OIL PALM IN SOUTH EAST ASIA

The ongoing expansion of oil palm plantations in the humid tropics, especially in Southeast Asia, is generating considerable concern and debate. Amid industry and environmental campaigners’ claims, it can be hard to perceive reality. Is oil palm a valuable route to sustainable development or a costly road to environmental ruin? Inevitably, any answer depends on many choices. But do decision makers have the information they require to avoid pitfalls and make the best decisions? This review examines what we know and what we don’t know about oil palm developments. Our sources include academic publications and ‘grey’ literature, along with expert consultations. Some facts are indisputable: among these are that oil palm is highly productive and commercially profitable at large scales, and that palm oil demand is rising. Implementing oil palm developments involves many tradeoffs. Oil palm’s considerable profitability offers wealth and development where wealth and development are needed but also threatens traditional livelihoods. It offers a route out of poverty, while also making people vulnerable to exploitation, misinformation and market instabilities. It threatens rich biological diversity while also offering the finance needed to protect forest. It offers a renewable source of fuel, but also threatens to increase global carbon emissions. We remain uncertain of the full implications of current choices. How can local, regional and international benefits be increased while costs are minimised? While much important information is available, it is often open to question or hard to generalise. We conclude this review with a list of pressing questions requiring further investigation. Credible, unbiased research on these issues will move the discussion and practice forward.

Few developments generate as much controversy as the rapid expansion of oil palm into forest-rich developing countries such as Indonesia. Oil palm expansion can contribute to deforestation, peat degradation, biodiversity loss, forest fires and a range of social issues. But oil palm is also a major driver of economic growth and a source of alternative fuel. Since the early 1980s, the total area of land allocated to mature oil palm has more than tripled globally, reaching nearly 14 million hectares in 2007. Most of this expansion has occurred in Indonesia, where the total land area of oil palm plantations increased by over 2100 per cent (more than 22 times greater) over the same period, growing to 4.6 million hectares. The total area of land officially designated to oil palm in Indonesia is estimated to be around 6.2 million hectares1 (which is less than 4 per cent of Indonesia’s land area, but up to 15 per cent in some provinces of Sumatra) and all of these plantations are planned to become productive by 2010 (IPOC 2006). Concerns over global warming and worldwide energy use have escalated the controversy over oil palm.2 Greenhouse gases and high prices for fossil fuel have spurred interest in biofuels3 and other alternative sources of energy. Currently, 77 per cent of palm oil is used for food. However, the interest in biodiesel from palm oil (palm oil methyl ester) is currently a leader among biofuel options, and major investments are already planned to convert millions of hectares of tropical forests and other land types to oil palm plantations. Biofuels may have major positive or negative effects on natural forests, forest dwellers and owners. On the one hand, biofuel from oil palm plantations could increase the value that can be derived from previously forested land and help to promote economic prosperity and alleviate poverty leading to a higher standard of living with fewer people depending on the remaining forests for subsistence. On the other hand, demand for biofuels could increase competition for land, threaten food production and exacerbate inequality between rich and poor.

In 2005, Indonesia stated its intention to develop biodiesel and bioethanol industries to meet 2 per cent of the country’s fuel needs by 2010. In early 2006, the government revealed a plan to establish 3 million hectares of new oil palm plantations to meet these targets. This triggered an outcry from the environmental sector. Much of the controversy is about clearing natural forests and peatlands to make way for oil palm plantations, which has generated widespread negative publicity. Producers are afraid that environmental concerns will turn consumers against biodiesel, and even palm oil. Today, biodiesel investors are rethinking their decisions not just for environmental reasons but also because of cost concerns. In mid 2008, the price of crude palm oil was higher than the selling price of petroleum-derived diesel. Given that it costs, on average, about 10 US cents per litre to convert crude palm oil into biodiesel, unsubsidised biodiesel manufacturers would lose money. Prices for crude palm oil (CPO) were predicted to rise because demand for vegetable oil for human consumption is strong in India and China, but it dropped in early 2009 when the global financial crisis took hold. This study reviews oil palm cultivation and the oil palm sector in Southeast Asia; examines the reasons for rising demand for CPO and the effects of large plantations on local communities and the environment; and identifies questions for further research. Credible (objective) research is needed to answer these questions, so that the discussion and practice of oil palm production can be carried forward. THANKS.

By,

M Anem

Putrajaya,

Malaysia.

(January 2022)