The Oil Palm The Oil Palm

Is Palm Oil a Driver of Deforestation?

European policymakers, NGOs and vegetable oil producers have been attacking Palm Oil solidly for more than a decade – using environmental, health, and other scare stories to make their presence felt.

The primary argument against Palm Oil is its supposed contribution to deforestation. In the missives against Palm Oil, deforestation is taken as a given. That is the starting point. Malaysia often hears these claims in discussions with the European Commission. This is then used as a justification for a range of discriminatory policy measures and regulations against Palm Oil that include trade restrictions, taxes, illegal labels, procurement restrictions and local (though largely symbolic) bans from local governments and other institutions.

However, these actions rest on a false assumption – namely that Palm Oil is a major driver of deforestation. In order to assess this, we must ask the following questions:

  1. How much does Palm Oil contribute to global deforestation?
  2. How much of this is due to demand in Western markets?
  3. Will development of agricultural land happen regardless of the crop that is grown?

In 2012 the European Commission undertook a study into the impacts of various commodities on deforestation. The global results were clear, though not welcomed by anti-Palm Oil campaigners. They read as follows:

  • Of a total of 239Mha of deforestation that took place globally around 55 per cent of deforestation comes from forestry and agriculture;
  • Around 28 per cent of global deforestation is from crops, 24 per cent is from livestock (58Mha), which makes livestock the biggest single source of global deforestation;
  • Of deforestation from crops, the largest source is soy (5.4 per cent of the global total or 13Mha), followed by maize (3.3 per cent, 8Mha) and then oil palm (2.5 per cent or 6Mha);

In other words, Palm Oil is a very small contributor to global deforestation. Beef and livestock are around ten times larger; soy is more than double; and maize is also larger. That answers our first question.

A second major concern of the EU, however, is whether its demand for products contributes significantly to global deforestation.

The study says that of the 239Mha of deforestation, 22.4Mha (around 10 per cent) is traded internationally in the form of global commodities such as beef and soybean. According to the EU’s figures, 11.5Mha of deforestation is ‘exported’ as soybean. Around 2.39Mha is ‘exported’ as Palm Oil.

Drilling down to what goes into the EU, the numbers become smaller. The report says that around 7.4Mha of deforestation is exported to the EU as different commodities. The majority of this is soybean, clocking in at 4.44Mha (60 per cent); Palm Oil on the other hand clocks in at 0.89Mha (12 per cent).

Again, the deforestation of other commodities, in this case soybean, is significantly larger than of oil palm.  The EU report also breaks down its ‘imported deforestation’ by country; it says that Malaysia’s contribution in this period was 3 per cent (0.22Mha).

From this it’s possible to make the following conclusions:

  • Global trade is not a significant contributor to global deforestation; most deforestation – around 90 per cent – is a result of local factors and local demand. If global trade were to be halted tomorrow, global deforestation would continue.
  • European demand is an even smaller contributor to global deforestation. Around 3 per cent of global deforestation can be considered to be related to European demand for imported products. If the EU were to block all imports of so-called ‘deforestation commodities’, it would make nearly zero difference to the problem of global deforestation.
  • The role of the Palm Oil trade in global deforestation is, once again, insignificant. Just 1 per cent of global deforestation can be attributed to Palm Oil exports and imports. The role of European demand for Palm Oil in global deforestation plays an even smaller role, comprising 0.37 per cent of global deforestation.
  • Malaysia’s historical role is even smaller. European demand for products from Malaysia – mostly Palm Oil – contributes to 0.09 per cent of global deforestation. Consider that the UN Food and Agriculture Organization says that Malaysia’s forest loss is now effectively zero and the country’s forest area has in fact increased over recent years.

Is it therefore possible to say that both Malaysian oil palm plantations and the demand for Malaysian Palm Oil are not drivers of deforestation? Yes.

Anti-Palm Oil campaigners may counter by stating that historical oil palm expansion in recent years has contributed to deforestation, or that ongoing deforestation in other countries means that measures should be taken against Palm Oil regardless of where it comes from.

But no one would seriously suggest that Australian or European beef should be subject to boycotts or campaigns because of high deforestation in the Brazilian Amazon caused by beef. And no one would suggest that US farm or timber products should be boycotted because of deforestation that took place in previous decades.

The facts need to be separated from the hyperbole. If European policymakers and campaigners are concerned about deforestation and not just Palm Oil, then it is the drivers of deforestation that need to be tackled – not the consumption of Palm Oil.

Despite this, European policymakers have been seriously considering new regulations against Palm Oil instead of focusing on other commodities that pose a much greater threat to global forests, namely beef and soybean. This includes the equivalent of a FLEGT (Forest Law Enforcement, Governance and Trade) regulation for Palm Oil that would restrict Palm Oil imports in the same way it has restricted timber imports.  These ideas were floated again in the recent controversial report on palm oil by Members of the European Parliament.

This begs the question: Why not soybean or beef?  If the EU is serious about solving the developing world’s environmental problems, it needs to broaden its view.  Palm Oil plays a small role in global deforestation.  Is the EU ready to challenge the Trump Administration on beef and soya exports?

Brussels needs to prove that it is willing to conduct serious environmental and trade policy analyses, beyond the symbolic hysterics of Europe’s MEPs. One way it can do this is by taking Malaysia’s environmental record (particularly on deforestation), environmental management policies and sustainability standards seriously. This would include recognising MSPO in the so-called Amsterdam Declaration on Palm Oil and other official communications. Neither the Commission nor the Parliament have done so.

This needs to change, especially as Europe looks to Asia as Commission President Junker has recently so loudly proclaimed.