The Oil Palm

Why FERN and the British Government have teamed up to oppose Malaysian Palm Oil


The European NGO FERN recently released a report stating that a significant majority of the EU’s commodity imports are the result of ‘illegal deforestation’.

The report was funded in part by the US-based Ford Foundation and the UK’s Department for International Development (i.e. – the British Government).

It was authored by a forest campaigner who has worked closely with organisations such as Greenpeace and WWF through his private consultancy.

The report falls under DFID’s Forest Governance Markets and Climate programme.

Key Claims

The report makes the contention that a substantial proportion of commodity imports to the European Union are the result of illegal forest clearing. The report concentrates specifically on palm oil, beef, soy and leather.

In relation to Malaysia and Malaysian Palm Oil, the report makes a number of claims.

Claim 1: “Malaysia has the world’s worst deforestation rate.”

The source that is used for this claim is the environmental advocacy site Mongabay, which published the story in 2013. Yet in 2014, the same source claimed that Indonesia has the worst deforestation rate. Mongabay is not exactly the New York Times; what they publish should be taken with a grain of salt.

The academic sources cited state that Malaysia has the worst deforestation rate, but in terms of absolute area, forest lost in countries such as Brazil, Indonesia, Canada, Russia, the US and Australia are significantly higher. Indonesia’s actual forest loss annually is at least four times as large. Even by the sources’ own aggregate measures, countries such as Portugal and South Africa have more significant rates of loss, despite coming from a lower base. The inconsistency of the secondary source (Mongabay) simply reinforces the questionability of making such a blanket statement.

This claim is a classic example of cherry-picking data to suit a pre-existing agenda. The overall percentage of forest cover remaining in Malaysia is actually well over 50% – higher than almost every European country – and the Malaysian Government has been praised by among others the United Nations, for an ambitious and bold commitment to retain a minimum 50% of land area as forest. The insinuation in this report that Malaysia is happily and mercilessly deforesting is manifestly false.

Claim 2: Claims of corruption and graft in Sarawak, followed by the statement that “there are more than 200 land rights cases pending in the Sarawak courts, the majority of them relating to plantation development. The few such cases which have been concluded have found in favour of the local communities which brought them.”

However, it should be noted that the only comprehensive survey of NCR cases between 1995 and 2010 – undertaken by a conservation NGO – notes that of the 147 cases relating to forest clearance, around 40 per cent are related to palm oil. Not included in the survey are a large number of non-forest disputes relating to infrastructure developments such as airports.

That the courts have often found in favour of the plaintiffs effectively vindicates the independence of Malaysia’s legal system, and illustrates that – far from being a major problem – the system is working. Every country worldwide will experience land disputes: the key is that they are properly considered and administered.

Claim 3: The paper makes blanket claims about the amount of palm oil imported from Malaysia that it considers to be a result of ‘illegal deforestation’, based on value (EUR550 million) and area (130,000 ha).

Much of this work is based on earlier work undertaken by the same author for by another NGO, Forest Trends,

Yet this work is also plagued with problems. The Forest Trends report claims that 43 per cent of palm oil plantations have been established illegally. To arrive at this claim, the author takes a ‘measured average’ of illegality of plantation establishment in Cambodia, PNG and Borneo and halves it. This is despite all three countries having completely different land tenure and legal systems. In other words, there is no genuine attempt to distinguish – let alone measure – possible levels of legal or regulatory breaches.

Further, the author states that: “No suitable quantitative data exist on which to base estimates, though plentiful qualitative data demonstrate that problem is widespread, especially in Sarawak.” Yet even then, the source cited – another Forest Trends report – states, “studies by WWF and the World Bank in 2001 found that Malaysia’s legislative framework and political scenario provides adequate support for effective forest law enforcement, with the level of illegal logging (from selective felling and forest conversion) being “small (in the order of 1% or less) compared to the legal wood products trade.”

It should also be noted that the Forest Trends report on which the FERN report is based states that the ‘majority’ of NCR claims are around palm oil, citing the same NGO report cited above by the Oil Palm. This is simply not the case.

Analysis of Funding — and Why the British Government is Engaged in a Smear Campaign against Malaysia

The report was likely funded under DFID’s Forest Markets Governance and Climate programme. This programme has been responsible for much of the anti-agriculture rhetoric coming from Europe.

The programme can be read as a protectionist method for stymieing commodity imports from major developing countries such as Malaysia, Indonesia and Brazil as a means of conserving forests and protecting European industries. Yes, protectionism because Europe is simply uncompetitive in the 21st Century. The programme’s administrative documents state:

“The programme will actively support poor people, who are deprived of their livelihoods by poor forest governance, to make their case. It will also support investigation into best practice where rules benefit poor people. It will provide context-specific evidence on how changes in forest governance that tackle illegal logging and illegal clearance affect different groups.”

Yet there is little evidence to date that there has been support for the rural poor under the programme, particularly in Malaysia.

The documents further state:

“There may be costs associated with reducing agricultural commodity production on illegally cleared land in terms of employment for poor people and smallholder incomes. In this case the programme will help countries legalise land conversion or develop economic activities on already degraded or cleared land.”

So, on the one hand the programme says it will support poorer smallholders, but also acknowledges that the programme might completely ruin their livelihoods. But also states that it might attempts to relocate communities to suit the objectives of the programme – something that World Bank’s aid guidelines actively discourage.

This is an egregious act by the British Government against Malaysian interests, and is openly stymieing Malaysia’s efforts to increase wealth for its people.

There’s a further problem. The DFID programme concentrates on a handful of countries – mainly Liberia, Ghana and Indonesia. Malaysia is not one of them. So, while some in London think it is fine for DFID to pay for reports that actively discourage purchases of imports from a country like Malaysia and harm livelihoods, there’s no mitigation of this through support programmes.

In the end, the purpose of the document appears to be to lobby for something resembling a FLEGT arrangement for commodities, with voluntary partnership agreements (VPAs) with countries. While the objectives of VPAs might be good and in theory they might work, the fact is that there is not a single VPA on timber that is currently working and has moved beyond the pilot stage.

Even worse, small and medium enterprises in Indonesia have taken up the case with their forestry minister as they have had trouble accessing European export markets – because of the newly implemented export licensing regulations that will be a precursor to a working VPA. This is despite more than 10 years and literally hundreds of millions of euros being thrown at the programme.

So, the intentions might be good – but the implementation is, frankly, perverse. Rather than actually trying to improve forest governance where it’s needed, it is actively discouraging the purchase of commodities from developing countries – such as palm oil – across the board.

This isn’t development assistance; it’s Green Colonialism.