Renewable Matter # 08 / January-February

What is the Real Cost of Palm Oil Production?

by Roberto Giovannini

100,000 fires from January to date, harm to health for entire populations, environmental degradation and loss of biodiversity. To put a stop to all this, the only option is to promote sustainable production, which currently represents only 20% of the total.

 

It is used for everything and it is found everywhere: detergents, cosmetics, soaps, biscuits, snacks, ready-made meals, Nutella, ice creams. We are talking about palm oil, one of the world’s most versatile, widespread and controversial foods. Because the palm with its oil-producing berries – a native plant of Africa later transplanted for commercial reasons to South East Asia over a century ago – flourishes in the tropics, it is relatively easy to farm in industrial plantations and thrives in land cleared by men from tropical rainforests, one of the planet’s main reservoirs of biodiversity. As a result, within a few years, hundreds of thousands of hectares of primary forests were wiped out. It is common knowledge that, to this day, lands are cleared by lighting raging fires. Since January, over 100,000 fires have been detected, concentrated on the islands of Borneo and Sumatra: the satellite images have been showing a myriad of fires for weeks, that for a long time extended towards Singapore, Malaysia and the South of Thailand. The disaster is made even worse by the fact that such forests grow on peat deposits. When they burn, they release CO2 and are very difficult to extinguish. It is also a health calamity: serious respiratory problems for at least half a million people and severe environmental disaster, considering CO2 emissions and the devastating destruction of biodiversity.

Therefore, must palm oil be bluntly condemned as one of the main catastrophes generated by human greed? Things are slightly more complicated: as is the case for all complex problems, sometimes it is not easy to find straightforward and simple solutions, assuming they exist. 

Basically, this is the RSPO’s (Roundtable on Sustainable Palm Oil) argument, an association of volunteers created in 2004 to start a less destructive palm oil production. The idea is to involve all players of the global oil supply chain (from farmers to refiners, from industries to distributors, from banks to consumers and NGOs) in order to set up sustainability production standards. Those who respect RSPO’s criteria and policies can legally use their certification. So far, the association has certified over 12.5 million tonnes of palm oil, about 20% of the world production. The objective is to dramatically increase such percentage, for example by reaching 100% share of sustainable palm oil of European markets imports. Because, as the RSPO’s spokespeople explain, “The only alternative to palm oil is sustainable palm oil.”

But not everyone, as explained below, agrees on that. Many environmental associations deem the idea of “sustainable palm oil” as an oxymoron (i.e. a contradiction in terms, a philosophical impossibility on principle.) Others criticize, more or less radically, some of the policies and procedures implemented by RSPO, hoping to reform them. Lastly, still others have formed an alternative association for the certification of sustainable palm oil, based on more stringent criteria.

The fact remains that the industrial production chain of palm oil exists, it creates jobs and an income to 3.5 million people in Indonesia and Malaysia alone. And – whether you like it or not – for these two countries it represents a fundamental factor impossible to cross out at the stroke of a pen without causing all sorts of destabilizations. 

Considering that, worldwide, there is a huge demand for such oil, such demand needs to be met, in the short term, by other countries which will suffer the same environmental consequences. Quite apart from the fact that eliminating palms could turn out to be a worse solution than the evil itself: indeed, oil palms has a very high yield compared to any other vegetable oil. One hectare of land used for palms produces almost 3.6 tonnes of oil, which is ten times more than soy or olive oil and five times more than rape oil. In other words, in order to produce oil used in the industry by giving up palms and using other productive plants, much more land would be necessary, as well as chemistry, energy and deforestation, as Stefano Savi, RSPO’s director of Global Outreach and Engagement explains.

Let’s summarize the reasons of the overwhelming success of palm oil over the last few decades. How did palm oil manage to become the most widespread oil in the world? First and foremost, as we said before, it is due to its yield and cost-effectiveness, compared to other vegetable alternatives. Second, because of health-nutritional reasons: in the past the various industries used the so-called hydrogenated fats (for example margarine) which are produced with a chemical process starting from some oils, that can be stored for long periods and are inexpensive. The problem is that such hydrogenated fats contain trans fats, harmful for our health and, starting from 2005-2006 they have been rejected more and more by consumers and later by the EU and the US governments as well. Palm oil, instead, has no such risks, although like all saturated fats its unlimited use has negative consequences. The third reason is about the industrial process. “Palm oil – as Savi explains – is almost solid at room temperature, so it can be used for preparations for which olive oil or other vegetable oils cannot be used, for example for biscuits or spreads.” 

Of course RSPO does not deny that the spreading of palm oil plantation went hand in hand with heavy deforestation, as the recent choking haze testifies; despite moving away from Singapore and Kuala Lumpur, is still worrying. “It also depends on the season – Salvi explains – the dry season encourages fires. In any case, the so-called slash and burn is unfortunately a widespread practice in many developing areas of the planet in the tropics. Moreover, Indonesia has many peat bogs: peat is the organic material that has set for years in wet and marshy areas. It is a highly flammable layer of soil. When it burns it produces a lot of smoke and carbon dioxide and it is very difficult to extinguish.” Actually, both in Indonesia and Malaysia it is forbidden to carry out such practices to turn forests into industrial plantations, and, on paper, a special authorization must be obtained by the relevant ministry. But of course in such vast and little developed countries (and I would add, with a high corruption rate), it is virtually impossible to check. “We, at RSPO, – the representative of the association adds – enforce that wherever there is a legal authorization, palm farming must keep part of high conservation value primary as well as secondary forests. Our guide lines state very clearly that burning cannot be used to develop concessions, it is only to be in used in extreme circumstances, for example when parasitic invasions threaten the plantation. Occurrences that must be dealt with controlled burning and RSPO must be informed in all cases.” What about if burning happens in certified plantations? “Obviously a marvellous control system is of very little use if the area around the concession is rife with burning as it is currently the case. Anyway, when a possible fire is identified, RSPO asks its member in that area to go to that location with a camera connected to a GPS to assess the real situation on the field” Savi says. It is true that besides those cases where in situ assessment can carried out, normally RSPO only uses satellite images – and as a matter of fact, the latest available ones date back to December 2013 because governments in Malaysia and Indonesia do not make more recent ones available for public monitoring – cross-referring with geolocated data banks. “The bulk of our monitoring work is done by satellite and not by physical presence,” Savi clarifies, “and then members must submit their reports that can be checked in situ by us or by external organizations active in the area subscribing to an RSPO such as NGOs.”

 

 

So, sometimes it almost feels like that the work of RSPO is similar to emptying an ocean with a teaspoon, even though Savi claims that significant progress has been made and that by examining satellite images of burning hotspots, in recent months certified plantations’ performance has been much higher than uncertified plantations’. One thing is certain, RSPO is a voluntary association, “the only punishment that we can apply to a member who doesn’t respect our rules is expulsion from the organization.” But this punishment does not completely satisfy RSPO’s management who prefers other methods. “On the one hand, the expulsion of those who don’t respect standards is fine to protect our image and our credibility, but it is not the right solution to transform the market into a sustainable one, our vision as an organization. We want to encourage members to abandon wrong practices. This is why until we see that there is a genuine interest in changing we try to be understanding with our members.”

A moderate approach that has not convinced everyone. Greenpeace, for example, has openly accused RSPO of limiting itself to “certify the destruction” of forest and together with other associations, some producers and industrial users it has supported the creation of another certifying body, the Palm Oil Innovation Group (POIG) with stricter standards. Critics claim that RSPO does not oppose forest conversion, it does not care about greenhouse gas emissions deriving from palm plantations, it does very little to prevent forest and peat-bog fires, it is too lenient towards clear violations of its own standards. And that above all, through the so-called “Greenpalm” certification it allows those using “dirty” palm oil to appear as a “sustainable” producer or user. Most of the global production of “sustainable” palm oil (72% in 2012) is actually “Greenpalm.” In other words, it is exchanged on the basis of certificates – that in theory should be linked to a real quality of the oil produced sustainably – that end users can freely buy on the market for a modest premium. Consequently, for example, the confectionery industry can easily buy “dirty” oil, pay a premium to get certification and declare that it uses “Greenpalm” instead, considered “clean.”

“Be careful,” Stefano Savi replies, “it is true that Greenpalm is a virtual certificate, but it is also true that each certificate is linked to one tonne of palm oil truly produced sustainably. A classic case is that of small producers who do not have physical access to a certified oil mill that can buy their production and grant RSPO certification. In this case, the only option they have is to sell their production as ‘non certified’ and at the same time sell online a Greenpalm certificate for each tonne of palm oil they have produced on their certified plantation. At this point, retailers, distributors and companies can buy a Greenpalm certificate and link it to each tonne of non-certified oil used in one of the stages of the chain. Obviously we cannot state that that product contains sustainable palm oil, but there is an equivalent quantity of sustainable oil on the market.” Don’t consumers run the risk of being misled if they think they are buying a good which is only “indirectly” sustainable? “RSPO has set very strict rules. On the box of various products, depending on the stage, you can read that sustainable RSPO oil has been used or that by buying that product you support the production of sustainable oil.”

But can we state that there have never been instances of certification nonchalantly granted to “dirty” productions? “Certification is checked, but as with any systems, RSPO’s is not flawless. But if you think that something is wrong you can contact a complaint panel and submit your proof. The panel publically assesses the claim and publishes all the information on the website.” As a matter of fact, RPSO welcomes criticism. “Any movement engaged in promoting sustainable palm oil is welcome,” Savi states, “we believe that in order to promote real change, not just niche change, we need inclusive involvement of all those operating in this sector, the best ones as well as the less efficient ones. Nevertheless, we have realized that some producers – due to the conditions in which they operate or because they are not able to adopt the best practices – are really interested in proving that they can do better. So this year, RSPO Board of Governors will present a new initiative called ‘RSPO Next,’ voluntary guidelines that satisfy the new need to stop deforestation and burning, and some social measures.”

Finally, another tricky question. Will we be able to stop an economic mechanism that makes wholesale deforestation economically viable in order to produce oil cheaper than “sustainable” oil? And how? The reality is that today there is demand for more expensive sustainable oil – since famers must be economically motivated and refunded for the unavoidable higher costs due to certification – but in some markets low prices still prevail.

Europe, for instance, is an excellent market for RSPO oil: by 2020, we aim at reaching 100% certified oil and the industry, consumers and governments are sending positive signals. Countries such as China, India and Indonesia itself have a long way to go yet. A lot will depend on the green evolution of public opinion in emerging countries. It would be important to find, within global agreements on climate and the environment, ways of appreciating the natural capital in tropical countries, means to incentivize them to protect forests rather than cutting them down.

 

 

Roundtable on Sustainable Palm Oil RSPO www.rspo.org/about

Palm Oil Innovation Group (POIG), poig.org/