Indonesia “Demands Fairness” in Palm Trade

Indonesian trade officials have gone on the offensive on their trade defense for palm oil and started a pushback on the EU’s possible limits on 3-MCPD from palm oil.

Deputy Trade Minister Jerry Sambuaga recently told Indonesian media, “Palm oil is one of Indonesia’s biggest exports. Therefore, it should be defended. We want palm to have a broad positive impact on the welfare of the whole community, not just entrepreneurs but also palm farmers, workers in the palm industry and all communities in general.”

He underlined the rationale behind Indonesia’s current defense of palm oil in international trade proceedings, such as the case against the EU in the WTO: “Other vegetable oils are not as efficient as oil palm and therefore cannot compete. That’s why many trade barriers are introduced to discriminate against palm oil in international trade … Indonesia demands equality and fairness principles in world trade.”

Trade Minister Agus Suparmanto also told a meeting in Jakarta last week that health is likely to be a new focus in anti-palm oil campaigns: “Nowadays, the attack begins to target the more personal aspect of health. A negative campaign is a product of palm causing a wide range of ailments. Although there is currently no medical ban on palm products, but a strong campaign against it has long been felt.”

Exporting countries have highlighted the potential threat from new health campaigns against palm oil, highlighted by a new proposed rule in the EU that discriminates against palm oil by introducing measures that set different limits for the substance 3-MCPD in vegetable oils. The EU’s proposed rule goes against findings by bodies such as the FAO. In April, Reuters reported that Malaysia broke ranks with other palm oil producing countries by not opposing proposed EU health regulations. Palm Oil Monitor also covered this back in May, and Food Navigator Asia highlighted our work in exposing Malaysia’s decision to withdrawal from the unified position on 3-MCPD that had been agreed by the main producing countries.

COVID Underlines Deforestation-Poverty Link

The Financial Times has reported on research that has highlighted the links between deforestation and poverty. According to the NGO, the number of forest clearance alerts have increased by 77 per cent compared with the average across 2017 and 2019.

A WWF spokesperson said that In some parts of the world there has been a collapse in the local economy and people are turning to the land around them to find what they need to survive.” The COVID crisis lockdowns have made it difficult for people to access regular places of employment, resulting in turning to fuelwood sales and clearing for cash crops; WWF Nepal noted that forest clearances increased 227% in the first month of lockdown.

There have been numerous studies pointing out the links between poverty and deforestation following the East Asian economic crisis of the 1990s. Other scholars have pointed out that the pandemic may result in a decline in aggregate demand, therefore reducing demand for commodities in supply chains. This may be the case for more expensive protein-based commodities such as beef, but is less likely for staples such as grains and vegetable oils.

It may be the case that given palm oil’s overall efficiency, demand for the crop increases as low prices bring down plantings for annual crops such as rapeseed and sunflower. There is already extensive talk of lower rapeseed plantings for 2021 in both Europe and Canada.

IN BRIEF: CPOPC Takes Kraft-Heinz to task.

The Council of Palm Oil Producing Countries (CPOPC) has issued a statement calling on the food multinational to withdraw its ‘palm oil free’ claims on a hazelnut spread marketed in Canada. In a statement, CPOPC said such labelling “would mislead the consumers, break the hearts of millions of people whole over the world working in palm oil supply chain, such as, millions of smallholders who fight for producing sustainable palm oil and getting out of the poverty.” RSPO banned its members (one of which is Kraft Heinz) from using labelling claims that denigrate the production and promotion of sustainable palm oil.