The Borneo Post (10/03/2019) - UNDER pressure for years from three fronts – the environmentalists, the competitors of palm oil (lobbyists for other edible oils), and the bankers (Norwegian Sovereign Fund stopped financing 33 companies dealing in palm oil) – the countries in the European Union are phasing out the purchase of the edible oil, slowly but steadily. Understandably, two major producers, Indonesia and Malaysia, are greatly concerned about the impact of the coming ban because it will diminish their respective export earnings over time.
Unless and until they can find big outlets for the oil, in addition to India, China, and Pakistan, it is inevitable that the duo will fish from the same pond for some time. In this situation, they may have to adopt a code of conduct of cooperation rather of competition. This is easier said than done, but for the survival of the golden crop industry in this part of the world, the parties will have to work together on improving their production standards from A to Z.
So look at the question: why won’t the European Union countries continue buying the oil? Is it because the oil is a health risk, or is it too expensive for ordinary consumers? Not at all; in fact, the oil is not a health risk if consumed together with other foods (well, yes, do you usually drink a cup of oil by itself?). It is affordable as compared to other edible oils.
However, before we look at possible causes for the ban, allow me to digress at this stage. Does anybody remember, as I do with fondness and respect, the name Augustine Ong? In the 1980s, the soya oil and corn oil advocates in the USA were talking bad about ‘his oil’. Dr Ong and his team of experts were leading a campaign, proposing that palm oil is actually better for health compared to other fats. They made a big issue out of the ‘trans-fats’, which are created when margarine is made from soya or corn oils. As far as I recall, the team prevailed in the end and many food scientists accepted their views.
Since then, palm oil has dominated the market. It has many uses – from margarine to the fuel (biofuel) for your car (until you can afford the electric one); from soap to soups; the list goes on. Ever wonder why the humble palm is called the golden crop?
Now the other reason – climate change
One of the main reasons why the European Union countries are phasing out purchases of the palm oil is that they fear the impact of global warming on human lives. When you see on your TV screen the devastation caused by natural disasters in many parts of the world, you will understand how worried the buyers of the palm oil are. The storms and typhoons are getting more violent, the fires more frequently; the drought is getting severe, the flooding getting more damaging. All caused by planting oil palm – is it?
The climate warriors link palm oil to land use. The palm that produces the oil grows on land, obviously. People were buying this oil until the environmentalists told them that certain plantation companies use peat land, and that cleared peat swamp when burnt will smoulder and smoke for days. Weeks, actually.
Remember the haze that we have been experiencing?
Most of the original forests in Europe and the Americas have been felled long ago. Too late to worry about that, they say, but there is hope for the world if the countries with forests left keep their trees intact to absorb the carbon dioxide emission into the ozone layer. Not sure my explanation is quite correct, but then I’m not a scientist. And I do get the drift – “You can’t cut you trees because we’ve already cut ours.”
I am all in favour of preserving nature, but I am also in favour of eating, and I wish everybody on earth has three decent meals a day. The Europeans will continue buying our oil if it remains cheap and if it is sustainably produced at all stages – the chain of custody. For this they insist on more stringent standards, their standards of sustainability. What’s that?
In simple parlance, they do not want to buy the oil from palm that is grown on peat soil; or planted on land whose owner has been dispossessed due to some legal technicality; or during the development of a plantation, the impact on the environment and natural resources causes pollution of the rivers and streams, erosion, and flooding; or when development areas encroach on water catchments; when employers exploit labourers (no EPF contribution, no Socso protection, no insurance coverage); poor handling of the use of chemical fertilisers by workers. These are some of the many social factors that go into the calculation of why the palm oil is not sustainable. I don’t disagree with any of these; just make sure the factors are fairly and impartially evaluated.
Sustainability is the name of the game
Seeing all these indicators, the industry’s players have developed and promoted a set of standards of production to make the oil sustainable. In Malaysia, there are two certification organisations to ensure compliance with the principles and criteria and indicators: RSPO and MSPO.
RSPO, established by a group of oil palm oil producers, retailers, and non-governmental organisations, has its headquarters in Kuala Lumpur and offices in China and Indonesia.
MSPO (Malaysia Sustainable Palm Oil) started its operations in October 2015. The scheme is owned by the Malaysian Palm Oil Certification Council (MPOCC), an independent non-profit organisation, incorporated as a Company under the Companies Act, 1965. This organisation is overall responsible for the development and operations of the MSPO Certification Scheme based on the seven principles: Management commitment and responsibility; Transparency; Compliance to legal requirement; Social responsibility, health, safety and employment conditions; Environment, natural resources, biodiversity and ecosystem services; Best practices; Development of new plantings.
By Dec 31 this year, the smallholders (organised and independent) in Sarawak must make up their minds whether or not to submit their holdings and related projects for certification by MSPO.
I am concerned that the independent smallholders will be marginalised in this matter of certification. In Peninsular Malaysia, I am told there is NASH (National Smallholders outfit) and in Sabah RSPO is preferred by the independent smallholders. I think that many of these smallholders in Sarawak have been fully briefed on the importance of certification by MSPO. However, have they fully calculated the comparative benefits of being certified by a local scheme or by a global organisation?
It is the individual, family-run holdings which will eventually feel the real impact of the European ban unless, in the meantime, the owners get themselves organised into a guild or association to protect and promote their interests.
Certification by RSPO is voluntary while that by MSPO is mandatory (since Dec 31, 2018 for plantation companies already certified under other schemes such as RSPO or ISCC and by June 30, 2019, for other companies without certification.
“Smallholders, both independent and organised, need to obtain MSPO certification by Dec 31, 2019,” said information obtained during the MPOCC forum on Jan 27, 2018.
It is for these independent smallholders to pick a scheme that can better serve their interests in the short and the long run. Not so bad for those smallholders categorised as ‘organised’ as they operate under the umbrella of statutory bodies. Such smallholders are the peneroka (settlers) in the case of Felda or Felcra in Semenanjung and the participants of schemes managed by Salcra in Sarawak. Felda at Sempadi, Lundu, and the other estates in Sarawak have no settlers.
The independent smallholdings need nursing and help more than anybody else, because they face an uncertain future. They are partly self-funded or subsidized by government but they have little bargaining clout.
Their holdings are planted on family plots, usually untitled, or on land that has been over-used or has become infertile (kusi), or land under ownership dispute with certain plantation companies. What is their future?
Blessing in disguise
Now, back to the forest. Forests are so important that people in the West and Japan are willing to pay those who can keep their forests intact through a scheme called Carbon Credit Scheme.
The trees are our trump card. Are we in Sarawak playing our card smartly, though?
Having attended a forum organized by the MPOCC in Kuching last year and having talked to a number of stakeholders, I am not convinced of the advantages of MSPO over RSPO. In their campaign to woo the European buyers, the interests of some 650,000 smallholders are being used as a bargaining chip.
A guild is required
As a bargaining chip, they should form their own guild, in addition to the present groupings – one that is more inclusive of other indigenous people, in order to protect and promote their interests. Register it as a member of the RSPO as an alternative to membership of MSPO, or join both if that is possible. Then they should negotiate with the buyers, after the production of their oil has been independently audited by RSPO or MSPO, whichever is more helpful. In this situation, the government, both Sarawak and federal, have the responsibility in terms of their fiduciary duties, to ensure the sustainability of the oil and the participation of the rural people in the industry for as long as possible.
Meantime, the choice of standards of certification is crucial; it’s the silver lining in the clouds, if we play hand our wisely.
Just a thought.
Read more at https://www.theborneopost.com/2019/03/10/palm-oil-in-hot-soup/