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Jakarta Post

Finding the best path toward sustainable palm oil

Vincent Lingga
Kuala Lumpur   ●   Tue, November 25, 2014

The world'€™s largest palm-oil companies gathered here last week, sharing the best practices of what is assessed as the model of sustainable oil-palm plantation development.

Several of them magnanimously admitted mistakes amid the mounting campaigns by consumer and environmental organizations, but then they have often been accused by international green NGOs of being the main drivers of deforestation.

The occasion was the 12th conference of the Roundtable on Sustainable Palm Oil (RSPO), a global body of plantation companies, refiners, consumers and green groups, which promotes the development of socially, environmentally and economically sustainable palm oil.

Indeed palm-oil companies are most likely the first to be blamed, with pulp producers next on the list of culprits, every time haze pollution caused by forest fires in Sumatra or Kalimantan hits Singapore or Malaysia.

But it also happens that Indonesia and Malaysia, which together account for more than 85 percent of global palm-oil production, are home to the biggest palm-oil and pulp and paper companies.

Indonesia, now the world'€™s largest palm-oil producer with more than 30 million tons of annual output, has often been notoriously cited as the third-biggest polluter globally as the country has allegedly expanded its oil-palm estates, currently estimated at almost 10 million hectares, by destroying its rain forests.

But international environmental NGOs and consumer organizations cannot simply tell Indonesia to stop expanding its oil-palm estates because this crop turns out to be the most productive among all vegetable oils, with yields more than nine times as high as soybean, rapeseed oil, peanut oil and sunflower oil, which are cultivated mostly in developed countries.

Indonesia'€™s palm-oil industry, according to the industry'€™s association, now directly employs more than 4.5 million workers and earns about US$20 billion in export earnings a year. Yet more significant to the economy is that 40 percent of the oil-palm plantations are owned by smallholders with acreages ranging from two to 20 ha.

According to the Rome-based Food and Agriculture Organization, palm oil accounts for almost 40 percent of global vegetable-oil production, estimated at 145 million tons last year, with soybean, rapeseed, peanut, corn and sunflower accounting for the remaining 60 percent.

Douglass Cress, a senior executive of the United Nations Environment Programme (UNEP), who attended the big gathering, acknowledged the paramount role of the RSPO as an independent promoter of sustainable palm oil as it included all the representatives of the whole spectrum of the industry.


The causes of deforestation or forest fires are rooted in the most basic problem of poverty.

'€œI am impressed by the open and frank discussions in this forum where companies talk about their successes and failures within the palm-oil industry. It is really a brave thing to do,'€ Cress noted.

That is why UNEP had signed a cooperation agreement with the RSPO to jointly implement programs to enhance the sustainable development of palm oil, he said, hoping that RSPO would become a model for similar programs for other farm commodities.

But the representatives of environmental NGOs and smallholders still have a lot to complain about the RSPO'€™s performance, notably with regard to the still weak market reception for sustainably produced palm oil.

RSPO secretary-general Darrel Webber acknowledged that even though the capacity of RSPO-certified sustainable palm oil at present already accounts for 18 percent of global output, only about 50 percent of the sustainably produced palm oil has been taken up by the market.

Several European countries, including the United Kingdom, France, Germany, Sweden, the Netherlands, Norway, Denmark and Belgium, and major corporations such as Nestle, Unilever, Carrefour and Johnson & Johnson, have committed to 100-percent RSPO-certified sustainable palm oil in 2015.

But Europe takes only around 4 million tons from Indonesia, which exports over 20 million tons annually, and supplies more than 50 percent of the RSPO-certified palm oil.

The RSPO did boast more than 1,750 members representing the whole spectrum of the palm-oil supply-chain. But as long as the growth of market uptake remains slow and the premium price enjoyed by certified palm oil remains rather insignificant, market faith in the RSPO certification program could decline.

It is perhaps because of this low market uptake and the perpetual international criticism of the palm-oil industries in Indonesia and Malaysia that both countries have launched their own certification schemes: Indonesia Sustainable Palm Oil (ISPO) and Malaysia Sustainable Palm Oil (MSPO).

But the launch of the ISPO and MSPO should actually be welcomed as the result of the increasing awareness on the part of the governments of the vital importance of sustainable management of palm oil, not as competitors to the RSPO.

However, the operation of three different certifications of sustainability for the same commodity and toward the same goal seems a waste of resources. After all, the principles of sustainable management promoted and audited under the three schemes for their respective certification processes are by and large similar, covering such elements as transparency, legal and regulatory compliance, best production practices, environmental responsibility and commitment to local community development.

Now that UNEP has engaged with the RSPO, the UN body is expected to help develop synergy between the three sustainability-certification schemes, or else they could cause confusion and unnecessarily add to the production costs. Consumer or market pressures alone cannot make the campaign for of sustainability sustainable in the long term.

It would be counter-productive if foreign green NGOs and consumer organizations, which are among the most assertive members of the RSPO, try to intervene in implementing changes in Indonesia. There are rules which are already in place and numerous ministries and local government agencies that have to be brought into the process.

The causes of deforestation or forest fires are complex as they are rooted in the most basic problems of poverty, unemployment and weak law enforcement. The blunt fact is that poor farmers trees are usually worth much more dead than alive.

Put another way, land is worth more as cropland than as forests as the benefits from trees such as capturing carbon emissions and embodying biodiversity are hard to price. They are also intangible concepts for farmers who are preoccupied with the question of what to eat tomorrow.

It will be difficult to change the behavior of small farmers illegally cutting trees and burning degraded forest lands and peats if they remain gripped by dire poverty.


The writer is senior editor at The Jakarta Post.