Are we ready for a Malaysia without oil palm?

NGO vs CPO
Optimistically Cautious by Errol Oh, The Star 7 Nov 09;

The campaign against palm oil’s growth in Borneo and Sumatra may come to a climax soon. Must there be losers?

ARE we ready for a Malaysia without oil palm? That sounds far-fetched and overly dramatic, doesn’t it? For that to happen, plantation companies and smallholders would have to stop cultivating the crop because it’s no longer worthwhile doing so. What are the chances of that happening?

Exceedingly slim at the moment, but the domestic plantation industry now has to acknowledge that perhaps more than ever, it’s getting harder to cling to the status quo.

There are several forces at work here. The option of developing new estates in Malaysia, particularly in the peninsula, is fast fading. So there’s the limitation of land scarcity, coupled with the slow rise in yields.

This means it’s tough for oil palm growers operating here to increase output significantly unless they can expand their landbank, which is often an expensive step. Add to that the mounting costs of labour, fertiliser, pesticide and fuel, and you have a challenging operating environment.

On the plus side, demand for palm oil is climbing steadily, driven by the economic strength of major importers such as China, India and the Middle East, and by the world population growth in general.

Also, the food industry’s shift from edible oils that contain trans fatty acids, and the biofuel frenzy triggered by the surging oil prices, have boosted the United States’ and Europe’s demand for palm oil.

Many Malaysian planters have responded to this tangle of factors by venturing into Indonesia, specifically Kalimantan and Sumatra, and to some extent, by opening plantations in Sabah and Sarawak.

The oil palm rush in Borneo and Sumatra – Indonesian companies too have been aggressively increasing their acreage – has led to another shift in the dynamics of the palm oil industry.

As the producers of crude palm oil (CPO) turn tracts of land into oil palm estates, people began questioning the environmental and social impact. Non-governmental organisations (NGOs) and the media in the West have become vociferous opponents of oil palm expansion.

With bodies such as Greenpeace and Friends of the Earth at the forefront, the NGOs are often relentless and clever in swaying public opinion and political will, so as to apply pressure on the palm oil industry.

Different NGOs have different causes. Together, they link the oil palm industry’s rapid growth to deforestation and peatland degradation, which in turn is blamed for species extinction, worsening climate change and the displacement of indigenous people.

Nobody can deny that many of these NGOs are good at staging in-your-face campaigns that grab attention and influence consumers, businesses and politicians.

It helps too that these organisations operate on altruistic platforms, which also makes it easier for the media to support their fights.

The titles of Greenpeace reports on the oil palm industry, for example, scream that the industry is “cooking the climate” and “burning up Borneo”. NGO members take part in loud, theatrical demonstrations to highlight their protest against the development of oil palm plantations in Borneo and Sumatra.

The use of the orang utan as a symbol of what we stand to lose amid the oil palm boom, is inspired and effective.

The NGOs also target the big buyers of palm oil – among them are household names such as Unilever, Cadbury, Ferrero and Nestle – by urging consumers to boycott products that contain palm oil.

The attacks on the palm oil industry has intensified as the United Nations Climate Change Conference in Copenhagen next month approaches. Essentially, the NGOs want to halt the surge in oil palm cultivation in Borneo and Sumatra.

Says Greenpeace UK in its website, “We want to see the Indonesian government establish a moratorium on clearing forest and peatland areas and to help achieve that, we’re asking supermarkets and food companies to cease trading with palm oil suppliers that are involved in this environmental destruction.

“We also want to see deforested and degraded peatlands being restored, preventing yet more emissions from these areas.”

In the lead-up to the Copenhagen conference, Unilever and Greenpeace are leading a campaign to persuade the Indonesian government to impose a moratorium on deforestation for two to three years.

Clearly, the palm oil industry can’t ignore the NGOs. It’s not entirely bad, of course, that the industry is compelled to examine its practices and attitude towards sustainability issues.

And they have taken a step in this direction by being a part of the Roundtable on Sustainable Palm Oil (RSPO), which incidentally counts Unilever as a founding member. It’s an indication that the industry recognises the need for engagement with stakeholders.

However, Greenpeace and Friends of the Earth are not RSPO members, apparently by choice. It’s an example of how difficult it can be to reconcile the objectives on the NGOs with the raison d’etre of businesses and industries.

The detractors frequently describe palm oil as cheap as if it’s a commodity you sell out of the back of a van. Yet, it’s the crop that produces the most oil per hectare, making it the most efficient in land use, and thus the the lowest-cost option for food use. In addition, the palm oil industry are pivotal in the Malaysian and Indonesian economies.

These are arguments you hear all the time from the industry. Of course, these are not the only facts that matter, but they ought to be a huge consideration in assessing the worth and impact of the oil palm industry. The NGOs may have their hearts in the right place, but demonising the oil palm growers is more about strategy than fairness. Is stalling an industry’s growth truly an all-round superior alternative to engagement via the RSPO?

l Deputy business editor Errol Oh reckons that living in a world operated purely for profit is no better and no worse than living in a world run by NGOs alone.