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Why is oil palm replacing tropical rainforests?
Why are
biofuels fueling deforestation?
Rhett A. Butler,
mongabay.com
April 25, 2006
[Update]

In a word, economics, though deeper analysis of a proposal
in Indonesia suggests that oil palm development might be a cover for
something more lucrative—logging.

Recently much has been made
about the conversion of Asia’s biodiverse rainforests for oil-palm
cultivation. Environmental organizations have warned that by eating foods
that use palm oil as an ingredient, Western consumers are directly fueling
the destruction of orangutan habitat and sensitive ecosystems.

So, why is it that oil-palm
plantations now cover millions of hectares across Malaysia, Indonesia, and
Thailand? Why has oil palm become the world’s number one fruit crop,
trouncing its nearest competitor, the humble banana?

The answer
lies in the crop’s unparalleled productivity. Simply put, oil palm is the
most productive oil seed in the world. A single hectare of oil palm may
yield 5,000 kilograms of crude oil, or nearly 6,000 liters of crude
according to data from JourneytoForever. For comparison, soybeans and
corn—crops often heralded as top biofuel sources—generate only 446 and 172
liters per hectare, respectively.

Beyond biofuel, the crop is used
for a myriad of purposes from an ingredient in food products to engine
lubricants to a base for cosmetics. Palm oil is becoming an increasingly
important agricultural product for tropical countries around the world,
especially as crude oil prices top $70 a barrel. For example, in
Indonesia, currently the world’s second largest producer of palm oil,
oil-palm plantations covered 5.3 million hectares of the country in 2004,
according to a report by Friends of the Earth-Netherlands.

These
plantations generated 11.4 million metric tons of crude palm oil with an
export value of US$4.43 billion and brought in $42.4 million (officially)
to the Indonesian treasury. Since then, the value of palm oil has only
climbed. The price of palm oil currently stands at more than $400 per
metric ton [by 2007 prices were more than twice this figure], translating
to about $54 per barrel—quite cost competive to petroleum.

Oil palm plantations in and around Tanjung
Puting National Park in Kalimantan, Indonesian Borneo Satellite image courtesy of Google Earth. (click image to
enlarge)

At $400 per metric ton, or about
$54 per barrel, palm oil is competitive with conventional oil. In
the future, palm oil prices are expected to fall further as more oil
palm comes under cultivation. With cheap land, abundant labor, and
ideal climate, investors and developers are eyeing tropical Africa
as the next major producer of palm oil.

Despite the success of oil palm in
Asia, it is not native to the region. The African oil palm (Elaeis
guineensis) has its origins in tropical Africa, distributed from Sierra
Leone to the Congo rainforest of the Democratic Republic of Congo. The
species was introduced to Malaysia at the beginning of the 20th century
and was first grown commercially in 1917.

Today almost half of
Malaysia’s cultivated land consists of oil palm, and the country has
become the world’s largest producer and exporter of palm oil, though
Indonesia is quickly gaining ground. Both Indonesia and Malaysia are
exporting large amount of the product to China: Malaysian exports to that
country alone are expected to grow more than 20 percent from 2.9 million
metric tons in 2005 to more than 3.5 million metric tons in 2006,
representing almost 1 percent of the value of Malaysia’s total exports.

Palm oil is derived from the plant’s fruit, which grow in clusters
that may weigh 40-50 kilograms. A hundred kilograms of oil seeds typically
produce 20 kilograms of oil. Fruit clusters are harvested by hand,
difficult work in the tropical climate where oil palms thrive. In
Malaysia, much of palm oil harvesting is done by foreign workers, often
Indonesians. While oil palms can live longer than 150 years and exceed 80
feet in the wild, cultivated palms are generally clear cut or poisoned
once they are about 25 years old when they stand around 30 feet tall.
Beyond 30 feet, harvesting fruit clusters is a challenge.

Palm oil
is used as one of the raw materials in a biodiesel production, a fuel that
is derived from vegetable oils or animal fats. In general, biodiesels are
biodegradable and, when burned, have fewer emissions than traditional
petroleum-based fuels. Typically, biofuels are blended with traditional
petroleum-based fuels, though it is possible to run existing diesel
engines purely on biodiesel, something which holds a great deal of promise
as an alternative energy source to replace fossil fuels.

Traditionally environmentalists have been supportive of biofuels
for their lower rates of pollution, while others like the idea of reducing
dependence on Middle East oil since many biodiesel crops can be grown in
friendly territories or even domestically produced. With this in mind,
policymakers from Asia to Europe have shown interest and have made a major
push to promote and adopt biofuels.

So, why is oil palm
cultivation a concern? For environmentalists the problem with palm oil as
a source of biodiesel lies in the nature of how the crop is produced. In
recent years, vast areas of natural forest have been cleared across
tropical Asia for oil palm plantations. This conversion has reduced
biodiversity, increased vulnerability to catastrophic fires, and affected
local communities dependent on services and products provided by forest
ecosystems.

Forest
clearing in forest area near oil palm plantations in Kalimantan
Photo by R. Butler

Vast areas of natural forest
have been converted for soy farms in the Amazon and oil palm
plantations in Asia. However, on a relative basis, oil palm may be
more ecologically sound due to its higher oil yield than soy. In
theory, because oil palm can produce as much as 30 times more oil
per unit of area, it could require a lesser amount of land clearing.
Of course planting oil palm on previously deforested land would be a
preferrable option.

Beyond the loss of forest
ecosystems, the production of palm oil, as currently practiced, can be
quite damaging to the environment. In 2001 Malaysia’s production of 7
million tons of crude palm oil generated 9.9 million tons of solid oil
wastes, palm fiber, and shells, and 10 million tons of palm oil mill
effluent, a polluted mix of crushed shells, water, and fat residues that
has been shown to have a negative impact on aquatic ecosystems.

Further, the liberal use of petroleum-based pesticides,
herbicides, and fertilizers ensures that most palm- oil cultivation is not
only polluting on a local level but also contributes to greenhouse gas
emissions. Considering that Malaysia is held to be one of the most
efficient producers, production in other parts of the world may be more
polluting. Indonesian plantations are so damaging that after a 25-year
harvest, oil- palm lands are often abandoned for scrubland. Soils may be
so leached of nutrients, especially in acidic environments, that few other
plants will grow, leaving the area essentially devoid of vegetation other
than weedy grasses which serve as tinder for wildfires.

For these
reasons, the scientific community is deeply concerned by a proposal by the
Indonesian government to turn vast areas of Borneo’s remote and
biodiverse rainforests into oil-palm plantations. The proposed expanse of
monoculture threatens to obliterate the region’s legendary
biodiversity—the World Wildlife Fund (WWF) says some 361 species of
animals have been discovered on the island in the past decade—while
displacing local people, including the Dyaks, native forest dwellers
renowned for their hunting and tracking prowess.

Ambitious
plans:

According to a Friends of the Earth report, in the
mid-1990s Indonesia set aside 9.13 million hectares for oil-palm
cultivation. By 2004, only about 58 percent of this area was actually
planted, though vast areas of natural forest had been cleared in the name
of oil-palm production. For example, according to a paper by Lesley Potter
of Australian National University, while only 303,000 hectares of the 2
million hectares of land in East Kalimantan reserved for oil-palm
development had been planted, an estimated 3.1 million hectares of forest
was cleared under the guise of plantation development.

Orangutan in Kalimantan, photo by Rhett A.
Butler. More pictures
from Kalimantan

Recent related
articles

Eco-friendly
palm oil could help alleviate poverty in Indonesia
Since
demand for palm oil isn't going to go away, Europe's best approach
is to convince Indonesian oil palm producers to cultivate their crop
in a manner that's less damaging to the environment, as exemplified
by the Roundtable on Sustainable Palm Oil (RSPO). This won't be done
by hand-holding or Kumbaya circles; it will be done through
financial incentives--if no one is demanding "green" palm oil, no
one will not produce it. Europe should inform producers that it is
willing to buy a set amount of palm oil (in billions of liters per
year), provided that is independently certified as having been
produced in an environmentally friendly and socially equitable way.
Europe may even want to offer a minimum price guarantee to satisfy
producers that it intends to hold up its side of the bargain.

Social
impact of oil palm in Borneo
For most of its history Borneo
was scarcely populated by humans. The unforgiving climate and dense
rainforest kept populations small and scattered. In the past half
century this has all changed. The influx of more than half a million
transmigrants into Borneo over the past thirty years has doubled the
island's population and created tremendous demand for jobs.
Initially the rubber and logging industries provided employment, but
when this collapsed in the mid- (Malaysia) to late-1990s
(Kalimantan), work opportunities dried up for most of the local
population. Despite this, hundreds of new arrivals continued to show
up in Borneo on a weekly basis.

Indonesia has announced that it
plans to double oil-palm crude production by 2025, a goal that will
require either a two-fold increase in yield—something which is entirely
possible given trends in neighboring Malaysia—or an expansion in the area
of oil palm under cultivation. The report says that Indonesia appears to
be pursuing both options. Under a 2005 investment proposal, prepared by
the State Plantation Corporation PT Perkenunan Nusantara (PTPN), Indonesia
would develop about 1.8 million hectares in the Kalimantan/Malaysia border
region, where most of Borneo’s remaining intact forests exist.

China would be involved in the plan, investing $7.5 billion in
energy and infrastructure projects, including providing capital for
palm-oil plantations. Chinese investors would directly control about
600,000 hectares of oil-palm plantations, while 1.2 million hectares would
be slated for Indonesian companies. Based on extrapolations from an
average 100,000 hectare concession, the total cost of the project is
forecast by Friends of the Earth to be $8.6 billion.

The project
would eventually employ nearly 400,000 people and generate an annual
inflow of $45 million in tax revenue to the state. The PTPN proposal calls
for plantations to be established in three national parks, Betung Kerihun
(800,000 hectares), Kayan Mentarang (1,360,000 hectares), and Danau
Sentarum (132,000) as well as surrounding “protection forest” and
production forest under logging concessions.

According to Friends
of the Earth, outside the parks, most forests areas in the region are
under concession to logging firms, but due to the remoteness and lack of
roads, few companies have fully logged their concessions.

For
palm oil or something else?

On paper, given the vast area of
tropical forest in the region and the relatively high value of palm oil,
the plan may seem like a viable option from an economic standpoint.
However, closer analysis of the suitability of the land for oil-palm
cultivation has green groups questioning the stated purpose of the plan,
suggesting that there may be other intentions.

Surveys of the
region commissioned by WWF found that much of the land is poorly suited
for oil palm. Mountainous terrain combined with inappropriate altitude and
climate for oil palm means that only 10 percent at most can be considered
adequate for cultivation and lends credibility to claims by environmental
groups that the entire plan may be a cover for a massive logging scheme to
harvest the area’s rich timber resources.

Greenomics, an
Indonesian forestry non-governmental organization, has calculated the
timber value in the border region at $26 billion. Logging the area set
aside for oil-palm plantations would net substantial amounts of revenue
for logging firms and considerable tax income for the Indonesian
government. Further, since the oil palm project calls for extensive road
construction, the infrastructure would be in place to deliver
valuable—albeit previously inaccessible—timber to market.

Simultaneously, the government could extend its transmigration
programs to settle colonists crowded on Java, something is has done
extensively in other parts of Kalimantan. Finally the government would be
able to slow the loss in tax revenue resulting from the burgeoning illegal
timber trade in the border region—estimated a few years ago by the
Indonesian ministry of forestry at 230,000 to 250,000 cubic meters of wood
per month.

Given the prior record with oil-palm development and
the inadequacy of the land in question, environmental groups suspect that
should work commence on the project, forests outside the concession area
would likely be cleared, with some landowners never intent on actually
planting trees. The Friends of the Earth paper notes that “a lot of
plantation concessions issued by the government are not truly developed
into oil-palm greenfields. Instead, these lands appear to be abandoned as
the concession holder does not work the land.”

For green groups, what’s
particularly disturbing about this trend is that it is wasteful, occurring
in some of the most biodiverse ecosystems on the planet. The paper cites a
study by Greenomics that found “60 percent of all forest conversion for
the purpose of planting oil-palm and pulpwood plantations still occurred
in good forests in 2004-2005.”

A change of heart or more concealed
intentions? On March 28, 2006, at the UN Convention on Biological
Diversity in Curitiba, Brazil, the Indonesian government announced it
would support an initiative by the WWF to conserve the “Heart of Borneo.”
WWF concluded that this announcement meant Indonesia would abandon plans
to create the world’s largest palm-oil plantation in the Kalimantan border
region, leading environmental groups around the world to collectively
rejoice that this biodiversity hotspot would not give way to development.

However, their enthusiasm may have come too soon. The Friends of
the Earth report takes a different view of Indonesia’s announcement,
stating, “these commitments do not mean, however, that plans to
significantly expand oil-palm plantations in the border area are now
canceled.” It says that Indonesian President Yudhoyono “has not made a
formal statement to the general public that the border oil-palm project,
as proposed by PTPN, is now canceled . . . [and that] the President
remains a supporter of the overall border development programme.”

Further the report says, the government of Indonesia has
previously agreed to make land available for oil-palm development with the
Chinese and will not renege on this commitment. The report also notes that
the government has announced additional plans to expand the oil-palm
plantation area by 3 million hectares to meet the expected growth in
demand for biofuel. Finally the report goes on to warn that “commitments
made by the central government’s commitment may well be utterly ignored by
provincial and district level governments.” Friends of the Earth suggests
that Indonesia may have really not canceled the project after all.

Battle for the heart of Borneo.

While it is still
unclear as to the status of the oil-palm plantations in central Borneo,
the Friends of the Earth report lays out a set of recommendations for
making better ecological and economic use of the rainforests of
Kalimantan. The organization says a statement from Indonesian President
Yudhoyono is needed to clarify the official status of the oil-palm
project. If the government does intend to carry on with the proposed
project, then it should first focus on increasing productivity in existing
plantations, not on clearing new land for oil palm.

This can be
done using improved seeds and doing a better job of adopting harvesting
practices from other parts of the world, while encouraging replanting of
abandoned and degraded plantations. Along these lines, the report argues
that Indonesia would be wise to embrace agricultural certification for oil
palm to ensure that products are coming from sustainable managed
plantations.

Oil palm
plantation in Malaysia Photo by R. Butler

RELATED ARTICLES

Palm oil
doesn't have to be bad for the environment
As traditionally
practiced in southeast Asia, oil palm cultivation is responsible for
widespread deforestation that reduces biodiversity, degrades
important ecological services, worsens climate change, and traps
workers in inequitable conditions sometimes analogous to slavery.
This doesn't have to be the case. Following examples set forth by
the Roundtable on Sustainable Palm Oil and firms like Golden Hope
Plantations Berhad, a Malaysian palm oil producer, oil palm can be
cultivated in a manner that helps mitigate climate change, preserves
biodiversity, and brings economic opportunities to desperately poor
rural populations.

Eco-friendly
palm oil could help alleviate poverty in Indonesia
Since
demand for palm oil isn't going to go away, Europe's best approach
is to convince Indonesian oil palm producers to cultivate their crop
in a manner that's less damaging to the environment. This won't be
done by hand-holding or Kumbaya circles; it will be done through
financial incentives--if no one is demanding "green" palm oil, no
one will not produce it. Europe should inform producers that it is
willing to buy a set amount of palm oil (in billions of liters per
year), provided that is independently certified as having been
produced in an environmentally friendly and socially equitable way.

Borneo
February 12, 2007
Borneo, the third largest island in the world,
was once covered with dense rainforests. With swampy coastal areas
fringed with mangrove forests and a mountainous interior, much of
the terrain was virtually impassable and unexplored. Headhunters
ruled the remote parts of the island until a century ago. In the
1980s and 1990s Borneo underwent a remarkable transition. Its
forests were leveled at a rate unparallel in human history. Borneo's
rainforests went to industrialized countries like Japan and the
United States in the form of garden furniture, paper pulp and
chopsticks. Initially most of the timber was taken from the
Malaysian part of the island in the northern states of Sabah and
Sarawak. Later forests in the southern part of Borneo, an area
belonging to Indonesia and known as Kalimantan, became the primary
source for tropical timber. Today the forests of Borneo are but a
shadow of those of legend and those that remain are highly
threatened by the emerging biofuels market, specifically, oil palm.

News on
palm oil

A set of criteria has already been
established under the Principles and Criteria of the Roundtable for
Sustainable Palm Oil (RSPO). A key part to any certification scheme is
getting consuming nations on board. If these countries fail to demand palm
oil from sustainable sources, then there will be no incentives for
producers to manage their plantations in a sustainable manner. Therefore,
says the report, industrialized countries must be encouraged to accept
only oil-palm products derived from certified sources.

On a local
level, Friends of the Earth argues that the Indonesian government should
focus on assisting local communities to improve market access for
non-timber forest products and agroforestry products, as well as
minimizing the potential impact of any roads and related infrastructure
projects that could result from the plan.

Finally to prove that it
is serious about prosecuting misuse of oil-palm licenses, the Indonesian
government needs to enforce existing laws. To date, few plantations
operators have been fined or imprisoned for illegal deforestation or
fire-setting, and landowners have little reason to follow existing
regulations.

Beyond these recommendations, the current situation
may present an opportunity for trading forest conservation for carbon
emissions. Under an initiative proposed by 10 developing countries,
industrialized countries would pay for rainforest conservation in exchange
for earning “carbon credits” that would count toward their emissions
targets under the Kyoto Protocol or other international agreements.

There may also be potential for private conservation initiatives
whereby unlogged and undeveloped concessions are purchased by private
parties and set aside for long-term environmental benefit.

Regardless of the path chosen, Friends of the Earth and associated
environmental groups have made a strong case that the Indonesian
government needs to own up to its intentions and make its decision based
on careful evaluation of all available information. Because the country
still has the most extensive tropical forest in Asia, its decisions on
forest use are key to the long-term survivial of the region’s biodiversity
and the ongoing maintenance of ecological services.

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