensure the welfare of local people; it takes better planning, a revolution in expansion practices to assure that the industry can support welfare in the short and long terms.

Haze is a test for Indonesia as a palm oil producer, a test to see whether it can take a leading position and boost the welfare of its citizens, who currently bear the brunt of environmental degradation and poor living conditions.

With all the controls that the country has as a producing giant, the question is whether it wants to pass that test.
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The author is a staff writer at The Jakarta Post.

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