The Oil Palm

Environmental Regulation and Rising Input Costs May Hamper Efforts to Meet Global Food Demand – Says OECD

The Organization for Economic Cooperation and Development (OECD), an international organization of 34 industrialized countries, recently pointed out that factors including environmental regulation and rising input costs might hurt our ability to meet future demand for food. Its remarks accompanied its estimate that the world will need to increase food and feed production by 60 percent by 2050 to meet rising demand, as populations grow and more people move away from rural areas and into cities.

The warnings from this distinguished body resonated in Malaysia this week, where producers highlighted in news reports that a key input – the supply of labourers to work on plantations – is struggling to keep pace with the high global demand for palm oil, a key source for food production.  Producers pointed out that while the Malaysian palm oil industry will find itself at the forefront of rising demand for vegetable oil, they faced major challenges to future growth.

Producers identified different factors affecting their recruitment drive, including the fact that planters were increasingly bogged down by ‘nitty grities of Roundtable on Sustainable Palm Oil (RSPO) principles,’ as stated by Tradewinds Plantations Bhd group plantation advisor Ramesh Veloo.

Of course, these additional requirements weigh most heavily on small farmers who are also among the most vulnerable groups in the industry – given their reliance on additional labour to help them with farm work. As MPOC’s CEO Tan Sri Dr Yusof Basiron pointed out in his recent editorial for The Star, while large companies may be able to accommodate the costs – both time related and pecuniary – of certification like RSPO, small farmers cannot incur the costs imposed by NGO-led certification schemes – nor should they have to.  Such a focus on schemes like the NGO-led RSPO have deterred efforts to ‘lure more locals to become oil palm estate workers,’ as another Malaysian producer argued in the Star.

While the OECD’s statement recalls the importance of meeting future demand for food, the world must also heed their warning on environmental regulation – including certification schemes – and recognize that rising input costs may compromise our ability to meet these needs.  A step in the right direction would see small farmers not having to adopt costly certification which, in theory, allows them to sell their produce at a premium price, but for which there is little demand in major markets of palm oil.