Who is Darrell Lea and why did they boycott palm oil?

Australian confectioner Darrell Lea has added its name to the list of companies that have ‘boycotted’ palm oil – supposedly for environmental reasons.

The company made the announcement with considerable fanfare, featuring a promotional clip of an orang-utan playing drums. This is a clear dig at major confectioner (and palm oil user) Cadbury, which ran an advertisement in 2007 featuring a gorilla playing drums.

This suggests the real motivation is not for environmental benefit, but for PR-Marketing benefit. The move has drawn sharp criticism.

Anita Neville of GAR stated to Eco-Business:

“Darrell Lea could have used its unique position within the Australian confectionary industry to educate Australian consumers about sustainably produced palm oil and to contribute to the transition underway in one of Australia’s nearest neighbours. Instead they have chosen to walk away … It is unfortunate that Darrell Lea could see the value in investing in the transition of the cocoa sector to sustainable production practices—a sector that has been blighted by child labour, human rights and environmental concerns for decades—but was prepared to walk away from similarly investing in the transformation of another key ingredient – palm oil.”

A company that does any basic research on palm oil will understand that certified, deforestation free palm oil can be sourced from countries and regions that have no orang utans (e.g. Papua New Guinea, Latin America) and completely stable forest areas.

This prioritizing of marketing – rather than environmental – benefit is similar to the way UK retailer Iceland declared that there was no such thing as sustainable palm oil, drawing the ire of the Malaysian government. This is a similar story: a company with a relatively small market share attempting to distinguish itself from other players.

Another clear signal that this is a marketing gimmick and not a genuinely environmental decision is that Darrell Lea’s broader ownership appears to have extremely weak sustainability commitments.

Darrell Lea is part of RiteBrite, a larger snack group. Does the broader group have a sustainable sourcing policy for its other commodities, such as soybean derivatives? It appears not.

Further, RiteBrite is majority owned by Quadrant Private Equity, an Australian PE group. Does the parent PE group have a commitment to sustainability for sourcing timber furniture? It also appears not.

Perhaps this provides the clue as to why Darrell Lea has chosen not to pursue RSPO membership. It could have done so (a responsible step, rather than boycott).

Whatever the motivation, this move will gain attention but will probably lead to a lot of expert criticism. Palm oil boycotts went out of fashion years ago: the world’s largest FMCG companies, NGOs and serious forest researchers don’t support the idea any more.

Simplifying the complexities of deforestation to ‘palm oil equals destruction’ is a disservice to the millions of farmers that make up the palm oil community. It seems Darrell Lea is happy playing in the relatively small Australian market, but it may want to reconsider its approach if it has any ambitions in Indonesia and Malaysia.

COMMENT: Why are the knives out for Indonesia’s moratorium?

Two new developments indicate that the knives are out for Indonesia’s forest moratorium to influence the outcome of the proposed Due Diligence measure by the UK government and similar proposals being considered by Brussels.

First, a coalition of NGOs is lobbying global climate finance groups to halt avoided deforestation payments to Indonesia.

The coalition of NGOs – led by the World Rainforest Movement – has argued that Indonesia’s payment of USD100 million for avoided deforestation between 2014 and 2016 from the Green Climate Fund (GCF) should be stopped. It has argued this on a number of grounds. These include that the baseline reference period is too short, emissions from peat fires weren’t included in the avoided emissions, indigenous rights remain of concern, and that secondary forests aren’t under protection.

However, what the coalition skirts around is that nearly all of the points they have raised are within the GCF rules.

Anyone who had the misfortune of attending the UNFCCC conference in Bali in 2007 will remember one key idea that was tabled: REDD – reduced emissions from deforestation and forest degradation.

The optics of it being tabled at a climate conference in Indonesia, not long after a haze event were simple. This was about bringing the deforestation debate into the climate debate, and developing a mechanism where countries could be paid for avoiding deforestation.

At this time, the campaign was focused on forestry and timber; so little was known about the dynamics of deforestation in developing countries that few people had any idea that the biggest contributor to deforestation was in fact food production.

The idea of REDD was broadly supported, from NGOs to economists. There was a belief that it was possible to ‘make forests more valuable standing than cut down’. That, in part, was the problem. Wealthy countries saw forests and focused on the value of the timber; developing countries saw land and potential returns from agriculture.

But there were also a number of objectors who saw it as a means of preventing economic development and compromising food security.

Despite this, years of negotiating over the definitions, scope and terms of REDD agreements led to the establishment of several mechanisms for compensating developing countries for not developing forested land – including those supported by the GCF’s multilateral program, and Norway’s bilateral aid program. Indonesia has received payments from both.

So, are the NGO coalition’s objections against REDD? Or are they against Indonesia?

The second development comes from the UK.

Last month scholars from the University of Sheffield published a paper that in part argues that Indonesia’s moratorium was ineffective because it was not able to protect secondary forests. Yet that was arguably one of the key points of the moratorium; because primary forests are considered more valuable, they should therefore be the protection priority.

The headline from the Sheffield study was that 80 per cent of Indonesian forests remain vulnerable to deforestation for palm oil – and this makes the moratorium ineffective. But what was remarkable about this paper was its unremarkable conclusion: forests are converted to palm oil for economic reasons, prices determine whether land is converted, and areas that are close to existing infrastructure are more likely to be converted.

In simpler terms: “I’ll plant more this year on the next field because prices look better.”

But was the modelling here necessary, just to undermine the moratorium? As recent FAO data demonstrates, the moratorium has been a success in reducing primary forest loss in Indonesia.

That is what it was designed to do. Academics and commentators appear to be constantly forget that although Indonesia has a large population and large GDP, its GDP per capita is well down the table, and its rural populations rely on agriculture. They also forget that Indonesia retains an extraordinary amount of forest area according to the UNFAO – both in absolute terms and as a percentage of land area. This paper is a reminder of the bad old days when Western activists and politicians (from European countries with less than 20% forest area) criticized Indonesia (with greater than 50% forest area) over deforestation. Hypocrisy doesn’t seem quite a strong enough word.

Critics of Indonesia’s moratorium can’t have it both ways. They can’t criticize Indonesia for not protecting all forests, but also criticize the compensation payments for not growing food.

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