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Misdirected moral outrage pushes palm oil industry into unsustainable corner

The Edge Singapore
The Edge Singapore4/29/2019 08:00 AM GMT+08  • 5 min read
Misdirected moral outrage pushes palm oil industry into unsustainable corner
SINGAPORE (Apr 29): British supermarket chain Iceland fired up controversy last year when it pledged to say no to palm oil, with the view that the commodity was contributing to deforestation in Asia. The supermarket said that, by end-2018, all of its hous
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SINGAPORE (Apr 29): British supermarket chain Iceland fired up controversy last year when it pledged to say no to palm oil, with the view that the commodity was contributing to deforestation in Asia. The supermarket said that, by end-2018, all of its house label food products would not contain any palm oil. It said that by doing so, it would cut demand for the vegetable oil by more than 500 tonnes a year. Iceland’s managing director Richard Walker said at the time he believed there was no “verifiably sustainable palm oil available in the mass market”.

That may have some truth to it, as we report in our pages this week. Palm oil has been vilified as the main cause of deforestation, and the demise of the endangered orangutans that live in those tropical rainforests. But now, it turns out that beef, jewellery and chocolate are the top causes of the loss of primary tropical rainforest as well.

According to the latest report by the Global Forest Watch, 1.35 million hectares of primary rainforest was lost in Brazil last year to logging and cattle farming. The next biggest loss was in the Democratic Republic of Congo, at 481,200ha, followed by the loss of 340,000ha in Indonesia. The GFW report also noted that the biggest rise in rainforest destruction is caused by gold mining and cocoa farming in Ghana and Ivory Coast.

Indeed, some environment researchers have told this paper that the role of palm oil in deforestation may have been overblown, and that other commodities — such as cattle and soybean — deserve more scrutiny.

That is not to say the criticism heaped on the palm oil industry’s practices has been unfounded. But what has been the outcome of the last several years of attention and pressure? For one, as GFW notes, the rate of deforestation in Indonesia has actually decreased, with the loss at its lowest rate since 2003. This has been attributed to robust efforts by the Indonesian government. Meanwhile, the world’s biggest palm oil producing companies, including Singapore Exchange-listed Wilmar International and Golden Agri-Resources, have had to answer to allegations of deforestation and labour rights abuses, and in the case of Golden Agri, pollution and bribery, at plantations linked to them. The companies have since committed themselves to pursuing sustainability standards, including tracking the oil from plantation to mill.

But, the actual process of tracing and verifying whether all of the oil has been sustainably produced or sourced remains a Herculean task. To begin with, there are differing standards among industry players, certification bodies and regulators. And in Indonesia, where a major part of the industry comprises smallholder farmers, disputes over land and farming rights are rife and overshadow issues of sustainability.

Last November, the Zoological Society of London published the results of a survey showing that 49 out of 70 of the world’s biggest palm oil companies are not doing enough to meet the companies’ own environmental targets, as they lack ways to verify sustainable practices on the ground. Consequently, research by UK-based Radio 4 found that only 50% to 67% of palm oil used in products in the UK supermarkets is fully traceable despite most of these products carrying the label of “100% certified sustainable”.

Indeed, in January this year, a BBC investigation showed that Iceland was still selling own-label products that contained palm oil, even as the company told consumers that it had fulfilled its pledge. Subsequently, it was revealed that the supermarket chain had merely removed its brand from the products that contained palm oil, instead of reformulating them.

There have been efforts to cultivate and promote alternative vegetable oil crops such as soybean and rapeseed. But, as this paper reported last year (Issue 860, Dec 10, 2018), the other oil crops have proved to be either more expensive or even more damaging to the environment. According to a 2016 Oil World report, oil palm is arguably the most efficient crop, requires much less pesticide and fertiliser and has a yield that far outpaces its substitutes. One hectare of land produces up to 3.8 tonnes of palm oil, but only 0.8 tonne of rapeseed oil, 0.7 tonne of sunflower seed oil and only 0.5 tonne of soybean oil. Oil palm is also perennial, and each tree can last for about 25 years. The crop accounts for over a third of vegetable oil produced globally, yet occupies only less than 10% of land allocated to oilseed crops.

The palm oil industry is not going to turn green overnight. It is an incredibly complex sector with one of the messiest supply chains in commodity trading. Industry players have to face a myriad of issues — from corruption to disputes over land rights — even before they begin to think about deforestation. Critically, for sustainability efforts, the industry also currently lacks the comprehensive infrastructure and resources needed to keep track of the oil from plantation to mill; much of the resources and financial heft would have to come from the companies themselves.

Boycotting palm oil or restricting demand for it risks limiting the resources that will be needed for the industry to improve. To be sure, there is certified sustainable palm oil available in the market. But no one is really buying it. The producers lament that only half of it gets sold as such, at a premium, for their troubles. The rest of it is dumped into a common pool of non-certified palm oil and sold as such. So, rather than pretending to cut out palm oil, Iceland and others like it should be pushing for their suppliers and food manufacturers to purchase green palm oil for its products instead.

This story appears in The Edge Singapore (Issue 879, week of Apr 29) which is on sale now. Subscribe here

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