Zero-deforestation pledges and palm oil: a conversation

BOGOR, Indonesia—The 2014 New York Declaration on Forests has ambitious goals: halve deforestation by 2020 and eliminate it altogether by 2030.

But how feasible in practice is the declaration? Who will shoulder the heaviest burden for ensuring its effectiveness—and who will suffer the most if it doesn’t work?

Ahead of the World Bank Conference on Land and Poverty, where many of the signatories of the declaration will be present, two experts from the Center for International Forestry Research (CIFOR) spoke about implementation of the declaration, particularly with respect to the oil palm industry in Indonesia.

Question: The New York Declaration on Forests seems to be a very ambitious plan to stop deforestation. What do you think are the realistic aspects of that declaration?

Steven Lawry, CIFOR Director of Forests and Governance Research: Well, of course, the declaration was signed by governments, private companies, NGOs. And a lot of the burden or responsibility for its implementation falls on the private sector because these are large companies that produce key, global economies—like oil palm, sugar, beef, and so on. And they are the ones who are having a directly significant impact on the forest landscape. And so the implementation questions that arise really fall largely to the private sector. So, what’s significant about the declaration is that a very large number of the principle commodity-producing companies in the world signed on.

These are hugely ambitious kind of goals and so lots of implementation issues arise. Now, there’s been some experience over the last 10 or 15 years on the part of the companies to reduce the impact on forests of their agricultural production practices. One thing I might mention is the Soy Memorandum, a zero-deforestation pledge in Brazil that a number of companies signed in 2006 that has eliminated added loss of forests due to soy production among the companies that signed that pledge. And, of course, the incentive here for the companies is that, in signing the pledge, they get access to global soy markets. If they don’t sign the pledge, then they lose access.

Krystof Obidzinski, CIFOR senior scientist: We are talking about pledges which are not coming into effect immediately, giving us some time to kind of implement and put measures in place. Another important aspect is that the companies making these pledges, if you put them all together, represent around 60 to 70 percent of the global supply chain of trade of oil palm. So we are talking about a significant chunk of oil palm being traded globally. So, these companies are pledging zero deforestation over, let’s say, the next 15 years.

… [But] what are the implications for other players beyond this immediate, limited number of large, global players making these commitments? And this is the area … that we feel hasn’t been really looked into or examined sufficiently. Companies are making these pledges; NGOs like it [but] governments are kind of still trying to find their position on it. The question is [on] implications for other players—for small and medium-sized players, smaller companies, smallholders.

New York Declaration on Forests:

Both praise and concern

We have some preliminary concerns that implementing these pledges in practice may mean excluding or sidelining some of these small and medium-scale actors in the oil palm sector. And that has to do with cleaning up the supply chains, ensuring deforestation-free supply chains of oil palm. And drawing on the experience that we’ve had in the forestry sector, looking at how it played out in the timber sector, we see a lot of parallels with sidelining and excluding small and medium-size players. So, I think, our concern is how to ensure that is minimal, that it doesn’t happen.

Question: Given that it’s a voluntary declaration, is there a role for governments that have signed up to the declaration to be part of the process of checks and control?

Lawry: Most definitely in the kind of social economic questions arising. For instance, if a large number of small producers—whether growers of oil palm or marketing companies—if they’re excluded from these markets, then questions of where they market their product, what kind of price disadvantage they might face, what would be the consequences to their livelihoods and incomes, could be quite significant. And so here questions arise around safeguards, if you will, to ensure that smallholders and others who have secured livelihoods from forestry, the forest landscape or agriculture are not disadvantaged in participating in these markets.

This is a form of certification, really. It’s a process that’s been unfolding over the last 30 years where producers of commodities have met certain requirements with respect to sustainability, land use and resource use, but also social sustainability and values. Those have been introduced in later stages of the certification development. Here’s where considerations of social impact would come into the mix. … Consumers would be concerned about it because drivers of these sorts of pledges have been in markets.

Obidzinski: Consumers made this happen. But, of course, they don’t want to hear that, Oh, as a result of our pressure and the pledges, now smallholders or rural people, whoever, are going to suffer because of the exclusion. So almost certainly the social groups and NGOs will be pushing the governments, like in Indonesia I’m sure, to make sure there are safeguards to assist smallholders to speed up the adoption of certification measures among smallholders.

It remains to be seen how this is going to play out in the context of oil palm. We can expect that there’s going to be a lot of pressure on the government to make sure that there’s no excessive adverse effect on smallholders.

Question: What kind of research is needed to be done to make sure that the aspects of the declaration that involve deforestation actually work?

Obidzinski: In my opinion, one of the major basic pieces of research that needs to be done—a piece of research that we will be enthusiastically pursuing—is a better understanding of the small-scale sector. … We are talking about enterprises anywhere from two hectares to 150 hectares. There has been a virtual explosion of those kinds of enterprises in Indonesia over the last five years.

When we talk about oil palm, people imagine large-scale monoculture plantations, thousands of hectares, but recently there has been tremendous growth in what we call the small-scale sector. There are various estimates as to how big or how large it is, how many people it involves—some official statistics indicate that somewhere between 3 million to 4 million people are involved in this sector [in Indonesia]. It may be double that.

There are some basic pieces of information that we don’t have about this. … How is it distributed spatially? What are the working dynamics of this sector? The financing behind it? The political economy of it? Management practices and the links to the value chain, the supply chains … all these things need to be better understood in order to understand how we can safeguard these smallholders and growers of oil palm so they’re not adversely affected by zero deforestation.

Question: From a government perspective, the protection of those smallholders is vitally important?

Lawry: Any government would be concerned. But the government has other interests in these pledges. What are the consequences for instance for economic growth, if the adoption of the pledges means that there’s less overall production of oil palm in the country for export? Less government revenue associated with the sector, less maybe net employment as a result.

Promises to keep:

Can private sector ensure success of zero-deforestation pledges?

Obidzinski: There are some serious contradictions. … My sense is that the government of Indonesia is sort of caught in the middle. On one hand, yes, they would like to support the sustainability agenda of zero deforestation. On the other hand, of course, they are the leading producer and grower of oil palm.

And then there’s also these, indeed, contradictions in the sense that if we look at the Indonesian law, indeed, as it stands now, presumably zero deforestation is impossible in fact. Because companies legally are supposed to develop their full concession area into plantation areas. And they’re not supposed to be setting any sort of areas aside. That’s according to the letter of the law. So some parts of the legal framework would have to be changed as well if zero deforestation was to be implemented fully, effectively.

Question: We started the conversation discussing how realistic you thought the declaration was or is, and what aspects of it were more realistic than others. How would the declaration be judged a success?

Obidzinski: Well, I think one of the simpler measures of success would be precisely what Steve mentioned earlier—to keep an eye on the rates of deforestation in Indonesia. I mean, no matter how you look at it, oil palm is a major driver of deforestation. There are other drivers, other commodities, but oil palm by far is the leading one. So, if there is any progress being made in that area, you should see a drop in the overall rate.

Lawry: I want to say how potentially important these pledges are: They represent what we’re sort of characterizing as sort of a new element in the global forest governance architecture. Traditionally, forest governance has been the responsibility of the state. But in the last 20 or 25 years—and zero deforestation is the latest expression of this—we’ve seen consumers voting, if you will, in ways that have implications for how forests are used and how forest producers are treated in many, many settings.

For more information about CIFOR’s research on zero-deforestation pledges, please contact Steven Lawry at s.lawry@cgiar.org or Krystof Obidzinski at k.obidzinski@cgiar.org.  

CIFOR’s research on deforestation forms part of the CGIAR Research Program on Forests, Trees and Agroforestry.