Is It The Final Countdown For The Anti-Palm Oil Faction?

Greenpeace has just released its latest palm oil report, entitled the ‘Final Countdown’. As one would expect, the report is a breathless tome on the evils of the palm oil industry, on how it negatively affected the planet and on how time is running out before an agreed 2020 no deforestation deadline. But a closer read reveals that the Final Countdown might instead be for the anti-palm oil movement itself, rather than the palm oil industry.

At 194 pages, the Greenpeace report issued on Wednesday, September 19, 2018, is all packed with detailed negative points concerning a large number of palm oil companies and plantations, but the 194 pages also addressed a claimed deforestation that covered a mere 130,000 hectares.

Although the report touts the extent of the deforestation that has taken place since 2015 as being twice the size of Singapore, it has failed to put things into perspective. Singapore is tiny and so is the 130,000 hectares of the forest it said were denuded in just about three years.

In April this year, the Indonesian Ministry of Environment and Forestry puts Indonesia’s forest coverage at about 125.9 million hectares or covering about 63.7 percent of Indonesia’s land area.

The Greenpeace reports also fell into the trap of traditional grievances against palm oil that are no longer relevant. It claims that the production of the commodity is rapidly pushing deforestation and depleting forests.

A recent research has shown that while there may have been declining forest area in Asia in recent decades this has been more than compensated by the growth of forest in other areas.

What data in the report show more clearly, however, is how slow the rate of new oil palm planting has been in Indonesia, Malaysia, and Papua New Guinea since 2015. Indonesia and Malaysia are the world’s top palm oil producers, supplying some 85 percent of the global market.

According to the report, there have only been 80,000 hectares of palm oil planting taking place in Indonesia since 2015. And most were from before 2018.  The surface covered by the new planting represents a mere 0.7 percent of the total area planted with oil palms in Indonesia, put at about 11 million hectares. More recent government figures even put the total planted area at more than 14 million hectares.

The 80,000 hectares of new planting is mostly split between Kalimantan and Papua with Kalimantan accounting for 40,000 hectares. Kalimantan is the home of the Orangutan, pictures of which, of course, grace the report as expected.

Kalimantan is 54m hectares of total land and thus the 40,000 hectares of new planting represents a mere 0.07 percent of the home of the orangutans.

When the report talks about new planting, it refers to a period of some three years. The slow rate of new planting during those three years would mean that the industry expanded annually by less than 0.5 percent. A figure that only corroborates anecdotal evidence that new planting in Indonesia, at least by private companies, has reached almost zero hectares by end of 2017.

If on top of that, we add the increasing requirements for replanting and the hysteria surrounding the need for restoring cultivated peat soil, then the resulting implication may actually be much more dramatic than any deforestation.

It implies that after decades of robust palm oil growth, the productive areas in the palm oil industry will now start to shrink.

Without higher yields, the world supply of a very important edible oil would start to decline too. That would carry major implications on the oil prices and on both the prices and availability of food and other products which rely on palm oil. And the list is long, including ubiquitous daily consumer goods such as soaps and shampoos.

There has also been growing evidence, that the most favored alarm call of all, the orangutans, is also moving towards redundancy for the anti-palm oil crowd. Orangutan population estimates have been on the rise and have now surged to above 100,000. This is four to five time the level of twenty years ago when the palm oil industry was going through a major push.

But perhaps most damaging of all is the fact that it is now becoming clear that some scientists do not agree that biodiversity losses are always a negative thing. They also see some positive effects. For example, reduced varieties of mosquitoes thanks to palm oil helps to curb one of the world’s most deadly diseases, malaria.

Considering all of the above, the accusations against the palm oil industry are beginning to ring increasingly hollow.

Without planting, how can there be large deforestation? The other reality is that we now need more oil and that a shortage would be undesirable.

The orangutan population is growing and so are forested areas globally. The benefit of less biodiversity in some cases can also be a reason to celebrate. Is this the Final Countdown for the anti-palm oil movement?

*Sebastian Sharp is currently Head of Investor Relations at Eagle High Plantations. The view expressed in this article is his personal view.