Palm oil is cheap, but it’s also an eco-disaster

With Southeast Asian economies in the balance – especially Indonesia and Malaysia – the fruit producers must address growing concerns about environmental and employee abuses without losing their competitive edge

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An Indonesian girl works at a palm oil plantation area in Pelalawan, Riau province, Indonesia. Photo: AFP

Published: 9:00am, 22 Jan 2018Updated: 12:10pm, 22 Jan 2018

The self-regulatory group charged with balancing the successes of the palm oil industry against its labour and environmental abuses has a big year ahead of it, as it tries to bolster its guiding principles without adding costs that price its product out of the market.

In the late 1980s, a United Nations report “Our Common Future” set out what would become the most widely accepted definition of sustainable development, a process “that meets the needs of the present without compromising the ability of future generations to meet their own needs”. It looks simple on paper. But in practice, it has been hard to implement for the palm oil industry, a sector that has been linked to deforestation, land grabbing and slave-like working conditions.

The latest crisis to face the industry’s reputation came this week as European Union lawmakers on Wednesday agreed to draft measures that seek to phase out the use of palm oil as biofuel by 2021. The move sparked fear in smallholders, who account for about 40 per cent of global palm oil production. Hundreds took to the streets in Kuala Lumpur this week to protest against the EU’s changes, saying the decision threatens their livelihoods.

“Our palm oil trees empower us as indigenous peoples,” said the Dayak Oil Palm Producers Association. “Your discrimination against palm oil is hurting us.”

Palm oil is a major industry in Southeast Asia. Indonesia and Malaysia employ 3.5 million people to produce 85 per cent of the world’s palm oil with export values exceeding US$40 billion annually.

The Roundtable for Sustainable Palm Oil (RSPO), an association with thousands of member organisations currently based in Kuala Lumpur, is reviewing its Principles and Criteria, a set of standards that cover social and environmental issues that growers must comply with to get their palm oil certified. The new regulations will be approved in November of next year.