Palm Oil Monitor Weekly Update – 11th November 2019


The RSPO roundtable meeting took place in Bangkok last week. Much of the press surrounding the event involved the new smallholder standard. Here are our key takeaways:

The smallholder standard finally gets up

The RSPO’s new smallholder standard was approved at the RSPO General Assembly this year. This is a significant step for RSPO and the RSPO scheme.

As we’ve pointed out several times, the lack of effective smallholder inclusion mechanisms in RSPO has effectively kept smallholders out of RSPO supply chains – and particularly those destined for European markets.

The development of the standard and the wrangling of the necessary compromises in the standard is a considerable achievement, particularly given that some harder conservation-minded RSPO members didn’t want to see the smallholder standard introduced at all – they argued that it would undermine the integrity of the scheme as a whole.

The trick, however, for RSPO will be to have it followed through to the implementation stage and actually increase the number of smallholders using the system.

In our view, the lack of a high carbon stock assessment methodology for smallholders will hold back uptake for some time, particularly for smallholders.

We do, however, see greater potential for the scheme to be adopted and implemented by larger companies to increase their supply from independent smallholders in areas surrounding their plantations.

In the past, many companies have taken the step of bringing smallholders within their certified area and effectively paying for their certification. It’s quite possible that the new smallholder standard will simply streamline this process.

Indeed, this is the clear logical path for RSPO members that are seeking to increase production, but can’t increase production area due to zero deforestation rules introduced last year.

Palm oil doesn’t reduce poverty? We beg to differ …

Despite the clear achievements of the palm oil sector and palm certification, there are still a number of conservationists trying to put forward the bizarre argument that palm oil doesn’t alleviate poverty. One of the presentations at the RSPO Roundtable, by a Dr Matthew Struebig, argued precisely that, stating unequivocally “oil palm hasn’t alleviated poverty in Kalimantan.”

In our view, these types of blanket statements – particularly when they are paired with research in land-use policy journals – aren’t helpful and rarely advance the debate.

The original research actually points out that economic welfare across the entire study area increased significantly once oil palm was adopted. The apparent drop in welfare comes from drops in ‘socioecological welfare’. An example of a negative socioecological indicator is if a family takes on an external employee as part of farming operations.  This point is dubious, to put it mildly, in our view.

Further, the drops in socioecological welfare were noted several years after those with a subsistence lifestyle – as opposed to experienced mixed crop farmers – switched to oil palm. In other words, inexperienced farmers that in all likelihood had very little in the way of support or extension.

To make a blanket generalisation that oil palm doesn’t reduce poverty is a massive leap from the actual research. Rather, the original research argues that the lumpiness in some outcomes should be used to guide palm development policy. But, nuanced and complex arguments often don’t gain traction at RSPO meetings – see below.

Oh, and we mustn’t forget to talk about the funders of Dr Matthew Struebig’s work: the British Research Council (BRC). Where does the Council get its principal source of funding? The U.K. Government, specifically, “principally funded through the Science Budget by the Department for Business, Energy and Industrial Strategy (BEIS).”

The next time the UK’s Secretary of State Liz Truss heads to SE Asia to push for trade deals that will boost the economy of Britain’s inner cities like Oldham and West Bromwich, she might ask herself first why the British Government is funding projects that advocate increasing poverty and decreasing economic opportunity in Kalimantan.

Greenpeace exploits RSPO with an anti-palm report

Greenpeace used the RSPO to exploit the haze event that took place in September and October across the region. A new Greenpeace briefing for the event argued that local growers and traders (e.g. Wilmar, Cargill) and consumer goods companies were somehow responsible for the haze event because they had purchased palm oil from plantation areas that had recorded hot-spots on them.

This is particularly disappointing, even for Greenpeace.

Anyone who understands either the fire or the land-use situation in Indonesia and the palm oil sector will know that:

  • Oil palm concessions are generally not the main sites of fires and hotspots. In October in Indonesia, 18% of fires occurred in conservation areas; 34% of fires occurred in moratorium areas; 10% of fires occurred in pulp and logging concessions; just 5% of fires occurred in palm plantation areas;
  • RSPO areas are generally devoid of fires. In October, virtually no fires (0.2%) occurred in RSPO areas;
  • The major groups that Greenpeace has criticised generally have better fire control efforts than smaller companies, because they can afford to do so. The companies Greenpeace names in its report were literally responsible for 34 out of 30,000 fire alerts across all of Indonesia;
  • Oil palm growers have no incentives to start fires in their concessions – fires simply result in economic losses for oil palm producers;
  • The causes of the fires themselves are particularly complex, as CIFOR researcher Herry Purnomo points out in a new report, noting that they are often linked to land allocations in the lead-up to local level elections in Indonesia.

Purnomo, who is arguably the world’s leading voice on fires in the Southeast Asian region, writes:

Regulations that are rigid, impractical and often interest-biased, and the weakness of government institutions in developing and enforcing regulations, are the main causes of fire occurrence … The solution to land and forest fires should not only prioritize the technical management of land and forest, it should also be based on a political economy approach to building stronger governance.

In other words, it’s not palm oil and palm oil demand that’s causing fires.

So, what is it that Greenpeace wants? The report states that if companies “if they are unwilling or unable to do what is needed to fix the global commodities trade – they must instead avoid such high-risk commodities entirely.”

Greenpeace has argued for years that it is not anti-palm oil. Our view is that Greenpeace has always been anti-palm oil. Now that so many companies in the region have committed and implemented zero-deforestation policies, they’re prepared to reveal their true colours.

We’ll give a more detailed critique of the Greenpeace report in the coming weeks.


Global Policy Updates

Here are some quick takes on the latest out of Geneva, Brussels and Bangkok.

The EU – and European NGOs — are Getting More Serious on its Action Plan. A consultation event was run at the European Parliament on November 5th, organised by MEP Heidi Hautala (Finland, Greens) on behalf of the European Parliament Responsible Business Conduct Working Group, entitled “Tackling the global deforestation crisis:  the urgent need for EU regulation of supply chains”. Although there is no new information and no new policy developments, NGOs have started piling on to the idea, specifically calling for due diligence for supply chains involving forests. In particular, a group of nine NGOs including WWF, Greenpeace, Conservation International and Global Witness have called for the EU to: “Adopt new legislation that requires companies to conduct due diligence throughout their entire supply chain in order to identify, prevent, and mitigate environmental, social and human rights risks and impacts.”

WTO Challenge to REDII. Although Malaysia and Indonesia appear to have gone different ways on the WTO challenge to the Renewable Energy Directive, things appear to be proceeding in Geneva.

The first consultation between the two countries is likely to take place in late November or early December. Consultations generally take place in confidence, so we’re not expecting to report much on the consultations. They are likely to take place around the time of the next TBT (Technical Barriers to Trade) Meeting in November.

The next moves on RCEP. The East Asia Summit in Bangkok was supposed to be the forum for announcing the completion of the Regional Comprehensive Economic Partnership (RCEP) Agreement. Sadly, this was not the case. According to most sources there’s still quite a bit of work to do in terms of broader market access for goods in the region – including palm oil. POM is hearing that we can expect more movement in the first quarter of 2020, with a signing later in the year.