Sustainability-related trade wars, some useful Palm Oil stats/factoids and food companies and deforestation

Trade “wars” (actually skirmishes) are all over the news at the moment. Alongside the political posturing of Trump and his economically-unhinged cohorts, there may be, as mentioned before on this blog, a sustainability-related one brewing too.

I’m referring, of course to palm oil, the EU and deforestation. This headline from the Asia Times gives you an idea of what may be brewing:

EU, Indonesia sliding towards a trade war…New European Parliament legislation bans palm oil imports for biofuel use by 2020, a move Jakarta sees as discriminatory and promises to retaliate

Within the piece, which is a useful summary of some well trodden ground around how the EU wants to limit palm oil for biofuels (something which campaigners wholeheartedly agree with, see our recent podcast).

Here’s those palm oil stats I mentioned, as quotes from the Asia Times piece, which seems well researched by a decent journalist. Many are not referenced to original sources so I hope they are correct. I’ve seen similar numbers elsewhere so hope these are accurate – and useful – in providing some context to the challenges of palm oil and reducing its use in the EU:

“…a quarter of Indonesia’s 49 million hectares of agricultural land is now given over to palm oil, which last year racked up a record-high US$22.9 billion in foreign exchange earnings”

“The EU Parliament passed legislation last January setting 2020 as the deadline for banning all EU crude palm oil imports destined for conversion to biofuels. That amounts to 40% of the 4.2 million tons Indonesia exported to the EU’s 28 member states last year.”

“With 36.5 million tons made last year, Indonesia is by far the world’s largest palm oil producer. But for environmentalists, the sharp rise from the 8.3 million tons harvested in 2001 has come at a high cost of lost rainforest and damaged peatland across vast areas of Indonesia’s Sumatra and Kalimantan islands.”

“Palm oil plantations now cover 11.9 million hectares, more than double the amount in 2012 when production accelerated in response to the increased demand for biofuel”

“Price-wise, palm may be the most efficient of the crops to use for biodiesel production, but even the growers say it only makes sense when crude oil is over US$70 a barrel – a level it is only nudging now for the first time in four years.”

“The EU, in fact, accounted for only 14% of last year’s total exports of 29 million tons, far below the 65% that goes to Asian markets.”

“According to official figures, 41% of palm oil plantations are currently managed by 2.5 million smallholders who in turn support as many as seven million dependents; moreover, the sector as a whole employs 5.5 million workers and 12 million indirect workers.”

“World Oil news magazine forecasts that the EU’s share of global palm oil consumption will drop from 7.2% at present to 6.9% in 2025, trailing far behind Indonesia and India at 13-14%, while China is expected to take its place as the world’s second largest importer.”

“Only 17% of palm oil plantations have so far been certified under the Indonesia Sustainable Palm Oil (ISPO) scheme, introduced in 2011”

“…the need for increased mechanization has taken on new importance, and Indonesia and Malaysia are now also facing the challenge of replanting 160,000-190,000 hectares a year between 2019 and 2025 to maintain current production levels.”

Read the full article here.

Lots of recent coverage of the topic, and other commodities, can be found here, it’s list of posts I’ve done on the topic recently: http://sustainablesmartbusiness.com/?s=palm+oil

Of course, Palm Oil isn’t the worst culprit for deforestation and the concomitant climate change that brings, Beef holds top spot, and Soy is much in the news too. This recent analysis shows, to me at least, that food companies need to get their heads out of the sand (some already have) and start tackling these areas head on.

We’re going to be debating all this in London on November 6-7 with 250 leading experts, companies, NGOs and Governments at this event:

Innovation Forum’s Sustainable Landscapes Conference 2018 – Land, Forests, Farmers, Livelihoods: How business can manage risk, improve relationships and drive resilience in agricultural supply chains 

Finally, LOTS of exclusive, in-depth podcasts on palm oil, beef, soy, cotton, sugarcane, and other areas are all free at: https://innovation-forum.co.uk/analysis_podcasts.php