occasional paper

The impacts and opportunities
of oil palm in Southeast Asia
What do we know and what do we need to know?

Douglas Sheil
Anne Casson
Erik Meijaard
Meine van Noordwijk
Joanne Gaskell
Jacqui Sunderland-Groves
Karah Wertz
Markku Kanninen
CIFOR

Occasional paper NO. 51

The impacts and opportunities
of oil palm in Southeast Asia
What do we know and what do we need to know?

Douglas Sheil
Institute of Tropical Forest Conservation, Uganda; CIFOR

Anne Casson
Sekala, Indonesia

Erik Meijaard
The Nature Conservancy, East Kalimantan, Indonesia

Meine van Noordwijk
World Agroforestry Centre, Indonesia

Joanne Gaskell
Stanford University, USA

Jacqui Sunderland-Groves
CIFOR

Karah Wertz
CIFOR

Markku Kanninen
CIFOR

Sheil, D., Casson, A., Meijaard, E., van Nordwijk, M. Gaskell, J., Sunderland-Groves, J.,
Wertz, K. and Kanninen, M. 2009. The impacts and opportunities of oil palm in Southeast Asia:
What do we know and what do we need to know? Occasional paper no. 51. CIFOR, Bogor, Indonesia.

Photos by Ryan Woo (cover, pp. 48,50), Jan van der Ploeg (p.10) and Anna Claydon (p. 20)

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ISBN 978-979-1412-74-2

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© by CIFOR
All rights reserved. Published in 2009

Center for International Forestry Research (CIFOR)
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research to inform policies and practices that affect forests in developing countries.
CIFOR is one of 15 centres within the Consultative Group on International Agricultural
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Palm oil production and global trends 11 Palm oil production 11 Biofuel development. demand and expansion 13 Palm oil prices 18 The boom continues 19 4. Introduction and background 1 2. Oil palm basics 3 Oil palm and palm oil 3 Historical summary 3 Palm oil biology. Greenhouse gas emissions 25 Carbon emissions and carbon benefits 25 Time to reach positive carbon benefits 26 Peatlands and greenhouse gas emissions 27 Other greenhouse gases 28 REDD and carbon funds 30 . A driver of deforestation? 21 The burning issue 21 Abandoned land and logging 23 5.Contents Acknowledgements vii Abstract viii 1. products and productivity 5 Oil palm cultivation 6 Yield and its improvement 7 3.

new safeguards 45 Due diligence 47 9. Impacts on the environment 31 Biodiversity 31 Soil erosion and fertility 35 Fertilisers and pesticides 35 Mills and water quality 36 7. Livelihoods 37 Winners and losers 37 Tenure 39 Information and developments 40 Smallholder palm oil production 40 Biofuel versus food 42 8. Trends and the future 49 10. Conclusions and needs 51 What do we know? 51 Research needs 53 Endnotes 56 References 58 . Improving standards 45 New initiatives.iv 6.

scaled relative to petrol/gasoline 14 7. Cross section of an oil palm fruit 3 3. Prices of diesel. 1961–2007 5 5. Carbon debt. annual carbon repayment rate. The extent of oil palm cultivation in 43 oil palm–producing countries in 2006 2 2. and years to repay biofuel carbon debt for nine scenarios of biofuel production 29 13. 24 12. The extent of forest and planned oil palm plantations within forest habitat and in non-forest in Kalimantan. Indonesia. Comparison of species richness in oil palm plantations vs. Additional area of oil palm plantations required to meet country-specific biodiesel targets 15 8. Total number of species of forest birds and forest butterflies recorded from different land use types in southern Peninsular Malaysia and Borneo. Palm oil production in selected areas. Land requirements estimated from existing and planned biofuel processing capacity 16 10. palm oil and soya bean oil. biofuel carbon debt allocation. Key oil palm areas in Malaysia and Indonesia 4 4. Uses of oil palm byproducts and biomass in food and manufacturing industries 12 6. Additional areas of oil palm potentially required for all biodiesel blending targets compared to current oil palm plantation area 16 9. 1996–2008 19 11. Oil palm conflicts across Indonesia monitored by Sawit Watch in January 2008 38 . (a) primary forests and (b) degraded natural forest 32 14. Greenhouse gas emissions of 29 transport fuels plotted against overall environmental impacts. tables and boxes Figures 1. respectively 33 15. v Figures.

Potential oil palm byproducts may increase profits and reduce waste 12 2. Geographical distribution of oil palm plantations in Indonesia 41 Boxes 1. Oil production of palm and other major oil crops 11 2. Food or fuel? 43 . Palm oil to biodiesel 13 3. A positive impact on livelihoods 37 4.vi Tables 1. Kalimantan oil palm project 41 5. Projected global biofuel targets and potential feedstocks for biodiesel production 17 3.

From CIFOR. Suyanto. Hasantoha Adnan. and comments. Tom Maddox and Richard Dudley for their comments. and Lisa Curran. Chris Barr. Lian Pin Koh and Rhett Butler for their thorough and helpful reviews. We also thank the Indonesian Ministry of Forestry and Forestry Research and Development Agency. we thank Daniel Murdiyarso. Chip Fay. Beria Leimona. Mohammad Agus Salim. Gede Wibawa. we thank Martua Thomas Sirait.Acknowledgements Many people contributed to this report by providing literature to include. Krystof Obidzinski. Frances Seymour. Suseno Budidarsono. From ICRAF. Greg Clough. Laxman Joshi. Agus Fahmuddin. Doris Capistrano. . Linda Yuliani. Yayan Indriatmoko. Douglas Sheil thanks Wageningen University Library for help in locating references. Andree Ekadinata and Fitri Heryani. Brian Belcher and the library staff. This work was supported by the David and Lucile Packard Foundation and the Charles Stewart Mott Foundation. Douglas Sheil was supported by a grant to CIFOR from the European Commission. Ramadhani Achdiawan. insightful discussions. Carol Colfer.

It offers a renewable information they require to avoid source of fuel. requiring further investigation. We conclude this review commercially profitable at large scales. This review examines what we know We remain uncertain of the full and what we don’t know about oil implications of current choices. misinformation and development or a costly road to market instabilities. it is indisputable: among these are that often open to question or hard to oil palm is highly productive and generalise. Oil practice forward. Our sources can local. Some facts are information is available. also offering the finance needed to But do decision makers have the protect forest. offers wealth and development especially in Southeast Asia. with a list of pressing questions and that palm oil demand is rising. It threatens environmental ruin? Inevitably. along with minimised? While much important expert consultations. Is oil making people vulnerable to palm a valuable route to sustainable exploitation. Amid industry and traditional livelihoods. while also it can be hard to perceive reality. regional and international include academic publications benefits be increased while costs are and ‘grey’ literature. but also threatens to pitfalls and make the best decisions? increase global carbon emissions.Abstract The ongoing expansion of oil palm palm’s considerable profitability plantations in the humid tropics. any rich biological diversity—while answer depends on many choices. a route out of poverty. How palm developments. Credible. is where wealth and development generating considerable concern are needed—but also threatens and debate. It offers environmental campaigners’ claims. . unbiased research on these Implementing oil palm developments issues will move the discussion and involves many tradeoffs.

threaten food production and million hectares1 (which is less than 4 per exacerbate inequality between rich and cent of Indonesia’s land area. to develop biodiesel and bioethanol industries to meet 2 per cent of the Concerns over global warming and country’s fuel needs by 2010 (Wakker worldwide energy use have escalated the 2006).2 Greenhouse revealed a plan to establish 3 million . forest fires and a range options. forest-rich developing countries such as 77 per cent of palm oil is used for food Indonesia (Koh and Wilcove 2007. Indonesia stated its intention become productive by 2010 (IPOC 2006). the interest in 2007). reaching dwellers and owners. demand land officially designated to oil palm in for biofuels could increase competition Indonesia is estimated to be around 6. In early 2006. the total area of Biofuels may have major positive or land allocated to mature oil palm has negative effects on natural forests. Most of this expansion increase the value that can be derived has occurred in Indonesia. On the one hand. peat degradation. and major investments are of social issues. But oil palm is also a already planned to convert millions of major driver of economic growth and a hectares of tropical forests and other land source of alternative fuel. nearly 14 million hectares in 2007 biofuel from oil palm plantations could (Figure 1). Since the early 1980s. forest more than tripled globally. where the from previously forested land and help total land area of oil palm plantations to promote economic prosperity and increased by over 2100 per cent (more alleviate poverty—leading to a higher than 22 times greater) over the same standard of living with fewer people period. per cent in some provinces of Sumatra) and all of these plantations are planned to In 2005. ester) is currently a leader among biofuel biodiversity loss. On the other hand. 1 Introduction and background F ew developments generate as gases and high prices for fossil fuel have much controversy as the rapid spurred interest in biofuels3 and other expansion of oil palm into alternative sources of energy.2 for land. Stone (USDA 2008a). Currently. However. Oil palm expansion can contribute biodiesel from palm oil (palm oil methyl to deforestation. The total area of subsistence. the government controversy over oil palm. types to oil palm plantations. growing to 4.6 million hectares depending on the remaining forests for (FAOSTAT 2008). but up to 15 poor (Astyk 2006).

US cents per litre to convert crude palm Figure 1. unsubsidised biodiesel to meet these targets. This triggered manufacturers would lose money. Much of the controversy is about to rise because demand for vegetable oil clearing natural forests and peatlands for human consumption is strong in India to make way for oil palm plantations.2  |  The impacts and opportunities of oil palm in Southeast Asia hectares of new oil palm plantations oil into biodiesel. Asia. the price research is needed to answer these of crude palm oil was higher than the questions. Credible (objective) of cost concerns. about 10 carried forward. Prices an outcry from the environmental for crude palm oil (CPO) were predicted sector. In mid 2008. biodiesel investors are plantations on local communities and rethinking their decisions not just for the environment. practice of oil palm production can be Given that it costs. on average. so that the discussion and selling price of petroleum-derived diesel. examines the reasons for rising demand for CPO and the effects of large Today. but it dropped in early 2009 which has generated widespread when the global financial crisis took hold. and China. and even and the oil palm sector in Southeast palm oil (Murphy 2007). (Source: Koh and Wilcove 2008a) . negative publicity. and identifies questions environmental reasons but also because for further research. Producers are afraid that environmental concerns will turn This study reviews oil palm cultivation consumers against biodiesel. The extent of oil palm cultivation in 43 oil palm–producing countries in 2006.

Most crude along the coastal strip (200–300 km palm oil is used in foods. EXOCARP PERICARP MESOCARP ENDOCARP ENDOSPERM Figure 2. 2008. any other tropical or temperate oil crop. Considerable research palm native to West and Central Africa. meso. crude palm oil (CPO) from the outer Historical summary mesocarp and palm-kernel oil from African oil palm originated in Africa. 2 Oil palm basics Oil palm and palm oil health effects of eating different types of Elaeis guineensis is a tropical forest palm oil products. is already being conducted on these Grown in plantations it produces 3–8 issues (see Colon-Ramos et al. times more oil from a given area than Karsulinova et al. oil palm has been introduced and cultivated One debate we shall not explore in detail throughout the humid tropics (16°N to concerns the nutritional qualities and 16°S) (NewCROP 1996).and endocarp) and an oil-rich seed or kernel (endosperm). 2007. plastics. surfactants. 2007. 2008). 2001). Since its domestication. as well as a broad range 1996). . such as detergents. (Tanzania) and Madagascar (NewCROP herbicides. Cross section of an oil palm fruit. Oil (triacylglycerols) can be extracted from both the fruit and the seed. In contrast. the Indian Ocean. Zanzibar cosmetics. the endosperm (Figure 2). The fruit comprises outer oily flesh or pericarp (made up of exo-.4 It retains many traditional uses of other industrial and agricultural in Africa (Maley and Chepstow-Lusty chemicals (Wahid et al. south and east non-edible products. van Rooyen et al. to Senegal. 2005). Ladeia et al. wide) between Liberia and Angola. from most palm-kernel oil is used in various whence it spread north.

however. Key oil palm areas in Malaysia and Indonesia. The first of Margarine Unie. world’s second largest consumer goods The native pollinator of African oil palm company with annual sales of more than (the weevil Elaeidobius kamerunicus) US$ 75 thousand million. a British Malaysia (see Figure 3 for a regional soap maker. By the early 19th between the 14th and 17th centuries) century. Poku source for all Southeast Asian plantations 2002). By 1930. taking over palms to be introduced to Asia came THAILAND from Nigeria and Zaire (now DR Congo) from the Americas (where African oil CAMBODIA (Poku 2002).4  |  The impacts and opportunities of oil palm in Southeast Asia James Welsh first took 32 barrels of palm palm had been introduced some time oil to England in 1590. other sources and candles. Indonesia MYANMAR and Malaysia began to dominate world It has been suggested that the first oil trade in palm oil in 1966. a Dutch producer of plantations were established in Peninsular margarine. for heating and suggest that they came via Mauritius cooking. then later. and Lever Brothers. into Unilever—now the map of Malaysia and Indonesia) in 1917. the four original trees the food canning industry) to margarine planted in Java in 1848 were the seed (Henderson and Osborne 2000. PHILIPPINES VIETNAM BRUNEI Sabah Nanggroe Aceh Darussalam Serawak MALAYSIA Riau SINGAPORE West Kalimantan West West Sumatra Central Jambi Papua Kalimantan South Papua Kalimantan INDONESIA Bali TIMOR LESTE AUSTRALIA Figure 3. it was being used to make soap (Poku 2002). and in many other products (RMRDC 2004). . Both businesses does not occur naturally in Southeast shared a key ingredient. fruit production increased it would benefit from economies of scale and the cost of artificial pollination was (Anonymous 2008a). palm oil: growing Asia—when it was introduced to Asia it in overseas plantations and importing from Africa. Wherever they might from dynamite to tinplating (as used in have originated. saved (Southworth 1985). oil palm had become developed over the following century important enough to justify the merger (Henderson and Osborne 2000).

to roughly 16.58 t/ha to 2. Land is abundant (NewCROP 1996). products (IPOC 2006). 40 per canopies (Corley and Tinker 2003). About 10 per cent of in disturbed forest and near rivers. (NewCROP 1996). Palm oil production in selected areas.8 million tonnes grown on 6.4 palm oil producer.   |  5 Oil palm basics 40 Worldwide 35 World excluding Indonesia and Malaysia 30 Southeast Asia Indonesia Million tonnes 25 Malaysia Africa 20 Americas 15 10 5 0 1960 1970 1980 1990 2000 2010 Years Figure 4. Together. as long as it is well watered Most production comes from Sumatra. Increase in world production is driven by increases in Indonesia and Malaysia. The palm thrives and labour is cheap. where an average of 350 000 hectares of new oil palm plantations was planted each year between 2000 and 2006 Palm oil biology.6 t/ha) (BisInfocus 2006. Its wet tropical climate 24–30°C (minimum and maximum). 1961–2007. (Yusoff 2006). Indonesia has been the rainforest with 1780–2280 mm annual world’s largest and most rapidly growing rainfall and a temperature range of producer. Some experts estimate of the ca 36 million tonnes of CPO recent expansion in Asia at 0. cent from smallholders and 50 per cent Oil palm is tolerant of a wide range of from private plantations (IPOC 2006). (Source: based on data from FAOSTAT) By 1998. The African oil palm . provides ideal growing conditions for seedlings do not grow below 15°C oil palm (see below). see Figure 4).3 million hectares in 2006 (Indonesian Ministry hectares in 2007 (Malaysian Palm Oil of Agriculture) (annual yields rose from Board 2008). Malaysia account for about 90 per cent IPOC 2006). of this expansion has occurred in Indonesia. soil types. Production in Indonesia rose from 168 000 tonnes grown on Malaysia is the world’s second largest 105 808 hectares in 1967. Most 2008a. Indonesia’s palm oil production comes it does not grow well under closed from government plantations.4 million produced globally per annum (USDA hectares a year (Corley 2005). Indonesia and 1.2 million million tonnes of CPO from 4. palm oil contributed over 5 per but is expanding rapidly in Kalimantan cent of Malaysia’s gross domestic product and spreading further east to Papua. producing 15. and productivity5 The native habitat of oil palm is tropical Since 2005.

under well- managed conditions. 10–15 bunches can fertiliser (Weng 1999. be harvested per palm per year. see Figure 2). harvest.and endocarp) and an oil-rich seed or kernel (endosperm. world permanent . source of pulp and paper or organic male or female). POME can be used as cattle one new frond every 3 weeks. Once the female flowers are pollinated. total yields are thus 15–30 tonnes of fresh fruit bunches per Oil palm cultivation hectare per year. and it contains leaf adds 4. (Photo: Patrice Levang) about 5 per cent of FFB. Empty fruit bunches planted at a 9 m by 7.5 cm to the trunk height (80 enough methane to be a viable source of cm per year. Under ‘good’ conditions.5 cm long and 2 cm wide. depending on ripeness at harvesting time.5 m spacing and can be used as mulch and organic the resulting 148 palms per ha produce fertiliser. The fruit comprises outer oily flesh or pericarp (made up of exo-. Drought stress increases the proportion of male flowers. respectively) and kernels (dry weight to 20 metres in 25 years. the majority of bunches are female and can lead to high fruit yields. Oil palm has the highest yield of any oil seed crop. Trees can reach up rainforest plants. 20 m in 25 years) and goes biogas. Each fruit is about 3. Processing the fruit bunches begins with separating the stalks and empty fruit bunches (EFB. The fibre and shell can be used as on to form one flower bunch (either fuel.6  |  The impacts and opportunities of oil palm in Southeast Asia plant and levels of water and nutrient conditions. of which 45 per Typically. oil palm plantations are cent is kernel oil). leading to ‘press liquor’ that still needs to be separated into crude palm oil (CPO) and palm oil mill effluent (POME). The fresh fruit bunches (FFB) typically are 52 per cent dry weight and have an extractable oil content of 15- 25 per cent. typically. Henson 1999). each new feed or liquid fertiliser.5 per cent of FFB. averaging 3–4 tonnes of mesocarp oil per ha per year in the major palm oil producing countries (Wahid 2005). The ‘press cake’ yields fibre and shell (dry weight A 12-year-old palm tree at is now among the best studied tropical equivalent to 8 and 5. Oil palm is grown commercially in at least 43 countries and accounts for almost The sex determination of flower bunches 10 per cent of the world’s permanent crop depends on the level of resources in the land (ca 14 million ha. about 8 per cent of FFB dry weight) and then pressing the resulting mass. the plum-shaped fruits develop in clusters of 200–300 on short stems (pedicels) close to the trunk. weighing 15–20 kg each.5 g. meso. and weighs about 3.

aged 9–15 years are the most productive (Photo: Joanne Gaskell) . plantations can be productive on a wide range of soils. but patterns are inconsistent: sometimes the highest yields are from higher ground and sometimes from valleys (Balasundram et al. possibly as a result of expansion into less fertile areas. 2007)—water-stressed palms produce fewer female flowers and abort (drop) unripe fruit. and are replaced. Plantation developers avoid steep slopes because of access and erosion problems. and Malaysia.   |  7 Oil palm basics cropland: ca 138 million ha. In the early 2000s. Fruit production responds well to soil nutrients and trees produce more fruit when fertilised. including ‘problem soils’ such as acid sulphate soils. (BisInfocus 2006). Yields often vary with landscape terrain. palm yields are higher there than in West yields stagnated in both Indonesia Africa (Dufrene et al. for example. see Figure 1). 1990). although trees Worker harvesting palm oil fruits in a plantation in Riau. Oil palm needs humid trees become too tall to harvest7 and equatorial conditions to thrive. where few other crops are successful (Auxtero and Shamshuddin 1991). There are also laws prohibiting conversion of forests on slopes. Palm productivity benefits Yield and its improvement from direct sunshine: the lower incidence A typical mature palm plantation of cloud cover over much of Southeast in Indonesia now yields 2–4 tonnes Asia is thought to be one reason why oil per ha per year. FAOSTAT. Some long-established conditions in Southeast Asia are ideal. and Oil palm seedlings are typically raised the high proportion of immature in a nursery for one year before planting out. Ground cover crops are used to reduce weed growth and prevent soil erosion (Basiron 2007). After 25–30 years.6 Palms mature rapidly and fruit can be harvested as soon as 2–3 years after planting (Basiron 2007). Indonesia. deep peat and acidic high aluminium soils. Mulching also boosts yields. With appropriate management. empty fruit bunches used as a mulch can reduce the need for fertilisers by over 50 per cent in immature stands and by 5 per cent in mature stands (Tailliez 1998). 2006). plantations in Malaysia have already Seasonal droughts at higher tropical been replanted for the third time latitudes greatly reduce yields (Basiron (Basiron 2007). Planting densities range from 110 to 150 stems per hectare.

Rees et al. Substantial improvements are still thin mesocarp) and shell-less Pisifera. limited mechanisation. trials are underway to study occurred in 1998 (Casson 2000). the 2003). To combat low-grade planting material. reduce pressure for expansion (Murphy Spread of the fungus and disease is 2007). which was developed by more than unimproved varieties. The disease is a major and increasing nutritional values (increasing the levels threat in Malaysia.8  |  The impacts and opportunities of oil palm in Southeast Asia plantations (Fairhurst and Härdter instituted in Malaysia in the 1990s. The fungus can remain As well as increasing the amount of oil. and harvesting. cycle currently required for one round Since the no-burning policy was of selection (Wong and Bernardo 2008). 2005). possible as there has been little attempt Tenera varieties have high oil content. palms these and other pests. the main improvements in yields and disease Africa has a wider range of oil palm resistance have come from plant varieties than other regions. most producer that are too old or too tall. 10 tonnes per ha per year9 and further gains are anticipated (Murphy 2007). as even a 50 per cent increase in enhanced when old trunks are left to rot yield would produce 18 million tonnes within the plantation. vitamin E and iodine) susceptibility of varieties have been (Wahid et al. 2007. with thin shell and thick of oil palm already produce 2–3 times mesocarp. 2000). economic namely Metarhizium anisopliae fungus instability. communities. There is no cure better management and varieties could and infection is lethal to oil palm trees. 2005). make a big difference to an incredible 50 tonnes per ha per yields. Intensively managed (Poku 2002) and are widely cultivated in selected cultivars already produce over Asia (Wahid et al. Pest and disease control. Low yields are also attributable to rhinoceros beetle (Oryctes rhinoceros) labour shortages. has become a problem. . which could shorten the 19-year eventually be bred (Anonymous 2008b). crossing the wild-type Dura (thick shell. specific diseases year (Murphy 2007). It remains to be are known to reduce yields. Most selection and breeding8 (Durand- modern varieties are from the Tenera Gasselin et al. pilfering and fraud (Lord and Clay nd). increased production costs. inadequate fertiliser use. such as Malaysia. so breeding can also improve the types of the disease can reappear in a plantation oil produced by the palms10 and boost during its second or third planting. to match cultivars to specific soil types are easier to process than wild oil palm or conditions. ‘hidden’ in wood or soil-borne debris. which commonly causes can be achieved in practice and how basal stem rot in Asian plantations much is commercial hype (Breure (Paterson 2007. There is ongoing detected in Indonesia—suggesting intense genetic research (Anonymous that disease-resistant varieties could 2007). changes in oil prices. strategies such as beetle pathogens. some suggesting up to 18. corruption. gradually stop producing fruit. In pests and serious droughts. and Oryctes virus (Murphy 2007). 2003). Infected palms more oil. In recent decades. Selected varieties group. storage and processing per ha per year (Corley 1998) or even methods. poor crop countries are pursuing biocontrol management. In some areas. Yield improvements due to Anonymous 2008b). Differences in the of carotenoids. The most notable is the bracket fungus demonstrated what yield improvement Ganoderma. and finally collapse.5 tonnes transport. It is the extent to which birds in oil palm also true that reported yields can be plantations control pest species and unreliable because of conflict with local reduce crop losses (Koh 2008a).

that can produce fruits for longer than but approximately 60 million tonnes 25 years. Angelsen which raises costs and limits access. that will ultimately decide whether plant high-yielding varieties. pressure future improvements in both quality and on land will be reduced (Murphy 2007). sequencing the oil palm genome was if yields rise and oil palm production complete. unlikely before 2020 (Parveez et al. how can all limit oil palm expansion local production is insufficient to meet under certain conditions. The issues maximum yields and. There is. Most more or less land is turned over to oil smallholders. 2001). while the government Land. though the relatively the cash to buy high-yielding seedlings unusual conditions under which the or are unable to differentiate between ‘intensification hypothesis’—that is the good and bad seedlings sold by claim that intensive systems save land—is unscrupulous traders (Zen et al. such as shorter palms tonnes of seeds were required for 2008. however. The Ministry of . 2000). therefore. true are relatively well understood This is exacerbated by limited supply. however. By May 2008. 2006). (Kaimowitz and Angelsen 1998. which may provide significant becomes increasingly profitable. In Indonesia. access to capital.   |  9 Oil palm basics Various genetically modified plants are Agriculture estimated that 220 million being developed. but commercial plantings are needed to be imported (Syafriel 2008). labour. national demand. Tomich et al. production (Crowley 2008). the counterargument that there will be more incentive to Large companies naturally seek establish new plantations. do not have palm are complex. the first phase of Industry commentators often imply that. and Kaimowitz 2001. good supports and promotes the benefits planting material and associated know- of high-yielding seeds for oil palm.

.

12 factor in determining where palms can be commercially established (Vermeulen Table 1. and for countries. so access to a mill is a major and in mixed production systems. suggesting possible rapidly and must be processed within benefits from oil palm in less intensive 48 hours. Palm-kernel oil is extracted substantial revenues both for companies as a separate process. smallholders can get good 6–7 tonnes of oil. But in reality. Compared to other major oil crops.13 Refined oil is then separated produces more oil from less land (Yusoff into solid and liquid fractions—it is and Hansen 2007. 3 Palm oil production and global trends Palm oil production returns on very limited labour and low Once harvested. provide work throughout the year. involving grinding. buyers control fruit prices. capital and labour produce cooking oil. crops.11 Oil palm can be an attractive crop In Indonesia. Oil palm plantations heating and the use of an ‘oilseed expeller’ employ cheap labour and. Returns the liquid that is commonly used for on land. see Table 1). unlike annual or solvent (Poku 2002). Thus. If they can make the are believed capable of achieving a necessary initial investments and survive productivity of 32 tonnes of fresh fruit the 2–3 unprofitable years before their bunches per hectare per year. At present. (‡) Mielke (1991. fruit deteriorates inputs of fertiliser. Crude palm oil is refined to remove palm oil has lower production costs and impurities. cited in Fairhurst and Mutert 1999). large mills processing Groundnut† 890 at least 30 tonnes of fruit per hour are Sunflower† 800 more profitable and require less energy Soya bean† 375 per unit of oil produced than the current Coconut‡ 395 generation of small mills (Jekayinfa and Bamgboye 2007). yielding first harvest. typical . The development of small-scale or even portable mills would Oil type Oil yield (kg/ha) allow communities and companies to Palm† 4000–5000 plant and process oil palm fruit in remote Rapeseed† 1000 areas. Oil production of palm and other major oil crops and Goad 2006). small mills are Cotton seed‡ 173 not considered viable and centralisation Sesame seed‡ 159 (de facto local monopolies) means that Sources: (†) Journey to Forever. current planting materials for smallholders.

2005). 2007) and shells to surface plantation roads and low intensity maintenance. per year) is half that of large-scale steriliser condensate. vitamins and antibiotics waste—there has been considerable (Ramachandran et al. The producers (4–6 t CPO/ha per year) first two are widely used as mulch and soil improvers in palm (Goenadi 2008). fertiliser Carbon briquette. paper Sludge Feedstuff. compost for can increase profits and reduce growing mushrooms. and enzymes. palm fibre and palm kernel shell. 2008). making it an caught in pheromone traps in oil palm plantations are used in environmentally friendly industry a nutritional supplement for ornamental fish feed (Kamarudin (Chavalparit et al. the Oryctes rhinoceros beetles pollution discharge. Uses of oil palm byproducts and biomass in food and manufacturing industries. mill effluent. Oil palm Nut Shell particle board Pulp. (See also et al. lubricant. and appropriate proposed as a means to filter heavy metal pollutants from other energy management. and fibre and shell are increasingly used as fuels disparity probably include access to in the oil mills (Yusoff 2006). oleochemical Palm cake Feedstuff. the mean yield of smallholders (2. 2006). 2006). Palm fibre is already used in the research on these opportunities (Box composite body of Malaysia’s national car.12  |  The impacts and opportunities of oil palm in Southeast Asia yields are only 50–60 per cent of this Box 1. recycling. The use of byproducts can increase the financial ‘Mills and water quality’ in Chapter 6. 2007). activated carbon (Ahmad et The multiple uses of ‘byproducts’ al. pulp. soap. (Yusoff 2006). With a combination goes on: for example. Even the pests may find industry can achieve almost zero commercial use: for example. salad oil. particle board. while methane from mill effluent fermentation There are cases where smallholders can also provide energy for mills (Yacob et al. margarine.) viability of oil palm and reduces waste. feedstuff. (Tangchirapat et al. fibre board and fillers (Wahid et al. Commercial research 1. Food (frying oil. while fibre is being and liquid wastes. Treated achieve yields that surpass large-scale palm trunks can be made into furniture (Darnoko 2002 cited producers (van Noordwijk personal in Simorangkir 2007). the CPO industrial processes (Isa et al. 2008). cocoa butter substitute) Crude palm oil Oleochemical (stearine. (Source: Fairhurst and Mutert 1999) . fertiliser. Trunk starch. Figure 5). byproducts include paper (Wanrosli et al. vanilla flavouring can be generated from of reuse. Uptake in Malaysia is in advance of that in Indonesia and varies from company to company. Reasons for this plantations. 2007). using solid empty fruit bunches (Ibrahim et al. biodiesel) Fruit Fibre Particle board.5 t CPO/ha Oil palm byproducts include empty fruit bunches. 2007). soap. fish food (Bahurmiz and Ng 2007). paper. Potential oil palm byproducts may increase potential (Goenadi 2008). Empty bunch energy Furniture. 2007). particle board. fertiliser Kernel Frying oil. Other experimental items made from observation). Ash can be mixed with concrete good planting stock and fertiliser. energy Figure 5. In official profits and reduce waste Indonesian statistics. detergent. activated carbon.

) and critical research areas are currently neglected (Cassman and Liska 2007). Sovereignty and control and pesticide pollutants. carbon neutral. In various other additives can also be used. Biofuels have the potential to be . cent less greenhouse gas emissions than fossil fuels. gain than ethanol. they are typically more any case. biofuels. respectively. biodiesel releases just 1. breaks avoided. as well as enhancing rural per net energy gain. Biodiesel also address fuel needs. Volume levels) by 2030. many observers are increasingly costly) (Nikiema and Heitz 2008). biofuel is mixed challenge has been grossly underestimated with fossil fuels.14 Approximately 95 per for volume. Palm oil to biodiesel per cent by 2030 (with 92 million tonnes Biodiesels are fuels developed from mixtures of fatty acid methyl of oil equivalent production). The development of alternative while biodiesel produces about 86 per cent fuels is thus driven by two factors: first. the need to per cent. Biodiesel environmental degradation. 8. 2006).3 per cent and 13 per cent of reduce greenhouse gas emissions (Lin the agricultural nitrogen. Without esters (produced by transesterification of triacylglycerols) and major productivity increases. if spilt. (In virtually all current and because the magnitude of the scientific planned large-scale use. and are often blended with inadequate to compensate more than a traditional liquid fuels to improve physical properties (although fraction of global hydrocarbon use. 2007. of the petrol/gasoline energy. Talukder et al. including biodiesels. ethanol produces about 67 cent of global energy comes from fossil per cent of the energy of petrol/gasoline. 2008). There is a range of of biofuel production may look foolish. Tamunaidu and Bhatia 2007. Demirbas 2007c. The conversion of palm biofuel crops covered about 1 per cent of oil into fuel is more efficient than for the world’s arable land in 2007. this is minor additives (antioxidants. A variety of processes are questioning the various other impacts being explored that allow palm oil to be made into biodiesel of expanding biofuel production (Al-Zuhair et al. the net Global energy consumption is predicted energy from biodiesel is more than that. if it leads to and alcohols (Demirbas 2007a). (Scharlemann and Laurance 2008).). Ooi and Bhatia 2007. high food produces fewer harmful emissions than prices. and extension portfolio et al. Because biodiesel production (Box 2) from raw lipids is relatively efficient. and increases the number of fossil fuels (Lin et al. second. fuel oils or worse—unethical. There are predictions that this figure will reach 4 Box 2. it would require both an increase down more rapidly than fossil fuels (Lutz and redirection of the global research.   |  13 Palm oil production and global trends Biofuel development. Koh and Ghazoul 2008). It can be used undernourished people. from maize ethanol. 2006). According to UN releases less air pollutants per net energy estimates (UNEP and Cleveland 2008). 2006). fuels.0 of energy and. While we are in conventional diesel engines if mixed optimistic that this scenario can be with conventional fuels and. etc. phosphorus et al. whereas biodiesel reduces It is unclear to what extent biofuels can emissions by 41 per cent. to increase by 50 per cent (over 2007 for example. over supplies. development. because the carbon that demand and expansion combustion releases is the same carbon that the crop previously sequestered from the atmosphere during photosynthesis Ten years from now the rapid expansion (Somerville 2007). Compared the necessity to identify cheaper sources with ethanol. The production and development are also clear motivations combustion of ethanol produces 12 per (Wakker 2006.

USA canola. Using a defined not yet been extensively evaluated by the comparison protocol. But Up to 2007. MY optimised liquid-bed sugar beet grass. except where otherwise indicated by country codes: Brazil (BR). However. have markedly higher production (Rupilius and Ahmad 2007). Fuels in the shaded area are considered advantageous in both their overall environmental impacts and greenhouse gas emissions. CN co-substrate palm oil. In fuels. EU ethanol potatoes diesel methane 400 fossil fuel Total environmental impact (%) from raw material from waste 300 soy. these emissions and overall environmental factors.14  |  The impacts and opportunities of oil palm in Southeast Asia ethanol (Hill et al. have costs (Figure 6). for Biofuel Development. and the choices involved. France (FR). European Union (EU). 2008).26 each has specific advantages and costs thousand million litres of biofuel by (Scharlemann and Laurance 2008). and most major automotive and Scharlemann and Laurance 2008). FR recycled oil 0 0 20 40 60 80 100 Greenhouse gas emissions (%) Figure 6. BR maize. 2007 by Scharlemann and Laurance 2008) . palm oil had contributed nearly half (12) of the biofuels. The biofuels that offer the most Malaysia. 2006). using blending requirement of 10 per cent two established criteria: greenhouse gas and drawn up plans for the expansion of 500 rye. the greenhouse gas oil palm industry. Greenhouse gas emissions of 29 transport fuels plotted against overall environmental impacts. China (CN). diesel and natural gas). Origin of the tested biofuels is Switzerland. aggregate environmental costs than fossil but the industry is swiftly expanding. (2007) evaluated 26 biofuels. It has also formed a National Team Zah et al. (Source: adapted from Zah et al. Malaysia (MY) and the USA (USA). the government has pledged to reduce dependency on fossil fuels by Comparing biofuels is difficult as 25 per cent and to produce up to 22. 2025. 2007. emissions of 21 biofuels are 30 per cent less than those of petrol or even less. including less than 5 per cent to global biodiesel palm diesel. BR sorghum. scaled relative to petrol/gasoline. oil companies are researching biofuel (Herrera 2006). USA canola manure + sugarcane. EU 200 soya. palm biodiesel already fuels benefits are those derived from biowaste buses and cars (Reijnders and Huijbregts and other byproducts (Zah et al. In Indonesia. which has including palm biodiesel (along with recommended a mandatory biodiesel petrol. biorefinery gasoline manure methanol grass 100 optimised wood wood (ethanol) diesel (methanol) wood manure natural gas whey sewage biowaste manure + sludge co-substrate recycled oil.

50 2010 2. of these incentives to expand plantations Assuming a biofuel yield level of 5200 and invest in biodiesel plants (Casson et litres per hectare (Naylor et al. generation (500 000 tonnes in 2005.   |  15 Palm oil production and global trends biofuel crops. oil have a specific blending mandate) are palm can produce 5830 litres of biodiesel 3. While development programme. jatropha 600 litres per 2020. 2007).50 1. This is two-fifths of (Demirbas 2007b). 4. Countries vary widely in their biodiesel sugar cane and cassava. others (for example.5 and 6.00 2020 1. and algae 58 700–136 900 litres per hectare. In Europe.00 2. Additional area of oil palm plantations required to meet country- specific biodiesel targets. hectare.00 3. most palm the current combined area of oil palm oil used as a fuel has until recently been in Indonesia (6. Naylor et al. 2007) . MPOB 2007). Rupilius and Ahmad 2007).3 million hectares by 2010 and per hectare. from 1 per cent in Government has provided a number The Philippines to 10 per cent by 2020 of incentives to support its biofuel in the European Union (Table 2). an additional 4 million (Reijnders and Huijbregts 2008).00 0.2 million hectares) to biodiesel) in small-scale electricity (Direktorat Jenderal Perkebunan 2006. a current production capacity that roughly matches the volume of biodiesel Europe and the USA aim to use biodiesel required to meet proposed blending for both transport and electricity targets.50 Area (million ha) 3.00 a es esi il da sia an ina pe d pin az n na Jap ro on ila lay Ch Br ilip Eu Ca a Ind Ma Th Ph Figure 7. 2007). respectively (Figures 7 and 8). which does not Agriculture Bogor (IPB. such as oil palm. jatropha. conservative estimates of the additional land area needed to meet these targets According to data from the Institute for (not including the USA.50 4.50 0. in Indonesia) Several companies are taking advantage are still just recommendations. Research continues on all Global biodiesel infrastructure has three feedstocks. However. including tax some mandates have been passed into incentives and interest rate subsidies. The Indonesian blending mandates. law. (Source: authors’ calculations based on IEA 2006. Indonesia).1 million hectares) used as a fuel oil (without conversion and Malaysia (4. The hectares of palms would be required USA is expected to become the world’s to actually produce this maximum largest consumer of biodiesel by 2010 volume (Figure 9). al.

but an additional 4 million ha of oil palms would be required to run existing processing plants at full capacity. (Sources: authors’ calculations based on Naylor et al.00 8. 2007) 9.00 1.00 2. Total.00 5.00 Area equivalent (million ha) 7. Land requirements estimated from existing and planned biofuel processing capacity. Actual.00 Planned 4.16  |  The impacts and opportunities of oil palm in Southeast Asia 7 Oil palm planted area (million ha) 6 5 4 3 2 1 0 Y2010 Y2020 Y2010 Y2020 2006 2006 Actual.00 ia an pe sia A a tal esi US Ind Jap ro lay To on Eu Ma Ind Figure 9. Enacted Total Malaysia Indonesia Figure 8. Naylor et al. 2007. European Biodiesel Board 2008) .00 6.00 0. Global biodiesel production capacity roughly matches the volume of biodiesel required to meet proposed blending targets. Additional areas of oil palm potentially required for all biodiesel blending targets compared to current oil palm plantation area. International Palm Oil Congress 2007.00 Built 3. (Source: authors’ calculations based on IEA 2006.

Importer of Importer Mandatory B10 by future soya. etc. importer of palm Thailand Indicative B5 Implemented Tax waiver. B5 = 5%. rapeseed and palm Korea Mandatory B5 Implemented Mandate Importer of Importer soya and palm Malaysia B5 Tentative Exporter Exporter of palm The Mandatory B1 in 2007 Exporter of Importer Philippines to B2 by 2009 coconut. Projected global biofuel targets and potential feedstocks for biodiesel production Country/ Target† Tentative or Mandate or Veg oil trade Crude mineral Region implemented? subsidy/tax? status oil trade status Brazil Mandatory B2 in 2008 Implemented Strong tax Exporter Importer to B5 by 2013 incentives. Source: IPOC (2007) .4 thousand million Implemented: Tax credits. exporter 2012 mandate of palm USA 28.75 by 2010. of palm Jatropha focus Indonesia B2 to mandatory B5 Tentative Exporter Importer by 2010 of palm Japan B5 in 2009 Preparing Importer of Importer legislation soya.   |  17 Palm oil production and global trends Table 2. of soya mandate Canada B2 by 2012 Indicative None Exporter of Exporter rapeseed China 15% biofuels by 2020 No concrete Tax support Importer of Importer policy proposed soya and palm EU B2 to B5. Exporter Importer litres by 2012 (not fuel Energy Act of mandatory in of soya specific) 2005 some states General support for larger mandates † B2 = 2% of biodiesel mix. Implemented Subsidies and Importer Importer Mandatory B10 by tax incentives of soya 2020 ëvoluntary mandateí India Preparing Importer Importer legislation.

and continued to climb. While comparatively low palm oil should achieve a minimum level (35 per prices make it more reasonable to use in cent) of greenhouse gas savings.33/litre) in November 2006 to over $900 in November 2007 (Leow Opportunities for palm biodiesel 2007). economically a marginal activity at best.g. even before the additional $100 (a) land with high carbon stocks per tonne that it costs to convert CPO should not be converted for biofuel into biodiesel. The future for palm Currently. biofuel production based Palm oil prices on rapeseed and soya bean is heavily The economic viability of palm biodiesel subsidised and has been developed to depends on the price of crude palm oil. 2007). (b) land with high and petro-diesel prices underlines the biodiversity should not be converted uncertain role of palm oil in the biofuel for biofuel production. As Farrell and Gopal (2008) people who regularly use palm oil in note. closing in $1146 in March 2008 and falling again to Europe. A 2008 directive issued by the $791 in August of the same year. are meeting contracts at a from crops are typically higher than loss. the USA has installed 65 resources such as arable land and water’. nevertheless. although this can chain who also own large plantations change with changing oil prices. biodiesel is therefore likely to lie within converting palm oil into biodiesel is Indonesia and Malaysia themselves. buyers are scrambling to secure vegetable oil inputs at a reasonable price and. It biodiesel production facilities and remains to be seen what role oil palm will aims to meet 30 per cent of its needs play a role in meeting this challenge. which might be cheaper and less likely to compete with food crops (Chisti High CPO prices also impact upon local 2008).e. unless it is subsidised. Biodiesel producers who are the best those of fossil fuels (Peters and off are those with a well-integrated supply Thielmann 2008). and perhaps in other key consumer Producers who signed forward contracts countries outside the European Union to deliver biodiesel to European or US (i. support local agriculture (Rupilius and Global palm oil prices rose from US$ 390 Ahmad 2007). Commission 2008). for Without subsidies. In Europe and the USA. peaking at producers are. In Indonesia.. Even at European Parliament on biofuels and $700 per tonne in 2007. palm oil producers . the costs of biofuels the most part. China and India).15 The biofuel. Many (e. Riau) (Casson et al. which is currently researchers are seeking biodiesel establishing a large biodiesel plant in alternatives. per tonne ($0. The volatility of palm oil production. there must be a balance between European Commission ranked other oil crops (such as rapeseed and sunflower) prices being low enough for biofuel as having greater greenhouse gas production while remaining high enough savings than oil palm (European for oil palm plantations to be profitable. particularly for transportation. Wilmar Holdings. for transportation fuels from biomass by 2030 (Somerville 2007). CPO was more renewable energy sources has proposed expensive than petroleum diesel (Figure three criteria for acceptable biofuels: 10). such as algae and jatropha. ‘the overall research challenge for food.18  |  The impacts and opportunities of oil palm in Southeast Asia With renewed interest in liquid bioenergy is to develop the technologies biofuels. and (c) biofuels market. to produce useful products at low costs new initiatives are underway. For while minimizing the use of scarce example.

2 Soya bean oil 1 Price (US$/litre) 0. prices in the future.6 0. prior to 2009. There are several ‘biodiesel effect’.4 0.   |  19 Palm oil production and global trends 1. Demand The boom continues from China and India.16 Nevertheless. whether for influence commodity prices is a critical human consumption or because of the research question. per cent in India—because incomes rose and people consumed more oil It should also be noted that the growth (Murphy 2007). continues to grow plausible links to examine: (1) higher rapidly and is affecting the prices of maize production for ethanol in the vegetable oils in general (Murphy 2007). palm oil and soya bean oil. the world’s largest In most developing nations. .. from rapeseed) may lead to 2000). The Indonesian Government has higher vegetable oil imports. and quantifying how and to what extent biofuel developments Demand for palm oil. the price of cooking oil has doubled in recent years and many Indonesian consumers.2 0 Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Date Figure 10. China in the biofuels market may also be partly and India accounted for 29 per cent of responsible for the palm oil price growth global consumption (USDA 2008b).com/].g. 2009 financial crisis has caused prices to by 65 per cent in Indonesia and 94 plummet to US$400 a tonne.org/]) tend to increase exports when prices USA may displace soya bean production increase and this causes a shortfall for and raise global vegetable oil prices. are suffering. Prices of diesel. In 2004–2005.4 Diesel Palm oil 1. 1996–2008.globalfinancialdata.iea. (Source: Vegetable oil data from Global Financial Data 2008 [https://www.8 0. or (3) palm increased export taxes to keep domestic biodiesel production in Southeast Asia may contribute directly to higher palm oil cooking oil prices down. Such a shortfall sparked (2) biodiesel production within the protests and riots in 1999 (Casson EU (e.6 1. half of whom live on less than $2 per day. but the considerably in the 1990s—for example. domestic users. vegetable palm oil importers. petro-diesel data from International Energy Association 2008 [http://www. has pushed up palm oil consumption per capita rose oil prices over the past few years.

20  |  The impacts and opportunities of oil palm in Southeast Asia In 2005. aside from palm oil importers are China. . The main oleochemical processing. ‘fully traceable’ by 2012 (Unilever 2008). palm oil overtook soya as certified ‘sustainable’ sources within the world’s main vegetable oil. and 2008. spongiform encephalopathy. Unilever has known as ‘mad cow disease’ (Rupilius committed to using only palm oil from and Ahmad 2007). commonly in response to pressure. in part due to health changes in the market in response to concerns including the risks of bovine environmental concerns. Indonesia and Malaysia are now the leading exporters17 and both also have Virtually all growth in basic large domestic markets. is now in Southeast Asia and the European Union (BisInfocus and is supplied by palm oil and palm 2006. there are care products. For example. China is investing kernel oil (Rupilius and Ahmad 2007). Moreover. India biodiesel. production topped company in Europe will be certified as 41 million tonnes (USDA 2008b). and all the palm oil used by the in 2007/2008. heavily in processing and has several Palm oil is increasingly used because joint ventures with Indonesian and European consumers prefer it to Malaysian palm oil producers (Rupilius traditional animal ‘tallow’ for personal and Ahmad 2007). USDA 2008a).

Between 2000 and Wilcove 2008b in press). in 1997. At the same time. In dramatically increased during the 1990s Indonesia especially. 218–219). and 2005. For expense of natural forest cover19 (Koh and many pro-oil palm commentators.. bankruptcies and timber-theft cover data suggests that between 1990 land-clearance frauds. displaced people. In part. South Sumatra continuing debate over conversion of reported 366 fires in one week alone ‘degraded and secondary forests’ (Koh (Sulaiman and Saleh 2007). and plantations. pp. rubber and in 2007. the growth of oil palm estates and The area of forest lost is greater than the deforestation in Malaysia and Indonesia area of plantations that replace them.g. 2008). This is because of the knock-on effects of infrastructure. (Clay 2004. palm plantations and. in Indonesia (1 313 000–1 707 000 ha of this reflects a semantic debate on what a total of 3 017 000 ha) occurred at the constitutes ‘forest’ and ‘deforestation’. In one month used for cultivation (e. 4 A driver of deforestation? There is a direct relationship between (Buckland 2005. Koh and Wilcove 2008a). some 55–59 per cent18 of many in the Indonesian biofuel industry oil palm expansion in Malaysia (that and even many in government deny is 834 000–1 109 000 ha of a total of any links between oil palm and forest 1 874 000 ha). and over 56 per cent of that loss (Mita Valina Liem 2008). Malaysia and Although some claim that much Papua New Guinea were comparable to the destruction of forests is attributable to total volume of fossil fuel emissions in the previous impacts and uses such as logging region (van der Werf et al. oil palm continues to be widely associated with loss of natural In Indonesia. oil palm Wilcove 2008a). there is recorded in Kalimantan. plantation An evaluation of FAO (2005) land failures. Nonetheless.21 and 2006 the average carbon emissions due to fires in Indonesia.20 plantations are forests. Palm oil producers in Malaysia state categorically that primary forest is no The burning issue longer converted into plantations— Forest and other fires are an annual expansion only occurs on land already occurrence in Indonesia. some 5108 fire ‘hotspots’ were agriculture). large-scale burning forests (Yusoff and Hansen 2007). the government banned are believed to be the major cause of the use of fire in relation to the clearance fragmentation and loss of forest habitats of land (The Environment Management .

Developments of setting fires to degrade forest like oil palm plantations often increase intentionally to gain land use permits both the degradation of surrounding (Casson 2003). peat soils. 2008). 2008). The sheer emissions from fires were 30 times number of smallholders alone involved greater in Borneo that they were during is a formidable challenge as they cannot . where the costs of removing health. of ignition. increases degree of clearing. The fires burnt forest. and the types of human activities fires within the boundary of oil palm that might lead to both intentional and concessions are. In spite of this. including logging. associated with Indonesian oil palm. and the blame for such that occur in the vicinity of oil palm fires does not always lie with concession developments are likely attributable management (Dennis et al. with the incidence of experienced the worst fires worldwide fire increasing exponentially with drought in 1997 and 1998. In contrast. carbon will not be straightforward. biodiversity and habitat were wood with heavy machinery are high. contributed to global warming secondary vegetation or heavily logged (Simorangkir 2007). Indonesia the 2000 La Niña. Underlying causes of forests. In addition. Malaysia established a strict no-burning Fires require dry fuel and a source policy for land clearance in the 1990s. (directly or indirectly) to the plantation. however. Changing fire use Southern Oscillation event. disputed and unintentional ignition—thus many fires likely complex. there is a strong relationship The clearance of land by fire is part of between climate change and fires: traditional land management practices During the moderate 2006 El Niño– throughout the tropics. Intact rainforests are The country’s success in reducing fires generally too wet to burn—fires only may be related to the fact that most occur following severe droughts. oil palm development has Adiningsih 2006). Secondary forests are more flammable Oil palm companies are often suspected than primary forests. many the likelihood that a forest will dry out plantations in Indonesia are just being sufficiently even in a short drought established (Simorangkir 2007) and fire (Laurance 2003).3–3.6 million hectares of land. degradation and smoke haze forest clearance and fragmentation of the pollution were estimated at $2.22 extensive. lit specifically to prepare land for plantations (World Bank 2001). 0. and the fires potentially for existing large-scale plantations. The for ‘high volume’ forest and forests on impacts on human life and livelihoods. The economic costs of similarly been preceded by large-scale forest loss.8 thousand million in carbon release without the smoke and haze problems (Tacconi 2003). 2005). a third of them (van der Werf et al. and replanting did not require the same roads and fragmentation.5 larger forest landscape (Hansen 2005. to burn again in subsequent years. with an additional Abdullah and Nakagoshi 2007). While this is true the fires (van der Werf et al. This Burning is still widely regarded as period was also the major El Niño– the quickest and cheapest method to Southern Oscillation event which clear land for plantations (Guyon and certainly contributed to the severity of Simorangkir 2002). 23). Once a forest has is the simplest and cheapest way to clear burned it is likely to be dry enough the land.73 parts per million volume CO2 into the atmosphere (Murdiyarso and In Malaysia. thousand million.22  |  The impacts and opportunities of oil palm in Southeast Asia Act no. zero burning is more cost effective 11. But plantations were already established forest degradation. but $2. releasing (Simorangkir 2007).

cited in Nellemann et al.5 million Sumatra. often with forest million hectares of land. . He estimated that about that close to 70 per cent of the oil palm 7 million hectares of such uncultivated plantations located in Indonesia were land was available in Indonesia planted on land that formally fell within (Simamora 2008). Jambi. Central Kalimantan and infrastructure reduced penalties. granted to establish oil palm on 5. 2004). 2004) and. Oil palm is. it is possible that up to 4 million hectares Abandoned land and of forest has been converted to oil palm logging to date (2008).7 million ha) is forested in Indonesia (Ministry of Forestry 2006 (Figure 11. This totalled close to 2. Between the mid 1980s and late 1990s. 1999. In plantations. Kalimantan’s ‘protected’ Association. of which only clearance. 2007). although easier to hectares of forest land. (Photo: Patrice Levang) assume that this trend has continued. Forest loss and degradation in Southeast increasingly being planted on already Asia is more rapid than in other tropical cleared lands in part because most of the regions (Sodhi et al. in 37 of the 41 national parks 25 per cent (1. said on 12 May 2008 lowland forests were reduced by over 56 that in the future palm oil companies per cent (Curran et al. 2004). logging. spatial analysis infrastructure reduced forests in Sumatra indicates that permits have already been by 61 per cent (Nellemann et al. Between lowland forests located in Kalimantan the mid 1980s and late 1990s. for instance. the Executive 2 per cent (Fuller et al. plantations. human migration and Kalimantan. 2007).5 There is illegal logging. most of which was logging. from director of the Indonesian Palm Oil 1985 to 2001.   |  23 A driver of deforestation? usually afford to pay up front for heavy Indonesia’s forest estate between 1982 and Oil palm settlement in land-clearing machinery (Casson et al. South Kalimantan (Casson 2000). nevertheless. and Sumatra have already been lost. will only comply if the authorities within the provinces of Riau. target. would focus on developing ‘idle land’ (notably including former forest Ministry of Forestry statistics indicate concessions). Annual forest loss in Kalimantan is estimated at Didiek Hadjar Goenadi. Casson et al. 2007). Large estates. 2007). Aceh. human migration and implement the law strictly and issue West Sumatra. If we forests in Sumatra by 61%.

24  |  The impacts and opportunities of oil palm in Southeast Asia Nevertheless.5 million hectares of still considered to be a major driver degraded land was available. harvest the timber been done though the land would be then abandon the area. 2007). (Venter et al. 2007). As and land use licenses allocated to oil palm timber fetches $1024–2100 per hectare companies if they fail to plant within 2 (various references.3 million hectares of land for oil viable plantings. years. oil palm expansion is although 12. however. Many oil palm companies are without first seeking central government closely associated with logging companies approval—the forest was cleared but (Casson 2000). 2009) . and some investors use oil palm as a To our knowledge. In 2003. while less than 1 was indicted by Indonesia’s Anti- million hectares of land have actually Corruption Court in November 2006 for been planted with oil palm (Casson et issuing forest exploitation permits (IPK) al. it is extremely lucrative to set up occurs and the damage will already have a ‘bogus’ plantation. Laws presently allow the the plantation which otherwise requires government to revoke location permits several years to repay (Casson 2003). the palm developments have been issued former Governor of East Kalimantan in West Kalimantan. particularly available for plantation if investors are as there is no accountability. however. The extent of forest and planned oil palm plantations within forest habitat and in non-forest in Kalimantan. such revocation rarely 2009). clearing permit than a logging permit. This in Indonesia has been prosecuted for explains why location permits covering clearing land but failing to develop 5. Indonesia. The gains from selling the oil palm was not planted (Casson et timber can offset the costs of establishing al. willing to cover the establishment costs. not a single company means to gain access to timber. see Venter et al. Figure 11. This is palm plantations were established in because it can be easier to obtain a land forested areas (Casson 2003). most oil of deforestation in Indonesia. Notably.

Environmental changes. to 160 tonnes per hectare (544 tonnes of CO2) when oil palm trees reach With palm oil production. 2006). whether for As any review of the literature soon timber extraction or plantations. 5 Greenhouse gas emissions T ropical deforestation still result if the total amount of carbon contributes around a quarter emitted from palm oil production is of anthropogenically released less than that emitted from burning greenhouse gases (FAO 2005). For example. alternatives to fossil considerably with context.57 tonnes CO2 into the atmosphere (Frondel and Peters Carbon emissions and 2007). Each tonne of petroleum diesel releases around 3. or transport. this figure may be reduced et al. • show a net energy gain (Hill However. gases causing global warming in the world (World Resources Institute 2009). as oil palm trees contain when forest is converted and when fossil around 90 tonnes of carbon per hectare fuels are used in management. 2002). Venter et . processing (Tomich et al. 2002. an equivalent amount of fossil fuels. Casson et al. carbon is lost maturity. shows. Net carbon savings can Yusoff and Hansen 2007). 2007. mean be assessed—these allow those for or that Indonesia is the fourth largest against oil palm to find calculations to contributor to the overall greenhouse ‘show’ the benefits or the costs. there are many different ways the destruction of forests by fire and that the carbon emissions balance can the degradation of peatlands. The numbers for palm biodiesel carbon benefits are harder to estimate and will vary To offer benefits. fuels need to: a typical hectare of undisturbed • have more environmental benefits rainforest contains approximately than the fuel they replace 250 tonnes of aboveground carbon • be economically competitive (Tomich et al. Replacing primary • be produced in sufficient quantities rainforest with oil palm therefore to make a meaningful impact on reduces this carbon by around 250 energy demands tonnes per hectare (850 tonnes of CO2).

but are even less well characterised. Long-term benefits required for biodiesel production from in the future may not be worth short- palm oil comes from fossil fuel though term losses. an update than that of scientists working 2008) with oil palm can result in net thousands of miles away from the carbon gains. utilising degraded lands by and dependent upon the forest cover and by allowing secondary forest to are factored in. . forests are generally regenerate on exhausted plantation land responsible for sequestering considerably (Yusoff and Hansen 2007. 2020 so as to avoid disaster (IPCC 2007). oil palm plantations Time to reach positive are considered to contribute to global carbon benefits warming in the short term. 2008). energy released than fossil fuels and such as primary forest. Overall. But not all generating the chemicals (fertilisers forests are equal and there is considerable and pesticides) used on plantations and variation across locations. than refining and using an environmental emissions would be a energy-equivalent amount of petroleum great asset. in transportation. Making to address the Intergovernmental Panel various assumptions. they find that on Climate Change’s call to reverse the one tonne of palm oil can be linked to increase of greenhouse gas emissions by between 2. common biofuel crops. de Vries in press). observers are producing and using palm biodiesel having difficulty keeping up with all from converted forest land causes greater these developments: ‘A comprehensive greenhouse gas emissions. Moreover. Most for oil palm releases an average of 698 data and trends remain contentious: (±SD 162) tonnes of CO2 in the 30 years while fossil fuels do tend to be used in following development. halting lower—if soil carbon pools maintained deforestation. at least in the update on palm oil energy balance and short term.26  |  The impacts and opportunities of oil palm in Southeast Asia al. Reijnders more carbon than accounted for in most and Huijbregts 2008. planting open areas (Hartemink would be more valuable in making such 2005) or degraded areas (Gibbs et al. This Many palm oil processing plants already becomes especially crucial in the case of make use of waste biomass (shell and peat soils discussed below. Fargione et al. In addition. This is because Reijnders and Huijbregts (2008) suggest so much carbon is lost in the original that as much as 75 per cent of the energy land use conversion. if they replace Biofuels can release less C per unit of vegetation with higher carbon content. As de Many commentators believe that Vries (in press) notes.57 tonnes) Southeast Asian tropical forest cleared and the second far surpasses it. And it is likely that recent diesel (Figure 12. these inputs could the belowground carbon pools (and themselves be replaced in time ​  changes in these) can be substantial. Living belowground forest biomass is Emissions can be reduced by converting generally higher where soil fertility is waste products into energy. oil palm has the highest potential for carbon offsets (Gibbs 2008). (2009) use a compilation of data to Note that the first figure is below that estimate that each hectare of (dryland) of petroleum diesel (3. current ‘aboveground’ estimates.2 tonnes of CO2. especially if they are meant there is considerable variation. still cause net carbon emissions in the short to medium term.6 and 18. by biofuels. of the most nearest plantation’. thus saving fossil fuels (de Vries in press). fibre) to fuel processing. In knowledge of people from the sector contrast.

2007). allocated for oil palm developments 2008. (2009) estimate 2006). 2008) or in some total 711 815 ha) have been issued for cases. This makes it easier to seek and carbon at 100 kg/ha per year (Weiss gain ownership. In fact. estimating 86 years to become stopped allocating peatlands to oil carbon positive in normal forests cleared palm plantations in 2007 in response to by burning and ca 420–840 years for growing concern about climate change peat forest—the estimate assumes oil and GHG emissions arising from peat palm can contribute to CO2 savings degradation. allows conflicts (Casson et al. 2007). 50 per cent planting oil palm on degraded sites of the location permits26 issued for might lead to positive gains in only 10 planned oil palm developments (which years (Danielsen et al. and investors are less et al. recover the ‘carbon debt’ of converting peat forest to oil palm from biofuel One recent study estimated that about production and use.4 million Based on a compilation of published ha) are located on peat (Hooijer et al. about forest conversion and more than 600 13 per cent of the land use permits years on peat swamp (Danielsen et al. Sumatra. (2008) also found similar Indonesian government temporarily figures. In Riau. however. most financially attractive development 2002). Even a partially drained peatland draining. The Fargione et al. Another 646 234 hectares oil palm to make a positive carbon of peatlands have been allocated to contribution vary between 71 and 93 planned oil palm developments in years for oil palm planted following Kalimantan. In contrast. 2002). lie on peatlands.   |  27 Greenhouse gas emissions Estimates of the time required for Kalimantan. will result in significant CO2 can release over 4 tonnes of carbon per emissions and will counter any carbon hectare per year (Hirano et al. A benefits that palm-based biofuel may well-drained peatland is more likely to offer. which invariably involves 2005). per hectare per year. Venter et al. it revoked this equivalent to 7. release around 16 tonnes of carbon per Fargione et al. Oil palm is increasingly being planted on peatlands because most mineral Peatlands and greenhouse soil areas in the lowlands within gas emissions Sumatra and Kalimantan are already Tropical peatlands are one of the taken. 2008). Logging. however. Many are active sinks absorbing option. as mentioned earlier. 2008). figures. surface peat to become flammable24 or to decay.1 tonnes of CO2 repaid decision in February 2009. and releases large amounts of The conversion of these peatlands to CO2 (Wosten 1997 cited in Hartemink oil palm. peatlands (Casson et al. draining23 or likely to become embroiled in social clearing peatlands allows drying. 2007). one-quarter of existing Indonesian oil palm concessions (about 1. A study undertaken in 2007 for that each hectare of peat swamp forest the Indonesian Forest Climate Alliance drained and converted to oil palm may revealed that around 17 per cent of contribute 3304 (±SD 402) tonnes of the land use permits25 issued to oil CO2 over 30 years. Gibbs et al. (2008) estimate that hectare per year (55 tonnes of CO2/ha it could take ca 420–840 years to per year) (Fargione et al. Peatlands also tend to have low world’s largest near-surface reserves of population densities and oil palm is the terrestrial organic carbon (Page et al. If the approximately palm concessions lay on peatlands in 1 million hectares of oil palm planned . 2008). immediately (Gibbs et al.

from a greenhouse gas perspective. (2002) found four orders of magnitude across tropical that oil palm plantations released large plant taxa. In contrast. 1999.. Nitrous oxide (N2O) is Fermentation of mill effluent also responsible for 7. Lelieveld et al. When examining the greenhouse chemistry and climate (Wilkinson et gas emissions of land use types in al. This is an area Isoprene is known to react with the requiring further research. 2006). such as ammonium long periods of flooding (Hooijer et al. Murdiyarso et al.28  |  The impacts and opportunities of oil palm in Southeast Asia for Kalimantan are developed. ozone. isoprene does will be released into the atmosphere over not simply mop up hydroxyl radicals the following 30 years. methane. 1245 (±SD 155) million tonnes of CO2 in otherwise clean air.71 µg N m-2 h-1. These emissions vary by over Jambi. The most significant fertilisers. This is 65 per cent as was previously believed. nitrate. 2008).04 and 1. of CO2. plantation emissions of nitrogen oxides ozone and nitrogen oxides). but it is 21 times more photochemical air pollution with potent as a greenhouse gas than CO2 wider consequences for people and (Wuebbles and Hayhoe 2002).g.2 per cent per year (IPCC understood influence on atmospheric 2007). Tropical the environment.90 µg N m-2 h-1. Oil palm is a major nitrogen fertiliser use. 2006). 2009). MacDonald et Fertilisation of plantations may al. polluted environment this recycling is inhibited and is replaced by a process which promotes smog (Lelieveld et al. one kilogram significant—for example.5 per cent of the produces methane (Yacob et al. urea applied of nitrous oxide has an equivalent to peat probably increases methane impact to approximately 310 kilograms emissions (Melling et al. 2006). Recent research indicates that. isoprene emitter and the local and global fast-growing pulp trees and intensive consequences of such emission from annual cropping systems emitted only large oil palm plantations remain to 1. making vegetation emissions quantities of N2O into the atmosphere sensitive to overall composition (Lerdau (55 µg N m-2 h-1) probably linked to and Slobodkin 2002). be examined. 2006). . calculated greenhouse effect caused by human activity and the concentration Emissions of volatile organic compounds in the atmosphere is increasing at a rate also have a significant but as yet poorly of about 0. Other greenhouse gases 2008). while natural forests were found to emit just 0. perhaps 2008). The effect of drainage ditches According to the Intergovernmental and fertiliser in peatlands may also be Panel on Climate Change. forests appear to be major global methane sinks (Eggleton et al. which (from natural sources as well as from would otherwise accumulate (Guenther the fertiliser just discussed). 1999) and absorbance usually declines contribute to greenhouse gas emissions. respectively. while in a for 2008 (Venter et al. when forests are cleared. ammonium sulphate and urea. are Peatlands emit some methane after nitrogen based. but can of the reductions required to bring the also regenerate them (Guenther USA into line with Kyoto requirements 2008. we can predict that oil Methane (CH4) has been excluded from palm plantations near to industrial and most environmental assessments of oil urban areas are likely to exacerbate palm development. (natural) hydroxyl radicals that help cleanse the atmosphere of various trace Other relevant questions include how (greenhouse) gases (e. Thus.

biofuel carbon debt allocation. relative to fossil fuels they displace. to repay the biofuel carbon debt.1 7. and years to repay biofuel carbon debt for nine scenarios of biofuel production. 2008) . Carbon debt. Means and standard deviations are from Monte Carlo analyses of literature-based estimates of carbon pools and fluxes.9 1.1 7. annual carbon repayment rate.2 1.8 5 4. (D) Number of years after conversion to biofuel production required for cumulative biofuel greenhouse gas reductions. including CO2 emissions from soils and aboveground and belowground biomass due to habitat conversion. (Source: after Fargione et al.9 0. (C) Annual lifecycle greenhouse gas reduction from biofuels. (A) Carbon debt.8 Annual repayment 10 (t CO2 e ha-1 y-1) 7. including displaced fossil fuels and soil carbon storage.3 0.2 0 D 1000 423 319 Time to repay biofuel carbon debt (y) 86 93 100 37 48 17 No debt 10 incurred 1 1 Palm Palm Soybean Sugarcane Soybean Corn Corn Prairie Prairie Biofuel biodiesel biodiesel biodiesel ethanol biodiesel ethanol ethanol biomass biomass ethanol ethanol Former Tropical Peatland Tropical Cerrado Cerrado Central Abandoned Abandoned Marginal ecosystem rainforest rainforest rainforest wooded grassland grassland cropland cropland cropland Location Indonesia/ Indonesia/ Brazil Brazil Brazil US US US US Malaysia Malaysia Figure 12.   |  29 Greenhouse gas emissions Conversion of native ecosystems to biofuel production Belowground biomass and soil carbon loss 3452 Aboveground biomass A 1 294 carbon loss 1000 702 737 Conversion of degraded cropland 750 Carbon debt to biofuel production (t CO2 ha-1) 500 250 165 134 85 69 6 0 0 B 100 100 100 100 87 87 83 83 Debt allocated to biofuel (%) 50 39 39 0 C 9. (B) Proportion of total carbon debt allocated to biofuel production.

The impacts $1 thousand million in profits from the of oil palm plantations on non-CO2 initial timber harvest and a further $1.65) per tonne of climate policy makers agreed that policy CO2. unless REDD carbon credits could give national forest conservation are allowed to be traded on compliance agencies access to the rapidly expanding markets (currently they are restricted global carbon market. Ideally.30  |  The impacts and opportunities of oil palm in Southeast Asia and other greenhouse gases affect the mechanism for this. (using a discounting rate of 8 per cent). estimate that an area of one million 2004). Forest Carbon Partnership Facility have Venter et al 2009) except perhaps in the made millions and perhaps thousands of case of carbon-rich peat forests (Venter et millions of dollars available for payments al. Recent land to oil palm plantations will be more commitments from the World Bank’s profitable than REDD (Butler et al 2009. which range from about $5. For forest conservation to meet these opportunity costs. 2005). . 2009).66 (±SD 1. Payments important ecosystem services. to stop further deforestation for forest conservation will provide other oil palm. (2009) atmosphere and climate (Mosier et al. price of $4. which traded to voluntary markets) the conversion of $30 thousand million in 2006.78 greenhouse gas emissions. by 2013. These figures are deforestation and forest degradation well within the scope of global carbon (REDD) in developing countries should markets.50 be considered. Provisional data suggest that such hectares in Kalimantan proposed for emissions from Kalimantan’s peatlands oil palm development will generate are low (Hadi et al. indigenous for avoided deforestation may be one cultures and biodiversity. Venter et al. and carbon emissions. the costs. economic revenues from forest benefits not associated with oil palm conservation would compensate the development. emission reductions REDD and carbon funds will need to be compensated in the year At the United Nations Climate Change they are expected to occur at a carbon Conference in Bali (December 2007).28 This carbon price accounts for approaches and positive incentives the estimated costs of administration that aim to reduce emissions from and forest protection. such as the maintenance of lost revenue opportunities. In addition to generating direct revenues. awarded for REDD schemes. this However.92)27 thousand million from benefits and possible improvements are palm oil profits over the next 30 years still unclear. thereby slowing markets (April 2008 values). If carbon credits should therefore represent an attractive tradable on compliance markets are investment by national governments. This mechanism will entail per tonne on the Chicago Climate wealthy nations paying other countries Exchange (a voluntary carbon market) to reduce their rate of deforestation to about $30 on European compliance and forest degradation. (±SD 0.

). For example. 2006) and Most concern about biodiversity loss is even disturbed natural forest (Figure 13. the majority of oil are very poor habitats for most terrestrial palm is established in industrial scale mammal species (Maddox 2007). Maddox 2007). 2004. including orangutans (Pongo Mammals are also affected. in Jambi in Sumatra. size from 4000 to 20 000 hectares. tiger and other such of terrestrial mammals living in and charismatic species (e. concluded that oil palm plantations result The loss of Southeast Asia’s lowland in a significant reduction in biodiversity forests threatens the region’s exceptional29 if plantations replace natural forests. Peh et al.. research per cent of the number detected within demonstrates that the natural flora and the landscape) were regularly detected fauna which occur in oil palm plantations in the oil palm itself and none of these are greatly impoverished when compared species had a high conservation value. Not surprisingly. 2006) and degraded forests and scrubby unplanted has long been the principle conservation areas (Gillison and Liswanti 1999. spp. A number of species. 2004. conservation value (Tinker 1997. Gillison 2002..) and clouded leopards (Neofelis results in the near total clearing of former spp. Extensive field above). 2001. are the focus of international fewer than 20 of 75 mammal species concern. Indonesia. 6 Impacts on the environment Biodiversity 1994.) and Sumatran tiger (Panthera tigris in Malaysia researchers found that sumatrae). agroforests. around an oil palm plantation concession Brown and Jacobson 2005). PORIM Some species. concern in the region (Jepson et al. or even et al. Sodhi et al.g.g. Gaveau et al. 2007). FOE 2004. concluded that oil palm monocultures In Indonesia. tapirs (Tapirus establishment of these plantations usually spp. Indonesia’s and Malaysia’s research carried out in oil palm frontier lowland forests are among the Earth’s areas on the island of Sumatra has most species-rich terrestrial habitats. including deer. The such as Sumatran tiger. A 4-year study posed to orangutan. This is monoculture plantations ranging in especially the case for endangered species. to lowland rainforests (e. directly related to forest loss (discussed Fitzherbert et al 2008). macaques . Only four mammal species30 (10 vegetation. 2005. Curran secondary forests. Several NGOs have campaigned encountered in primary forest also used against plantations on the basis of threats oil palm (PORIM 1994).

32  |  The impacts and opportunities of oil palm in Southeast Asia (a) Relative species richness 2 Forest equivalent 1 NA 0 (b) Oil palm vs. showed limited tolerance palm expansion and are often captured but. forest-dependent birds (Aratrakorn et al. In fact. with conversion Jacobson 2005). especially affecting threatened establish oil palm plantations. (2009) find that planned . Endangered By comparing a 2006 map of planned species (and subspecies). are especially threatened by oil Venter et al. natural 2005. (a) primary forests and (b) degraded natural forest. with the exception of pigs. Comparison of species richness in oil palm plantations vs. palm habitats—even heavily degraded Elephants are considered to pose a risk natural habitats (Maddox 2007). 2006. disturbed forest Relative species richness 2 Forest equivalent 1 NA NA NA NA 0 Lizards Birds Forest Bats Primates Ants Bees Mosquitoes Beetles Moths birds Key: Species shared with forest Species not shared with forest Unknown proportion of shared species Figure 13. such as and ongoing oil palm developments orangutan. Species richness has been scaled such that forest richness is equal to 1. Orangutans have also concessions. and that these areas can been known to become violent around retain high conservation value (Maddox oil palm plantations when their food 2007). All of these species are of forest to plantations resulting in a vulnerable to illegal wildlife poachers reduction in species richness of at least 60 when forested areas are opened up to per cent. all species or killed when vegetation is cleared showed a general preference for non-oil to make way for new plantations. tiger. (Source: Fitzherbert et al. Tigers will also forest) is therefore warranted. 2008) and pangolins. see also Figure 14). to the oil palm plantations because they the study highlighted the conservation often destroy plantations and feed on importance of marginal and degraded the oil-rich palm nuts (Susanto and habitats often found within oil palm Ardiansyah 2003). Sumatran elephant (Elephas with a forest cover map and a recent maximus sumatrensis) and Sumatran orangutan density map for Kalimantan. Further consideration of the source is threatened and they too are biodiversity impact of oil palm on all often destroyed (Brown and Jacobson vegetation types (not just primary. be killed if they are considered to pose a threat to plantation workers (Brown and Birds are also affected. Buckland 2005).

but also from the increases in oil palm provides an important food access. Total number of species of forest birds and forest butterflies recorded from different land use types in southern Peninsular Malaysia and Borneo. For example. many species that occur in an oil Species richness is a relative concept palm plantation setting are protected that makes sense only with respect to by Indonesian and Malaysian law. though not well Hladik 2005). Still. of fire and of increased and Matsuzawa 2004.   |  33 Impacts on the environment 180 Forest birds 77% 160 Forest butterflies 140 73% 120 Number of species 100 80 83% 60 79% 14% 40 20 0 Primary forest Logged forest Rubber plantation Oil palm plantation Land use Figure 14. (2008) raise the question would seem that much of the decline in of whether it would be possible . wild of forests. The impacts of oil palm arise not only from the loss In its native habitat in Africa. Because planting on steep slopes plantation managers are responsible for is avoided. the damage that patterns (these are the patterns seen in this causes to plants and the associated timber concessions. The likelihood of further forest loss chimpanzee (Pan troglodytes) (Humle and degradation. including edges. for plantations to harbour valuable habitats for various species—indeed it Turner et al. seem likely to be prevalent agroindustrial setting. Leciak and hunting pressure. considering that Nonetheless there are counterarguments. orangutans (P. but clearly in an documented. and water courses and less the continued existence of protected accessible sites are protected. (Source: Koh and Wilcove 2008a) plantations encompass 1 million hectares biodiversity noted around plantations of forest containing about 10 000 (20 may be due not to habitat change but to per cent) of the remaining Bornean direct human impacts (Maddox 2007). Forest birds and butterflies are species that depend extensively or exclusively on lowland evergreen rainforests. financial losses are unacceptable to companies. comparisons. 2005). Meijaard et al. population and proximity to forest source to various species. a typical oil new management guidelines and palm plantation has a greater diversity regulations are needed that protect of species than planted forests in many crucial habitats for such species and (temperate) developed countries (Basiron develop a clear understanding that 2007). pygmaeus). respectively. it is possible species in their areas.

The role cover at the landscape level. plantations. profitability of oil palm might allow new plantations. Borneo. Koh losses that occur when forests are cleared. more studies must be conducted for different taxonomic groups and across oil palm- growing regions of the world (Koh 2008b. Venter et al. are often captured or These approaches included the planting One recent debate asks whether. Turner et al. the sheer scale of oil Sumatran tiger. and Wilcove 2007. Nevertheless. higher yields from improved varieties and planting Orangutan mother to enhance biodiversity in oil palm on land that is already degraded could and infant. Bird exclusion significantly increased herbivory damage to oil palm seedlings compared to control treatments. simply because more can be produced on less land..g. . 2008). are focusing on approaches the oil palm palm plantations threatens biodiversity. Given that there have to be tradeoffs between conservation and economic growth this is not a minor point. Sumatran elephant and in Borneo addressed this very question. 2008). and the magnitude of this insect control increased with the abundance of insectivorous birds (Koh 2008a). (2008) hint that such biodiversity enhancements may bring benefits to oil palm growers. or by increasing natural forest forest (Koh and Wilcove 2007).34  |  The impacts and opportunities of oil palm in Southeast Asia Turner et al. the and competencies of conservationists gains in biodiversity resulting from these in dealing with such issues is also hotly practices are quite minor relative to the debated (Clements and Posa 2007. The environmental impact of oil palm plantations could be considered to be less than that of most alternative crops. the cleared to make way for predators and parasites of oil palm pests. percentage ground weed them to buy up and protect pristine cover). 40 000 hectares of oil palm plantations further deforestation (Hardter et al. They growers currently use (Koh 2008b). A bird- exclusion experiment in oil palm plantations in Malaysian Borneo tested the hypothesis that insectivorous birds inhabiting plantations provide a natural pest control service for oil palm agriculture. however. An empirical study in about improve yields significantly without Endangered species. To gain a better understanding of the biodiversity impacts of oil palm agriculture. (Photo: Jacha Potgieter) This study implies that biodiversity in conservationists to form profitable oil palm plantations can be enhanced by collaborations with image-sensitive altering vegetation characteristics at the producers who would in turn allow local level (e. Better management. rather killed when vegetation is of flowering plants to attract the insect than fighting such developments. such as the orangutan. especially threatened by oil palm expansion. 1997). These results imply that biodiversity friendly practices may benefit growers.

This is Palm oil production. The Malaysian high value of the crop—any systematic Government banned the use of the decline in soil properties is likely to be hazardous herbicide paraquat despite addressed by the industry. perhaps because companies (PORIM 1994 cited in Hartemink do not wish to see expensive fertiliser 2005).   |  35 Impacts on the environment Soil erosion and fertility Fertilisers and pesticides Land clearing and road construction Fertiliser use in Asia increased by 1900 increase soil erosion in previously per cent in the last four decades of the forested regions—especially in steeper 20th century (Zhao et al. 2006) and steep sites are generally of this increase. But such runoff is less of cultivation. This can result in landslides (Sidle palm industry is responsible for some et al. Studies on erosion in oil palm in Southeast Asia (Hardter and are few. even when well an area where more work is needed. perhaps because of than might be expected from the sums fertilisers and leguminous cover crops involved. may still decline because applications of fertiliser do not compensate Pesticides and herbicides also increase for uptake and retention by crops pollution. plantations expose the soil to erosion. basic hydrological functions from catchments (Yusop et al. runoff and it is safer (to people and the environment) evaporation (Weng 2000). especially Oil palm plantations apply large during initial site preparation and tree quantities of nitrogen-based fertilisers establishment (Hartemink 2005). mid 1990s—this supplies nutrients Initial trials with glyphosate suggest that and reduces erosion. soil nutrients washed from their plantations. for example using barn pests) (Baligar and Fageria 2007). In mature oil palm plantations and peat soils requires around 354 in Malaysia. as it is one of the avoided for practical as well as legal largest consumers of mineral fertilisers reasons. maintain yields. A typical oil palm erosion on paths and open areas can plantation planted on both mineral be high. though—given the use (Hartemink 2005). e. the potential benefits of various cover crops for their soil improvement Integrated biological pest management properties (and their influence on in plantations. owls or snakes to reduce rat populations. 2006). 2007). Even to plantations in order to increase and after trees have become established.7–14 tonnes per hectare per year and Simorangkir 2002). tree crops more generally.. The oil sites. This appears (Hartemink 2005). Generalising from studies of Fairhurst 2003). Mulching its popularity with users—the oil palm has been greatly increased since the industry has had to seek alternatives. managed. There is and more effective for weed control also increasing interest in examining (Wibawa et al. In the longer term. 2007). Such suggest that well-managed oil palm measures can reduce the use of pesticides can serve reasonably well in regulating (Yusoff and Hansen 2007). has been tested in Malaysia with mixed Some small-scale preliminary studies results (see.g. has a significant environmental . Fee 2000). especially with repeated (Hartemink 2005). erosion was estimated kg N/ha over the first 5 years (Guyon at 7. to increase loss of gaseous nitrogen oxides (discussed above as a greenhouse Studies of soil changes under oil palm gas) and to increase eutrophication in in Malaysia indicate that nutrient neighbouring water bodies and wetlands levels increased in the early stages affected by runoff.

Most of the positive reports on clarify the extent of such concerns. many negative environmental Action has been taken to address this. Runoff and palm oil mill water quality (Ahmad et al. are lost when forest is converted to oil palm. by good management (Yusoff and Hansen though there is no recent survey to 2007).36  |  The impacts and opportunities of oil palm in Southeast Asia impact simply because of its scale. Humle and Matsuzawa can have significant negative impacts on 2004). A systematic POME is a colloidal suspension that assessment by unbiased ‘objective contains 95–96 per cent water.6–0. However. The habitat of many species such as the slow lorises (Nycticebus sp. here a pet in East Kalimantan.7 per observers’ would be valuable. (Kittikun 2000). How this affects the ecological have historically created problems for functioning of waterways remains largely the aquatic ecosystems in Malaysia unstudied. separator sludge and hydrocyclone wastewater (Ma Mills and water quality 2000). 2003. leaks of POME and Clay nd. in the past. Wakker effluents (POME) entering rivers 2005). and 4–5 per cent total prove difficult due to the prevalence of solids.0–5. the fish’ in Malaysia (Johnstone 2008). in (Yusoff and Hansen 2007). i.0) (Ahmad was often returned to natural water et al. but may cent oil and grease. solids originating from the mixture of sterilised condensate. and a fairly acidic pH (4. 2005). thus lack credibility—while most negative stories come from NGOs. Although most modern mills courses without treatment (Lord have treatment areas. particularly lead.e.). environmental impacts are generated by Observations suggest that Indonesia lags companies or their collaborators and can behind Malaysia in these measures. 0.. including 2–4 per cent suspended vested interests. at Extraction of palm oil results in large a temperature of between 80° and 90°C amounts of effluent which. It is often discharged hot. (Photo: Jan van der Ploeg) . WWF has been quoted as finding ‘effluent from palm oil mills There is general agreement that further and chemical and fertiliser run-offs improvements (Yusoff 2006) and research enter rivers on which local communities on the environmental costs of current depend and there is a high concentration practices to protect waterways are needed of heavy metals. impacts could likely be reduced further but in some locations problems persist.

For example. The plantation husbands for their work on family oil sector in Malaysia is one of the country’s palm plots. other family members) found that when Large-scale oil palm production has women are paid separately from their documented benefits. providing income access to income and their motivation to and employment for many rural get involved (Koczberski 2007). Sabah are Indonesians. 7 Livelihoods Winners and losers needs and experimented with how they Reports on the impacts of large-scale oil can benefit local people (Zen et al. Box 3 A positive impact on livelihoods There are also national benefits: export revenues earned Indonesia over more In Sumatra. downstream activities has uplifted the 90 per cent of the plantation labourers in quality of life of people’. access to healthcare and palm fruit. fed on oil palm waste. Zen get the rights and protection that a et al. often make a difference within families. and do not necessarily in the oil palm sector (Wakker 2006. like oil palm. Sometimes companies community relations excelled (Zen et al. many of whom have been rescued from poverty (Goenadi 2008). weeding and other In Indonesia. people. who are employed for harvesting. Payment mechanisms can differ greatly. 2006) palm plantations on local communities (see Box 3). harvested education have brought benefits to oil areas increased. 2006). is disseminated by study in Papua New Guinea (where companies or by NGOs. used for breeding. The cattle population doubled. 1. a company distributed three cattle to than $12 thousand million in 2007 each of its 500 employee families. have successfully engaged with local . Looking at wider benefits. the hours oil palm sector benefits around 6 million people. 2006). with cases. Most information. allowed to graze on plantations. this greatly enhances their largest employers. Basiron (2007) comments that ‘involvement in cultivation or Workers can be exploited.7–2 million people work maintenance work. and for transporting oil Secure incomes. and objective research is limited. incomes of workers increased and palm workers. The cattle were (Goenadi 2008). Most is based on men often share little of the income they anecdotes or a small number of selected gain from cash crops. A highly conflicting. Malaysian labourer would demand—the it is estimated by the industry that the work is physically demanding.

from Marti 2008) . conversion of forests to strategies are largely opportunistic. and this is Sulawesi. 2008). such as oil or use (Belcher et al. where farming communities likely to continue (Belcher et al. As the Friends of the Earth 160 136 140 120 94 100 80 60 60 43 40 28 13 13 18 15 21 23 21 20 13 12 1 2 0 ng n ng i g u La ulu So Kali tan i Ea lim n ul i ra lim n Su si a ra Su si b es s es anta Ce t Ka Ria un ka atr a Ka nta ra awe SE we e m at at pu nt w w k an Ja W elit m m um la a ra ma So ula a m l m Su Su Be B tS lS tS li a rth h h es lK ut ut ng h nt No st W So es ut Ba Ce nt W Figure 15. especially in reconcile with the more monotonous times of crop failure (Sheil et al. Van Noordwijk et al. Marti 2008). 2004). Marti 2008). They derive problems is the high level of conflict staples like rice through shifting emerging from the industry (Figure ‘swidden’ agriculture and supplement 15). opposition (e. and disciplined work and landscapes There are many cases of communities required for developing large-scale that now have no wood to build with plantation monocultures. who rely on forests for a wide range Corresponding lifestyles are difficult to of goods and services. Sumatra or and jungle rubber gardens. (Source: based on Sawit Watch data 2008. 2006.38  |  The impacts and opportunities of oil palm in Southeast Asia are long. This can and institutions has been reported contribute to ethnic conflict—such by various NGOs—they note how as occurred between indigenous companies often engage community Dayak groups and Madurese in West leaders individually so as to undermine Kalimantan—as one group gains while community cohesion and united the other loses. plants and animals (Sheil et al. Oil palm companies therefore has displaced large areas of rattan often hire staff from Java. Such Moreover.g. Oil palm palm. and the labourers are poorly their diets with a wide variety of wild paid (Anonymous 2008b).. Oil palm conflicts across Indonesia monitored by Sawit Watch in January 2008. forests and other uncultivated areas. 2006).. Accounts of abuses against local people Forest-dependent people in the region by oil palm companies are common often use diverse resource gathering (e. have long traditions of primarily Significant erosion of local culture growing single crops like rice. plantations has significant impacts on and depend (among others things) on forest-dependent communities (even time and the widespread availability of those who are predominantly farmers). One sign of these and cultivating strategies.g. 2004).

Previously forested areas. cultural government to repossess land if deemed rights and the right to be protected in the public interest (Wakker 2006). The from ill-treatment and arbitrary rights of indigenous people to customary arrest—are being denied in some lands are not fully recognised by the communities (FOE 2008). and cleared areas. forests and wildlife. the right to work. many these abuses—are they the exception individuals may move into an area and or the rule? Given that the main claim ownership. Many defective or rarely applied (Colchester companies consider women better at et al. Many—including few villages. areas need to negotiate with many more it is often simply dismissed by industry stakeholders than in forested ones. absent. 2006). Indonesian state. Tenure Land tenure and the recognition of Contested tenure affects most large-scale ownership rights affect how locals developments in the region. there is seldom concomitant financial compensation. applying pesticides and fertilisers (they do it more precisely) and so prefer them Potential tenure conflicts may be one for these tasks—many of these women reason why companies prefer developing are illiterate and therefore unable to read forested lands and peatlands rather than the warnings written on containers. worker to such lands are ambiguous. in a village can be convinced to give up While most commentators accept that ownership of a forest area and accept the serious abuses do occur. and observers companies can lay strong claims to the disagree concerning the prevalence of land. Forest lands are often are not given training. especially its report Losing Ground: where the land is forested or deemed ‘underutilised’. water backed government and its claims to or adequate livelihoods. In 2000. The unsustainable expansion of Indonesia’s palm oil industry In Indonesia. Human rights—including the right to water. Local politicians are reluctant Traditional customs and culture are to lose control over profitable investments being damaged alongside Indonesia’s such as plantations. once key leaders serious health problems (Marti 2008). This makes negotiations pregnant women—subsequently incur relatively simple and. formal recognition local communities (Vermeulen and . communities rarely is leaving many indigenous challenged President Suharto’s military- communities without land. Companies in such information comes from critical NGOs. In deforested areas. Today. adequate investigation. however. procedures for gaining title need evaluation—for example. safety equipment within the claim area of one or only a or protective clothing. every oil palm company communities or individuals have in Sumatra had land disputes with traditional claims. contested. although the state self-sufficient communities find is less feared and despite decentralisation. supporters as anti-industry propaganda. Though benefit. Indonesian regulations enable to health. health and safety is often poor.   |  39 Livelihoods concludes in the executive summary of of these claims is very limited. themselves in debt or struggling ownership of considerable areas is still to afford education and food. While laws recognise the rights of customary communities to There are many specific problems that their lands. increasing costs and potentially delaying plantation establishment.

price rises for CPO. owners have often found it useful to work more directly with local people. see Box 4). though not without of how communities and NGOs used their problems. but are contractually obliged land with other crops (Cooke 2002). Smallholders Indonesia was seven times higher than are often obliged to take out loans to the average net income of subsistence establish plantations and receive limited farmers (Hardter et al. The sites allocated 2005). These development (Wakker 2006. they into price contracts with companies and can produce comparable and. in practice the schemes net income of oil palm smallholders in are often problematic. areas for oil palm. Often Nicholas 2005). sufficient also common because smallholders enter inputs and good planting material. 2006). (Belcher et al. Potter Although assessments of land suitability 2007). in some locations such tactics assess the propaganda put out by are increasingly difficult. 2004). Better information about issues access to large areas of contested land. Although. social factors are torture and even death (DTE 2000. and plantation investors (Padmanaba and Sheil 2007). By working closely with the will grow and provide high returns in government and accepting government unsuitable areas (Padmanaba and Sheil ownership. smallholders generally achieve the community. ‘nucleus–plasma’ schemes recognise local tenure over some land and offer a share of the oil palm development in return for company ownership of the Smallholder palm oil rest of the land. at times. developments scale plantations (DTE 2001. provide assistance information about soil types. and even local political representatives. 1997. . Some smallholders communities have tried to secure their also have a desire to plant other crops on land claims by planting the disputed their land. In 1997. Hartemink technical support. arrests. These schemes mean production that companies ensure production on For smallholders seeking good returns both the land they hold (nucleus) and from low inputs. oil palm is attractive the land held by smallholders (plasma). and replanting programmes for overmature plantations have revived conflicts with local people Information and who lay claims to land allocated to large. the average However.31 oil palm companies and smallholders is if they have training. rarely assessed (Wakker 2006). to plant oil palm on the majority of Communities are also demanding the their land holding (for more details of return of land taken during the Suharto problems see Marti 2008). topography and socioeconomic benefits to an and various other factors to defeat estimated 500 000 smallholder farmers a poorly thought through oil palm in Indonesia (Zen et al. regime in Indonesia. are not able to benefit from any marked higher yields (Hartemink 2005). Social conflict between lower yields than large-scale plantations. support. In Sarawak. Malaysia. local people. The proposed biofuel-driven Kalimantan oil palm megaproject is one example ‘Nucleus estates’. and choices would help communities However. powerful interests gain easy 2007). injury. as has already been are often suboptimal and distant from noted.40  |  The impacts and opportunities of oil palm in Southeast Asia Goad 2006). Land tenure disputes have led to are usually undertaken when identifying conflict. intimidation. are not well informed and Plantation developers exploit uncertain are easily duped into believing oil palms tenure.

2 19. private companies The ‘post-productive’ category is 1 hectare and state companies. (Source: IPOC 2006) . Geographical distribution of oil palm plantations in Indonesia Region Smallholders as percentage of total area Percentage Immature Mature Damaged Total Total of total area area in % yield Sumatra 76.2 Java and Bali 0.7 Total 100.7 22.9 42. suggesting that there is little 11 per cent of the area and produced 34.5 43. they may account for a third development in the world.0 39.0 42.2 43.2 Kalimantan 20. indicating and 3 hectares of productive garden. 48 and respectively.1 0.5 37.0 This table shows the fraction of land in different stages of production that is managed by smallholders.0 0. which immature (newly planted) area is 51 per is below the replacement level of 1:10 (if cent in Sumatra. oil palm area (Vermeulen and Goad 2006).6 40. and Goad 2006).0 0. indicating rapid expansion. respectively. oil palm is rapidly considered and there was an outcry. while the smallholders’ share of immature area is 43 smallholders and private plantations per cent in Papua and only 15–20 per cent have 1 hectare of immature per 4 in Kalimantan and Sulawesi.0 and Maluku Papua 1. Some the initial plan—though not before conflicts.0 43.0 0.1 42. from Sumatra and Java to the less populated islands.3 33.4 51.0 49.3 47. The and 30 years of production).4 0.1 62. In Indonesia and The proposed plantation would have been the largest oil palm Malaysia.0 29.8 Sulawesi 2. as communities smallholder schemes in Indonesia took matters into their own hands—but oil palm is still originally targeted families that migrated reported to have been introduced to this area (Wakker 2006). Of a total planted per 65. the Indonesian Minister of Agriculture announced a yields are rising rapidly—averaging plan for a huge oil palm plantation on the Kalimantan–Malaysia around 2. 95 and 83 hectares of mature for area of 6. National statistics on oil palm in Indonesia recognise three strata: smallholders. respectively. which has 76 per cent of we assume 3 years of immature garden the country’s oil palm area (Table 3). particularly in Indonesia.1 0.3 41.3 31.2 million hectares in 2006.9 43.7 27.3 kg/ha in 2006 (Vermeulen border that would affect primary forest in three national parks. damaged areas are post-productive.0 0. Kalimantan and Papua have the highest Table 3. smallholder In 2005.5 23. Kalimantan oil palm project part in the palm oil industry and. scope for more active replanting within the 52 and 14 per cent of national palm oil. The customary land rights of the Dayak people were not Indeed in Indonesia. these three actors controlled 41.3 Nusa Tenggara 0. The government retracted becoming a smallholder crop.9 24.1 14. covering 1. smallholder.0 21. The government plantations have 1 hectare of immature plantation The relative share of smallholders in the per 20 hectares of mature gardens.3 72. Nature areas are productive. Livelihoods   |  41 Smallholders already play a significant Box 4. private and state companies.0 0. and Goad 2006).8 million hectares of hills of the palm oil produced and 35–40 per and mountains—areas regarded as inappropriate for oil palm cent of the productive area (Vermeulen cultivation. a substantial difference in pattern.8 34.

42  |  The impacts and opportunities of oil palm in Southeast Asia

relative growth rates, with 1 hectare fruit per hour, now available in Indonesia
of immature plantations per 3.5 and (Bisnis Indonesia 2000 cited in Belcher
1.9 hectares of mature plantations, et al. 2004). This could free smallholders
respectively, compared to 4.1 hectares from the requirements of large-scale
in Sumatra, 8.4 hectares in Sulawesi and processors and allow them to get into
4.0 hectares for Indonesia as a whole. oil palm gradually. Such a change would
The production data for smallholders have a major impact on small-scale
are approximately proportional to their producers though such developments
share in the productive area, which are no longer being promoted—perhaps
may indicate the way the statistics were because they would result in powerful
derived (estimated) rather than reality commercial interests losing their
on the ground. Statistics for smallholders local monopolies. Expansion and
are considered less reliable that those for improvement of smallholder production
private plantations. presents a major opportunity for meeting
rising demand for palm oil in a socially
Smallholders function on two levels— sustainable manner.
supported and independent—both of
which have risks and benefits. Supported Nevertheless, it is important to note
smallholders share risks (for example, that smallholders are notorious for poor
a poor harvest) with companies plantation management. Smallholders
or the government, they lose their almost always use fire to clear land. This
independence and are less flexible in is because they cannot afford heavy land-
how they can use their land; however, clearing machinery and because they are
they may have guaranteed access to used to using fire in preparing land for
international markets where prices cultivation. They are also less regulated
are more stable than in local markets. and will often clear land and plant oil
Independent smallholders do not have palm without appropriate permits. In
to share their profits, but face other risks, Indonesia, regulations issued to protect
such as their susceptibility to theft of ripe against erosion, biodiversity loss,
crops (Vermeulen and Goad 2006). sedimentation and other environmental
issues arising from oil palm establishment
Regardless of their status, smallholders are also rarely followed by smallholders.
are tied to a long-term crop and are
exposed to significant financial risk
(poor harvests, fluctuation in CPO Biofuel versus food
prices, pests and diseases). They also There is an ongoing debate on the
cannot fall back on the natural habitat competition between biofuels and food
that the oil palms replaced for wood and production for land and labour (Box 5,
non-timber forest products. see also Chapter 3). The sharp rise in the
price of oil has meant that grain, sugar
Access to capital is an important issue and oilseed crops are increasingly being
for most smallholders, who cannot get planted to produce biofuel. This has also
loans or, if loans are approved, face linked oil and food prices more strongly32
arduous repayment schemes (Vermeulen at a time when oil prices have been rising
and Goad 2006). rapidly. Some commentators suggest that
these links will work against regions that
Smallholders would also benefit from consistently experience food shortages
alternatives to large mills. A good or rely on food imports, which will face
example is the simple, low-cost (less greater food insecurity (Cassman and
than $20 000) palm oil processing unit Liska 2007).
with a capacity of 0.5–2 tonnes of fresh

Livelihoods  |  43

In Southeast Asia, palm oil is the
Box 5. Food or fuel?
cheapest food oil and it is feared that
production for biofuel will link the
‘Biofuels are driving up food prices at a
price of palm oil to rising fuel prices.
time when there are 854 million hungry
Using food to produce biofuels might
people in the world and every 5 seconds a
also place further strain on already tight
child under 10 dies from hunger or disease
supplies of arable land, thereby pushing
related to malnutrition.’
up food prices. Domestic prices for palm
– Jean Ziegler, United Nations Special
oil in Indonesia and other countries
Rapporteur, New York, 26 October 2007,
dramatically increased over the year
calling for a 5-year moratorium on biofuels
2007–08, accentuating this argument.
Nevertheless, higher prices for cooking
‘FAO strongly feels that food security and
oil and other staple foods (such as soya
environmental considerations must be
bean33) are also attributed to bad weather
fully addressed before making investments
and floods in major food producing
or policy decisions … a moratorium that
areas.
ignores the potential of biofuels to support
rural development and assist the economies
Mendoza (2007), writing with an
of developing countries would not, in our
emphasis on The Philippines, notes
view, be a constructive approach to this
the contribution to increasing water Aerial view of oil palm
topic.’ developments in Kutai,
scarcity from biofuel crop production
– Jeff Tschirley, Head, FAO Environment East Kalimantan,
and processing, and suggests the land Indonesia. (Photo:
Assessment and Management Unit
pressures from large-scale monoculture Douglas Sheil)

44  |  The impacts and opportunities of oil palm in Southeast Asia

plantations will reverse many benefits already changing rapidly due to a range
achieved from agrarian reform. Mendoza of powerful forces—including income
(2007) concludes, ‘biofuels are the single growth, climate change, high energy
greatest threat to food security especially prices, globalisation and urbanisation—
for the low-income groups in view of that are transforming food consumption,
their influence on supply and prices of production and markets (von Braun
staple foods’. 2007). Even without biofuels, there is
a feeling that world cereal and energy
One specific problem in Indonesia is prices are increasingly linked. Since
the limited fertiliser supply and the ever 2000, the prices of wheat and petroleum
increasing demand from plantations. have tripled, while those of maize and
Farmers and plantations inevitably rice have almost doubled (von Braun
compete. While the government 2007). There is evidence that fuel makes
subsidises some fertilisers, farmers a difference—an increasing link between
are having difficulties obtaining them energy and food prices means that
because of limited supply (Syafriel 2008). energy price fluctuations are increasingly
These debates and challenges are so felt as food price fluctuations. Since
recent that they are playing out in 2002, variations in oilseed, wheat and
newspapers and political statements maize price have doubled compared
rather than in the academic literature. to previous decades (von Braun 2007).
It is clear that biofuel is only one factor. More work is needed to examine the role
Many blame the recent rises in world of oil palm in these relationships and
food prices on quite separate issues: processes. There have been urgent calls
principally speculators who are turning for a rapid research response (Cassman
away from risky ‘stock markets and and Liska 2007):
the property sector’ to invest in food
commodities. In some cases, large- The critical challenge is not only to
scale commercial hoarding has led to produce enough food to meet increased
artificial scarcity. However, this does demand from population increase and
not mean that the threat of plantations expansion of biofuel production, but
per se is not real—for example, the fact to do so in an environmentally sound
that oil palm plantations make up 40 per manner. Achieving these dual objectives
cent of Sarawak has impacted fisheries in a relatively short time period will
and other local food production. The require a substantial increase in research
Malaysian Government plans to invest and extension with an explicit focus on
more in agricultural food production, increasing the rate of gain in crop yields
though this is likely to benefit large- while protecting soil and water quality
scale industries rather than the more and reducing greenhouse gas emissions.
vulnerable smallholders (Netto 2008). It is sobering to note that agronomists
have never been asked to develop
According to Joachim von Braun innovative management systems that
(Director General of the International both accelerate yield gains and protect
Food Policy Research Institute), there is natural resources. In the absence of such
general evidence that biofuel production investment, global demand is likely to
has contributed to the volatility of exceed supply for crops that can be used
food prices, which adversely affects for both food and biofuel.
the poor. The world food situation is

8 Improving standards

New initiatives, Palm Oil (RSPO) initiative (see below).
new safeguards Financial incentives may encourage
developing rainforest-rich countries to
The negative media stories about the
optimise degraded lands for plantation
oil palm industry are seen as a threat to developments and to reduce the rate
an industry that earned Malaysia $14.1 of deforestation (Simamora 2007). For
thousand million in exports in 2007. example, the Reduced Emissions for
Concerns about wider opinions and Deforestation and Forest Degradation
media campaigns provide important (REDD) scheme may enable Indonesia
incentives for improved practices. to receive funding and support for
policies and measures that encourage
The Malaysian oil palm industry is companies to plant oil palm on
adopting self-regulating environmental degraded lands rather than on forested
management tools, such as ISO lands.
14000 EMS and life cycle assessment
(LCA), to reduce environmental Meanwhile, several new international
impacts (Yusoff 2006). In addition, the and national initiatives are underway
Malaysian Palm Oil Council (MPOC) is to improve practices in establishing
striving to change negative views of oil oil palm plantations and using forests.
palm, with the message that ‘oil palm One national initiative in Indonesia
is sustainable’; however, their practices is Sawit Watch (oil palm watch, www.
have been challenged by environmental sawitwatch.or.id), which campaigns
groups who believe that many of the for the rights of indigenous people in
lobbying messages of the MPOC are land disputes and highlights the social
questionable (Raman et al. 2008). ramifications of oil palm developments
in Indonesia. A consortium of
In Indonesia, until recently only a organizations, including the World
handful of companies were providing Resources Institute, Sekala and The
evidence that their products can Nature Conservancy (TNC) are also
meet internationally recognised working together to encourage oil palm
‘environmental or social standards’ companies to utilize available degraded
(Wakker 2006), though this is changing lands rather than forested lands or peat
with the Roundtable for Sustainable lands for oil palm plantations.

widely publicised industry statement The RSPO’s Criteria and Indicators that ‘HCVF will not be converted’ is in for sustainable oil palm are part of a fact less rigorous than the claim that voluntary forest management certification further forests will not be converted.46  |  The impacts and opportunities of oil palm in Southeast Asia In Indonesia. but have Conservation Values. But. world’ (RSPO nd). Southeast Asia. apparent urgency in their application. members continue expanding their and perhaps politically the country plantations into forests in breach of both has been affected by the unbelievable the law and RSPO principles (Greenpeace booming of this so-called liquid gold 2007. has recognised that the political claim it is simply a cynical attempt at PR situation in Indonesia has allowed the and ‘greenwashing’. 2007). Even the Executive McCracken et al. (Goenadi 2008). but that palm oil ‘contributes to a better today is used in many other sectors. Johnstone 2008). costly and voluntarily choose to undertake HCVF hard to implement (Paoli 2007). definition HCVFs—but there is clearly Smallholders also struggle to adopt best an expectation from industry that practices. RSPO believes it including plantation forestry. logged or not. easy task for the government to make appropriate allocation of land which The High Conservation Value Forests potentially demands significant trade-offs (HCVF) concept. Some Goenadi. Didiek Hadjar RSPO has its external critics too. RSPO analysis for certification purposes. social. has also channelled activities towards In Indonesia. are by for mainstream RSPO certification. established in 2004 by Malaysian Steward Council (FSC) standard for and Indonesian companies to ensure certified responsible forestry. and indeed most of developing a standard for smallholders. Overall. This means that the and are more expensive at the outset. because only a small proportion will gain such such practices require upfront capital a designation. cultural or ecological values of Several companies have experimented exceptional importance for local and with the RSPO standard since it was global stakeholders—the so-called High ratified in November 2005. mining has developed a ‘verifiable standard for and even commercial lenders. environmentally. Companies can found it to be complicated. socially. Greenpeace claims that many RSPO Economically. HCVF was originally Roundtable for Sustainable Palm Oil proposed in 1999 as part of the Forest (RSPO). Director of the Indonesia Palm Oil Producers Association. there is little without adequate safeguards. as part sustainable palm oil’ and encourages of due diligence. Despite the publicity commodity to be developed widely surrounding the standards. system in Indonesia and the government certification and verification schemes is investigating how it can be integrated have been abused in many tropical . Centre for Orangutan Protection commodity … It is indeed not an 2008. there would be a strong because smallholders cannot afford argument for saying that all remaining the additional oversight required natural forests. which appears in on livelihoods and on the environments Principles 5 and 7 of the RSPO standard. it aims to within forest landscapes that contain promote sustainable palm oil production. the existence of problems into current policies (Rietbergen- is not in dispute. such as zero burning. encourages companies to address the biodiversity and social aspects of oil International initiatives include the palm production. The HCVF concept oil palm companies to adopt more aims to identify and manage areas responsible practices.

natural forests from sites allocated for oil However. This means investment proposals to [them] should that companies can gain maximum not be involved in burning and clearing profit from timber before planting the oil tropical rainforest. respect local palm—it also raises questions regarding communities’ rights and demands. finance meet global environmental and welfare standards. But these companies usually rely on international finance. certification and sustainable production (Van de Wiel nd). there is little hard evidence palm development. The Dutch Government economic rents associated with the wood recently temporarily excluded palm oil removed from these sites. without subsequently of these pledges being followed up or planting those areas. Simorangkir 2007). In some cases. investors monitoring best practices remains. Campaigns by NGOs have positively impacted policies—for Due diligence example. . Although illegal. companies respect Indonesia’s law and relevant affiliated with these groups have used international conventions’ (Focus on land clearing permits to clear degraded Finance 2001. Pulp and paper producers and oil palm Rabobank and Fortis pledging that ‘oil companies are often part of the same palm plantation companies submitting conglomerate (WWF 2008). this practice suggests that the conversion of forested lands scheduled for oil palm Governments too can support better development is sometimes driven by the practices. statements by ABN AMRO. motives. must be held at least partly responsible largely unresolved. So. rather than from its national green energy subsidy serious intentions to develop oil palm scheme because of the uncertainties of estates (WWF 2008).   |  47 Improving standards countries and are unlikely to succeed for ensuring that the companies they without legal and political reform. especially in Issues of how past mistakes can be developing their processing capacity avoided and who is responsible for for pulp and palm oil. again. verified.

.

But it role for crops like oil palm to be seems the biofuel bubble has already managed less intensively to provide burst. High CPO prices made palm for local fuel needs nearer to where biodiesel economically unviable in the crops are grown. market trends. encouraged investors to At the same time. demand for palm oil of good planning. But palm biodiesel does have benefits. access tropical deforestation. Many of these factors have been It is still cheaper than other major extensively investigated in the context biodiesels and. and profitable land use system. For oil palm production. it is recognised clearer examination in the context of that palm oil can ‘come clean’ if suitable oil palm in its various guises is much practices are adopted. security. the outlook regulation. be Western countries are concerned about determined by a variety of factors that the relationship between oil palm and will include land availability. and are reviewing to labour. notably including demand and consumer perceptions. 9 Trends and the future C learly. Thanks in large measure to Trends in the future will. boosted speculation and India and other economies develop. Certainly fuel needed. like any new NGO-led information campaigns. investments. their biofuel targets. for palm oil as a major source of biofuel competing land uses and alternative is not wholly positive—at least in sources of income—balanced with European and North American nations. derived from oil palm plantations planted on degraded lands may have We know what many of the key more positive carbon benefits. management. there may be a open new oil palm plantations. palm biodiesel capacity because of the cost. the biofuel boom uses—and is likely to rise. Overall. remains high—for food and other transparency and accountability. but a and Huijbregts 2008). most would agree on the importance In any case. especially in less 2008 and Indonesia’s state-owned oil accessible locations where the costs of palm company ceased developing importing fuel are high. capital and technology. although far from of other crops and innovations (see climate neutral at present (Reijnders Angelsen and Kaimowitz 2001). . as China. issues are.

.

8 Malaysia is largely driven by (a) million hectares are in Malaysia and growing demand for oil for food 4. especially in Europe.3 million tonnes. • Recognised and anticipated consumer while Malaysia produced 17. If this demand were discussions with colleagues and experts to be met from palm oil alone. may allow companies to improve production and profitability without • Global production of palm oil was the need for additional land. many commentators particularly in India and China. and industrial processes in Asia. litres by 2017. • The global area of productive oil • The current rapid expansion of oil palm plantations is in the order of 9. Indonesia was the new plantations and clear forest. thousand million at the end of 2007 These generally arise from the references and less than 1 thousand million in discussed above and from our many 2000 (FAO 2008). tonnes (USDA 2008b). up from nearly 11 and second. but reaching 15 per continue and accelerate. and question the accuracy of these figures. have been a deterrent to the use of . what we need to know. regarding for biodiesel is 24 thousand million what appears well established. but it may about 41.6 million hectares by 2017—assuming a yield of 5830 litres What do we know? of palm oil per hectare per year. This trend cent in some provinces of Sumatra.10 Conclusions and needs H ere we summarise some key • The projected annual global demand conclusions: first.) (b) to a lesser extent demand and speculation for biofuel.5 • There is a general consensus that the million hectares.1 palm plantations in Indonesia and million hectares. additional area of plantations needed would be 4. of which about 3.6 million hectares are in Indonesia.7 million concerns. largest producer of CPO in the world as it produced 18.1 million tonnes in 2007/2008 also provide an incentive to establish (USDA 2008b). (However. the (see Acknowledgements). less than 4 per cent of trend of increasing palm oil yields will the total land area. • The total area of planted oil palm in Indonesia is estimated at about 6.

roads and factories is in place. fuel is already waning in Europe and the USA.52  |  The impacts and opportunities of oil palm in Southeast Asia GMO technology in oil palm. even degraded forests. misrepresentation by investors who play up the positive and • Oil palm diesel is one of the few ignore the negative). with rubber as the impacts of oil palm plantations main comparison and competitor in and processing palm oil have been Sumatra and Borneo. • Oil palm is a very profitable crop in both industrial plantations and • Palm biodiesel will only be smallholder contexts. The short-term carbon costs • The development and implementation of deforesting and preparing land. is more economical than petroleum the principle of ‘free and prior diesel or if sufficient subsidies are informed consent’ has rarely been applied (as in the US maize industry). annual • The area cleared of forest in the name CO2 emissions may be several times of oil palm establishment is believed the CO2 equivalent of fossil fuel to be several times the area actually substituted. particularly in Indonesia. But in the economically viable if prices for CPO acquisition of land and relations remain at a level where palm biodiesel between companies and local people. but few independent ensures that oil palm plantations will assessments of their application and be a major driver of land use change effectiveness have been made. This reflects the impacts of associated labour migrations and of plantation • The use of fire to clear land is still failure. theft in which investors clear-fell the forest in the guise of a plantation • Species diversity in oil palm development and profit from the plantations is much less than in timber sales but abandon the project natural forests. Forest clearing for oil palm leads to species losses. of oil palm plantations involve crop management (fertilisers and various cases of legal and social abuse other inputs). Benefits are not shared with everyone impacted by or involved in • Interest in palm oil as a carbon-saving palm oil production. data are still scarce. or coercion. It also reflects a form of timber common in Indonesia. land theft greatly outweigh the benefits. labour and capital compared to minimising the environmental other land uses. biofuels where the mean energy yield . in the humid forest zone of Southeast Asia for some time to come. The exceeds the fossil fuel energy input investments needed in the technology for fertiliser and transport. without developing plantations. Full carbon accounting planted. On peat soils. followed. but the and the planting time to be profitable carbon emission costs of clearing magnify the financial risks if the forest may take 80–90 years of market proves limited. processing and transport (excuses for logging forest. biofuel production to be offset on mineral soils. oil palm plantations provide high returns to • Various ‘best practices’ for land. High profitability developed. Many of the species • Once the required infrastructure of impacted are protected by law.

g. by improving rise—could palm biodiesel compete management systems). fertiliser may improve yields but negatively impact the • Research into the impact of increased carbon balance). and and the consequences of making bioenergy processing technologies. and oil palm. with no attributed responsibility for preceding • How can biofuel developments be land clearance. approach and their choices on the - Research into peatland management spectrum. and tropical forests in carbon-neutral oil palm industry.. key points for intervention? What are the options for mitigation? How • Analysis of new policy mechanisms can these be effectively acted upon? introduced in the EU and other countries/regions (particularly Asian countries. be productive without drainage regulation. interest in biofuels.g. if prices maximised (e.. production efficiency. to . Is the threat real and significant? If so. • Investigation into how the carbon • Given that oil palm is a high-yielding benefits (if any) and energy benefits oil crop. What are the restoration and re- needs of these producers and how can establishment. Is restoration and they be met? re-establishment desirable? - Research into how oil palm • Development of scenarios for plantations on peatlands can different levels of demand. in remote areas. drained or planted independent smallholders to use oil peat can be treated or managed palm as part of a farm diversification to restore the carbon balance.   |  53 Conclusions and needs Research needs food security. how can this be remedied effectively? Oil palm plantations and biofuels • Lifecycle analysis throughout the • How can palm oil contribute palm oil biofuel production chain to meeting future global would help us understand under what energy demands? circumstances—for example. under what circumstances— of palm oil plantations can be for example. applying and their impacts on land use. high internal nutrient made more beneficial to biodiversity use efficiency—palm biodiesel would and the environment? What are the be acceptable as a carbon-saving fuel. them productive (e. developing countries. with hydrocarbon oil products and other sources of energy? • Given that the carbon balance is What technologies are needed negative when peatlands are drained to achieve this? to make way for oil palm plantations: - Research into how already • Determination of the options for damaged. such as Indonesia and Oil palm plantations and Malaysia) and their impact on CPO environmental concerns prices. oil palm • Development of guidelines for a expansion. biofuel development.

secondary forest. requirement to maintain narrow • Research into oil palm-based [<100 m] riparian buffer zones).. players—large and small—are to Environmental guidelines for changing markets. help them avoid debt compounds (VOCs) in climate and enable them to build up capital. want to diversify and plant 2–3 crops on land holdings rather than just • Assessments of the environmental one crop.54  |  The impacts and opportunities of oil palm in Southeast Asia • Determination of the level of Oil palm plantations and benefits emission and impact of greenhouse to the poor gases other than CO2 from oil • Research into the technical issues palm plantations. . agroforests) and the region. How (processing stage) and nitrogen oxides to ensure access to high-yielding (linked to fertiliser use). but strong vested different vegetation types (primary interests are suspected to have forest. Smallholders often forest matrix of timber concessions. change and atmospheric chemistry. What are the of small-scale processing and rural management options that influence enterprises in palm oil production. What are the benefits and impact of clearing riparian forests. degraded suppressed such developments in forest. etc. these emissions and how can emissions Conventional processing plants are be most effectively reduced? only economic on a large scale. years) and how vulnerable industry and how these can be improved. How can such plantation development are similar to vulnerability be reduced? those for natural timber concessions (e. Small- scale processing is costly. grasslands. at low prices. varieties and protecting against fraud. replacing them with oil palm. • Development of mechanisms that • Research into the role of isoprene would give smallholders access to and other volatile organic better prices. • Assessment of the value that environmental guidelines on oil • Research into the risks of specialising palm have for maintaining ecological in such a long-term crop (20–25 functions and species diversity.g. especially methane alternatives in using oil palm. costs of these strategies? What are and mill effluent and fertiliser the best options and how can they be discharges on river ecosystems. Cooperatives • Examination and comparison of may bring greater benefits to small- the carbon implications of clearing scale producers. but agroforestry combinations that the non-forest matrix of plantations could be economically viable for is ecologically very different from the smallholders. Smallholder producers often have no We know that oil palms are major option but to sell to monopoly buyers emitters of VOCs. promoted? including stocks of fish and crustaceans that are important to local economies. • Better accounting methods for • Ensure smallholders are well greenhouse gases from oil palm informed of the management production.

standards and the concerns of peat lands and carbon emissions. • Collection of quality statistical • Development of ‘criteria and and spatial data in Indonesia. areas maximise the good and minimise allocated for new oil palm plantations. • Research into the extent to which the palm oil industry can • Research into how oil palm and regulate itself effectively through biodiversity can better coexist in initiatives such as the Roundtable landscapes. to be able to production of palm oil in any more accurately determine the area given location. assistance that would allow smallholders to adopt best Incentives for good practice in management practices. effectively monitor adherence to environmental and product • Research into incentives and quality standards. . How to manage plantations.   |  55 Conclusions and needs • Emergence of independent • Research into optimal planning and smallholders with access to multiple management of oil palm plantations processing plants. how to the trend towards smaller enterprise prepare land (without burning) and units making decisions. such as oil palm plantations zero burning. In what ways can we of existing oil palm plantations. peat process into wider land use planning? areas. etc. consumers. For of oil palm are bound to change with example. and the mechanisms by for Sustainable Palm Oil. degraded areas. These data are needed to more accurately determine the impact • Certification of oil production of oil palm expansion on forests. and indicators’ for ‘good’ ecological perhaps other countries. How can these dangers of such initiatives being benefits be brought about? hijacked by vested interests. the bad? How can we integrate this forested areas. What are the best options and to ensure that future expansion for industry and the consumers? minimises similar impacts. and the which this may occur. where to plant. The social aspects (under multiple demands).

is native to continue to increase mainly because oil is tropical Central and South America. and in less desirable palmitic acid.5% to 6. fertilising. fertile stock. The two palm are land clearing and development.gov/oiaf/ieo/pdf/ 6 Land with slope of 40 per cent or highlights. Indonesia and Malaysia prohibit the use of A ban on CPO exports was also put in place fire to clear land. In Malaysia. Both fluctuated between 60% in 1999 and 2. species are easily hybridised and produce planting. 10 Palm oil is rich in desirable oleic acid. pest and weed control.5% in the world’s largest collection of Elaeis 2007 for similar reasons. from sugar cane for example. 2007). 2002). more than half again). The government increased 8 The Malaysian Palm Oil Board maintains the CPO export tax from 2. RTRWP cited in Basuki and Sheil 2005). 14 http://www. yields in excess of 20 2 Demand for oil alone may rise 40 per tonnes of fruit bunches per hectare per cent by 2030 as reported by the president year were being reported at the turn of the of the Roundtable on Sustainable Palm millennium (Poku 2002). E.. 13 It is these impurities that give the distinctive red colour and flavour to oil 5 See also http://www. oleifera is generally not as high yielding as animal feedstock. ground transportation fuel (Kennedy 2007). Thus E. While a byproduct of a crop grown primarily for E. slopes above 20º cannot be 16 The export tax on CPO exports has lawfully cultivated (Weng 2000).Endnotes 1 Discussions suggest little agreement 9 It is suggested that yields in Sumatra on virtually all of these area figures. as the price of germplasm.doe. oleifera is the subject of and harvesting (Belcher et al. between January and April 1998 to ensure a constant supply of cooking oil to the 7 A labour-intensive manual process.org/sea/ from cottage industry in Africa (Poku Products/AFDbases/AF/asp/SpeciesInfo. commercial interest and crop improvement programs. High 3 Ethanol. more cannot be converted to agriculture in Indonesia and should remain forested 15 Palm oil currently achieves 32 per cent (Rencana Tata Ruang Wilayah Propinsi/ (European Commission 2008).eia. 2007). 2004). . 11 Soya bean oil production will 4 A second species. asp?SpID=724. domestic market when CPO prices peaked at $770/tonne. African oil palm. Oil (RSPO). palm oil reached over $800/tonne (Casson et al. oleifera. Moreover. Some and Peninsular Malaysia were already at suggest the true figure for area designated 15–25 tonnes of fruit bunches per hectare to oil palm may be more than 50 per cent per year in the mid 1990s. with some higher (i.5%. fields producing 30–38 tonnes (NewCROP 1996). Jan Kees Vis of Unilever (Anonymous 2005). it has various potentially valuable properties including shorter stature 12 The principle costs in establishing oil and different disease susceptibility.icraf.e.pdf (7 Nov. levels of palmitic acid lower the value already accounts for a quarter of Brazil’s compared to soya and sunflower oils.

was $332. The permit is linked to a map 19 The authors note that they may have that identifies the location of the planned oil neglected grassland or urban areas. many Malaysian richness occurs in the Borneo lowlands (Kier companies. 27 Using an average value of $840/ha per year 20 These figures are uncertain because the (Lestari 2006. Technically. processing and however. but believe palm plantation. plantations.   |  57 Endnotes 17 While Africa as a whole imports over 1 25 A land use permit gives the user the legal million tonnes of palm oil annually despite right to use the land for oil palm plantations. food prices rise with increased fuel costs due to the increased (the plant copes with waterlogged soils). Lonsum 2006. transport (Cassman and Liska 2007). though the authors attempted to take account of this in their assessment. such as Sime Darby (the largest oil palm plantation company)—are said by NGOs to be 30 Wild pig (Sus scrofa). 24 Preventing fires but not drainage merely 33 In early 2007. common palm civet (Paradoxurus (Greenpeace 2007). it is necessary to create access. bearded pig (Sus behind major forest conversion in Indonesia barabatus). when only a year before it as CO2 (Hooijer et al. 26 A location permit is given out prior to a land 18 Much of the uncertainty results from use permit and allows companies to begin the conversion of rubber plantations. 23 Drainage incurs costs. a tonne of soya bean cost slows the rate at which the carbon is released $610 in Indonesia. 2006). local production. 22 It is also argued that there is no cost benefit to using fire to clear any land 31 One case study in Sumatra reported (Sargeant 2001). Wilmar 2006). 2005). that any such contribution is very slight. hermaphroditus) and leopard cat (Prionailurus bengalensis). who claim good practice locally— et al. . there is no need to drain peat for oil palm production 32 Even without land competition. inputs. 29 An independent global assessment reports the highest estimate of regional plant species 21 At the same time. costs of management. smallholders produced 66% less than large-scale plantations (Hasnah and Coelli 2004). FAO definition of forests includes degraded forests and secondary regrowth as well as 28 Includes C from peat drainage in peat areas. process of gaining a right to use the land for oil palm plantations.

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unbiased research on these issues will move the discussion and practice forward.org The ongoing expansion of oil palm plantations in the humid tropics. The Center for International Forestry Research (CIFOR) is one of the 15 centres supported by the Consultative Group on International Agricultural Research (CGIAR) . but also threatens to increase global carbon emissions.org. is generating considerable concern and debate. it can be hard to perceive reality. any answer depends on many choices. and that palm oil demand is rising. Some facts are indisputable: among these is the fact that oil palm is highly productive and commercially profitable at large scales. along with expert consultations. Amid industry and environmental campaigners’ opposing claims. The content is peer reviewed internally and externally. Is oil palm a valuable route to sustainable development or a costly road to environmental ruin? Inevitably.CIFOR Occasional Papers contain research results that are significant to tropical forestry. Oil palm’s considerable profitability offers wealth and development where wealth and development are needed—but also threatens traditional livelihoods. To request a print copy. It offers a renewable source of fuel. But do decision makers have the information they require to avoid pitfalls and make good choices? This report examines what we know and what we don’t know about oil palm developments. Our sources include academic publications and ‘grey’ literature. especially in Southeast Asia. For an electronic copy visit www.cifor. www. Credible. How can local.cgiar.org/publications/papers.cifor. regional and international benefits be increased while costs are minimised? At the end of this report we present a list of pressing questions requiring further investigation.cgiar. contact cifor@cgiar.