November 1, 2022
JAKARTA – The Group of Twenty (G20) Sustainable Vegetable Oil Conference in Bali this week, which will coincide with the Indonesian Palm Oil Conference and Price Outlook 2023 on Nov. 2-4 and the G20 Summit on Nov.15-16, is a good opportunity for Indonesia to enlighten the developed countries about the increasingly important role of palm oil in the global consumption of edible oils and on the sustainability standards of that commodity.
As the world’s largest palm oil producer and the host of the G20 summit, Indonesia should see to it that the discussions and debates at the conference, the first global meeting discussing all kinds of vegetable oils, would not turn into another forum for blaming palm oil plantations as the main culprit of deforestation.
There is the risk of another wave of bashing palm oil for all kinds of environmental ills in view of the upcoming Conference of the Parties (COP) 27, the climate summit of the countries that signed the United Nations Framework Convention on Climate Change (UNFCCC) in Egypt on Nov. 6-18.
Delegates from developed countries, which have so far been at the forefront in constantly alleging the palm oil industry as main driver of deforestation, may prefer to raise the issue on the implementation of the agreement to halt and reverse forest loss and land degradation by 2030, which was signed in the COP26 in Glasgow, the United Kingdom, in November 2021.
We have been witnessing how not only the number of arenas has increased enormously, in which the sustainability of palm oil is being discussed; but also the kind of players and the tone of the debates have dramatically changed. Palm oil has increasingly become the subject of different public policy-making processes of developed nations in the field of climate, biodiversity and energy.
The sustainability of palm oil is predominantly treated from an environmentalist perspective and often disqualified in an absolute way as not sustainable. The campaign in developed countries for imposing exclusive and discriminative standards of sustainability for palm oil, while overlooking other vegetable oils, has in some way substantiated the suspicions of trade protectionism in favor of the vegetable oil producers in the temperate zone. They tend to enforce a robust yardstick for palm oil, but they are indifferent to other vegetable oils. This is a showcase of market discrimination.
The reality is, palm oil has the most advanced sustainability standards, whether market-scheme or government mandatory-scheme. The Tropical Forest Alliance (2021) reported that 78 percent palm oil companies assessed already fully comply with No Deforestation, No Peat Development, No Exploitation-NDPE and 5 percent partially implemented it.
Delegates at the Bali conference should engage in productive debates on how to ensure sustainable production of all vegetable oils, notably palm oil, soybean oil, rapeseed, sunflower seed, peanut and cottonseed oils. The aim should be at agreeing on a common framework for sustainability for all vegetable oils. The Council of Oil Palm Producing Countries (CPOPC) is currently developing the framework and should get more buy-ins from other industries.
It is a blunt fact that palm oil has increasingly become the most competitive of all vegetable oils. Palm oil is highly versatile as it is used as an ingredient in hundreds of consumer goods and its yield is five to eight times as high as other edible oils. Its production costs are also much lower. Yet more important for developing and emerging countries is that oil palm trees are one of the most profitable crops for farmers, thereby reducing rural poverty. Life-cycle assessment studies on crops also have concluded that palm oil is the lowest in terms of environmental impact compared to other vegetable oils.
Palm oil now accounts for almost 40 percent of global vegetable oil production, which, according to Statista and the United States Department of Agriculture estimates, totaled 215 million tons in 2021. Boycotting palm oil and replacing it with alternate vegetable oils would result in using up to 10 times more land to produce the same quantity of oil. Even the International Union for the Conservation of Nature (IUCN) and the World Wide Fund for Nature (WWF) have recognized this fact, thereby supporting the production and use of sustainable palm oil, to prevent bigger damages on the environment, biodiversity and communities.
In discussing the environmental aspects of vegetable oil production the Bali conference should take note of the UN Framework Convention on Climate Change (UNFCCC), as the backbone of the COP climate summit, which recognizes and acknowledges the different capabilities and responsibilities of individual countries in addressing climate change.
This is to assert that Indonesia and other developing countries have the right to development – or, more precisely, sustainable development, since the stage of their development has lagged for hundreds of years behind the developed world.
Other commodities have been developing sustainability standards, but almost all of them are targeted for industries in developing countries, and almost none for developed countries. Hence, the sugar industry has Bon Sucro. Soy has Round Table on Sustainable Soy. Metal and mining have ICMM and Aluminum Stewardship Initiative and Coffee players have Global Coffee Platform.
The palm oil industry has established forums: Indonesia Sustainable Palm Oil (ISPO), Malaysian Sustainable Palm Oil and the multi-stakeholder Roundtable on Sustainable Palm Oil (RSPO), which set the principles and criteria of sustainability with no deforestation, no peat development and no exploitation.
The sustainability standards used by the three sustainability schemes go beyond any similar sustainability standards for agricultural products in the world today — even when it comes to the commodities in developed countries – sunflower-seed oil in Russia and Ukraine, olive oil production in Spain, rapeseed production in France, soy production in the US or canola production in Australia.
Certainly, the palm oil sector is far from perfect, especially because palm oil trees are developed in rural areas with their complex problems of land title, poverty and low level of education. But a lot has been done to address the social, environmental and governance principles (ESG) of the commodity.
It is better to drive the ISPO, MSPO and RSPO standards forward, regardless of the spurious claims by major green NGOs in the developed countries. For the benefit of all, the key is to prevent future deforestation, not to ban palm oil with deforestation labels.
International institutions should provide incentives for the development of responsible production and supply chains, and adopt strict criteria not only for palm oil but also for other vegetable oils.
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The writers are sustainable palm oil analysts. These views are personal.