The Oil Palm

Sustainable Palm Oil the Norm? A Loaded Term

The Center for International Forest Research recently asked the question: “What will it take to make sustainable palm oil the norm?”

This is a question that NGOs often ask, and it’s often unqualified.

When NGOs ask, it’s a loaded question. It’s directed at Western companies and Western policymakers. It goes hand in hand with a series of assumptions about oil palm growing and palm oil production.  First is that oil palm growers are a large, homogenous group. Second is that oil palm growers are, for the most part, part of large corporations. Third is that everyone everywhere considers environmental sustainability to be the number-one priority. Fourth is that Western developed markets are the only markets that matter. Fifth is that ‘sustainable’ means all aspects of sustainability – including poverty reduction – are covered.

Anyone who has a basic understanding of palm oil production and palm oil markets knows that none of these assumptions are true.

But there’s such a misunderstanding in the debate over palm oil that Western NGOs have been able to push it in the opposite direction. Consider how NGOs are pushing for tighter, more expensive standards that are completely out of reach for small farmers, and exclude small farmers from supply chains. The most egregious example of this is the ‘zero deforestation’ traceability model. This was the model that resulted in Unilever having to cut 80 per cent of its smallholder suppliers from its supply network.

What this underlines is that most of the NGO arguments around sustainability are simply a string of Western moral arguments about the environment. They have little to do with balancing the perspective or producing strong social and economic outcomes on the ground. Fortunately the CIFOR research bears these fallacies out  – but don’t expect NGOs and campaign groups to be leaping on the findings.

Take this from the report’s executive summary when looking at the uptake of RSPO and ‘zero deforestation’ commitments by major companies:

“… oil palm growers are a diverse group, operating in a range of contexts; this means that current high profile signs of change by large multinational companies may not be representative of the entire sector.”

Or on the importance of sustainability among smallholder growers:

“In regions such as Sumatra with long-established oil palm sectors, the number of independent smallholder farmers is growing rapidly. These smallholders have access to an escalating number of independent mills, which offer competitive pricing opportunities. These mills rely heavily on fresh fruit bunches purchased on the open market and often do not have corporate purchasing policies or checks in place for legality and sustainability concerns.”

And on the importance of Western markets:

“…growers are catering to rapidly growing import markets in China and India, which place much less focus on environmental and social principles, compared to western markets.”

The research also bears out the reluctance by oil palm growers in Indonesia to taking on sustainability commitments and certification standards.

The basic and overarching problem is simple: cost. This is now a generally accepted point in the debate: certification is expensive, and small farmers can’t afford it without assistance from aid agencies or other groups.

Failing that, more NGOs have called for greater RSPO certification. The problem there is that the uptake of RSPO at the demand end is approximately 50 per cent. Why is uptake so low? First, there is almost zero consumer demand (well, maybe in some parts of Europe…). Second, because the demand is not there, there is no premium that can be offered to producers – so there is zero incentive for small farmers to sign up to certification initiatives such as RSPO.

What few people have suggested is that there should be attempts to make certification cheaper. It could be argued that some Western companies are already attempting this via support for small farmer initiatives. But this misses the point; these schemes only serve Western markets.

A Better Way Forward?

There is a better way: national standards.

Malaysian Sustainable Palm Oil (MSPO) is the best example of this. It implements government sustainability policy consistent with broader national sustainability goals.  It is cost-effective because it has to be. These are standards that articulate the balance between social, economic and environmental concerns. One of the key differences between RSPO and conventional international standards is that RSPO is a private body not subjected to legislative checks and balances. RSPO as a body effectively decides who is and isn’t accredited to audit a standard, as well as developing the standard.  That’s not how national standards are formed or work in practice.

Under national and international standards, standards development and accreditation are distinct and separate processes. This is why, for example, a tyre maker can make tyres according to an official standard without having to be a member of a tyre producing body. So, producers don’t have to pay membership fees; they just pay audit fees. It also means that auditors can be competitive without cutting corners, as they need to maintain their credibility via a separate accreditation process.

But one of the reasons NGOs remain wedded to RSPO is that it is weighted towards Western interests.

The CIFOR report states:

“The majority of motions submitted by the growers target the governance of RSPO, generally requesting better representation of their needs. Private sustainability standards, with their origins or leadership in Europe or America, may be perceived as a new manifestation of Western control, as reported by four of our key informants.”

One of the problems with the Western environmental movement is that it has taken on a moral position that is generally fixed. CIFOR’s report on sustainability demonstrates that if it is genuinely interested in improving environmental outcomes, it needs to dispense with the notion that tougher, more expensive standards are always better.  It needs to accept that solutions developed on the ground – such as MSPO – will provide an improvement. And any improvement is better than no improvement.