Greening the palm oil industry could help save Indonesia's forests

Posted: 16 December 2002

The world's growing demand for palm oil - a major ingredient of soap, moisturiser, lipstick and food stuffs - is likely to lead to a doubling in the area of oil palm plantations in Indonesia, threatening the country's already dwindling forests, and the animals that depend on them. Jamie Grant and Emma Duncan report.

Palm oil is a versatile product. You might not realise it, but it's present in a wide range of goods at your local supermarket - from cosmetics and detergents to a variety of food products, including confectionery, chocolate, ice cream, ready-to-serve meals, and margarine.oil palm plantationOil palm plantation, Sumatra, Indonesia.© Alain Compost/WWF-Canon It's also an extremely productive crop. Grown in tropical areas around the world, from its native West Africa to Southeast Asia, Pacific regions, and Latin America, oil palm (Elaeis guineensis) plantations produce far more oil per hectare than any other oilseed. Oil palm also requires less fertiliser, pesticide, and herbicide than other common oilseed crops, such as soybean, sunflower, and rapeseed.

Small wonder then that oil palm has become a bumper crop in many developing countries, providing income and employment in isolated areas where it's often most needed. And with the world trade in palm oil predicted to double from 22.5 million tons per year to 40 million tons in in the next 20-30 years, the boom looks set to continue.

Forest loss

But despite the apparent environmental benefits of oil palm, the industry has often been criticised by environmental organizations. The issues are complex and differ in different countries, but often include problems associated with loss of natural forest.

Indonesia is a case in point. Although prohibited by Indonesian law, a new WWF report, Oil Palm Plantation and Deforestation in Indonesia, says that clearing of natural forest for plantations still continues here. For economic reasons and due to poor governmental control, logging and estate companies do not use widely available degraded lands for oil palm plantations. Instead, they set fire to natural forests on their concessions after having removed all the valuable timber, and then convert the cleared land to plantations.

The fires themselves can lead to further forest loss. The horrendous fires that swept through Indonesia in 1997 - burning down an area of rainforest bigger than the Netherlands and sending up smoke that reached as far as Brunei, Singapore, the Philippines, and Thailand - have been blamed on fires that were deliberately lit to clear forest for oil palm and other crops and then got out of hand because of a prolonged drought.

The extent and speed of forest loss in Indonesia is alarming. The country already has one of the highest rates of deforesatation in the world. Fifty years ago, the island of Sumatra was covered with millions of hectares of tropical rainforest. Today, most of the lowland forest is gone, converted to settlements, oil palm and pulpwood plantations, and other crops. With 2 million hectares of lowland forest destroyed each year, the last remaining tracts will be lost by 2005. The same could happen on the island of Kalimantan by 2010.

Threatened species

The shrinking forest area threatens thousands of animal and plant species, many of them endemic and already endangered. Sumatra's Tesso Nilo forest, for example, has the highest level of lowland forest plant biodiversity known to science, with over 4,000 plant species recorded so far. It's also home to three per cent of the world's mammal species, including elephants, rhinos and tigers.

Sumatran tiger, Sumatra, Indonesia© Frédy Mercay/WWFForest loss and oil palm plantations are proving a particularly deadly mix for Sumatra's elephants. As their natural habitat disappears, the animals are increasingly raiding oil palm plantations surrounding Tesso Nilo for food. But an agonising death awaits them. Angry farmers coat the palm fronds with pesticide or lay out poisoned bait. Earlier this year, 17 elephant corpses were found in the vicinity of a plantation. An entire family wiped out, every one a victim of poisoning. Tigers too are increasingly entering villages to find food, where they are often killed.

With the area of oil palm plantations in Indonesia predicted to double to 6 million hectares by 2020 and logging - both legal and illegal - continuing unabated, the outlook seems bleak for the country's remaining forests and the animals that depend on them.

Greening the industry

But it doesn't have to be. Many players in the international palm oil industry could help save forests in Indonesia by implementing sound environmental, social, and economic practices. WWF is actively promoting this, and the results are promising.

Financial institutions are one target. The expansion of the oil palm sector is largely funded by European, North American, and East Asian financial institutions which, for the most part, rarely try to improve the social and environmental practices of their clients. However, these institutions could actively find and fund palm oil plantations that do not destroy natural forests. In partnership with WWF, four of the biggest banks in the Netherlands - ABN AMRO, Rababank, Fortis, and ING - have already agreed to stop or substantially restrict financing for palm oil plantations in Indonesia on environmental and social grounds.

Palm oil consumers also play a role in environmental responsibility. With some 17 per cent of the 22 million tonnes of palm oil produced worldwide destined for Europe, this market could significantly influence the industry's practises.

Switzerland's largest retail chain, Migros, has already started to do this. Also in partnership with WWF, the company developed a strict set of social and environmental criteria to be met by their palm oil suppliers. For example, oil palm plantations must not be grown on newly deforested land and must include secure wildlife and forest corridors. Social concerns are also taken into account to minimize conflict with local communities and ensure that workers' basic pay and conditions are met. This year, margarine became one of the retailer's first products made from palm oil that meets their new criteria. Step by step, all other products sold by Migros that contain palm oil will follow suit.

Palm oil producers too are realising the benefits of environmentally friendly plantation practises. The powerful Malaysian Palm Oil Association (MPOA) recently formed a Task Force to address environmental issues. Working with WWF, the MPOA made a proposal for the development of better practices for palm oil both at the landscape as well as the plantation level. Unilever, a major worldwide consumer as well as a producer of palm oil, is also working with WWF to develop sustainable palm oil production methods.

Our ice cream, soap, moisturiser, and lipstick - as well as products from other tropical crops such as soy and pulp - should not come at the expense of forests in Indonesia or other parts of the world. Although promising first steps have been made towards a more environmentally friendly palm oil industry, there is still a long way to go. Other companies and financial institutions need to follow in the footsteps of Migros, Unilever, and the four Dutch banks, not only in Europe but also in China, India, and Pakistan, the world's largest palm oil importers. Consumers too must demand environmentally friendly palm oil products, and if necessary be prepared to pay a higher price for these. Only then will the destruction stop.

Jamie Grant is Press Officer at WWF Scotland and Emma Duncan is Managing Editor at WWF International.

Related links:

Oil Palm Plantations and Deforesatation in Indonesia (WWF report)

WWF Forest for Life Programme