- Brussels faces fresh challenges in ASEAN
- Is Rokas misleading Southeast Asia?
- Irish campaigners Miss the Big Picture
- MSPO gains acceptance in Japan
- Manila looks to protectionism against palm biofuels
Indonesia, Malaysia Elevate Palm at ASEAN; Presents New Challenge for Brussels, Borrell
Indonesia and Malaysia have signalled they will elevate cooperation on palm oil even more on the sidelines of the ASEAN ministerial meeting in Indonesia earlier this week.
The meeting discussed – among other things – “cooperation to palm oil discrimination” following on from a similar discussion in February. In a statement, Indonesia’s Coordinating Minister for the Economy Airlangga Hartarto noted that the two countries are seeking to explore
“Bilateral cooperation between Indonesia and Malaysia, especially in the commodity sector such as palm oil and rubber [and] cooperation in policies and negotiations concerning the export of Palm Oil commodities and derivatives, as well as increase cooperation within the CPOPC framework.”
It’s also apparent that the two countries are seeking to elevate the issue of the EU Deforestation Regulation – and other measures like it – further among ASEAN members.
Malaysia’s Deputy Prime Minister Fadillah has noted that the trade barriers go beyond palm oil to other commodities across ASEAN. “Hopefully this issue will be discussed in the ASEAN Summit so that it becomes an agenda at the ASEAN level.”
The cooperation comes ahead of the two countries’ joint mission to Brussels at the end of this month, where they are seeking to take the EU to task over the EUDR.
Rokas: EUDR “Rule Won’t Apply”
Michalis Rokas, the EU’s Ambassador to Malaysia has given a clear misrepresentation of the EUDR to Malaysian media.
At a recent media event, he stated:
“Since your (smallholders’) plantations … have had no deforestation since 1990, the rule does not apply. I want to make it clear the EUDR will only apply if the land is cleared from Jan 1, 2021.”
Now this simply is not the case. Whether the land was cleared or not after the cut-off date, everyone still has to meet the rules to prove that the land wasn’t cleared, which will involve the inclusion of land data and satellite data, among other many other data points.
This is what EU officials appear to either misunderstand us or are deliberately attempting to mislead farmers in developing countries.
And this is the whole point of much of the pushback against the EUDR: whether you have been a good actor or a bad one, you still suffer the same penalty.
In addition, a realistic reading would be that the rule doesn’t apply if you have cleared the land after the cut-off date. Anyone who has done that will immediately export to another market – hence significant concerns about the effectiveness of the regulation.
EU Campaigners Still Ignore the Big Picture
Irish protesters this week held a ‘mock’ demonstration against palm oil, as part of an advocacy campaign on the EU’s Corporate Sustainability Due Diligence bill. The Bill is aimed at ensuring firms – selling anything – don’t deal with companies that breach human rights, among other things.
Our question: why protest palm oil? Given that Indonesia is one of the EU’s smaller trading partners, and that the EU is still, for example, purchasing vast quantities of Russian goods, it would appear that Oxfam and co are more interested in scoring a cheap publicity point than making a concrete political change.
At the same time – and still in the EU – EU Parliamentarians released their next iteration of the EU’s Forced Labor laws. Parliamentarians have added amendments to their draft bill that will designate some products that enter the European market as ‘high risk’ for being made with slave labour.
This designation will require importers of the products to prove that their products have no direct links to slave labour. The question is, how are those products going to be determined?
If it’s left up to the usual anti-Southeast Asia crowd in Brussels, palm oil would undoubtedly be at the top of the list. But the EU will need to be extremely consistent on this matter and set a very high bar. US meat could come under fire. As would cocoa. And there’s a well established pattern of slave labour in Italian agriculture.
Quiet win for Malaysia: MSPO gains acceptance in Japan
US-based NGO Mighty Earth appears to be the sponsor of an attack running on advocacy site China Dialogue, targeting Japan’s renewable electricity generation policies.
The piece targets the operation of existing Japanese energy plants that use palm oil as a feedstock – and a potential new plant that is in the planning stage.
This isn’t new for Mighty Earth; they’ve done this on numerous occasions before. But these things are never accidental – so what’s changed?
Japan’s energy regulations provide incentives for renewable energy under its ‘feed in premium’ and ‘feed in tariff’ schemes. Eligibility for the incentives requires certification under a number of schemes. For palm oil, eligibility can come under RSPO and ISCC.
But here’s the catch: Mighty Earth run by former U.S. Representative Henry Waxman lost. According to news reports, Japan’s Ministry of Energy, Trade and Industry (METI) added MSPO certification as qualifying under the scheme. They are also considering ISPO certification on an ongoing basis. Both have previously been recognised by the Japanese government under other procurement guidelines.
Is there an anti-Palm campaign in the Philippines?
There are clear signs that global palm oil biodiesel markets are about to go through some major changes. Indonesia is upping its blending mandate to B35; Malaysia is moving to B20. The IEA expects biofuels demand to increase 20 per cent over the next five years.
At least two articles have appeared in Philippines media attacking palm oil – but specifically from an energy perspective and whether palm-based biofuels can reduce emissions compared with fossil fuels, rather than anything do with deforestation.
Unusual? Yes. The Philippines’ own track record on plantations and deforestation has been less than stellar, with the country experiencing high levels of deforestation through the 1980s and 1990s.
So, what’s the motive?
The Philippines has three problems. First, its own vegetable oil is powerful, backed by some of the country’s largest plantation owners, with widespread support among farmers. Second, coconut oil is generally more expensive to produce than palm oil, but like many oils, often has its price determined by other commodities. Third, the Philippines government subsidises coconut production through its biodiesel program, which in practice only permits the use of coconut oil as a biodiesel feedstock. Fourth, palm oil imports to the Philippines have been accelerating over recent years to meet domestic demand,
In other words, this is a globally less competitive oil that is fed by subsidies. Sound familiar?
Reports emerged last September of palm oil ‘smuggling’. According to the reports, palm oil was being imported as an animal feed (and subject to zero domestic sales taxes), and then instead sold on as vegetable oil for human consumption, or used as a biodiesel feedstock. An inquiry into the reports was launched earlier this year, with coconut refiners asking for a new tax on palm oil.
This may well be the case; but if there is a subsidy or a lower tax rate on offer, there will always be people trying to game the system.
Unsurprisingly, however, the complaints were started by the domestic coconut industry – who are also pushing for an increase in coconut biodiesel requirements. And appear to be pushing back against proposals and Philippine government studies that could mean palm could qualify for the domestic biodiesel program.
And this is at a time when prices for coconut oil are weak. Again, sound familiar?
Is this the fault of the commodity, or the fault of a protected industry, market-distorting subsidies, and problems in tax administration? Blaming palm oil for bad policy is a little like blaming gold for bank robberies.