Lessons from the South: Regulating economic, environmental and social aspects of oil palm production

Oil palm fruit. Photo by Iddy Farmer/CIFOR

BOGOR, Indonesia (23 September, 2011)_Managing trade-offs between socio-economic benefits and environmental preservation are key to the development of the booming oil palm industry, said experts at a South-South exchange at the Center for International Forestry Research headquarters in Indonesia.

Key policy decision makers, industry representatives and researchers from Indonesia, Malaysia, Colombia, Brazil, Ghana and Cameroon met to promote the sharing of experiences and knowledge of what works in sustainable and equitable oil palm development for food and biofuels.

Rising demand for palm oil is being seen in domestic markets and for export to China, the USA and the European Union. According to experts, population growth and per capita consumption will require and additional 28 million tons of vegetable oil annually by 2020.

Indonesia and Malaysia are the largest oil palm producing countries, supplying 85 percent of the world’s demand for palm oil. In both countries, there are huge economic benefits from oil palm, with seven million hectares under plantation in Indonesia producing 16 million tons of palm oil per annum. Oil palm companies are bringing in big profits, receiving USD$910 per ton in 2010, and the industry is said to employ 6 million people globally.

However, rampant deforestation and the conversion of carbon rich peat forests into oil palm plantations which accounts for 80 percent of all carbon emissions in Indonesia has raised alarm over efforts to reduce greenhouse gas emissions.

Utilising degraded land, rather than intact forest and promoting the smallholder production model are some of the key changes that the palm oil industry needs to make, according to Patrice Levang, a CIFOR scientist currently based in Cameroon.

“If we can focus development on already cleared land, generally owned by small holders, we can avoid further conversion of primary forest,” he said.

Tang Men Kon, head of plantation sustainability at Sime Darby, the world’s largest palm oil producer, says for big companies, becoming certified under the International Roundtable on Sustainable Palm Oil (RSPO) is most important. Although heavily criticized, RSPO certification is crucial for meeting stringent sustainability regulations on palm oil being sold to the large markets like the Eurpean Union.

Malaysia’s experience with certification and regulation processes is helping to guide countries like Cameroon and Ghana regulate their production of palm oil. While oil palm originated from these regions, it remains a cottage industry with little or no regulation. Small-scale producers use homemade artisanal presses for extracting oil from the fruit and half of Ghana’s 300,000 hectares of oil palm are wild groves.

“In our country, production is not yet regulated,” says Emmanuel Ngom, from the Ministry of Agriculture in Cameroon, “we need to regulate the economic, environmental and social areas of production.”

But although Cameroon is learning from the practice of oil palm plantations in South East Asia, Ngom is wary of the of land use choices resulting from its development in the region. Oil palm development in Cameroon, Ghana, Brazil and Colombia currently does not encroach on forests and policy makers are attempting to contain development to degraded lands.

Levang questions whether the situation will remain this way when companies like Sime Darby are leasing or attempting to purchasing vast tracts of land in Africa to expand oil palm production to meet EU market demands.

“Right now in Africa, most of the big companies are trying to get land deals over large areas, over 100,000 hectares, and the only place they can find huge tracks of land like that is on the last conservation forests.”

Ensuring that emerging oil palm industries are highly regulated and monitored will be critical for the sustainable development of small-scale crop production.

  • Shannon

    This is an excellent blog, very succint and well written. It is excellent that CIFOR is hosting such exchanges so that lessons learned from South East Asia can be passed on. Let us hope Africa can try and hold onto some it’s last and most precious conservation forests.