Palm oil production: towards sustainability.

A mini-review on current
and potential environmental and social sound practices in the palm oil
sector.
Katalina Sánchez González
20th of October 2014

Abstract
In the current context of global challenges for farming and food systems (increasing
global population, scarcity of some resources, and negative impacts of conventional
agriculture), palm oil production can be seen as an interesting case to study. Controversial crop,
it has become the most important oil crop in terms of production and surface cultivated, and its
increasing demand for edible and non-edible purposes have stimulated its expansion in many
tropical countries. However, its production is linked to negative aspects such as deforestation
and social conflicts. The present review aims to provide some insight about the current practices
in the palm oil sector and see their suitability in terms of sustainability with a special focus on
environment and social wellbeing. Even though the literature reviewed refers to the term
sustainability, it can be implied that the practices listed correspond to some extent to the
agroecological practices Wezel et al. (2014) describe. Since the whole palm oil sector is
analysed, other practices, especially related to social empowerment, must be included to adapt
these agroecological practices to the tropical context.

Keywords: palm oil, sustainable practices, RSPO, deforestation, biodiversity conservation

Introduction
According to demographic projections, the growth of world population is a fact: from
6.9 billion in 2010 to 9.5 billion in 2050 the global population is expected to increase (UN
2013). Thus the question of how to feed this increasing population persists. Even though the
Green Revolution seemed to provide a possible solution, nowadays drawbacks of this promising
approach (soil erosion, loss of biodiversity, high fossil-fuel dependency inter alia) have shown
that new strategies should be prioritised. Considering new global challenges such as climate
change and depletion of some natural resources (such as fossil fuels, phosphorus and drinking
water), agriculture must be oriented to more sustainable systems in order to keep fulfilling its
main function in the long term, i.e. providing food, as well as providing other services and
products increasingly demanded (e.g. biofuel promoted by the European Union Directive for
Renewable Energy) (Teoh 2010).
An alternative intended to respond to these challenges is agroecology. Promoted in
various countries at different periods of time with diverse definitions, the concept gains in

1
popularity since references to it have increased in the research sphere in the last years (Wezel
et al. 2009). For supporters of this approach claim that it provides a concrete alternative to the
conventional agriculture shaped by the Green Revolution that is seen as no more desirable by
an increasingly part of the civil society because of its unsustainability. And although
agroecology is a concept without a unique definition (Wezel et al. 2009), its relevance on a
global scale is shown by the organisation of the International Symposium on Agroecology for
Food Security and Nutrition hold last September in Rome (FAO 2014). If agroecology is
currently seen as an appropriate approach to cope the global challenges agriculture is facing to
provide food security and a proper nutrition worldwide, agroecological practices could be the
means to increase food production in a sustainable way (Wezel et al. 2014).
In this context of global challenges for farming and food systems (increasing global
population, scarcity of some resources, and negative impacts of conventional agriculture), palm
oil production becomes an interesting case to study. Since its momentum mid-1970s, this
controversial crop has led to an important debate between environmental and social defenders
and advocates of the palm oil industry (Teoh 2010). Even though the driving force for palm oil
development was and is still its impressive economic profitability (Basiron and Weng 2004,
Feintrenie et al. 2010, Sayer et al. 2012), evidences have shown the impact this sector has had
on environment and local communities in particular deforestation and land conflict (Koh and
Wilcove 2008, Edwards et al. 2010, Primadona 2011, Sayer et al. 2012). As a result,
questioning the sustainability of the palm oil sector has led to promoting new principles and
practices on palm oil production conceived within the Round Table in Sustainable Palm Oil
(RSPO), and opening a research field, mainly since 2000s. The present review aims to provide
some insight about the current practices in the palm oil sector and see their suitability in terms
of sustainability with a special focus on environment and social wellbeing. For that, first a short
explanation on the development of this crop with challenges and opportunities related to it is
provided, followed by a brief exposition of the different views on sustainability along the supply
chain. Then an overview of the practices implemented at different levels are presented.
Eventually the sustainability of the sector is discussed including the possibility to adapt the list
of agroecological practices proposed by Wezel et al. (2014) to tropical cash crops such as oil
palm.

Development of palm oil sector: challenges and opportunities

Nowadays, palm oil is an important agricultural commodity worldwide (Teoh 2010).
From being a small crop gown in the tropical-humid Africa, African oil palm (Elaeis guineensis
Jacq.) has expanded (in hectares and production) all around the humid tropics in the last 40
years, mainly in Malaysia and Indonesia, becoming the main edible vegetable oil consumed
worldwide as it represents nearly 30% of the global production of this type of oils (Teoh 2010).
The main reason of its success is its high productivity, three to eight times more than most of
the oil seed crops (Basri et al. 2005), high profitability in terms of land use and low production
costs (Sayer et al. 2012). Although the main purpose of growing oil palm is to produce edible
oil, in the recent years there has been an increasing demand of palm oil for other industries
(oleo-chemical, biofuel feedstock), with an estimated global demand for vegetable oil to be ca.
2
240 Mt yr-1 by 2050, the double of the demand at the end of 2000s (Corley 2008). Thus this
rising demand due to the continuous population growth and new production purposes is an
indubitable fact and therefore favourable prices are stimulating the palm oil sector to increase
the production (Teoh 2010, Sayer et al. 2012).

Consequently, increasing palm oil production is a goal for producing countries in order
to meet current and future estimated demand (Corley 2008, Teoh 2010). Both Indonesian and
Malaysian governments have established in their economic agenda objectives of increasing the
production (Teoh 2010). As an example, Indonesia seeks to become the “best sustainable palm
oil producer in the world” and pretends to double the current production to achieve 40 million
tonnes of palm oil produced by 2020 (Jiwan 2009 cited in Teoh 2010). And other producing
countries such as Thailand and Colombia are following the same trend (Teoh 2010). All the
authors consulted agree on the fact that expansion of the cultivated surface area is the main
mean to meet this productive goal. Even considering increases of yields, different scenarios
have been proposed to estimate the surface area required to expand palm oil production (Corley
2008, Garcia-Ulloa et al. 2012, Sayer et al. 2012). Already pointed out by environmental NGOs
in the last decades, deforestation of tropical rain forest is still the main threat regarding
expansion of oil palm plantations (Butler and Laurance 2009). Impacts of converting primary
forest into oil palm plantation has been reported in literature (Koh and Wilcove 2008, Butler
and Laurance 2009, Edwards et al. 2010, Wilcove and Koh 2010). Loss of biodiversity and
carbon emission are the most common effects mentioned. In addition, human right violations,
especially regarding land tenure, is also highlighted as an important social issue related to oil
palm cultivation (Feintrenie et al. 2010, Primadona 2011).

Beyond the economic attractiveness of palm oil production, producing countries are
maintaining a high interest on this cash crop also for other reasons. Palm oil is a basic source
of fat in the national diet in developing countries, a major source of employment and income in
rural areas in producing countries, and therefore a central pillar of rural development (Teoh
2010). For small farmers, oil palm represents an opportunity to improve their livelihood and
this expectation is supported by governments (Boons and Mendoza 2010). Colchester et al.
(2006, p.11, cited in Feintrenie et al. 2010) observed: “Done right, palm oil should generate
wealth and employment for local communities. Done wrong, oil palm estates can lead to
alienation, loss of livelihoods, social conflicts, exploitative relations, and degraded
ecosystems.” What is “right” and what is “wrong” remain the key questions to answer. If it is
increasingly recognise that the palm oil sector must move towards sustainability, defining
sustainable palm oil production depends on the actors involved in the supply chain and their
different perspectives (Boons and Mendoza 2010).

Criteria of sustainability in the palm oil sector

Until now it has been stressed the importance for the palm oil production to become
more sustainable. From the palm oil sector, an attempt to overcome the negative impacts, and
therefore to give a better image, has been by creating the RSPO, a multi-stakeholders platform
where members and participants of the international palm oil chain communicate, develop and

3
implement criteria for sustainable production and use of palm oil, and undertake practical
projects to help implementation of sustainable best practices (RSPO 2013). On a voluntary
basis, this action involves stakeholders from different parts of the supply chain, although
members come mostly from developed countries (Germany has 220 members, all category
included, the same amount as Indonesia and Malaysia together1) and from developing countries,
smallholders are not represented. This imbalance and the difficulties small palm oil producers
and communities have to access to information disseminated through the website (such as
surveillance reports from auditors who evaluate certified palm oil companies) have been
pointed out by Primadona 2011.

Establishing principles and criteria of sustainability, RSPO main goal is to “to promote
the growth and use of sustainable palm oil through co-operation within the supply chain and
open dialogue between its stakeholders.” (RSPO 2014). However, according to Boons and
Mendoza (2010), sustainability definitions along the supply chain are diverse, depending on the
actors’ values and motivations, as well as their relation to other stakeholders. For that reason,
when producers, especially bigholders, are incentivized to produce more eco-friendly, their
definition of sustainability depends on accomplishing an ecological assessment while looking
for an economic assessment (Boons and Mendoza 2010). In the case of smallholders, the idea
of sustainability may be generated by their attachment to their ancestral land (Boons and
Mendoza 2010). In the same way, biodiversity conservation has different significance for oil
palm consumers in developed countries and producers in developing countries. Even among
consumers there is a different idea of sustainability. Such divergence is highlighted by the fact
that China and India, the main markets for palm oil, until now have not shown any particular
interest in purchasing certified sustainable pal oil, 8-15% more expensive than uncertified palm
oil (Wilcove and Koh 2010). On the other hand, this certification has been mainly supported by
Europe, USA and Australia, even though the purchase of this type of oil is still very low
(Wilcove and Koh 2010).

Practices at different levels of the supply chain

Even though there is no consensual definition of sustainability in the palm oil sector
among all stakeholders, in practice research has shown that some practices provide a more
environmental and social sound production (Phosri et al. 2009, Nájera and Simonetti 2010,
Foster et al. 2011). The next part of this review presents some of the practices that are or can
be implemented in the palm oil production in order to reduce the negative impacts generated
by the supply chain, and thus to promote sustainability in the sector. Considering that this
review is made for the whole chain and not only for the oil palm cultivation, practices at
different levels of the food system are presented.

Plantation level. The size of oil palm plantations varies among and within producing countries.
Even though the main production comes from big estates owned by private or public companies,

1
http://www.rspo.org/en/rspo_members (retrieved October 2014).

4
the participation of smallholders2 (independent smallholders and smallholders under public or
private contractual schemes) in the market is also significant (Vermeulen and Goad 2006). The
management system is also quite heterogeneous, especially depending on the type of producer
(Basri et al. 2005). Therefore, agricultural practices are influenced by the size of the plantation
and the type of producer that may have more or less access to inputs (selected seeds, fertiliser)
and technical assistance (Vermeulen and Goad 2006).

This review found out a series of practices in oil palm plantations favouring the
environment. Management of the structural complexity of oil palm plantations by enhancing
the understory vegetation provides a mean to conserve bird diversity, especially insectivore
birds (Nájera and Simonetti 2010). Inoculation of arbuscular mycorrhyzal fungi (AMF) to
improve soil fertility and reduce plant mortality in the nursery and at the transplantation phase
(Phosri et al. 2010). Adoption of Integrated Pest Management (IPM) by using beneficial plants
(Cassia cobanensis and Euphorbia heterophylla) as a source of nectar for parasitoids of
bagworm and nettle caterpillar (Basri and Norman 2000, cited in Basri et al. 2005). Recycling
palm biomass within the plantation and between the mill and the plantation (empty fruit brunch
– EFB and palm oil mill effluent – POME) (Basri et al. 2005). Zero-burning practice on
clearance (Basri et al. 2005), an important practice due to the highly criticised burning practice
by environmentalists (Teoh 2010). Eventually, integrating animals in the cropping system may
have beneficial effects on weed control, incorporation of organic matter and nutrients in the soil
from excrete and urine, and possible reduction of rodent population (an important problem in
plantations) (Devendra 1991).

All the authors agree on the importance of carrying out more research, especially to
assess the effects on yields by the implementation of these practices. However, most of these
practices seem to have positive effects on other non-negligible aspects of the plantation
management: reduction cost due to an improvement in the survival rate in nursery and
transplanting phase (Phosri et al. 2010), and a reduction of pesticides and fertilisers use (Nájera
and Simonetti 2010, Phosri et al. 2010).

Landscape level. At this level, the main concern is about expansion of oil palm cultivated area
to the detriment of natural forest (Koh and Wilcove 2008, Foster et al. 2011). The main impacts
of converting forested land or peat land into cropland reported in literature are biodiversity loss
(Koh and Wilcove 2008, Wilcove and Koh 2010, Foster et al. 2011), and carbon emissions
occurring during the establishment phase (Sayer et al. 2012). As a result, oil palm expansion is
expected to be in a way that minimises the impact on biodiversity and carbon emissions.

Edwards et al. (2010) claim that due to the inefficiency of oil palm plantations to protect
wildlife, a “land sparing” strategy must be favoured to deal with biodiversity conservation.
Although some plantations are reported to keep forest patches in the field or along the river, the
effectiveness to keep richness and abundance of forest species, especially birds, is very low
(Edwards et al. 2010). However, even recognising the loss of biodiversity from oil palm
expansion, Wilcove and Koh (2010) argue that biodiversity conservation must be done through

2
Smallholders are family-based enterprises producing palm oil from less than 50 ha of land (RSPO definition
cited in Vermeulen and Goad 2006).

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a combination of different approaches that include regulations, incentives (such as REDD+)
and disincentives touching all the sections of the palm oil sector.

More precisely, creating different scenarios for oil palm expansion according to
production, food security, carbon emissions and ecosystem conservation, Garcia-Ulloa et al.
(2012) simulate the outcomes of this expansion. The results show that there is no a simple
solution to achieve all these goals, most of them conflicting between them. Nevertheless, a
consensual combination of all of them may lead to a mitigation of negative effects, especially
related to biodiversity conservation (Garcia-Ulloa et al. 2012). What has been highlighted by
authors studying this issue, is that in order to minimise deforestation and use of peat land, the
expansion of oil palm must be done in areas of low productivity, such as degraded pastures and
fallow land where oil palm may improve biodiversity and productivity, as well as carbon
sequestration (Koh and Wilcove 2008, Garcia-Ulloa et al. 2012, Sayer et al. 2012). Although
these areas seem to be limited in South East Asia, in Africa and the Neotropics it could be a
good opportunity to expand oil palm cultivation without threatening the rain forest (Koh and
Wilcove 2008, Garcia-Ulloa et al. 2012, Sayer et al. 2012). However, more research should be
carried out, especially on land-use change and its effect on biodiversity (Koh and Wilcove
2008).

Industry level. In palm oil mills, waste management has been criticised due to its highly
polluting capacity (Teoh 2010). The use of ponds to store effluents in order to prevent mills
from poured them directly in water bodies, has been reported to increase methane emissions
(Basri et al. 2005, Teoh 2010). Different mechanisms to reduce these emissions exist, especially
in the frame of Kyoto Protocol (Teoh 2010). Clean Development Mechanism (CDM) has been
mainly used in the implementation of projects to reduce methane emissions in the mill by
catching methane gas released from the effluent treatment system and using the biogas to power
generation (Boons and Mendoza 2010, Teoh 2010). Although it provides a mean to reduce
GHG emissions and make palm oil production more sustainable, the reality shows that this
technology is not affordable for most of small mills (Primadona 2011). Basri et al. (2005) point
out the importance of using palm oil mill effluent (POME) as co-products: solid POME for
animal feeding as source of protein, liquid POME to produce biogas and the excess of fibres to
use in manufacturing.

Companies, smallholders and community. In this level, social aspects are stressed. As already
mentioned, different stakeholders are involved in around oil palm plantations. The relationship
between them has been reported several times as conflicting, mainly due to unclear land tenure
and acquisition (Vermeulen and Goad 2006, Boons and Mendoza 2010, Primadona 2011) but
also because of labour conditions (Vermeulen and Goad 2006, Primadona 2011). Agreements
between small producers and big plantations and mills (through governmental schemes or not)
to sell their production are common, since it is difficult for smallholders to market their product
individually (Boons and Mendoza 2010). Therefore, the social welfare is shaped mainly in a
context of dependency of smallholders on bigholders (Boons and Mendoza 2010).

Empowering smallholders seems to be a way not only to improve their livelihood, but
also to increase productivity (Vermeulen and Goad 2006). The development of alliances among

6
smallholders (e.g. creation of cooperatives) is seen by Boons and Mendoza (2010) as an
effective practice to bring them to a more favourable position at the national level.

Discussion
The palm oil sector represents an interesting case to study the sustainability of tropical
cash crops. In a context in which agriculture is facing important global challenges (climate
change, growing population), oil palm cultivation has expanded under the tropical-humid areas
as respond of these challenges since it has economic and agronomic advantages compare to
other oil seed crops. The debate between environment and social associations and advocates of
palm oil industry has led to the development of a platform where stakeholders of the supply
chain share and implement principles and criteria for producing and using palm oil in more
sustainable way (RSPO). This structure provides an important amount of opportunities, such as
establishing certification schemes to stimulate better practices that protect the environment and
livelihood of smallholders and communities where palm oil is produced, although the
effectiveness of these measures is still low (China and India do not import certificate palm oil
yet). Consumer behaviour is an essential factor to take into account when trying to develop a
certain type of industry.

Sustainability seems to be a broad concept that has different definitions, and the creation
of a shared definition among the whole palm oil sector remains incomplete, even though there
has been a great attempt to promote it through the RSPO. Nevertheless, environmental and
social sound practices have been highlighted in this review. Some are already applied whereas
others may be applied in the future, as long as they are backed by a good governance at national
and international level. An important aspect to point out is that the main concern of palm oil
production is related to loss of biodiversity, carbon emissions and land tenure conflicts, the two
formers in an expansion of oil palm context.

The first one, although it is an important issue, it remains difficult to evaluate in terms
of ecosystemic services if there is no accurate assessment of the effect of changes in biodiversity
(Foster et al. 2011). It is worth to mention that the inefficiency of some practices pointed out
by Edwards et al. (2010) (absence or reduced presence of biodiversity in forest patches) may
be caused by a lack of connectivity in the landscape configuration and thus more research on
habitat fragmentation should be done at the oil palm landscape level. The carbon emission issue
is closely linked to climate change and solutions for reducing GHG emissions are manly
provided at the international level. The social issue remains more in the national level, where
solutions depend mainly on the government willingness to develop policies and programmes
strengthening community and worker rights and smallholders position in the market, even
though private alliances between smallholders and companies and among smallholders can be
done. This last aspect becomes more relevant if smallholders are perceived as key actors in the
development of a more sustainable palm oil production (Vermeulen and Goad 2006), e.g. by
implementing agroforestry or silvopastoral practices as suggested by Devendra (1991).
Eventually this review allowed to identify different level where these practices may be
applied, going further than the plantation and landscape level. What has been interesting to see
7
is that even though the literature reviewed refers to the term sustainability, it can be implied
that the practices listed correspond to some extent to the agroecological practices Wezel et al.
(2014) describe. Considering that the whole supply chain has been analysed, other practices
linked to other stages of the chain should be included. An especial place must be kept to
practices related to smallholders and community empowerment since it is an important issue in
the context of developing countries where palm oil is produced.

It is certain that this literature review set aside a great amount of aspects, it did not
pretended to be an exhaustive review on the current situation of the palm oil sector and research
done on it related to sustainability. However, it is possible that it has provided some insight of
the challenges and opportunities linked to this sector.

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