Palm oil trade barriers perpetuate poverty

EUROPE, in reducing palm oil usage in its food supply chain, blames oil palm planting for widespread tropical deforestation and peatland clearance.

France's largest frozen food maker Findus said it is removing palm oil from its products in favour of rapeseed oil. French retailer Casino, too, said more than 200 food products would be palm oil-free by the end of the year. This policy would apply to its other retail divisions like Franprix, Leader Price and Monoprix. Another food retailer Auchan said it was working on ways to guarantee all its products are palm oil-free. Carrefour, the world's second-largest retailer, said it will replace palm oil in several branded goods.

British retail chain Marks & Spencer started a campaign against palm oil by putting up five-foot displays in its UK stores stating: "We think that destroying rainforests for palm oil is too high a price to pay for a biscuit."

Two weeks ago, Greenpeace campaigners abseiled into Nestle's annual shareholders meeting in Switzerland and demanded that the food giant stop using palm oil. They hung a banner with the slogan "Nestle, Give the orangutans a break!" and claimed Nestle's use of palm oil in KitKat chocolate bars was harvested at the expense of the rainforests.

These developments have hit a raw nerve among Malaysian lawmakers.

Kanowit Member of Parliament (MP) Aaron Ago Dagang said there's a lot of talk linking oil palm planting to deforestation and climate change but until now there're no empirical evidence. "We need to look at it from all angles," Dagang said in an interview at the Parliament lobby in Kuala Lumpur recently.

He drew attention to a recent news report from Jakarta where World Growth chairman Alan Oxley said several environment non-governmental organisations (NGOs) have strong connections with the European Commission.

Oxley pointed out that up to 60 per cent of WWF Europe's revenue is funded by the EU government. Europe can prioritise environmental issues over economic growth because they are already wealthy, he said.

A quick check on the European Commission's website revealed the Directorate-General for the Environment had, in the last 10 years, handed out over €66 million (RM211 million) to green NGOs. In 1998, the EU funding to environmental NGOs was just over €2 million (RM6.4 million) but last year, the amount nearly topped €9 million (RM29 million).

Mambong MP Datuk Dr James Dawos Mamit said he is not surprised by the EU government funding these NGOs as propaganda proxies. "Politicians in the EU are using political solutions, disguised as environmental concerns, to protect trade interests of their local farmers," he said.

Mamit pointed to an independent think tank report released from Brussels, Belgium admitting the EU Renewable Energy Directive discriminates against imported biofuels, such as palm oil. The EU Renewable Energy Directive is a law that provides the guidelines for European countries to draw up their own biofuel regulations.

The GlobEcon report titled "European Policies Towards Palm Oil: Sorting Out Some Facts" , admits the Renewable Energy Directive's foreign biofuel greenhouse gas calculations as faulty and intentionally discriminate against palm oil. The report demonstrates that the default assumptions embedded in the Directive about the ecological impact of foreign biofuels are based on politics, not scientific or economic reality.

While the use of biofuels across the EU is rising, so too is the chorus of environmental activists opposing their use. Sadly, many of the claims that foreign biofuels, specifically palm oil, are a threat to the environment are seriously flawed, some even completely unfounded, GlobEcon director Dr Gernot Pehnelt wrote.

Standing before lawmakers at the European Parliament, Pehnelt explained how the oil palm industry drive economic growth to alleviate poverty in developing nations like Malaysia and Indonesia. He also urged EU lawmakers to acknowledge the sufferings in low-income nations that palm oil critics continue to perpetuate.

Mambong MP Mamit concurred with Pehnelt that the EU Renewable Energy Directive restricts biofuel imports by rejecting forest land conversion and mandating compliance to greenhouse gas emission standards that are not science-based.

Mamit, who is an environmental expert, explained that conversion of degraded forest to oil palm plantations is just like establishing pine tree plantations in Europe and North America. "In fact, oil palm trees are better at sequestering carbon dioxide than pine trees. Herbs, bushes and shrubs in oil palm plantations thrive underneath the canopy and trunks of oil palm trees," he said.

In Europe and North America, prescribed burning is carried out in pine tree plantations every spring to eliminate pests like pine-bark beetles and fungi. Yet, such destruction of plant biodiversity and greenhouse gas emissions is often ignored.

Mamit then highlighted the hipocrisy of the EU renewable energy directive that dictates developing countries to protect the environment to a far greater degree than Europeans did at the same stage of development but refuses to recognise the high opportunity cost of foregone development.

"If our oil palm planters fail to conform to EU's definition of 'sustainable standards', we are denied access into their market," said Mamit. "It clearly is a political trade barrier meant to protect EU rapeseed oil producers."

On European green NGOs' calls to reject oil palm planting on Sarawak's peat soil and the imposition of unrealistic greenhouse gas criteria on palm oil exports, Julau MP Datuk Joseph Salang Gandum said "We need to take a more balanced view, based on logic and facts."

"These lobbies seemed more targetted at killing the growth of oil palm plantings and blocking palm oil shipments into developed nations like Europe. Such trade barriers only serve to perpectuate poverty in rural Malaysia," he added.

Gandum said oil palm planting has allowed Malaysia to supply affordable cooking oil and margarine to billions of people in other developing nations like China, India, Pakistan, Bangladesh and Vietnam. He cited numbers from Oil World and Malaysian Palm Oil Board's (MPOB) reflecting the growing global palm oil consumption and significant value addition of the palm oil industry to the nation's economy.

According to Oil World trade journal, Malaysia and Indonesia collectively export the bulk of 36.8 million tonnes of palm oil.

In the last two years, Malaysia earned between RM50 billion and RM65 billion (or US$15-20 billion) a year from palm oil exports. Indonesia Palm Oil Commission reportedly said the republic earns US$10 billion annually from palm oil shipments.

Malaysia's annual US$20 billion palm oil exports supports some two million jobs and livelihoods along the sprawling palm oil value chain.

Bankers, insurance companies, islamic financiers, freight forwarders, cargo surveyors, shipping companies, traders, brokers, stock analysts, fund managers, food scientists, process engineers, mechanical engineers, agronomists, economists, ecologists, publishers, doctors, cosmetics companies, detergent manufacturers, lecturers, land surveyors, contractors and relevant government officials are all stakeholders in the palm oil industry.

MPOB's data also show more than 330,000 smallholder families, working on 1.6 million hectares of oil palm plots, produce a quarter of the nation's palm oil exports.

"The numbers speak for themselves. The final frontier of Malaysia's oil palm planting expansion is in Sarawak. Many who live on native customary land, stand to uplift themselves from poverty through sustainable oil palm planting," Gandum said.

"When I say sustainable, I mean better enforcement of the laws governing land boundary rights, good agriculture practices and workers' rights that had already been enacted by Parliament," he added.

3 Responses to Palm oil trade barriers perpetuate poverty

  1. palm oil outsider 27 April 2010 at 12:28

    Bravo! to All our Y.B M.P's who spoke out on facts on palm oil and not just political gimmick!

    In fact our whole Parliment should adopt a urgent resolution highlighting the wrong's of the EU Commission on unfair treatment of palm oil
    as food as well as biofuel, basing on unsound scientific claims as used by their NGO's.
    The Parliment should give them an official report if not protest!

  2. Very informative and inspiring article. Well done! Please keep on writing more good article to alert readers on the unethical acts of these so-called NGOs.

    Our government need to do more to protect our palm oil industry.

    Palm Oil supporter

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