Block’s Indicator of Sustainable Growth

by Ray Block

 Over the last two years, Greenpeace has been condemning the palm oil cartel for being behind the destruction of the Indonesian Kalimantan Borneo rainforest. First came Greenpeace’s  report Cooking the Climate. A two year study linking the palm oil cartel with the international oil and fats producers, with the latter standing idly by, while the rainforest was being destroyed tree by tree to grow more oil palm. Also destroyed were colonies of orangutans and other animals, birds, along with the diversity of tropical plants.

In April 2008, Greenpeace openly accused Unilever, the British/Dutch margarine and specialty chemical supplier for its cosy relationship with Sime Darby, the diversified Malaysian oil palm plantation group and its downstream oil, fats and oleo chemical interests. Now the same wholesale destruction of rainforests is happening in the remote West Papua province.

Add these facts together. Malaysia and Indonesia control 85 per cent of world palm oil production and 98 per cent of world exports (2006-07 stats). Palm oil represents more than 50 per cent of the total world supply of edible oils and fats.

At the apex is the Malaysian Palm Oil Council led by the aggressive Dr Yusof Basiron, the CEO. Basiron acts like a mini OPEC chief wanting to dominate edible oil prices, as he did in November 2008, when world prices of palm oil was considered too low. The agricultural ministers of both Indonesia and Malaysia agreed to initiate a 300,000 hectare replanting program, that will replace aging trees with seedlings of higher yielding varieties.

The seedlings will begin to bear oil palm fruit for harvest in three to four years. This stratagem reduces overall supply over a period of weeks, and some years later when prices will be substantially higher after the world recession, supply will rise dramatically.

Yusof Basiron hates the position taken by environmental scientists, who persist correctly in comparing the biodiversity of oil palm plantations with the former rainforests, which have been ripped out for oil palms. Mongabay.com, an environmental site, which is a strong supporter of tropical rainforest conservation (November 11 2008) reported a study published earlier in 2008. That showed oil palm plantations retaining less than one sixth the biodiversity of old growth forests, and less than a quarter of that in secondary forests.

What Basiron prefers to say is that “if a comparison is to be made, the biodiversity of the oil palm, an agricultural crop, should be compared with that of soyabean or rapeseed, corn or sugar cane, or other agricultural crops. “He rejoices in the fact that oil palm is the highest yielding conventional oilseed on the market- far outstripping the production per unit of area for rapessed and soy.

The Malaysian Palm Oil Council was also strongly supporting  a heavy handed move by eight developing countries, led by Brazil, Malaysia and Indonesia, which threatened to file a World Trade Organisation complaint against the European Union for its proposed legislation requiring imported biofuels to meet environmental standards. The EU ministers under pressure from environmental groups and domestic biofuel producers had been considering measures to restrict imports of biofuels that fail to reduce greenhouse emissions. The impacts of environmental damage on forests are overwhelming, taking into account the consequences of deforestation – mud slides, and extreme flood conditions.

But some amends are being made with a new international carbon accounting standard, aiming to reduce carbon emissions. It is a voluntary carbon accounting standard, as it was excluded from the Kyoto Protocol. Currently, one third of global greenhouse emissions are coming from a mixture of deforestation (15-20 per cent), more than the global transportation sector, and agriculture makes up the balance.

Conservation International, a non government agency that has several forest carbon projects under development in tropical nations believes that the voluntary accounting standard will enable projects benefiting local communities and biodiversity to access significant new global investment.

Hopefully, the UN Framework Convention on Climate Change to be held in Copenhagen at the end of 2009 will include provision for avoided deforestation. A coalition of rainforest nations and some environmentalists are promoting recognition of forest carbon credits. Were this to happen, it would enable the funding of sustainable forest development for the benefit of the indigenous people who live there.