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Jakarta Post

Palm oil reputation under attack

  • Pietro Paganini

    -

Jakarta   /   Sat, May 11, 2019   /   02:47 pm
Palm oil reputation under attack According to Agriculture Ministry data in 2015, total oil palm plantation area is 11.24 million hectares. (Shutterstock/File)

We know full well that the war being waged against palm oil is a trade war. It was the producers of competing products that triggered it and waged it really aggressively, investing in significant resources as well as, and this has to be said, with wise efficiency. Indonesia and Malaysia, the two main victims of this war, have tried to fight back, but with very little effect. The facts of the last four years demonstrate just this.

Finally, the reaction from Asia is becoming more aggressive, resorting to more traditional trading weapons: duties, tariffs, blockades. Protectionism does no one any good, but it is very useful during negotiations. And this is what Indonesia, and with a little less conviction, Malaysia too, would want. The decision to resort to the weapon of protectionism has perhaps arrived a little late, and there is no more time to reverse the EU’s choice to eliminate palm oil.

The problem is not the decision of the European Parliament or that of the Commission, but it is the cultural choice that the old continent has taken to gradually exclude the use of traditional combustibles, be they fossil or vegetable. Palm oil is paying the highest price, and it is paying it immediately.

It is the most competitive oil and this is why it annoys European competitors, otherwise bound to be replaced. It is not produced in Europe and therefore cannot leverage the holding to ransom of electoral consensus. We can rest assured that, after palm oil, it will be the turn of oil produced in Europe or in the United States, it’s only a matter of time.

Will the threat of duties, that has already caused alarm among different production sectors in Europe, be able to mobilize European politicians and force them to do back-pedal? It has worked in the past. The government of Malaysia made good use of it in order to convince the US government to lift the boycott of palm oil in favor of soybean producers — they too being voters, just like Europe’s producers of rapeseed and sunflower oil. It should work this time as well.

Opponents of palm oil are undoubtedly hardened and well-organized, as only farmers know how to be, but they are a lot less influential than the sum total of all the production sectors that would suffer as a result of an Indonesian retaliation. There is a problem, however.

This time the war against palm oil has spread much further afield, involving many more interests compared to then (the producers of alternative energy, for example). Above all it has spread to the food sector, involving producers and, above all, the emotional reaction of consumers. They are an army, an increasingly growing multitude (according to the data on the perception of palm oil in different European countries), that marches alongside the vegetable oil, clean energy lobbies and food sector companies.

How is this possible? The reasons are very simple: the west’s obsession — questionable — with health and healthy foods, and the resulting health ideology that is on a par with those of environmentalists; the emergence of new marketing and communication techniques, like, for example, resorting to a healthy claim on packaging and labeling; social media; the crisis with the science and the dominance of prejudice, and therefore the spread of fake news.

It is within this new context, that the communication campaign against palm oil has taken shape: Fake news that is spread socially through different channels and various media in order to discredit an ingredient, to consumers who are terrorized by the dangers linked to health and the environment.

It is a perfect strategy. False pieces of information are disseminated that terrorize consumers who demand a product that has no palm oil. Hence the “Palm Oil Free” claim. Fake news spreads exponentially exploiting the emotiveness of citizens.

They are produced by sources that can, from time to time, change and are therefore difficult to identify. They use social, but also traditional media, as significantly powerful means of dissemination. There aren’t only the competing producers, but there many who are thinking of, or actually gaining from the boycott of palm oil: Food and cosmetics businesses, refineries, financial institutions, NGOs, consumer groups, and even restaurants, pizzerias and ice cream parlors.

Each with their own tools, each for their own ends, they speculate by exploiting the sensitivities of the moment in order to gain from it. And this is also a way of explaining the difficulty in finding a true instigator compared to the old American war. Then they were producers of soybean. Now they are many. To use an unpleasant metaphor, this is a Vietnam. This is no longer simply a trade war, it is a reputational one.

The major producers, Indonesia and Malaysia struggle to comprehend it. They restrict themselves to the figures of the possible losses that would result from a Palmexit, the exclusion of palm oil from European biodiesel. They are spurred on by the fact that China and India are worth so much more. They ignore the fact that the old and small Europe will continue — for a long time to come — to dominate public debate on many issues.

The losses deriving from biodiesel can be recouped elsewhere. The harm to the reputation of palm oil could have unpleasant consequences, eroding not only financial and economic assets, but also the value of the two countries that are looking to dominate the global scene.

It is for this reason that the battle against the “palm oil free” claim and the spread of fake news is, from a long-term perspective, more important than the losses that would result from Palmexit. Get a move on.

***

The writer is adjunct assistant professor of Business Administration at John Cabot University and is on the faculty of Temple University Rome, and cofounder of think tank Competere.eu.

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