Palm oil is heavily relied on in the food industry and other industries to develop products ranging from personal care products to biofuels. Globally, there are challenges with sustainable production of the oil palm crop. Nigeria produces the largest quantity of oil palm in Africa (FAOSTAT) and is seeking to grow the industry. Sustainable agriculture and food systems are important to support food security, to ensure future agricultural productivity and to facilitate access of the vulnerable to resources. Sustainable systems are also a key part of combatting climate change and the spread of new diseases from animals to humans, engendered by the encroachment of the former’s habitats. This two-part article examines the policy approaches to sustainable oil palm production in Nigeria in the context of efforts by some major oil palm producing and consuming economies.
Palm oil (as Crude Palm Oil, Crude Palm Kernel Oil or Palm Kernel Cake) is derived from the oil palm and can be applied in diverse food and non-food industries. It is used in cooking oils, spreads, detergents, cosmetics, biodiesel and as raw materials in the pharmaceutical and plastic industries.
Consumers may be surprised to discover their ice-cream, vitamin supplements and lipstick can be traced to palm oil products.
The European Parliament resolution of 4 April 2017 on palm oil and deforestation of rainforests notes that about 50 per cent of packaged goods now contain palm oil.
There is a high demand for palm oil globally. In 2019/2020 palm oil usage worldwide amounted to over 71.48 million metric tons (Statistica). Several factors intersect to make palm oil so dominant. These include the following. First, the growth of modern industries and the health/environmental concerns that accompany this growth. Second, the discovery of palm oil as an alternative to unhealthy fat used in the food processing industry. Third, the discovery of palm oil as a replacement for animal tallow in cosmetics and cleaning products. Fourth, the desire to shift from fossil fuels to biofuels. Palm oil is also priced favourably in comparison to other vegetable oils (such as sunflower and canola oil) and produces more yield per area of land utilized than these other oils.
For a top producing economy like Indonesia, the palm oil industry is of great economic significance. It employed (directly and indirectly) at least 16.2 million Indonesians in 2019. Palm oil also amounted to USD 16.5 billion of exports and contributed to 10.3 per cent of total non-oil and gas exports in 2018 (World Bank).
Despite its industrial utility and economic value, the crop has acquired a negative reputation for being produced unsustainably, including wrecking rainforests, driving wildlife from their habitat and threatening endangered species such as the Orangutan and Sumatran Tiger. The Impacts of oil palm production include deforestation, carbon emissions and loss of biodiversity which occur when land is cleared for oil palm plantations. An European Union (EU) forest report indicates that between 1990 and 2008 about 5.5 Mega hectares used for the expansion of palm oil globally were associated with deforestation, with notable countries being Indonesia (57 per cent), Malaysia (25 per cent), Nigeria (7 per cent), Thailand (2 per cent), and Ghana (2 per cent). According to the National Geographic magazine, in 2015 alone, at least 12,000 premature deaths were caused by haze from Indonesian forest fires. Many of these fires were being used to clear land for oil palm production.
Considering its utility and economic value, seeking a sustainable way of producing palm oil may be a more viable option than banning production. Palm oil is so ubiquitous that it is difficult to avoid, at least in the short term.
Additionally, there are counter-arguments that alternatives may produce worse consequences. Global demand and consumption of vegetable oils continue to rise, thus the demand for palm oil would be replaced by some other oil. More land would be required to produce alternative oils to meet this demand, as palm oil gives more yield from less land. A study published in the Current Biology Magazine shows that other vegetable oils also come with environmental costs which are in some cases higher than the environmental cost of palm oil.
The case for sustainable alternatives recognizes that oil palm plantations could also be a habitat for some species if proper approaches are used. It was recognized in the European Parliament resolution on Palm Oil and deforestation of rainforests that use of agroforestry polycropping for plantations can result in benefits for biodiversity, productivity and positive social outcomes.
Efforts towards sustainable production of palm oil have been made by both the private and public sectors in producing and consuming economies.
Non-Public Sector Measures
Major users in the private sector such as Unilever and Nestlé have developed guidelines on sourcing palm oil sustainably. Some companies have made zero deforestation commitments such as the consumer goods forum Zero Net deforestation pledge which involves about 400 member companies resolving to achieve zero net deforestation by 2020 in key commodity sectors including palm oil.
There are also consumer-led measures such as boycotting palm oil or the Greenpeace campaign against Nestlé which led to the company developing a policy to source its palm oil sustainably. Palm Oil investigations has created a product guide to help consumers purchase products that are palm oil free or contain palm oil from sources that are ethical and traceable. The product guide includes categories like biscuits, cereals, detergents, hair care, margarine, noodles, soap bars and toothpaste.
Voluntary Palm oil certification schemes have also been developed to encourage sustainable production of palm oil. A scheme like the Roundtable on Sustainable Palm Oil (RSPO) certifies palm oil producers after verifying that the production process meets the RSPO standards for sustainable production. Certified organizations can use the RSPO trademark on their products.
The impact of voluntary certification schemes and industry self-regulation is limited for reasons that include conflict of interests, lack of transparency and enforceability. The use of voluntary certification also depends on the demand for the product due to the additional costs that may be involved in production. Industry led schemes that are driven by large corporations may not consider the interests of smallholders and thus leave them at a disadvantage in the market. For instance the Indonesian Palm Oil Pledge (IPOP) which was a zero-deforestation pledge by six large multinational palm-oil producing companies was criticized by the Indonesian government as excluding smallholders by its strict standards. IPOP eventually disbanded in 2016. Consumer led actions may have pockets of impact but tend to target well-known brands and may also be affected by misinformation or lack of focus when the movement gains popularity.
A sustainable approach to palm oil production can be guided by clear policy interventions. These could be legislation directly on protection of wildlife and forests or other public sector measures such as economic, trade or procurement policy to guide industry and consumer behavior.
Consumers
Even in regions where production does not occur, but palm oil is imported, measures can be taken toward sustainable production. The Amsterdam Declaration of 7 December 2015 is a declaration of support by 7 EU members states for private sector-driven commitment to 100 per cent sustainable palm oil in Europe. The goal of the declaration is to support private sector approaches to sustainability and encourage the European Commission to act. The signatories agreed to promote a fully sustainable supply chain. It is noteworthy that the commitments are not legally binding and do not mandate the signatories to introduce any legislation.
The European Parliament resolution of 4 April 2017 on palm oil and deforestation of rainforests recognized the existence of certification schemes like the RSPO but also their limitations and called for a single scheme as well as mandatory measures including introduction of a minimum sustainability criteria for palm oil entering the EU market; a binding regulatory framework to ensure that all agricultural commodity importers’ supply chains are traceable back to the origin of the raw material; and inclusion in EU biofuels policy of effective sustainability criteria that protect land of high biodiversity value, high carbon stocks and peatland.
In March 2019, the European Commission issued Delegated Regulation 2019/807 on biofuels, further to the Renewable Energy Directive 2018/2001. The renewable energy directive sets limits which will gradually decrease to zero by 2030 for biofuels associated with significant Green House Gas emissions. The effect is that these fuels cannot be counted as renewable energy when calculating the country’s share of renewables. The Regulation sets out the criteria for determining what feedstock is high indirect land use charge (ILUC) risk in the context of the Directive. The Regulation also lays down criteria for certifying low ILUC-risk biofuels. By the directive, palm oil is considered as having a high-ILUC risk. Indonesia has instituted a complaint to the WTO against the EU measures on the basis that they impact the access of Indonesian palm oil and oil palm based crop biofuels to the EU market. Indonesia also pointed out in its complaint that the criteria in the Directive and Regulation result in palm oil being the only feedstock considered to be a high ILUC risk.
Producers
Indonesia is a useful case study for national measures in a palm oil producing region, as it is the biggest producer of palm oil in the world. About 13 million hectares of land were used for oil palm plantations in Indonesia in 2018 compared to 7.33 million in 2008 (Statistica). This number reportedly increased to 16.381 million hectares in December 2019.
Forest fires that occurred in 2015 in Indonesia released about 11.3 million tons of carbon each day and destroyed about 2.6 million hectares of land (Indonesia Investments). After 2015, 2019 was the worst year for man-made forest fires in Indonesia with a damage and economic loss estimated by the World Bank to be USD5.2 billion, affecting transportation (e.g. closure of national airports due to haze), trade, industry and the environment.
The Indonesian Government issued Presidential Instruction No. 8 of 2018 which required a three year moratorium on licenses for oil palm plantations in forest areas. The Presidential Instruction contained directives applicable to the Minister of Environment and Forestry, Minister of Agriculture and the Minister of Agrarian and Spatial Planning / Head of the National Land Agency.
The government had also earlier issued Government Regulation of the R.I. No. 57 of 2016 which amended Government Regulation of the R.I. No. 71 of 2014 concerning the protection and management of peatlands. Part of the effect of these regulations is that conversion or new clearing of peatlands is not permitted even in areas that have already been concessioned.
A study showed that the oil palm development moratorium could reduce forest conversion when implemented alongside increased productivity. It also showed that peatland protection policies could reduce carbon emissions and the risk of fires where oil palm plantations on peatlands are removed and swapped with mineral soil lands under a government land swap arrangement.
In 2011 The Indonesia government established its own certification scheme Indonesian Sustainable Palm Oil (ISPO). The standards for ISPO certification are linked to existing Indonesian legislation. It is now mandatory for palm oil producers in Indonesia to obtain ISPO certification.
This part of the article focuses on the importance of palm oil and developments on the subject in different jurisdictions. The concluding part of the article (see here) discusses the palm oil industry in Nigeria.
