Big Questions Remain after Palm Oil Summit

posted by Adrian Ran

After two days at the tenth annual meeting of the Roundtable for Sustainable Palm Oil (RSPO), I had just about given up on hearing anything controversial. The RSPO is a multi-stakeholder group and process that aims to, in its own words, “transform the palm oil sector” by establishing a certification for palm oil that is environmentally and socially responsible. Palm oil is the fastest growing edible and fuel oil crop in the world, and upwards of 85% of it is grown in Indonesia and Malaysia, meaning that this explosive growth is happening at the expense of rainforests, human rights and the climate. An effort to clean things up is undoubtedly a good thing. But as the Secretary General of the RSPO said in an uncharacteristically candid moment, the body is an “imperfect solution.”  RAN has made no secret of the fact that while we applaud the intent of the RSPO, we are highly critical of some of the enormous loopholes in the standard that allow companies to obtain membership and all the good publicity that it entails, without in reality doing much to change the way they procure or cultivate palm oil.

Which brings me back to the lack of controversy. By the final day of the conference, I was tempted to tweet the phrase “Palm oil industry meets in air conditioned building, congratulates itself” as the take-home message from the whole event. But then, a well-spoken man rose during the final plenary and asked a representative of Cargill, who manages one of the companies’ plantations, “How long does Cargill intend to support smallholders?” A hush fell over the room, and the Cargill representative hesitated, and then answered a completely different question, at length. Huh.

Later on that day, Lindsey Allen, RAN’s Forest Program Director, explained to me that there was a world of controversy behind that simple question. Cargill, and other RSPO member companies like it, purchase palm oil from groups of smallholders who essentially hand over the rights to the produce from their land in return for a guaranteed market for their palm fruits. As part of the RSPO certification process, the companies pay the smallholders a premium for their crop, approximately 50% of the premium that the company itself receives in the consumer market. The company then turns around and charges the smallholders a fee for upkeep of the roads to the plantations, to the schools and for chemical inputs like fertilizer and pesticide.

But here’s the catch: when the palm fruit are mature, the farm workers harvest them by using long sticks with curved saws at the end to bring them down from the top of the trees. This works just fine until the palm trees are about 25 years old. At which point, the saws simply can’t be made long enough to reach the fruit. So, instead of building ladders (or creating some other equally high tech solution), the company simply pulls up all the palm trees and replants the plantation with baby trees.  Right away that sounds wasteful to me, but waste isn’t even the biggest issue. The problem is that immature palm trees take about 5 to 7 years to bear fruit. So, all these smallholders have a 5 to 7 year gap in income to contend with. And not only that, but during that time they are still expected to pay the company upkeep of the roads, infrastructure and any other necessary maintenance. Which is tricky, since during that time….they don’t have an income.

The question the eloquent gentleman was asking during the RSPO meeting was essentially “what is Cargill’s plan?” And the reason that the Cargill representative avoided the question is because quite simply, they don’t yet have an answer. And neither do any of the other companies, despite ongoing requests from smallholders and NGO’s. Without alternate plans, smallholders will inevitably go into debt to pay for general maintenance during the ‘fallow’ years when the new plantation is maturing, leaving them with crippling bills that could translate into life-long debt bondage to the company. Cargill would probably protest that this is an inaccurate picture of their business practices, and perhaps it is. But the simple fact that they are not willing or able to make public an alternative scenario puts the burden of proof squarely on them. I learned later that there is a working group at the RSPO struggling to address this issue, and that in and of itself is undoubtedly a step in the right direction. But until there is a result, I take the side of the smallholders. The Secretary General of the RSPO, closed the final plenary saying that there were three key questions:

  •  Is the RSPO good for people?
  • Is the RSPO good for the planet?
  • Is the RSPO good for profits?

After attending the meeting and observing the progress made over the past ten years to develop the RSPO standard, it is my view that the RSPO may be good for profits, but still falls well short of being good for people and the planet.