Palm Oil Monitor Weekly Update – 29th April 2019

GFW Forest Data for 2018: Room for Optimism

Global Forest Watch has released its tree cover loss data for 2018. Although media reports have made much of the updated data – according to some, the world’s forests are in an ‘emergency room’ – there are some optimistic signs, particularly in the Asia-Pacific region.

It’s important to remember that GFW doesn’t (yet) record deforestation – it records tree cover loss. The two are distinct. So, if forest area has been lost to fire, disease or other natural disturbances, it is still in the negative.  It also includes oil palm replanting operations and timber harvesting within production areas that will re-grow as part of a cutting cycle.

So what does the data say?

Malaysia’s tree cover loss – 440,000 ha – was its lowest since 2013 (and the year 2013 itself was something of an aberration). Tree cover loss in Malaysia was around 15 per cent lower than the average from the past ten years.

Indonesia’s tree cover loss – 1.3 million ha – was also significantly lower than its ten-year average. Brazil, however, clocked in 2.9 million ha, which is on par with the past decade.

In the global north, Russia clocked up around 5.5 million ha, Canada hit 2.1 million ha, and Sweden reached nearly 300,000 ha.

This year GFW also introduced an algorithm that estimates the amount of primary forest tree cover that was lost for the year. According to the algorithm, Malaysia lost around 144,000ha; Brazil clocked in at almost 1.4 million ha. For the record, this algorithm hasn’t been applied to non-tropical and European countries.

Regarding the Malaysian statistics, it’s worth pointing out that Malaysia’s total forest area is 18.3 million ha, and that production forests have an annual allowable cut of 247,000ha. This leaves less than 200,000ha (around 1 per cent of total forest area)  that might be attributed to other causes, including urbanisation and replanting of tree crops – including oil palm and rubber.  If the number includes a conservative estimate of replanting of 3 per cent of oil palm plantation area (around 180,000ha) much of this forest cover loss is accounted for.

And just to repeat, this is forest cover loss – not deforestation. It illustrates how much the global discussion on deforestation is driven by NGO campaigning slogans, and not by actual data and evidence of which there is plenty.

Malaysia and China ink deal on palm 

As foreshadowed last week, Malaysia and China have inked a memorandum of understanding (MoU) on greater palm oil trade.

China has agreed to buy an additional supply of at least 1.9 million tonnes of palm oil from Malaysia over the next five years, worth around USD1.2 billion.

The likely volumes for exports to China for the year will be around 3.5 million tonnes. This is up from 3.07 million in 2018, and 2.9 million in 2017.

China was historically Malaysia’s largest export destination for palm oil up until around 2013, when the EU and India increased their purchases. In 2015, China started importing more of its palm oil from Indonesia.

ILO Representative: EU RED risks jobs

ILO’s representative in Indonesia, Irham Ali Saifudin, has said that the EU’s Renewable Energy Directive will have an impact on 16 million workers across Indonesia.

Irham made his comments at a forum hosted by the Indonesian Palm Oil Journalists’ Network.

He also said that Indonesia needed to develop new information strategies for the industry.

Executive Secretary of the Indonesian Palm Oil Workers Union Network (JAPBUSI) Nursanna Marpaung has also called on the Indonesian Government to take a tougher approach on the issue.

“The government must be firm because it concerns the fate of workers who depend on oil palm. Our members at JAPBUSI have up to 2 million people working on oil palm.”

COMMENT: Does SR think Europe is the victim?

Sarawak Report (SR) has wandered into the current palm oil debate, with two lengthy pieces on palm oil.

Sarawak Report’s input is indeed welcome; its work on the 1MDB scandal was instrumental in Malaysia’s change of government.

In the first piece, SR criticises the Renewable Energy Directive as “one of the world’s worst ever policies cloaked with ‘good intentions’”. And this is in many ways correct.

But SR’s criticism is for the most part not reserved for the EU, bad policy design and its poor behaviour as a trading partner; its criticism is for everyone else. This is strange, given that throughout the RED process it is the EU that has been driving the issue.

Instead, SR criticises farmers around the world for responding to the EU demand signal; but fails to point to the fact that the whole process was designed to provide subsidies to European oilseed farmers that were already losing market share to imported products.

It also states the following on the EU’s decision to bar palm oil from the RED:

“Rather than fighting these decisions, Malaysia should act smart and work together with the next generation and the chastened EU to forge a better model for raising money from its valuable tropical forests.”

There are three problems here.

First, what Indonesia and Malaysia have difficulty accepting is that palm oil is being singled out for being linked to deforestation, but soybean – which is responsible for deforestation across Latin America – is not.  Both countries would probably be satisfied if there were no double standards and no hypocrisy; but this is simply not the case. Palm oil is restricted; soybeans are welcomed. The fact that this has been done for political reasons – not scientific ones – has caused even more frustration.

Second, the forest-ecosystem payments, which are alluded to by SR for ‘raising money from its valuable tropical forests’ have not yet worked.

Some of us have had the misfortune of attending UN climate change meetings for more than a decade. We watched PNG forest envoy Kevin Conrad float the idea of Reduced Emissions from Deforestation and Forest Degradation (REDD) for the Coalition of Rainforest Nations in 2005, and then again in Bali in 2007.

Back then, we were told that timber was the problem, only to find out that people were cutting forests to grow crops and graze cattle.

We have since watched the UN’s Green Climate Fund fall into disarray. We have watched Norway’s climate aid programs fail to even get their money out the door for suitable projects.

Millions of dollars have been thrown at avoided deforestation mechanisms, and they are yet to deliver anything meaningful.

And, when they are successful in the form of carbon offsets or credits, they are pilloried by NGOs in developed economies.

The Renewable Energy Directive and the palm oil debate have moved beyond avoiding deforestation. The RED as it is right now states that palm oil – no matter where it is from – causes deforestation indirectly. How does Colombia argue with that? How does Malaysia argue with that? Both countries have stabilised their forest areas.

Malaysia has ‘acted smart’. Malaysia has tried hard to work constructively with the West. Malaysia developed RSPO with European partners almost 15 years ago.  It has arrested its forest decline. It has increased its yields. It has supported its smallholders. But European legislators and regulators still want to penalise it. And some observers, including Sarawak Report, argue that Malaysia should simply accept this unfair treatment.

Malaysia and other palm oil producers will probably be more than happy to work with the EU for more constructive solutions – provided the dialogue and negotiations proposed by the EU are in good faith.  This is something the EU is yet to do.

Third, how is it that SR sees the EU as the victim here? The EU introduced a bad policy, and has continued to make poor, politically-motivated regulatory decisions that have resulted in suboptimal economic and environmental outcomes. Why is the blame being pointed at Indonesia and Malaysia?

SR’s second piece on landgrabs argues that the larger concerns of smallholders in Sarawak are not around policies being developed in the European Union, but around the threat of landgrabs, particularly among indigenous communities.

This is an issue that is at the heart of everything SR has written about over the years. After the election last year, SR’s editor said they had ‘unfinished business’ in Sarawak, and will continue the push for land tenure and forest reforms in the state.

It would, therefore, be particularly frustrating to see European renewable energy policies dominating the debate around the palm oil sector.

It is also an easy way to highlight the forest reform issue by weighing into the palm oil debate.

But is this effective?

News of indigenous land grabs in Sarawak is fuel for anti-palm oil campaigners in Europe. It’s wrong to assume that policymakers in Europe supporting the RED ban or other measures will support palm oil just because it comes from indigenous communities or smallholders.

EU policymakers have shown their indifference towards Malaysia and the region before; their main interest is European farmers. They support indigenous and human rights when it suits them.

The clearest and most recent examples are RED campaigners seeking to target regulation at smallholders because they see them as a ‘loophole’. Or, more recently, ecologists analysing the Indonesian election called palm oil smallholders ‘the biggest forest destroyers of all’.

It’s easy to assume that EU officials and politicians will be swayed by ‘facts’ or ‘truth’ on the ground in Sarawak or elsewhere in Malaysia. They won’t.  This is about keeping palm oil out of the European market, for any reason, real or constructed – just look at ILUC.

The two SR pieces highlight one of the problems of oversimplifying the RED-palm debate. It can be summarised as follows: all palm oil is corrupt and destructive, and anything that moves against palm oil must therefore be good.  Palm oil is not corruption, and palm oil is not deforestation. Conflating them will provide good copy, but it won’t provide an adequate and considered policy solution — and this is what is needed right now.