Oil palm is a remarkably efficient crop that provides the majority of the world's vegetable oil and generates valuable revenue for the developing countries where it is grown. Trade value is US$50 billion a year for the commodity that goes into about half the products on supermarket shelves (soap, margarine, ice cream, noodles and chocolate, to name a few), but palm oil has struggled on the road to sustainability. It is even a candidate for some UK power plants as a cheap but unsustainable fossil-fuel alternative.
The sustainable production of palm oil, however, is not without additional costs. These include growing processes and techniques as well as ensuring that production sources are managed in an environmentally and sustainable manner. As these extra costs are passed along, with a domino effect on suppliers, manufacturers and, of course, the consumer.
Environmental and social issues: According to Helen Buckland of the Sumatran Orangutan Society (SOS), a passionate advocacy group, the development of oil palm plantations has brought extensive deforestation in Indonesia and Malaysia, threatening the existence of the orang-utan and many other critically endangered species. Increasing tracts of arable land in Thailand are also being converted to oil palm plantations.
Indonesia and Malaysia together account for 86% of global production of oil palm, according to an SOS briefing paper. Indonesia has a striking 1.5% annual rate of deforestation through conversion of forests with high conservation value into oil palm plantations. This is having a catastrophic effect on critically endangered species such as orang-utans and the Sumatran species of tiger, elephant and rhinoceros.
The report further notes a surge in illegal logging and poaching as roads are built through forested areas to reach plantations. Widespread peat forest fires that have been causing major pollution in Thailand recently are directly associated with land clearing as the development of palm plantations displaces crops and other traditional land use, increasing the threat of poverty. Plantation labourers are usually migrant workers, not locals. Oil palm cultivation is also strongly linked to poor working conditions, forced and child labour, health and safety risks and even fatal land conflicts.
Sustainable or not? The Roundtable on Sustainable Palm Oil, set up in 2004, has endeavoured to prod the industry into producing "sustainable" palm oil _ i.e. certified as not having involved the destruction of areas of high conservation value. It includes growers, processors, food companies, retailers and advocacy groups. As well as certifying and setting a code of conduct for its 550-plus members, it has itself come under attack for its slow progress on achieving sustainability targets.
The problem is palm oil has a fiendishly complex supply chain, which makes it difficult to guarantee that the drop of oil that ends up in a bar of soap began life on a sustainable plantation and went through the entire chain unsullied by other, less rigorously produced oils. As well, many manufacturers rely on derivatives or fractionates of palm oil, which economies of scale prohibit from being produced wholly sustainably. As a result, roughly half the sustainable palm oil produced is not even sold as such _ it is simply sold alongside less rigorously produced oil.
Traceability nightmare: For huge international buyers such as Unilever and Nestle, verifying the sustainable palm oil on the market is difficult. Big companies all buy from processors and traders rather than directly from plantations. In an ideal world, plantations and mills would be certified as sustainable and the oil they produce shipped separately. But this is expensive, and there is often no large-scale segregation of raw stock supply _ if plantations produce oil certified as sustainable, it often gets mixed in with the rest.
As demand for palm oil surged _ roughly doubling in the past decade _ farmers scrambled to plant trees, mostly on peat-rich forest land loaded with carbon. In a paper in Nature, an international team of scientists examined how the deforestation of peat swamps in Malaysia (to make way for oil palm trees) is releasing carbon that has been locked away for thousands of years. Microbes then penetrate the carbon, and the harmful greenhouse gas carbon dioxide is released, which is thought to be the biggest contributor to global warming.
Unsustainable methods of growing crop-based biofuels have also come under fire as environmentalists question the emissions savings they make, the farmland they occupy and whether the growth of certain crops contributes to deforestation. As governments and companies look to biofuels to provide a low-carbon alternative to fossil fuels in transport, the industry has expanded rapidly.
Not as green as we wish: However, leaked EU data have also shown palm oil biodiesel to be more polluting than conventional petrol when the effects of deforestation and peat land degradation are taken into account. A research team measured water channels in oil palm plantations in the Malaysian peninsula that were originally peat swamp forest. They found ancient carbon came from deep in the soil, then broke down and dissolved into nearby streams and rivers as deforestation occurred.
In summary: Given the huge global reliance on palm oil and its economic role in the developing world, abandoning the production and use of palm oil is not a realistic option. Yet the continuing expansion of non-sustainable plantations remains a primary threat to biodiversity, particularly as the growing industry spreads beyond Southeast Asia. Palm oil is truly a global commodity in both its production and use but an environmental and social dilemma for those who have any interest in supply chain sustainability.(This article is drawn from various direct and indirect sources including www.huffingtonpost.com, www.greenpalm.org, www.ft.com, www.panda.org)
The Link is coordinated by Barry Elliott and Chris Catto-Smith CMC of the Institute of Management Consultants Thailand. It is intended to be an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: Barry.Elliott@inslo.com
About the author
- Writer: Chris Catto-Smith