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Jakarta Post

Insight: Fair trade for palm oil, please!

  • Iman Pambagyo
    Iman Pambagyo

    Director general for international trade negotiations at the Trade Ministry

Jakarta   /   Fri, April 20, 2018   /   09:11 am
Insight: Fair trade for palm oil, please! Indonesian palm oil and its derivatives have been under the scrutiny of international environmentalists since the early 2000s. (JP/Dhoni Setiawan)

Palm oil has been one of Indonesia’s top trade priorities for decades. However, this fourth most populous country on earth has become increasingly concerned lately as negative campaigns against palm oil enter a new era: not only are NGOs and industries of other vegetable oils campaigning harder, but parliaments as well as central and regional governments in some countries are now taking the issue to the official level.

The European Parliament, for example, adopted a resolution recommending that the European Union Commission phase out palm-oil biofuel from the European market beginning in 2021. Another example is the Norwegian Parliament, which has proposed to exclude palm-oil biofuel from government procurements. 

Elsewhere, a regional state in Pakistan is contemplating proposing a tariff increase on palm oil due to health reasons, while India keeps on raising its import tariff on palm oil for a simple reason: domestic politics.

This may remind us of the beggar-thy-neighbor policy: an economic policy through which one country attempts to remedy its own economic problems by means that tend to worsen the economic challenges of other countries.

For producing countries, palm oil is more than just a product. The palm oil sector provides a livelihood for 16 million Indonesians through direct and indirect employment. Palm plantations involve small farmers living in rural and remote areas: 42 percent in Indonesia, 40 percent in Malaysia and 80 percent in Nigeria. In Indonesia alone, around 61 cities and small towns develop and live thanks to this sector. 

Palm oil is also one of the most important sources of export revenue for Indonesia, worth US$19 billion annually, with the EU, China and India being Indonesia’s main export destinations. 

It should not surprise anyone, therefore, when Indonesia expresses its deep concerns about heightened efforts to wage a trade war against palm oil. To Indonesia, if the issue at hand is the environment, then all vegetable oils should be treated equally. 

Any attempt to target palm oil without treating other vegetable oils equally and on the same footing will simply be construed as discrimination in favor of other vegetable oils. It is also Indonesia’s view that when it comes to the environmental issue, we have to look at it holistically without single-targeting or cherry-picking products or sectors. 

It is worth mentioning a report issued by the European Commission (DG Environment) in 2013 entitled “The Impact of EU Consumption on Deforestation.” The report suggests that, “Globally, the main crops that contributed directly or indirectly to deforestation include soybeans (19 percent), maize (11 percent), oil palm (8 percent), rice (6 percent), and sugar cane (5 percent).” Another report suggests that the main non-vegetable oil contributor to deforestation is livestock. It indicates that animal agriculture and the dairy-product industry — the so-called “cowspiracy” — is responsible for 18 percent of greenhouse gas emissions, 55 percent of water consumption and 45 percent of land use.

If health is the issue at hand, recent studies suggest that consumption of saturated fatty acids from palm oil does not, per se, lead to an increased risk of cardiovascular disease. Even if we assume that saturated fat needs to be regulated, the measures taken should be non-discriminatory in nature by targeting all food products that contain saturated fats, regardless of the origin of the fats, whether from vegetable oils or animal fats.

There are reports publicly available associating other vegetable oils with health issues, too. Canola oil, for example, is believed to cause kidney and liver problems; its erucic acid content could inflict life-threatening heart problems. It could cause hypertension and stroke, and retardation of normal growth on infants. Because canola oil undergoes hydrogenation, it tends to have a higher level of trans fats compared to other vegetable oils. Further, because more than 90 percent of canola oil is genetically modified, it is often associated with toxicity, allergic reactions, immune-suppression, cancer and loss of nutrition.

How about soybean oil? Again, open sources suggest that it can cause obesity and diabetes. Consuming soybean oil continuously over a long period of time is proved to lead to excessive amounts of Omega-6 in our diet, which can lead to inflammation. Many studies also suggest that soybean oil can increase the risk of cardiovascular disease, as it is predominantly a polyunsaturated fat, which has an impact on blood pressure and cholesterol. 

The question we have is quite simple: why is it that palm oil continues to be blamed as the main source of environmental and health problems? Palm oil is renowned as the most efficient oil crop (highest tonnage per hectare). Palm oil is not a threat to nature or human health but a gift from nature when sustainably produced and properly processed. Campaigning against the use and consumption of palm oil in favor of other, competing vegetable oils will be felt as a punitive action by Indonesian farmers. It is not a friendly way of addressing the issue. And it is not at all an effective way of promoting free and fair trade.

As the champion of a free world now embarks on a campaign toward free, fair and reciprocal trade, it is not impossible for Indonesia to follow suit and begin putting an emphasis on “reciprocity” if it feels that other countries are treating Indonesia unfairly. However, we are not going in that direction, at least not yet. Until proved otherwise, we remain hopeful that fair trade is possible in today’s world.


The writer is director general for international trade negotiations at the Trade Ministry.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.