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Jakarta Post

Oil palm: Wonder crop but most controversial commodity

  • Vincent Lingga

    The Jakarta Post

Jakarta   /   Tue, November 12, 2019   /   09:13 am
Oil palm: Wonder crop but most controversial commodity A worker moves bunches of oil palm fruit at a plantation in Pangkalan Bun, Central Kalimantan. (JP/Dhoni Setiawan)

Sustainability standards for oil palm, a wonder crop that has lifted tens of millions of people in Indonesia, Malaysia and Thailand out of poverty but has become the most controversial vegetable oil, dominated a big conference held immediately after the ASEAN Summit in Bangkok last week.

But the timing of the conference was only a coincidence. The occasion was the three-day 17th annual meeting of the Roundtable on Sustainable Palm Oil (RSPO), a multistakeholder body of almost 4,400 plantation companies, refiners, lenders, consumers and green groups from 90 countries that promotes the development of socially and environmentally sustainable palm oil.

Oil palm trees yield five to 10 times more than all other vegetable oil crops, which grow in temperate-zone countries, thereby making it easier and cheaper to manage and enabling more efficient use of land. Yet more wonderful, its fruits are processed for ingredients in thousands of food, cosmetics and other consumer products and have even increasingly been used for biofuel. The effluents of palm oil refineries also have been used to generate electricity in rural areas.

However, massive campaigns by environmentalists in Europe and the United States since the early 2000s have succeeded in influencing a big segment of the public opinion to associate palm oil development with deforestation and forest fires, which cause huge carbon emissions.

In March, the European Union restricted the volume of biofuels made of palm oil that may be counted toward the bloc’s renewable-energy goals. By 2030, the EU aims to stop all imports of palm oil. Then, on Aug. 14, the EU reintroduced tariffs, ranging from 8 to 18 percent, on palm oil imports.

The tariff and nontariff barriers certainly hurt Indonesia as the world’s largest palm oil producer with a total output of more than 40 million tons last year. The upstream and downstream palm oil sector, according to the Indonesian Palm Oil Association (GAPKI), employed more than 15 million people, involved about 4 million smallholders and generated US$20 billion in exports.

“About 70 percent of the population in the United Kingdom and other European countries still have bad opinion about palm oil,” said RSPO chief executive officer Darrel Webber.

Carl Bek Nielsen, chief executive director of Malaysia’s United Plantations Berhad, concurred that it would take some time to convince consumers in Europe about the sustainability of palm oil.

“But I assure you there are now no other farm commodities that have been subjected to the same level of positive scrutiny as palm oil”, Nielsen added.

The problem is that less than 25 percent of the total area of oil palm plantations in the three-biggest producers have been certified sustainable according to RSPO standards. Whereas, RSPO certification is virtually the only sustainability standard recognized by the international market.

However, many in Asia do not believe the scrutiny of palm oil in Europe and the US are entirely positive.

Harry Brock of Britain, who is a general manager of Thailand’s Univanich Palm Oil Public Company Ltd, noted “I often found many people, even conscientious consumers in the UK, did not understand what they meant by sustainability when they referred to palm oil”.

Indonesian former agriculture minister Bungaran Saragih, who is now an adviser to RSPO, questioned the motives behind the campaign against palm oil. “I think a good portion of the international scrutiny is quite negative and in a bad faith, motivated by business interests because vegetable oils in the developed countries will never be able to compete with palm oil,” he argued.

According to data discussed at the conference in Bangkok, palm oil now accounts for more than 73 million tons or about 40 percent of the estimated global vegetable oil consumption of 175 million tons last year with the rest supplied by soybean, rapeseeds, sunflower, peanut, coconut, cotton and olive.

Bungaran added that there would never be a good global solution to the palm oil controversy as long as Europe and the US insisted on asking for absolute sustainability.

“The process should be gradual because palm oil development not only involves big plantation firms that have the resources to meet the legal, environmental and social standards but also tens of millions of poor smallholders in Asia and Africa,” Bungaran argued.

However, the massive wave of forest fires between August and October in Sumatra and Kalimantan, and the different data at government institutions on the total area of oil palm plantations have weakened Indonesia’s position in defending its palm oil sustainability.

On the opening day of the RSPO conference, Greenpeace International alleged in a press release that major consumer goods companies and top palm oil traders still bought palm oil from producers linked to thousands of fire hot spots in Indonesia over the past three months.

The questionable credibility of the basic facts Indonesia put up to defend the sustainability of its palm oil industry has caused distrust among industries and consumers in Europe.

On the other hand, the perpetual European harsh attacks on the palm oil industry, despite the improvements already made in implementing sustainability standards have caused many in Indonesia and even in Europe itself to suspect that the negative campaign is partly motivated by the business interests of vegetable oil producers

As long as this mutual distrust is not removed, there will never be a meaningful understanding about the need for palm oil sustainability and the palm oil issue will remain a “thorn in the flesh” in relations between Indonesia and Europe.