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As crises hit, staying the course for sustainable palm oil

Climate, food, and energy challenges for ‘greening’ the critical commodity
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Oil palm fruits ready for processing. Lake Sentarum, West Kalimantan, Indonesia. Photo by Tim Cronin/CIFOR

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Most global consumers have heard of palm oil – and if not, they’ve probably tasted it. The versatile commodity is used in almost half of the packaged products found in supermarkets, from chocolate to deodorant or lipstick, as well as for animal feed and biofuel.

“Oil palm is one of the world’s most prominent and effective vegetable oils globally, and is contributing 40% of global trade volume in vegetable oils,” said Beatriz Fernandez, who manages the UN Environment Programme (UNEP)’s partnership in the the GCRF Trade, Development and the Environment Hub (TRADE Hub). She made the remarks at a high-level dialogue held on 30 August 2022, in Jakarta and online, to discuss issues and potential solutions for sustainable palm oil trade in Indonesia in light of current crises.

Why is palm oil so popular? Well, it’s relatively cheap, odorless and tasteless, and highly productive: per hectare, oil palm produces around four times the yield of sunflower or rapeseed, and 10-15 times that of coconut. Indonesia is the world’s biggest palm oil producer, accounting for about 60% of global trade, and the sector contributes significantly to the country’s national and economic development. But there are key sustainability concerns associated with oil palm cultivation, including deforestation, peatland degradation and loss, and forest and land fires: all of which are particularly significant for a nation with some of the largest remaining areas of natural forests and the highest biodiversity values of any country on Earth.

However, it’s not palm oil per se that’s the problem. “So long as there is a demand for cooking oil, palm oil is a reasonably logical answer to that demand,” said Centre for International Forestry Research (CIFOR) Director General Robert Nasi. “Substituting that demand with less-productive crops would take up more land, and thus likely cause more deforestation. And demand is set to grow, from 199.1 million metric tons in 2020, to 258.4 metric tons by 2026, according to Musdhalifah Machmud, Deputy Director of Food and Agribusiness at Indonesia’s Coordinating Ministry of Economic Affairs, Indonesia.

As such, building a more sustainable palm oil sector is high on the agenda of the Indonesian government, as well as other key stakeholders in the public and private sectors. This year, however, the global food and energy crises – spurred by climate change impacts and regional conflicts – threaten to shake the strong foundations of this work. The price of palm oil has shot up, providing greater incentive for unsustainable practices, and making palm-oil-based products unaffordable for many. “As the world warms, these multiple crises are interrelated, making them complex and requiring an integral and comprehensive solution,” said Arif Satria, the rector of IPB University. “We are facing a very, very difficult situation,” said Herry Purnomo, CIFOR’s Indonesia deputy director. “Are we still going to reach sustainable palm oil, or are we going to give up?”

Amidst these challenges, there’s ongoing and increasing pressure from palm oil consumer countries to ‘green’ supply chains, through supply chain commitments [like Indonesia’s FOLU Net Sink 2030]. “These laws and regulations will mean that there will be requirements on businesses operating out of the EU and the UK to ensure that there is no deforestation embedded in the commodities that they’re importing into these markets,” said Neil Burgess, TRADE Hub’s principal investigator. “I think this may have an interesting and policy impact in producer countries which could be positive for nature and climate, but may also be negative in terms of smallholder farmers and incomes for some parts of the supply chain.

This focus on people as well as nature was supported by CIFOR research under the TRADE Hub, which laid out indicators for palm oil sustainability that placed ‘employment’ as equally important to ‘no deforestation’. “People are part of the environment,” said CIFOR researcher Sonya Dyah Kusumadewi. Mego Pinandito, who deputy heads Indonesia’s Research and Innovation Agency (BRIN), highlighted the importance of providing support for smallholders’ livelihoods at multiple levels. “It is not possible to solve this challenge through the [national] government alone – we need to call in the regions, and get more support from all of the elements,” he said. “We need more capacity building to identify vulnerable smallholders and consider farm labourers, too,” added Suria Tarigan of IPB University.

Notwithstanding the critical current challenges, many presenters remained optimistic about progress towards sustainability goals. “Despite the disruption, there are still positive trends, including increasing product certification and commitment towards sustainability,” said Zulkarnaen Siregar during his wrap-up of the event. “Producer and buyer countries, let’s talk together, and keep meeting the sustainability criteria, including sticking to the standard of sustainability, more dialogues on trade and markets, transparency and traceability, including research and innovation,” he invited.

“Let’s continue setting the course for sustainable palm oil.”

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For more information on this topic, please contact Herry Purnomo at h.purnomo@cgiar.org or Dyah Sonya at s.dyah@cgiar.org or Dyah Puspitaloka at d.puspitaloka@cgiar.org.
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