Daily Mirror (11/05/2020) - Consequence to COVID-19, Sri Lanka is now compelled to ban imports, restrict imports or increase import taxes to manage its valuable foreign exchange reserves. Though such short-term actions are timely and inevitable to face a crisis situation, they would invariably cause hardships to consumers, industrialists and eventually to the public.
Long-term and ultimate solution would be for the country to maximise production in industries, where the country has the competitive advantage to do so whilst importing the rest.
In 2018, Sri Lanka’s annual oil and fats imports stood at more than 250,000 metric tonnes (MT). In the same year, the country produced only around 23,000 MT of coconut oil (https://cda.gov.lk/web/index) and 18,000 MT of palm oil.
Accordingly, the national production was a mere 16 percent of the total oil and fat needs of the country. This scenario compelled Sri Lanka to spend over Rs.31 billion worth of foreign exchange to import and bridge the gap of its oil and fat requirement in 2018. A significant proportion of this expenditure, i.e. Rs. 24 billion, had been to import 220,000 MT of palm oil.
Yet, the country has the capacity to produce palm oil as an import substitution strategy and overcome this unaffordable draining out of valuable foreign exchange from the country. The COVID-19 pandemic the world currently experiencing has put further pressure on countries foreign exchange earnings, compelling the government of Sri Lanka to be very cautious in using its much-depleted foreign exchange earnings.
Given the commodity’s versatile nature, palm oil has rapidly become the world’s most widely used vegetable oil, found in a vast range of products from confectionaries and baked goods to cereals, washing powders, cosmetics, milk powders, pharmaceuticals and even as a first-generation biofuel. Nearly 40 percent of the global demand for vegetable oil is met by palm oil and the average per capita consumption of palm oil in Sri Lanka is at around 10kg.
A well-established palm oil industry in the country whilst having a vast potential for import substitution could also be used for export development. As per the current oil and fat needs and production of the country, the government has the potential to save up to Rs.31 billion in foreign exchange annually. In addition, since oil palm is a highly economically viable crop to the grower, it could also strengthen the continuously weakening plantation economy in the country, giving the financial capability to enhance worker wages and improve plantation infrastructure.
Countries like Indonesia and Malaysia have widely used this crop in their poverty alleviation programmes by introducing this crop to the smallholders, with the assistance of World Bank-funded projects.
Though the potential benefits from a palm oil industry is enormous towards the economic growth of a country, its progress of development in Sri Lanka is hindered due to multiple reasons. The perception of a few that oil palm plantations impact the environment negatively is one major reason. Unfortunately, what they do not understand is that it is a criticism aimed at countries planting of oil palm after felling of virgin forests elsewhere in the globe.
Hence, obviously this concern is not relevant and valid in the Sri Lankan context since oil palm is grown only under crop diversification programmes in the plantation sector of this country. Arguments that oil palm cultivations are a threat to the biodiversity in different habitats of the country too are not relevant and valid for the same reason.
Among the other issues raised is that oil palm cultivation severely depletes water resources. It is certainly true that each oil palm plant consumes more water. A typical mature oil palm plant on average requires 249 litres of water per day (Naan Dan Jaan Irrigation (C.S.), Israel), whereas coconut requires 130 litres and rubber consumes 63 litres.
However, the requirement per plant must also be balanced against the fact that oil palm requires a significantly lesser number of plants per unit land area than coconut, rubber or tea. As per unit land area, the water consumption of the oil palm crop is lower than in tea and is only around 10 percent higher when comparing with the rubber crop.
Mike K.V. Carr, a Professor at Cranfield University in the UK, has conducted extensive research on water use of plantation crops grown in tropics and has authored many scientific publications, which could be perused for further information on this subject. In addition to such scientific data on water use of plantation crops, we could also analyse the real-life scenario in the vicinity of oil palm plantations.
Malaysia with over 100 years and Sri Lanka with over 50 years of oil palm cultivation have not experienced water shortages that could be firmly attributed to the crop. Malaysia even has excess water to export to other countries. In any part of the country, a dry spell would lead to water shortages, whether or not that area has oil palm cultivations or not. The recent dry spell experienced in Sri Lanka, i.e. January to March 2019, caused severe water shortages even in villages in close proximity to the Sinharaja forest. This is apparently a global phenomenon.
Less forest cover, urbanisation, changes in soil properties, extreme weather, population increase, increase in water consumption, increase in atmospheric temperature, are reasons for drying of water sources, leading to shortages and not any of the crops planted. Actually, plantation crops would be beneficial in mitigating some of the factors identified earlier in this article that lead to water shortages.
All plant species have the capability to adapt to the environment they grow through stomatal apparatus, morphological and physiological characters. If there are soil moisture stress conditions, plant water uptake will invariably be relatively lesser, leading to low growth rates and crop production. Plants would not absorb high volumes of water under water stress conditions as perceived by some environmentalists.
As for any other crop, oil palm too will be absorbing a lesser amount of water under soil moisture stress conditions, leading to low growth rates and crop production. Among the plantation crops grown in Sri Lanka, coconut and oil palm are monocotyledons, having a shallow fibrous root system.
Some argue that seedlings from oil palm cultivations have become invasive, threatening the existence of other plant species in some habitats. However, when investigated, it became apparent that such situations are evident in reservation areas and nearby lands, where wild oil palm plants grow naturally. In systematic oil palm plantations, with regular harvesting of ripen fruits, collecting of fallen fruits and weed management, the chances of oil palm seedlings becoming invasive is very rare.
Even if there is any threat, it is a manageable situation. In areas with high seed fall and poor weed management, it is reported that even rubber seedlings too have become invasive in certain countries (email@example.com). The lesson to be learnt is not to quote such sporadic events and demand to stop development projects but to request relevant authorities to adopt management strategies to overcome such manageable issues.
Impact on other plantation crops
Coconut and rubber growers are of the view that the oil palm is a threat to their industries. In the year 2018, total coconut production in the country had been in the region of 2.7 billion nuts. Nearly 68 percent of this total production had been used for domestic consumption, i.e. cooking, as fresh nuts.
Accordingly, what was left for other coconut-based industries is only 32 percent of the total production. It is also reported that in 2018, from the total coconut production in the country, only a mere 2.4 percent had been used for oil production (https://cda.gov.lk).
However, at approximately 8,000 nuts to produce one MT of coconut oil, to produce 23,000 MT, the nut requirement should be around 6.8 percent of the total coconut production in 2018. Anyhow, this clearly indicates the coconut production in the country is very much inadequate for the production of total vegetable oil requirement of the country whilst catering to the domestic needs and other coconut-based industries.
To bridge the current national deficit of about 200,000 MT of oil and fat, the country will need an additional 200,000 ha of coconut land. If oil palm is used for the purpose, the land extent needed will be only 50,000 ha, since it’s a much efficient crop than coconut in production of vegetable oil.
From a unit area of land, oil palm produces four times more oil than coconut. Further, the chemistry of the coconut oil is such that it cannot be used to manufacture most of the products made using palm oil. In the light of this scenario, the palm oil industry could be supportive rather than negatively impacting the coconut industry in the country, as there will be more nuts available for the coconut-based industries, which will facilitate to earn relatively more foreign exchange to the country and also income to all the stakeholders in the industry.
The concern of some stakeholders in the rubber industry and a couple of environmentalists is that, given the option to the growers, they would opt to cultivate oil palm instead of rubber and hence, it would lead to a significant drop in rubber extent and production in the country. As a consequence, the rubber product manufacturing sector is worried that there could be a short supply of the raw material for rubber-based product manufacturing.
However, it should be emphasised that this is the case even at present and the country is importing approximately a similar quantity it produces each year to cater to the needs of the rubber product manufactures.
Environmentalists on the other hand foresee the services provided by the rubber plantations to the environment would be lost, if they are replaced with oil palm.
Policymakers responsible to the rubber industry and the growers involved have many options to increase the national rubber production. The land productivity in Sri Lanka is at a low level, when compared to other rubber-growing countries in the world. Further, through research and development work undertaken by the Rubber Research Institute of Sri Lanka, alternate areas to cultivate rubber have been identified. In such areas, there is potential for rubber plantations to perform better than in the traditional south western part of the country.
Therefore, the natural rubber production in the country could be increased by adopting strategies for both productivity improvements and increasing the total land area. This would be a better strategy to enhance the national rubber production rather than contemplating to do it at the expense of another industry that has enormous potential towards the development of the country.
The perception of some environmentalists, “oil palm plantations contribute less to environmental services than rubber”, is nothing but a myth. Oil palm has a higher potential than rubber to fix atmospheric carbon dioxide (CO2), which is the greenhouse gas mainly responsible for global warming. Further, like in rubber, oil palm plantations also contribute to protect the soil from direct impact of rainfall with a well-formed canopy.
Both rubber and oil palm plantations contribute to the natural water cycle through the transpiration process. Tea, rubber, coconut and oil palm are plant species originally found in natural forests and subsequently domesticated considering their benefits to the mankind. Therefore, how can oil palm not be environmentally friendly whilst all others are environmentally friendly?
The sustainability of a crop mainly depends on the agro-management practices adopted and not on intrinsic features of the crop. For that matter, any crop could be damaging to the environment, if it is not managed in a sustainable manner by the growers.
Impact on health
Triglycerides are the building blocks of oils and fats. Therefore, all edible oils and fats are a mixture of triglycerides, where three fatty acid chains are anchored to a glycerol backbone. Whilst this three-carbon atom bridge (glycerol) is a common feature of all triglycerides, the fatty acid side chains can vary in their length: short, medium or long. They are further categorised to various subtypes depending on the presence or absence of double bonds within a given fatty acid chain.
For example, saturated fatty acids have no double bonds whereas unsaturated fatty acids contain one or more double bonds. This latter feature is important because both the behavioural (physicochemical) and nutritional (biological) outcomes of any given oil/fat are influenced by its overall make up as represented by different types of fatty acids.
Accordingly, vegetable oils are a mixture both saturated and unsaturated fatty acids of varying chain length. For instance, in coconut oil over 90 percent are in the form of saturated fatty acids of short to medium length (C8-C14). Palm oil in contrast is only 50 percent saturated and are made of longer fatty acids (C12-C18) than those found in coconut oil. Seed oils such as canola, sunflower as well as soybean and corn are rich sources (over 85 percent) of unsaturated fatty acids.
Both the types and amount of fatty acids in our diets are known to influence heart disease. The present global advice is to increase the consumption of unsaturated fats (mixed fatty acid profile) at the expense of saturated oils and fats. For optimal health, we require a mixture of fatty acids to be present in our diet. In this context, palm oil could be viewed as the better option for its ‘mixed’ fatty acid profile, as compared to coconut oil, which has over 90 percent of saturated fatty acids.
Palm oil with its 1:1 balance of saturated and unsaturated fatty acids is the preferred choice for many applications in the food industry. This is because highly unsaturated oils, which stay liquid over a broad temperature range, are not suitable for many commercial uses such as in the baking industry, manufacturing of margarines, confectionary products, etc. where ‘harder fats’ with higher melting point are essential to provide optimal taste, sensory and visual attributes and also to avoid softening and improve stability in warmer ambient temperatures.
Until 10-15 years ago, it was common practice to use chemically modified unsaturated oils for commercial food uses. This chemical process called hydrogenation transforms the highly unsaturated vegetable oils into more saturated forms (semi-solid to solid fats), thereby achieving the desired range of melting points for commercial applications.
However, from health and nutrition viewpoint, there have been major concerns since the hydrogenation process not only increases the melting point to the desired range but also leads to the formation of trans-fatty acids, due to changes in the unsaturated double bonds.
Trans-fatty acids have been found to adversely impact human health and now been banned or severely restricted from the food supply in many countries. In fact, recently, the World health Organisation (WHO) has called on all governments to ban trans-fatty acids from the food supply by the year 2023. Palm oil on the other hand is trans-free and is the product favoured by the food industry.
Who opposes oil palm industry?
A few environmentalists are in the forefront of the anti-oil palm campaign in Sri Lanka. The issues raised by them in their campaigns held in oil palm growing areas, printed and electronic media and at different forums are untrue and unscientific. Water shortages, loss of forest cover and biodiversity, oil palm plants are invasive, oil palm needs 10 times more chemical fertiliser than rubber, oil palm plantations need high doses of pesticides, dogs losing fir, reduction in bee population, no undergrowth in oil palm plantations, threat to natural habitats, are some of the claims they have against the oil palm plantations.
They also attempt to create a public opinion to the effect that palm oil consumption leads to cancer and heart-related ailments. Attributing all these issues to the oil palm industry very clearly indicates that they do not possess adequate scientific knowledge on the subject and that they do not have a proper understanding of the crop and its produce.
However, this small group of environmentalists, may be with some hidden objectives, continues to hold protests in areas where oil palm cultivations are undertaken, also dragging a few villagers from the area. There are instances where these villagers are made to say that with only a couple of hundreds of hectares of two to three-year-old oil palm plantations perennial sources of water are now dry and the bee and bird population in their village is also reduced.
The environmentalists behind this campaign, wherever possible attempt to drag the clergy to support their case. Unfortunately, some of them also become emotional and take part in these protests. However, they need to endeavour to fully understand the oil palm industry and then provide with correct guidance and advice.
Protestors also attempt to get the blessings of politicians. Some do support their views probably due to lack of understanding of the subject. Political leadership of the country is morally bound to listen to views of all stakeholders. Having done that, they need to identify development programmes that would support sustainable development of the country.
Finally, they need to facilitate the implementation of such development programmes, as per the guidelines and recommendations given by the experts of relevant government institutions.
Impact of COVID-19 on economy
The requirement for a country to produce its own needs is more than evident now with the COVID-19 pandemic. Even before, when considering the disparity in outflow and inflow of foreign exchange to the country, the need to produce our own requirements were very much obvious.
One initiative the current government took, after coming into power, was to stop imports of ethanol and drive the local industry to produce the national requirement. The annual requirement of ethanol is in the region of 36 million litres and 55 percent of this need was imported, costing the country over Rs.20 billion in foreign exchange each year.
The country is now reaping the benefits from this policy decision by saving up to Rs.20 billion worth of foreign exchange annually. With the same approach, the oil and fat requirement of the country could be produced within the country through the development of the local oil palm industry, saving a further Rs.30 billion in foreign exchange each year and allowing that money to be circulated among the people of this county enhancing their livelihoods.
(Wayamba University Emeritus Professor Asoka Nugawela can be reached via firstname.lastname@example.org)
Read more at http://www.dailymirror.lk/features/Oil-palm-industry-Not-understood-and-utilised-to-potential/185-188048