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Putting sustainable, equitable palm oil on the G20 recovery agenda

Stakeholders at policy dialogue explore priorities for December talks
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Aerial view of canal blocking in Dompas, Riau. Photo by Mokhamad Edliadi/CIFOR

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Diverse ways to improve the environmental footprint and equitability of the palm oil trade took center stage at an online policy dialogue on 22 March, 2022.

The event was hosted by CIFOR-ICRAF as part of GCRF TRADE Hub activities in Indonesia, which is funded by the UK Research and Innovation Global Challenges Research Fund and led by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC). It gathered representatives from government, academia, the private sector, and civil society to tease out some of the knotty issues associated with the palm oil trade, ahead of the 17th leaders’ summit for the G20, a multilateral cooperation forum that represents the world’s major developed and emerging economies.

Indonesia has been awarded the G20 Presidency for 2022 and will host its annual summit at the close of this year, on the theme ‘Recover together, recover stronger’. This title offers an important opportunity for the country to set the discussion agenda for global economic recovery and transformation – including taking the lead on discussions to advance a sustainable and equitable palm oil trade that will bring benefits to Indonesia’s economy, environment, and people.

“The issue of palm oil can be very divisive,” acknowledged Robert Nasi, Director-General of the Center for International Forestry Research (CIFOR) in his keynote speech about the commodity. “It’s a bit of a Dr Jekyll and Mr Hyde situation [in terms of how it’s often portrayed in the media]. Fundamentally, however, it’s a very productive plant that yields very good oil with great properties for industries and businesses; it’s a very important source of livelihood for local people; and at the same time, it’s often associated with tropical deforestation. So, how can we trade it more sustainably?”

TV news anchor Sara Wayne then facilitated a ‘talk show’ that delved into this issue, exploring opportunities, barriers, and progress in implementing global green deals for palm oil trade.

Neil Burgess, Chief Scientist of UNEP-WCMC and Principal Investigator of TRADE Hub, explained how growing awareness about deforestation and its link to climate change has created demand in the EU and UK for ‘greener’ and deforestation-free supply chains. “The population has become well-informed,” he said – “there was genuine interest coming not only from the world’s governments, but also from its citizens.” However, he also cautioned that measures to this end could negatively impact on smallholder farmers who are currently benefitting from oil palm production and may struggle with increased regulations and compliance.

Ahmad Maryudi, a professor in the Faculty of Forestry at Gadjah Mada University, described how initiatives so far have failed to fully eradicate deforestation from palm oil supply chains, and that governing bodies in the EU are interested in tightening the legislation. “There may be issues with enforcement; gaps in terms of [importing] countries’ willingness to achieve sustainable commodities; and suppliers that do not really guarantee the conservation environment,” he said. “So we’d like to have a process that applies across all countries, big and small.”

   Landcape Oil palm plantation in Muara Kaman Ilir village, Kutai Kartanegara, East Kalimantan. Photo by Ricky Martin/CIFOR

Agam Fatchurrochman, the Deputy Secretary of the GAPKI (Indonesian Palm Oil Business Association), then spoke about the impact of green deals for palm oil business players in the country, and the need to compensate them for costs incurred through this – particularly for smaller players. “We need to move beyond one-sided policies that can hamper our economic development,” he said. He also highlighted the importance of establishing agreement on a sustainability certification standard and system.

Made Ali, Coordinator of the Jikalahari (Riau Forest Saviours Working Network), which has been working on legislation issues for twenty years, with a particular focus on smallholders who own under five hectares of land – and who face significant challenges getting registered under green deal regulations. “These farmers are so busy working in their fields, so the government needs to be proactive in contributing to building community-based corporation or cooperatives,” he said.

The second ‘talk show’ session covered opportunities inherent in the G20 Presidency for Indonesia to strengthen the sustainable palm oil trade. “This is a very important opportunity for not only Indonesia but the international community, since right now we are in the second and almost third year of the global pandemic, and the challenges we currently face are systemic and planetary,” said Shofwan Al Banna, an associate professor at the University of Indonesia’s Faculty of Social and Political Science. In terms of the palm oil trade specifically, “it’s a great opportunity for some of the countries that are most involved in the issue, both directly and indirectly, to sit down and talk together,” he said – “I think it’s a key platform in which we can push for more sustainable practices.”

CIFOR-ICRAF scientist Herry Purnomo highlighted the need to “distinguish between good [sustainable] and bad [unsustainable] palm oil production…and then to strengthen the good palm oil while transforming the bad.” Part of ‘strengthening the good’, in his view, is about offering smallholder farmers financial and technical support to implement good agricultural practices.

On that note, Bremen Yong Kin Kong, the Director of Sustainability of Apical Group – one of the largest palm oil exporters in Indonesia – spoke about using green funds to drive supply chain transformation. He also mentioned the need to build trust within the sector by collaborating with diverse actors towards environmental, economic, and community livelihood goals. As sustainability issues are a shared responsibility among all, it is essential for us to have an open mindset. Inclusivity among all stakeholders is also a key component in discussion forums in terms of policy and standard-setting,” he said.

Al Banna, from University Indonesia, agreed, though he added that “in implementing this inclusiveness we have to recognize that yes, we have differences, and we have to put those differences on the table – rather than consolidating our own positions and turning our negotiation tables into a battleground, instead of a forum for finding solutions.” That included producer and consumer countries going beyond considerations of their own domestic stakeholders in their economic diplomacy efforts, he said.

Beatriz Fernandez, who is the Associate Programme Management Officer of Environment and Trade at UNEP, shared her hopes and expectations that the G20 talks “maintain and reinforce the importance of the multilateral trading system to foster economic and social development to protect the environment, but also that that trade can contribute to tackling environmental issues and to advancing a sustainable palm oil trade agenda through policies”; that the talks are inclusive, collaborative, and trust-building; and that they help provide the enabling conditions for developing countries to face challenges, recover, and succeed.

Al Banna shared these sentiments and contributed a rallying call for all those interested and involved in the sustainable palm oil transition. “We should not wait; we should not be expecting that we still have time. Let us, together, push the agenda forward.”

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