Growing palm oil’s capacity for good

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Growing palm oil’s capacity for good

Blog 24th Jul, 2018

My participation in EU-RT 2018 (RSPO Europe Round Table 2018) a few weeks ago brought out some frank conversations on one of my WhatsApp groups. Some friends wanted to know more about EURT and when I explained that it relates to use of sustainable palm oil, some of those that are more distant from the palm oil debates asked if there was such a thing as ‘Sustainable Palm Oil’. It affirms my awareness about how one-sided the palm oil debate has become and how lop-sided the image is. Yes, the answer is simple and short – THERE IS Sustainable Palm Oil. And we all need to do much more to make ALL Palm Oil Sustainable.

The June report from the International Union for the Conservation of Nature (IUCN) found that “palm oil is damaging global biodiversity, negatively impacting 193 species assessed as threatened on the IUCN Red List affected”. But further reading of the report also brings to light their awareness and acknowledgement that “banning Palm Oil would DISPLACE RATHER THAN HALT the global biodiversity losses attributed to palm oil”. To this, I would add that we cannot forget the positive side of the palm oil equation and the human impact.

Over my 25 years at Olam, working across commodities and countries, I have had the occasion to work in developing economies and I hold two causes close to my heart – one involves improving farmers’ wages through market opportunity and the other, creating livelihoods for young people.

At Olam, when we first started buying cashews in the Republic of Benin in 1994, annual production for the country was 4,000 metric tonnes (MT).  Advising better farming and sustainable crop care practices made a huge difference to yields so that in a matter of 10 years, production levels were ten-times at 40,000 MT benefitting not just farmer livelihoods, but also generating a higher and consistent supply of better quality nuts, making our business more sustainable while farmers had more of a choice in crops to grow. The classical virtuous cycle and a clear outcome of free market action (fair price discovery) for farmers.

Creating sustainable opportunities for our next generation and preparing them for these new opportunities is also our responsibility. In 2001, I was living in Abidjan and on weekends, on our way to the beaches in Assinie, we would come across women and young girls in Bonoua who sold baskets of pineapples for 500 CFAs (US$1). I would wonder at the little cash these rural economies generated for their participants. Bonoua was at least blessed in that it was on the road to the weekly beach trip for the city-dwellers. But the young people in other villages and towns such as Boundiali, Tabou, Bouna didn’t have even this opportunity! The boys and young men would come to Abidjan and hang around the business district of Plateaux to help park cars and guard them. This would earn them a few hundred CFAs quite quickly…….but what might go some way in Bonoua does not in Abidjan, with weekly rentals and daily food expenses becoming real cash outflows. So, while a young man could leave the village and earn something in Abidjan, it was not really any break out of the vicious grips of poverty.

Agriculture holds great promise for creating better livelihoods in rural Africa and especially the Oil Palm holds a multi-dimensional ‘power to do good’.

The lack of commercial activity is a serious issue in many parts of Africa. In fact, this is a global issue with even many rural regions of Indonesia facing the same problem. I have seen agriculture building rural economies and especially I have seen oil palm agriculture effectively eradicating poverty and bringing sustained dynamism to rural economies.

In Gabon, we have developed 64,000HA of palm oil plantations and in this period I have seen how the village dwellings have transformed in the Mouila and Awala regions. The village dwellings in those areas used to be shabby and poor. Our plantations have created 7,900 new farming jobs and this introduced USD500k of new money – WEEKLY! – into those communities. The houses started getting new roofing sheets, others got their first brush of paint and some others very much rebuilt houses. We not only developed 64,000HA of palm oil plantations, we have also undertaken the responsibility of protecting 72,000HA of High Conservation Value forests.

We remain equally aware of the damage that palm oil plantations can do if it is not developed and maintained within strict sustainability framework. At Olam we have vast experience of working towards shared progress and responsible growth. We find partners who understand the narrow development space that exists for agriculture and Oil Palm development in rural equatorial belts. Our approach, as outlined in our Palm Policy and new Living Landscapes Policy, is about inclusivity. It is also about knowledge sharing. We equally seek to learn and partner with stakeholders and experts and this includes farmer associations, cooperatives, policy makers, and NGOs – all connected by shared knowledge of the sector and shared interest and passion for developing communities and including them in the modern economy. There are many stakeholders who have an immense amount of knowledge, particularly the Non-Governmental Organisations (NGOs). It is important that we include each other in conversations and debate, ensure we each have a clear understanding of the challenges we face, and identify how we might make progress together. If you haven’t already seen them, this blog from World Resources Institute with film from The Forest Dialogue demonstrates this in practice.

We should be very careful to not forget investors, big lenders and their financial stakes involved. By my estimates, oil palm has seen US$2 billion of foreign direct investment in Africa over the last 10 years, but commensurate returns are still a long distance for these investors. We have to be very mindful that these investments in oil palm have already created over 20,000 farm jobs in Africa, they bring in USD1m every week through salary and wages into these communities. Such money-flows are possible for sustainable and regular introduction into communities only through agriculture.

20,000 jobs are but a drop in the ocean and many more are required by Africa and that is what is at stake when we do not find means and ways to join hands for developing agriculture in Africa. I look with admiration at what agriculture has been able to do for Malaysia and more recently in Vietnam for creating rural economy and bringing their BPL communities into mainstream.

Society has to play its role in driving the uptake of sustainable oil, and that involves all stakeholders. For those oil palm farmers, large and small, investing to achieve RSPO certification, there has to be a pathway to credible offtakes. Certified oil today accounts for about 20% of production and we have to focus and grow this number.

Let us also remember that edible oil is a critical food item that is a corner-piece for public health improvement through diet and today with 67mMT of production and a new demand developing for 40mMT of edible oil, palm oil is a saviour for many stakeholders and surely the public at large. Given its ability to use less land than other oils, it is well endowed and well positioned to deliver on the new volumes required – all through sustainable agriculture practices.

The way forward does not lie in demonizing palm oil, or in claiming over-simplified solutions for complex issues. Instead we must re-imagine our sector for the better, with all participants in the value chain, not just those in production, coming together, building partnerships and fostering inclusivity to ensure that the IUCN Red List decreases rapidly. That the environment is preserved, rights of workers are respected, farmers are fairly rewarded and sustainable palm oil becomes part of our everyday lexicon and consumption.

Author

author
Ranveer S. Chauhan Managing Director & CEO Palm & Rubber

Ranveer joined Olam in 1993 and is the Global Head of the Oil Palm and Natural Rubber businesses. He is a management graduate with over 27 years’ experience in agri-commodities, and he is an alumni of IIM-A, India.

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