Palming off livelihoods? The misguided campaign against palm oil

ABBREVIATIONS

EU = European Union
FSANZ = Food Standards Australia and New Zealand
NGOs = Non government organisations
RSPO = Roundtable on Sustainable Palm Oil
UNICEF = United Nations Children's Fund

1.0 EXECUTIVE SUMMARY

Internationally environmental non-government organisations and activists are campaigning against industry and consumer use of palm oil.  Their opposition to is driven by claims that it is unsustainable promotes deforestation and reduces orang-utan populations.

Regulations have now been approved in the European Union to artificially reduce the capacity for palm oil to be imported as a biofuel.

But these campaigns are based on false foundations.

The primary cause of deforestation is poverty -- not palm oil.  One of the core reasons forests are converted to agricultural use is because poor farmers need land to grow crops to sell on the international market to help themselves, and their communities, be lifted out of poverty.  In fact small holders account for up to 40 per cent of planted palm oil plantations in Malaysia and 45 per cent in Indonesia.

Palm oil is in demand in the developing world.  If palm oil isn't consumed in developed countries, developing countries will simply be flooded with cheaper product, and other lower-yield agriculture products may be grown to replace it.  And in contrast to the activist campaigns, because palm oil is a high yield oil seed in comparison to its competitors, its use is likely to cause less deforestation and keep more forests intact.

In recognising the impact that the industry is having, private certification regimes, like the RSPO, have developed to give consumers confidence that palm oil is produced sustainably.

Deliberately reducing consumption of palm oil is not going address the primary reasons behind the declining orang-utan population, but it will definitely harm one of their closest cousins in the area -- poor farmers and their communities.  Reducing demand for palm oil will harm their livelihoods and their capacity to lift themselves out of poverty.

Palm oil is also a necessary dietary staple for the poor because it is a rich source of Vitamin A.  Vitamin A is essential to boost the immune system, and Vitamin A deficiency leads to the death of one million children in the developing world each year.

Rather than being a campaign to help conserve animal and plant life in Malaysia and Indonesia, opposing palm oil is a misguided campaign that will alleviate developed world consumers of guilt, at the expense of the world's poor.

2.0 INTRODUCTION

Recently NGOs and activists have run campaigns in Australia and New Zealand attacking the use of palm oil as an ingredient in consumer products.  As a staple agriculture product in Indonesia and Malaysia the consequences of reducing consumer demand has the potential to have a real impact on these countries and those who depend on the industry for their livelihoods.

This backgrounder will analyse the palm oil industry, the campaign against it, whether it is justified and who will deal with the consequences.

3.0 WHY PALM OIL?

Palm oil, extracted from the fruit of oil palms, is the world's most produced oil seed and all-round one of the world's most produced agriculture commodities.  Brought to South East Asia in the 19th Century from Africa, ⁽¹⁾ nearly 90 per cent of the world's palm oil is currently grown in Malaysia and Indonesia.

Palm oil is a valuable commodity in Indonesia and Malaysia because it is an inexpensive, high yield oil crop that is in demand in the lucrative export market because it is used as an ingredient in many common household products including margarine, potato chips, chocolate, margarine and soap. ⁽²⁾  Palm oil is particularly popular in developed country markets because is it trans-fat free. ⁽³⁾

Global production of palm oil has risen from 16.9 million tonnes in 1995 to 43.1 million tonnes ⁽⁴⁾ in 2008 and is the world's most traded edible oil.

Since December 2007 Indonesia has overtaken Malaysia as the world's largest producer of palm oil, ⁽⁵⁾ with around 40 per cent of plantations run by small holders in Malaysia, and 45 per cent in Indonesia. ⁽⁶⁾  In 2006 the Indonesian palm oil industry employed approximately 1.5 million people. ⁽⁷⁾  Employees are also provided with free or heavily subsidised housing, schools and healthcare. ⁽⁸⁾

Earlier this year the Indonesian government announced plans to double its palm oil output by 2020, but only 20 per cent of that growth is expected from increased plantations. ⁽⁹⁾  Most is expected from improved yields;  especially the yields of small holders.

One of the core reasons that palm oil is grown in Indonesia is because the government is seen as "aware of the need to alleviate poverty and to provide food and employment on an economically sound and sustainable basis to an already large and rapidly increasing population", ⁽¹⁰⁾ and holds the belief that "labor and land remain plentiful" ⁽¹¹⁾ for production.

Despite historically producing more palm oil than Indonesia, the Malaysian industry has a higher yield output than Indonesia because of "improved tree varieties, improved cultural practices, and perhaps the biological yield cycle" ⁽¹²⁾ -- not expanding land use.  As of 2007 the Malaysian industry supported more than half a million workers. ⁽¹³⁾

4.0 THE CAMPAIGN AGAINST PALM OIL

Yet, despite the benefits of palm oil to farmers in Asia and the Pacific islands, campaigns are now run against palm oil based on allegations that it is grown on land converted from natural forest, causes carbon dioxide emissions and reduces habitat for endangered species like the orang-utan.

Despite only emerging in Australia and New Zealand's mainstream media this year, Greenpeace ⁽¹⁴⁾ and Friends of the Earth ⁽¹⁵⁾ have been campaigning against the growth, importation and commercial use of palm oil for years.  Their campaigning activities have ranged from opposing the loading of palm oil shipments to developed country markets, ⁽¹⁶⁾ to lobbying European officials to ban the importation of palm oil as a biofuel ⁽¹⁷⁾ to working to get palm oil industry advertisements taken off television. ⁽¹⁸⁾

And they have had some success.  In 2002 Swiss-based supermarket chain, Migros, announced plans to hire auditors every year to assess the sustainability of palm oil suppliers. ⁽¹⁹⁾  A number of US and EU-based companies have taken equivalent measures or stopped using palm oil all together.  And in 2008 the European Parliament accepted a directive imposing limitations on biofuels that can be imported into the EU.  As a result, from 2009 imported biofuels must reduce carbon dioxide emissions by at least 35 per cent against fossil fuel alternatives, ⁽²⁰⁾ artificially locking out palm oil because its bottom range can be as low as a 19 per cent saving, but actually has the potential of a 72 per cent saving. ⁽²¹⁾

And in early 2008 the campaign against palm oil reached Australia and New Zealand.  Following complaints from anti-palm groups the Auckland Zoo took Cadbury chocolates off its shelves, and anti-palm oil activists encouraged consumers to "Boycott Cadbury".  Their campaign was also supported by the establishment of Facebook group claiming "Only d*cks eat Cadbury". ⁽²²⁾  After a relatively short campaign, Cadbury New Zealand advised that they were removing palm oil as a key ingredient from chocolate, despite health benefits.

The campaign then moved across the Tasman and Cadbury also removed palm oil as an ingredient in its Australian chocolate products. ⁽²³⁾  The Melbourne Zoo, partnering with celebrities from popular television and radio programs, have established a similar campaign criticising the use of palm oil. ⁽²⁴⁾  Their "Don't Palm Us Off" campaign is designed to request the Food Standards Australia and New Zealand (FSANZ), an intergovernmental body that establishes standards on food labelling, to specifically require palm oil to be labelled on all products. ⁽²⁵⁾  Currently it is labelled as part of a family of vegetable oils.  The objective of the campaign is to encourage consumers to haze products that include palm oil, and by default push industry to stop using it as an ingredient in their products. ⁽²⁶⁾

And more recently the web-based Palm Oil Action Group has produced and supplied coloured stickers to activists that state "Warning:  contains palm oil".  These stickers are being used on supermarket products that have palm oil as an ingredient to encourage consumers not to buy them. ⁽²⁷⁾

5.0 PALMING OFF LIVELIHOODS?

The campaign run against palm oil is multi-faceted, but has one clear objective -- to reduce the consumption of palm oil in its raw and processed forms in developed country markets, like Europe, the United States, Australia and New Zealand.  But these campaigns have been built on false foundations.

5.1 DEFORESTATION AND ORANG-UTANS

The principle claim by anti-palm oil activists against the industry is that it causes deforestation in Malaysia and Indonesia and the loss of habitat for orang-utans.  But what activists miss is the core driver for the demand for increased agriculture land;  it isn't palm oil specifically, but the development of primary industries to help lift rural communities out of poverty.  This was the same driver that saw wealthy countries redevelop land for agriculture practices to support economic development.

Without palm oil deforestation would still occur, it would just be for a different crop.  But farmers have used palm oil because it is a high yield oil seed that delivers between three and four tonnes per hectare.  By comparison competitor seeds such as rapeseed, sunflower and soybean oils yield less than 0.7 tonnes per hectare. ⁽²⁸⁾

Behind the claims that expanding plantations for palm oil is driving increased deforestation, and increased output from the industry, the reality is that recent growth in industry output has been a direct result of increased yields driven by industry improvements.

While deforestation is legitimately concerning, like in developed countries, not all land can be kept as forest.  The European average is only 25 per cent, which is roughly the same as allocated in Indonesia, and less than half of Malaysia's allocation at more than 55 per cent. ⁽²⁹⁾  As the Stern Review found less than 20 per cent of forest land cleared in Indonesia was to support the palm oil industry, and it is only 30 per cent in Malaysia. ⁽³⁰⁾

And behind the superficial claims of activists arguing that virgin rainforest is behind destroyed, a deeper reading of their material points out that "it is unlikely that virgin forests are still cleared for palm oil expansion in Malaysia on any significant scale, merely because most forests have already been logged, at least once". ⁽³¹⁾

Measures should reasonably be taken to protect wildlife like orang-utans, such as the Malaysian government's plan to ban planting palm oil near rivers to maintain wildlife habitats. ⁽³²⁾  But pressuring consumers off consuming palm oil won't solve the problem, but it does have the potential to increase the amount of land needed to produce equivalent agriculture output.

In 2004 the palm oil industry established the Roundtable on Sustainable Palm Oil to develop and enforce private certification standards to "promote the growth and use of sustainable oil palm products through credible global standards and engagement of stakeholders". ⁽³³⁾  Part of RSPO criteria for certification is that new plantations not replace land with a high conservation value and damage to high conservation value habitat is avoided.  And under the GreenPalm program consumers can buy GreenPalm certified palm oil products and make a contribution to farmers who voluntarily choose to have their product independently certified. ⁽³⁴⁾

Industry has also partnered with civil society in projects like the Borneo Conservation Trust and the World Wildlife Fund to develop programs that ensure endangered wildlife are not threatened.

5.2 SUSTAINABILITY FOR WHOM?

The campaign against palm oil is underpinned by the expectation that palm oil cannot be produced in an environmentally, socially and economically sustainable way.  Yet even the United Nations Development program recognises the potential for it to be grown and harvested in a sustainable manner. ⁽³⁵⁾

But there is one area that palm oil activist campaigns won't deliver a sustainable outcome -- the economic sustainability of the roughly one million Indonesians and Malaysian workers who depend on the industry for their livelihoods and the millions of people dependent on it as a dietary staple.

An agriculture crop principally grown in developing countries, small holder palm oil farmers include some of the world's poorest producers.  And they are not insignificant contributors to the industry.  In Malaysia small holders account for up to 40 per cent of the total area of planted oil palm and in Indonesia it is 45 per cent. ⁽³⁶⁾  And the industries in both countries support hundreds of thousands of workers.  And that is one of the reasons why the Asian Development Bank finances palm oil projects, whose success ensures that it delivers strong repayment rates on loans from funded projects. ⁽³⁷⁾

Supporting poor farmers is not the only contribution of palm oil.  Is also a dietary staple for millions of Indonesians and Malaysians, as well as the poor in other developing countries.  Palm oil also has a high Vitamin A content, an essential dietary vitamin to boost the immune system.  According to UNICEF an estimated one million young children die each year as a consequence of complications from Vitamin A deficiency. ⁽³⁸⁾

6.0 CONCLUSIONS

Palm oil is an essential crop in the developing world, but most importantly for the world's two largest producers -- Indonesia and Malaysia.  Recent campaigns against palm oil by developed country activists may appear to be well intentioned to promote the best interests of communities and wildlife in these countries, but they are misguided in blaming palm oil.

Lost forest and the impact that may have on endangered species isn't a consequence of growing palm oil, but the consequence of the developing world's process toward economic development.  Contrary to the claims of anti-palm oil activists, because it is a high yield crop, palm oil may actually be limiting any deforestation needed by farmers to expand holdings and increase usable land.  And recent significant increases of output by the industry have not been driven by increased land use, but increased yields which have progressively grown.

Reducing demand in developed world markets may make consumers feel good, but it will not be cost free.  An essential crop, it provides nearly one million workers in Indonesia and Malaysia with a sustainable livelihood and is also a vital dietary supplement in these countries to boost immune systems and stave off developing world diseases that can kill millions each year.

7.0 REFERENCE LIST

___., 2009, "Buttering up chocolates", Daily Telegraph, August 20, Sydney, Australia

___., 2006, "Indonesia counting on biofuel", International Herald Tribune, August 16

___., 2009, "Malaysia argues for green palm with own CO₂ standard", The Malaysian Insider, October 19

___., 2009, "Malaysia to ban some palm oil plantations to protect orangutans", Malaysia in Focus, October 15

AFP, 2009, "Indonesia to double palm oil production by 2020", Khaleej Times (Business), May 27

Asian Development Bank, 1999, "Project performance audit report on the West New Britain small holder development project"

Basiron, Y. 2008, "Malaysia's Oil Palm -- Hallmark of Sustainable Development", Global Oils & Fats Business Magazine, v5, i4

Brown, E. & Jacobson, M., 2005, "Cruel oil:  How palm oil harms health, rainforest and wildlife", Centre for Science in the Public Interest, Washington DC, United States of America

Commission of the European Communities, 2008, "Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources", Brussels, January 23

Datuk, A.Y., 2009, "Case of biofuel in Asia:  Palm oil based biofueld in Indonesia, Malaysia and Papua New Guinea", Nueva Sociedad

Forest Watch Indonesia, World Resources Institute & Global Forest Watch, 2002, "The State of the Forest:  Indonesia", Washington DC, United States of America, February

Friends of the Earth International, 2008, "Malaysian palm oil -- green gold or green wash:  A commentary on the sustainability claims of Malaysia's palm oil lobby, with a special focus on the state of Sarawak", October

Friends of the Earth International and Friends of the Earth Europe, 2007, "Complaint to the Advertising Standards Authority", July 25

GreenPalm, "How it works", London, United Kingdom

Greenpeace, 2007, "How the palm oil industry is cooking the climate", November 8

Greenpeace, 2009, "Greenpeace challenges RSPO to stop green-washing member companies", November 14

Greig-Gran, M., 2008, "The cost of avoiding deforestation:  Update of the report prepared for the Stern Review of the Economics of Climate Change", International Institute for Environment and Development, London, United Kingdom

NZPA, 2009, "Cadbury sweet with Auckland Zoo", New Zealand Herald, August 18

Oil World, 2008, "Oil World Annual 2008", Hamburg, Germany

Riedner, U., 2002, "Palm oil from sustainable production -- a Migros pilot project", Migros

Roundtable on Sustainable Palm Oil, "Overview of RSPO", Factsheet, RSPO, Malaysia

Roundtable on Sustainable Palm Oil, "Palm Oil, Factsheet, RSPO, Malaysia

Sargeant, H., 2001, "Vegetation fires in Sumatra Indonesia:  Oil palm agriculture in the wetlands of Sumatra:  Destruction or development?", Forest fire prevention and control project, Ministry of Forestry, European Union

Sunday Star-Times, 2009, "Palm oil foes sticking it to supermarkets", New Zealand, October 11

UNICEF, 2004, "Vitamin and mineral deficiency:  A global damage assessment report", United Nations, New York

United Nations Development Program, 2007, "Human Development Report 2007/08", United Nations

United States Department of Agriculture, 2007, "Indonesia:  Palm oil production prospects continue to grow", Foreign agriculture service, Commodity intelligence report, December 31

United States Department of Agriculture, 2005, "Malaysia:  Palm oil yields surprisingly high", Production estimates and crop assessment division, Foreign Agriculture Service, June 24

Vermeulen, S. & Goad, N., 2006, "Towards better practice in smallholder palm oil production", International Institute for Environment and Development

World Growth, 2009, "Palm oil -- the sustainable oil", Washington DC, United States of America September

Zoos Victoria, 2009, "Campaign launch"

Zoos Victoria, 2009, "Don't palm us off", October 2

Zoos Victoria, 2009, "What do I need to know?"

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ENDNOTES

1.  Datuk, A.Y., 2009, "Case of biofuel in Asia:  Palm oil based biofueld in Indonesia, Malaysia and Papua New Guinea", Nueva Sociedad

2.  Forest Watch Indonesia, World Resources Institute & Global Forest Watch, 2002, "The State of the Forest:  Indonesia", Washington DC, United States of America, February, p42

3.  Brown, E. & Jacobson, M., 2005, "Cruel oil:  How palm oil harms health, rainforest and wildlife", Centre for Science in the Public Interest, Washington DC, United States of America, p27

4.  Oil World, 2008, "Oil World Annual 2008", Hamburg, Germany

5.  United States Department of Agriculture, 2007, "Indonesia:  Palm oil production prospects continue to grow", Foreign agriculture service, Commodity intelligence report, December 31

6.  AFP, 2009, "Indonesia to double palm oil production by 2020", Khaleej Times (Business), May 27

7.  ___., 2006, "Indonesia counting on biofuel", International Herald Tribune, August 16

8.  Sargeant, H., 2001, "Vegetation fires in Sumatra Indonesia:  Oil palm agriculture in the wetlands of Sumatra:  Destruction or development?", Forest fire prevention and control project, Ministry of Forestry, European Union, pvi

9.  AFP, 2009

10.  Sargeant, 2001, pv

11.  Sargeant, 2001, pvi

12.  United States Department of Agriculture, 2005, "Malaysia:  Palm oil yields surprisingly high", Production estimates and crop assessment division, Foreign Agriculture Service, June 24

13.  Basiron, Y. 2008, "Malaysia's Oil Palm -- Hallmark of Sustainable Development", Global Oils & Fats Business Magazine, v5, i4

14.  Greenpeace, 2007, "How the palm oil industry is cooking the climate", November 8

15.  Friends of the Earth International, 2008, "Malaysian palm oil -- green gold or green wash:  A commentary on the sustainability claims of Malaysia's palm oil lobby, with a special focus on the state of Sarawak", October, i114

16.  Greenpeace, 2009, "Greenpeace challenges RSPO to stop green-washing member companies", November 14

17.  Greenpeace, 2007, "How the palm oil industry is cooking the climate", November 8

18.  Friends of the Earth International and Friends of the Earth Europe, 2007, "Complaint to the Advertising Standards Authority", July 25

19.  Riedner, U., 2002, "Palm oil from sustainable production -- a Migros pilot project", Migros

20.  Commission of the European Communities, 2008, "Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources", Brussels, January 23, p32

21.  ___., 2009, "Malaysia argues for green palm with own CO₂ standard", The Malaysian Insider, October 19

22.  NZPA, 2009, "Cadbury sweet with Auckland Zoo", New Zealand Herald, August 18

23.  ___., 2009, "Buttering up chocolates", Daily Telegraph, August 20, Sydney, Australia

24.  Zoos Victoria, 2009, "Don't palm us off", October 2

25.  Zoos Victoria, 2009, "Campaign launch"

26.  Zoos Victoria, 2009, "What do I need to know?"

27.  Sunday Star-Times, 2009, "Palm oil foes sticking it to supermarkets", New Zealand, October 11

28.  Oil World, 2008, "Oil World Annual 2008", Hamburg, Germany, and Brown, E. & Jacobson, M., 2005, "Cruel oil:  How palm oil harms health, rainforest and wildlife", Centre for Science in the Public Interest, Washington DC, United States of America, p7

29.  World Growth, 2009, "Palm oil -- the sustainable oil", Washington DC, United States of America September

30.  Greig-Gran, M., 2008, "The cost of avoiding deforestation:  Update of the report prepared for the Stern Review of the Economics of Climate Change", International Institute for Environment and Development, London, United Kingdom

31.  Friends of the Earth International, 2008, "Malaysian palm oil -- green gold or green wash:  A commentary on the sustainability claims of Malaysia's palm oil lobby, with a special focus on the state of Sarawak", October, i114, p30

32.  ___., 2009, "Malaysia to ban some palm oil plantations to protect orangutans", Malaysia in Focus, October 15

33.  Roundtable on Sustainable Palm Oil, "Overview of RSPO", Factsheet, RSPO, Malaysia

34.  GreenPalm, "How it works", London, United Kingdom

35.  United Nations Development Program, 2007, "Human Development Report 2007/08", United Nations, p144

36.  Vermeulen, S. & Goad, N., 2006, "Towards better practice in smallholder palm oil production", International Institute for Environment and Development, p4

37.  Asian Development Bank, 1999, "Project performance audit report on the West New Britain small holder development project"

38.  UNICEF, 2004, "Vitamin and mineral deficiency:  A global damage assessment report", United Nations, New York