Multi-faceted barriers to trade

AT A CROSSROAD: The bigger the palm oil industry becomes, the easier it is a target for smear campaigns by rivals via political means. Planters urge the government to tackle barriers to palm oil exports in Malaysia’s free trade agreement talks with the European Union. OOI TEE CHING writes.

WELL-FUNDED environmental activist groups like World Wildlife Fund, Friends of the Earth, Greenpeace and Sawit Watch of Indonesia, have in the last 15 years or so, launched many campaigns alleging the expansion of oil palm plantations have destroyed forests in Indonesia, threatened many endangered wildlife and robbed indigenous peoples of their land.

A manipulative but favourite ploy used by environmental activists to discredit palm oil-producing countries like Malaysia and Indonesia, is to take satellite imagery of a small part of the country and magnify it as logged-over areas in a cynical and deliberate attempt to create the impression that the entire rainforest system is destroyed.

To put things in perspective, the oil palm industry in Malaysia accounts for 15.5 per cent of total land area and only 4.5 per cent that of Indonesia. 

Unknown to many, the environmental activists’ strident criticisms have created trade barriers to the global palm oil trade under the pretext of environmental activism. Indeed, this sits oddly with the fact that oil palm is one of the world’s most sustainable crops. 

Oil World, a Hamburg-based trade journal, noted that the oil palm tree is the world’s most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soyabean planted in the United States and five times more than rapeseed, Europe’s main oil crop. 

Should alternatives to oil palms be grown, more land would be needed to produce an equivalent volume of oil to replace palm oil, likely resulting in further deforestation. 

In giving a better insight to the terminology “deforestation”, Sarawak Plantation Bhd chairman Datuk Amar Abdul Hamed Sepawi who studied forestry and was trained as a forester, cited the United Nation’s Framework Convention on Climate Change defined a forest as an area of 0.5 to one hectare having more than 30 per cent canopy cover and having a potential height of two to five metres.

“So, how can it be said there is deforestation when oil palms fit the United Nation’s definition of forest plantations like fir and cone trees in Europe? 

"How can it be said that planting oil palms is highly polluting when these trees, like any other forest species, produce oxygen for us to breathe?” he said in his keynote address before 1,003 delegates at a conference organised by the Incorporated Society of Planters (ISP) in Sibu, Sarawak, recently.

Last year, the Rainforest Foundation of Norway made sensational headlines when it alleged Norwegian Government Pension Fund Global (GPFG)’s investments in Malaysian and Indonesian plantation counters causes wanton deforestation.

GPFG sold off their shareholdings and in their annual report noted: “In the first quarter of 2012, we sold our stakes in 23 companies which by our reckoning, produced palm oil in an unsustainable manner…” 

Abdul Hamed caused a stir among the ISP delegates when he pointed out the elephant in the room. 

GPFG, which was previously known as The Petroleum Fund of Norway and derives its seed money from selling depleting fossil fuels, is throwing dirt at farmers who plant trees that sequester carbon dioxide. 

“We have two groups of people. One digs oil from the ground and the other harvests edible oil from above the ground. Yet, it’s the group that contributes to fossil fuel burning that is blaming environmental pollution on the other group who plants trees that clean up the air,” he smirked. 

Abdul Hamed moved on to highlight that the western environmental activists’ campaign against oil palm plantation expansion, in the name of “saving rainforests”, is actually a blatant violation of international norms and Malaysia’s sovereignty.

“Many people unsuspectingly believe Greenpeace, Friends of the Earth and Wetlands International are protectors of the world’s forests but ... let me ask you ... are they bringing their own governments to justice for deforesting 90 per cent of their country’s landmass? Are they lobbying for reforestation of deciduous forests in their own countries?” he asked.

By criticising the virtues of oil palm planting and ignoring the evidence that economic development leads to better environmental protection, Abdul Hamed said it is questionable whether these activists’ true commitment is to the environment or to erection of trade barriers to benefit rapeseed farmers who are already heavily subsidised by the European Union (EU) government.

This hand-in-glove fit is also seen in the activists’ campaign against palm oil imports, especially for biofuels, which is very much aligned with the EU’s Renewable Energy Directive that seeks to discriminate against palm biodiesel.

Skilful in communication and blackballing tactics, these activists have also harassed oil palm planters into submitting to the standards and criteria of which they dictate, such as the Roundtable on Sustainable Palm Oil (RSPO). 

Abdul Hamed described these mercenary activists as whistleblowers, judge and jury, all rolled into one — a stark contrast to the check and balance that corporates undertake in the name of justified return on investments to shareholders. 

“Why should our oil palm industry submit to principles and criteria governing our country’s land resources that is being pushed by green activist-driven organisations such as the RSPO? 

"Where is the respect for Malaysia’s laws enacted by Parliament and state assemblies that had shaped good agriculture practices, workers’ rights and sustainable return on investments for farmers?”

Abdul Hamed noted that France’s smear campaigns of “no palm oil” on food packaging and environmental activists’ incessant harassment for oil palm planters to cough out tonnes of money to be RSPO-certified has restricted market access for palm oil. 

“Is RSPO the EU’s “Trojan Horse” meant to hoodwink plantation corporates into surrendering their rights of redress with the World Trade Organisation that promotes fairness in free trade?” he asked.

Abdul Hamed reiterated the oil palm is an economic security crop. This is because Malaysia’s annual US$25 billion (RM79.75 billion) palm oil exports support some two million jobs and livelihoods along the sprawling value chain.

More than 40 per cent of oil palm planters in Indonesia are smallholders whilst in Malaysia they contribute to 38 per cent of the country’s palm oil output.

Last year, Malaysia and Indonesia earned some US$45 billion from exporting more than 40 million tonnes of palm oil all over the world, data from industry regulators of both countries revealed.

Oil World confirmed that in 2012, Malaysia and Indonesia shipped out the bulk of 41.8 million tonnes of palm oil, or 61 per cent of the 68.2 million tonnes of vegetable oils traded globally. Soyabean, rapeseed and sunflower oils, however, only commanded 27 per cent of market share.

Interestingly, Oil World’s data also showed that while the vegetable oils market had doubled in size since 1990, people around the world have chosen palm oil over other oils. Among 17 major vegetable oils traded in the world, palm oil consumption exceeded soft oils like soyabean, rapeseed and sunflower.

In the last two decades, global palm oil consumption expanded three times. Rapeseed oil purchase, however, only increased by 2.5 times and soyabean oil’s popularity just doubled.

“We’re at a crossroads. It’s time for oil palm planters to adapt to the fast-changing world of ruthless vegetable oil politics if we want to stay relevant in this market,” Abdul Hamed said. 

He then highlighted Malaysia’s neighbour has its own certification called the Indonesian Sustainable Palm Oil (ISPO) that is structured around a more commonly acceptable definition of sustainability and good agricultural practices. 

“Indonesia has embarked on ISPO to retain its sovereignty and bring discrimination against palm oil exports to the World Trade Organisation to achieve liberal trade that thrives on healthy competition. What about Malaysia?” he asked.