In Brief

Demand is driving innovation and technology to improve sustainable palm oil production

Source – Gettyimages

Recently, the  Rainforest Foundation Norway published an article which noted an increase in EU palm oil and soy consumption. Citing data which saw a 7 percent increase from 2019  the report noted that the EU reached an all-time high of 4.5 million tonnes of palm oil biodiesel consumed in the region. In fact, the EU is currently revising its Renewable Energy Directive (RED II), which will include biofuel incentives.  

Although a number of EU countries have announced plans to phase out biofuel based on palm oil and soy respectively, the statistics show little evidence of a drop in consumption in the EU.

With this renewed demand for palm oil strict sustainability requirements are good for all—especially for palm oil producers.

This can be seen in the report by a Greenpeace and WWF report which published several recommendations for EU’s upcoming legislation for forest risk commodities in the EU market. The recommendations included a call to the European Commission to propose regulations to oblige operators to exercise mandatory due diligence on their products. This, the briefing stated, should include Forest and Ecosystem Risk Commodities (FERCs) or products derived from or containing (relevant) FERCs that are placed on the EU market to comply with strict sustainability requirements. Adding that these requirements include concerns for human rights impacts, deforestation, forest degradation and the conversion or degradation of natural ecosystems other than forests. These regulations are to be applied to a comprehensive list of commodities all identified according to objective and science-based criteria.  

 The proposal also recommends flexibility in the legislation for regular reviewal so that additional commodities can be added to the list if new commodities meet initial objectives and science backed criteria. Of importance here is the NGO recommendation to initiate the said list by including, as a minimum, products like: livestock products (beef, leather, poultry), soy, palm, timber, cocoa, coffee, rubber and maize.   

They also recommend that the EU make it obligatory for operators and traders on the EU market to ensure traceability of their goods and transparency of their supply chains. Last but not least, they recommend that there be due diligence on financial institutions to ensure that no financing goes to business activities that do not meet the sustainability requirements for FERCs and/or Relevant Products.  

The briefing also included a framework regarding enforcement, which includes: dissuasive and proportionate penalties for non-compliance; a network of well-resourced competent authorities that proactively carry out checks and controls; effective EU Member State complaint mechanisms and review procedures; and rights for third parties to seek redress before EU courts if they are harmed by any adverse impacts addressed by the proposal or by non-compliance with its requirements. 

 If taken into account by the EU, these measures could make it harder for certain commodities to enter the EU marker.

However, if adopted correctly, recommendations like these could promote certification schemes such as Malaysian Sustainable Palm Oil (MSPO) certification  which have robust regulations for avoiding deforestation, protecting biodiversity and promoting labour rights. 

Meanwhile another article published the finding of a research conducted by the African Plant Nutrition Institute which highlights ways to develop climate-smart methods to increase the yield of palm oil plantations.  

The article provides insight into the latest development in palm oil plantation research using a data-rich modelling approach. It provides information on crop production strategies in palm oil production, which is an industry facing increasing regulation in Europe and around the world. 

 Currently, palm oil production is facing the ire of environmentalists as well as certain sectors of social and governance lobbies due to unsustainable and questionable practices. The research highlights the possibility of maintaining palm oil production while adopting alternate plantation management techniques.  

 The research presented in the article is published in a peer reviewed journal. One of the authors, Dr Thomas Oberthur, has vast experience in sustainable palm oil intensification. He currently serves as the Director of Business and Partnership Development at African Plant Nutrition Institute. Indonesia’s crude palm oil (CPO) is the largest single source of the most used vegetable oil in the world.   

The articles go on to highlight the Indonesian palm oil industry where production has shown constant growth over the last two decades, owing largely to area expansion, which includes converting tropical rainforests and peatlands into palm oil plantations. Such expansions are the primary reason that the palm oil industry is facing increasing criticism from environmentalist because it is the cause of loss of biodiversity and unique eco-systems.  

 One of the problems identified in the article is that palm oil plantation managers are not willing to adopt new farming practices due to a variety of reasons including lack of expertise, equipment and man power. This leads to continued reliance on methods which do not produce attainable yield. The research highlights three pathways that can are new. The first is the conventional business-as-usual (BAU) model, which relies on area expansion and has been the reason for increasing scrutiny. The second method advocates a better plantation management policy aimed at increasing yield. This would mean that production quota would be met at established plantations without the need for area expansion. The third approach is a combination of the first and second, where area expansion and mid-level yield growth are the targets.  

 The study is pertinent because it advocates for the adoption of policies and practices that will reduce the environmental concerns surrounding palm oil production whilst maintaining a desired production quota. This is a positive development because the report endorses sustainable palm oil production as backed by research.  The report also identifies problems like lack of expertise, man power, and equipment, that need to be worked upon so sustainable practices in the palm oil sector are more widely applied. These areas amplify the need for greater cooperation between regions to promote sustainable practices in the palm oil industry.

It is through such research and a balanced, and nuanced approach that governments and producers can increase sustainable palm oil production.