JAKARTA, INDONESIA — The palm oil industry has once again been under fire on an international level after an Associated Press (AP) investigation revealed multiple violations in the industry — ranging from deforestation to labour exploitation — involving the world’s top brands such as Unilever, Oreo, and Néstlé.
The United States banned the import of palm oil from Malaysia’s palm oil company FGV Holding Bhd Malaysia due to allegations of forced labour. The company has plantations in Malaysia and Indonesia.
Indonesia and Malaysia contribute to 85 per cent of the world’s total palm oil supply. Data from Tridge as cited by Warta Ekonomi showed that Indonesia is the world’s largest crude palm oil (CPO) exporter, with a market share of 47 per cent until the end of 2019, followed by Malaysia with a market share of up to 29.5 per cent of the global CPO consumption.
Tarnished image of the crude palm oil sector: From deforestation to exploitation
The AP report was not the first one targeting the CPO industry.
In 2016, human rights non-government organisation (NGO) Amnesty International published a report disclosing gender-based discrimination and children’s rights violations in a palm plantation owned by one of the most reputed CPO firms.
The report revealed that the company discriminates female workers by hiring them on a freelance basis while their male counterparts were recruited as permanent workers. The company also employed children who are vulnerable to hazardous chemical substance exposure.
“We have had enough of this. There are rights violations and environmental degradations in sectors such as mining. However, when it comes to palm oil, everything is exaggerated,” economist Fadhil Hasan told TOC in a recent interview.
Mr Fadhil — previously a consultant for palm oil company Asian Agri — elaborated that rights violations also occur in other sectors such as mining and agriculture.
For example, female strawberry pickers in Spain — mostly migrants from Morocco — are paid under the minimum wage. They are also vulnerable to sexual abuse, forced labour, and inhumane living conditions.
CPO is to blame for deforestation
The most common allegation against the palm oil industry is that the sector is the main culprit of massive deforestation.
Mr Fadhil, however, claimed that such an allegation is often generalised.
In 2008, Simon Chambers of Deforestation Watch stated the opposite, claiming that palm oil tree absorbs more carbon dioxide compared to other vegetable-based oil crops such as corn and canola.
According to USDA data in 2017 as cited by Media Indonesia, soybean plantation dominated 45 per cent of 276.6 million hectares of land used for plant-based oil. Palm oil only accounted for 8 per cent.
Meanwhile, Head of The Climate Change Regional Council Daddy Ruhiyat told Balikpapan Pos in 2017 that the deforestation rate reached 60,000 hectares from 1998 to 2012. He added the forestry — meaning palm oil — and plantation sectors were to blame for damaging forests in East Kalimantan during that period.
“Palm oil plantation contributes to 99 per cent of deforestation. There are many factors that push forests’ land opening. Compared to the forestry and plantation sectors, land opening from the coal mining sector only accounts for one per cent,” Mr Daddy revealed.
Hendrikus Adam, an environmental activist based in West Kalimantan, told TOC via text message that the presence of palm oil plantations has threatened customary forests, citing that the opening of new land for palm plantation always triggers a conflict with local communities.
“Palm oil companies expect a conflict with indigenous communities, as the dispute often pave the way for those corporations to clear lands. As a result, locals will be busy resolving their internal conflict. You can check – there is no evidence that palm oil plantations bring prosperity to local communities living near the plantation,” Mr Hendrikus stated.
Is sustainable palm oil feasible?
The palm oil industry has been trying to manage its plantations and make them as sustainable as possible through certifications known as ISPO (Indonesia Sustainable Palm Oil) and RSPO (Roundtable Sustainable Palm Oil).
The ISPO — introduced in 2011 — aims to ensure that all palm growers meet the sustainability practices and the legality procedure. In comparison, the RSPO is the primary certification for the use of palm oil and its derivatives in food products and oleo-chemicals.
RSPO was established in 2004 aimed at promoting the growth and the use of palm oil-related products through a credible global standard. RSPO involves all stakeholders related to the CPO sector ranging from investors to NGOs.
“ISPO is compulsory, while RSPO is voluntary. Also, there is a certification called International Sustainability and Carbon Certification (ISCC) for biodiesel export to the European Union (EU),” Mr Fadhil explained.
Mr Hendrikus stated that there are no eco-friendly palm plantations due to the process of opening lands for plantations through slash and burn and other methods that destroy forests.
Negative campaigns against palm oil and business competition
Malaysia and Indonesia accused the European Union (EU) of applying double standards by banning the use of palm oil in biofuel, citing that such an act is based on the political protectionism.
“Well, there are hidden interests behind the black campaign against the palm oil sector. Some politicians want to attract votes and gain sympathy from farmers and activists,” Mr Fadhil stated.
At the end of January this year, Indonesia filed a legal complaint to the World Trade Organization (WTO) over the EU’s alleged discriminative policy regarding Indonesia’s palm oil products.
Indonesia’s biofuel is made from palm oil, while in other countries, the fuel is produced from other plant-based oils such as soy and canola.
Indonesia is optimistic that it can win against Brussels. Previously, Indonesia won the dispute against the EU over the bloc’s dumping tariff on Indonesia’s biodiesel.
A thorough evaluation of Indonesia’s CPO is needed through a moratorium on the palm oil sector to improve the management of the industry, from land verification to land opening permits.
Therefore, close monitoring from all stakeholders is expected to ensure that the country will not have to continue to rely largely on the CPO sector for economic growth, as well as to prevent further harm to the environment and local communities.