By Denys Collin Munang*
Prices are good right now, for Palm Oil. We never had it so good for so long. Well, it felt long for two reasons, one is because we had an awful time a year ago with the drought and low prices. And then when it started to get better late in 2019, prices crashed again, because of the Great Pause… I call it that now because that’s what the Coronavirus has effectively done and it also sounds much less depressing than the word Pandemic.
Palm Oil demand is one of the things many expected to also crash during the Great Pause. Oddly, it did not. The smart men have now worked out that people still need lots of it… Maybe not in Hotels, Restaurants and Catering (HORECA) outlets but in their homes where most of them cook on their own now, sometimes wastefully. In the bathrooms and everywhere we touch things we need soaps to wash ourselves. In Biofuels because there is not enough used vegetable oils from HORECA now, so they have to use up Palm Oil and other vegetable oils to meet the Biofuel mandates.
We need it just as much as we need masks, rubber gloves and a vaccine now. But there is also not enough of Palm Oil around because several years of low prices, drought and sustainable practices have put the brakes on any new planting in the industry.
So, great, right? Prices are high, demand is good… Why would the industry need to be in the same desperate predicament as Hamlet right now? Incidentally Hamlet had suicidal thoughts when he thought out loud, to be or not to be… whether he should continue to be, meaning to exist or remain alive, or to not exist –in other words, commit suicide.
Well, the hardest thing for Palm Oil farmers right now is to decide whether to replant or not to replant…. I mean prices are good, even the old trees that are less productive make a lot of money, why pray should one replant? To replant would be to forgo the joy of good prices which may not last long and endure suffering the loss of revenue for at least four years, on top of the hefty investment you have to put in to replanting.
But not to replant would mean to endure the agony of old sickly trees, forgo the benefits of better more productive genetic material and higher costs of maintaining old palms when the prices fall again. Which they will… Eventually. Because it is a commodity and it is rather cyclical, such is their dilemma.
As with Hamlet’s thoughts, the consequences are also suicidal too. Back in the bad old days, we chose not to replant when prices were good. What most did was double down on the bet, borrow or invest more money to find new places to plant, keep the old palm trees and enjoy the good times… While it lasts and this is where the danger is.
Sir David Attenborough, already 93, had articulated it beautifully when he said that he just wished the world was twice as big and half of it was still unexplored. Similarly, we must learn that the world, as he had learnt, is finite. And we must begin to change the way we used to do things. We cannot afford to deforest our precious forests or high conservation areas anymore. Our laws no longer allow us to do that. Our yields will never improve if we ignore the old palm trees. But beyond that, we must also have that deep conviction in our conscience that our children deserve a better world to inherit and wherever we can, we must allow nature to regenerate to create those valuable natural ecosystems that we once watched in awe on TV or even lucky enough to see for ourselves in the wild, jungles, rivers and seas.
Palm trees are a perennial crop but replanting is a given, in commercial agriculture. We also cannot open new lands, there just is not any left. Land is now finite. If we are to feed the world, we must do so sustainably by replanting when it is biologically due.
To leave old trees in our plantations is also a biological monoculture time bomb. Numerous studies have shown that old palm trees are more susceptible and harbor many diseases, especially Ganoderma, that would make our trees and soils untillable for many years. Many parts of Peninsular Malaysia and Sumatra, where much of the first planting were started, are now being ravaged by this problem and it can only get worse. Simply because with monoculture any diseases will spread rapidly since we have planted with one predominant plant species.
We must think and put in interventions necessary to save ourselves from falling into that slippery slope of extreme capitalism. The Singaporeans have done this quite successfully, but with a different situation. They have successfully curbed the appetite of their residents for vehicles. They have done it with what I call the Great Singaporean COE.
In the late 80s, Singapore knew that with rising affluence, the tiny island nation would be overwhelmed by cars and that conventional road taxes or even fuel taxes would not curb everyone’s voracious appetite for cars. They also needed money to fund the investment in mass public transport. So, realizing that they could ill afford too many cars in their tiny island, Singapore instituted a vehicle quota system (VQS)in the early 90s.
At the heart of this system was the Certificate of Entitlement(COE). It is a brilliant system, because anyone wanting to buy a car in Singapore first had to bid for a COE through an auction (a form of tax) before they could buy one. What this did was effectively limiting licensing rights for Singaporean Residents to use cars for 10 years and beyond that if they still wanted to use the same car, the costs would be prohibitively high.
This had the net effect to control the number of cars on the road in Singapore as pricing would go up for the COE once the VQS had reached its upper limits. Indirectly, old inefficient polluting cars would be taken off the road too. It also generated a lot of income for the government to invest into their mass public transport system that is now world class.
Perhaps we now should think of adopting a similar system for old palm trees. The older your palm trees, the higher your COE or Biological Tax. Palm trees beyond their productive age should be subject to a Biological Tax, giving the same intended effect as the COE does on cars.
To induce the palm oil farmers to replant or sell their land if they choose to do so, to avoid paying the Biological Tax.
Who knows, some clever minds could invest the funds generated from the Biological tax into an annuity that would compound and be available for farmers to draw on to replant when they need to. Indirectly the biological tax could release hitherto unproductive agricultural lands to those that would have the resources and skill to make it more productive and sustainable.
‘Someone would say, but hey, even if it’s a good idea, how would you monitor and enforce it. Well the 2nd part is a political question… You can appoint whoever you think is responsible enough to enforce it. Maybe the government or combination of industry and government, such as the BPDPKS in Indonesia. But the first part is obvious to me at least. We should direct those satellites and Artificial Intelligence that we use spying on other people to instead look at spatially and biologically mapping our palm oil trees.
The technology is already there, AI & Satellites can not only count the number of palm trees you own and determine their age, they can also now tell you if you have been lazy and scrimping on the nutrients you should put into your estates. We don’t need to send endless amounts of human resources around the estates all over the country to do it. A large part of it can be done working from home with an internet link and some technology, without wearing pants, if you perhaps have gotten used to during the Great Pause.
Is a biological tax far-fetched? Well consider that in Indonesia and most parts of Malaysia, tenure on land is also limited by the government, unless you own freehold land you plant oil palm on, which is incredibly rare. Governments all over the world limit land tenure for the same reason and charge you to renew the tenure, to ensure it would remain productive.
Some would also say, this problem of not replanting is mainly with the smallholders. Yes true, but smallholders make up more than 40% of global palm oil produced, which is significant and if truth be told, many corporations have also shirked their responsibility to replant.
For now, at least, unless a palm oil genome is found that will forever have infinite productivity, it is in everybody’s interest to replant when it is biologically due, not just Hamlet, if he was a smallholder farmer.
So there, who would have thought that Shakespeare’s memorable phrase in Hamlet would apply to the plight of the Palm Oil industry now too…
*)Denys Collin Munang is Chief Sustainability Officer with the DSN Group