LAST_UPDATEMon, 18 Jun 2018 9am

How Far Will The EU’s Palm Oil Ban Affect Our Impoverished Farmers?

Imagine this: You are an impoverished farmer working on a piece of land with a valuable crop and the profits from your harvests is what puts food on your table, a roof over your family members’ heads and pays off your child’s education costs. But in an unexpected turn of events, your customers stopped buying your harvests, leaving you with lesser income to support your family.

While the hypothetical scenario above sounds like an exaggeration, it is not an unimaginable fate for around 650,000 palm oil smallholders in Malaysia who rely on the crop for their livelihood. They are getting concerned with the decision by the European Union (EU) Parliament to reduce their consumption of palm in motor fuel by 2021 in order to reach ambitious climate goals.

This ban could have significant economic ramifications for Malaysia, as 13 per cent of shipments of palm oil and palm-based products were exported to the EU last year. In fact, 90 per cent of Malaysia’s biodiesel exports also go to Europe.

Though this is not the first time we are hearing the palm oil industry come under fire, on January 16, more than 2,000 palm oil smallholders protested against the EU ban at the EU Delegation office in Kuala Lumpur, with over 350,000 signatures collected, both from palm oil smallholders and Felda settlers, for a petition against the resolution.

While Plantation Industries and Commodities (MPIC) Minister Datuk Seri Mah Siew Keong who deemed the boycott “discriminatory” as well as a form of “crop apartheid”, assured the government will raise objections when Malaysia and the EU are in discussion for a free trade agreement.

“Trade is a two-way process. If Europe discriminates our biggest export item we will definitely take action if needed. I hope this will not be the case. If Europe implements this discriminatory act, then Malaysia will have to retaliate against goods from Europe,” Mah said.

However, EU’s ban is not without its reasons, especially when palm oil plantation in Southeast Asian countries are associated with deforestations, destruction of wildlife habitat and causing the haze that has plagued our country in many occasions.

How Are Smallholders Responding To The Impending Ban?

Yosri Siran is a palm oil smallholder who owns eight hectares of land consisting of lands from Kuala Langat, Selangor and Jerantut, Pahang. He has been working on the land for more than 15 years.

“To me, the ban by the EU towards our palm oil is a form of discrimination. It is also a new form of economic oppression to burden the livelihood of those relying on the commodity.

“They claimed that our plantations are causing pollution, haze and destruction of nature are simply not true. In my opinion, palm oil plantation are not as bad as other agricultural industries as the palm trees are still converting carbon dioxide into oxygen,” he said to Malaysian Digest.

To prove his commitment for the environment, Yosri shared that his plantation is now in the midst of obtaining certification by the Malaysian Sustainable Palm Oil (MSPO), and he is doing his best to comply with the standards of the certification.

As for smallholder, Mohd Azwan, he shared with Malaysian Digest his worries of not having a sustainable source of income in the event of the ban.

“Maybe I won’t feel it now, but with the rising price of groceries and operating costs, I am afraid it will affect my livelihood in the future.

“I have seen how palm oil plantations lift people out of poverty, so I am afraid that this ban will affect many rural families, especially those who live in Felda areas,” said the man who manages a five-acre palm oil plot in Tenggaroh, Johor.

On the other hand, while the European market for palm oil products from Malaysia is huge, some smallholders are optimistic with what the future holds from other emerging markets like China.

Ramli Omar who also owns a few hectares of land in Kuala Langat, says he is optimistic for the future, given that there are still other countries who buy large amounts of Malaysian palm oil.

“The number one importer of our palm oil is India, and they have no plans to stop buying our palm oil. China has also assured the Malaysian government that they are not setting any limits on their palm oil imports,” he opined.

Earlier this month, Chinese ambassador to Malaysia Bai Tian, has assured that the Chinese government will not be setting any limit on their palm oil imports, and are expected to become Malaysia’s largest primary products importer in two years’ time.

Last year, Malaysia exported 2.8 million tonnes of palm oil to India, surpassing that of Europe which amounted to 2.06 million tonnes.

“Add the Middle Eastern countries into the market, and I am pretty sure we will still have a huge market to export our palm oil,” he remarked.

As for the plans to boycott European goods in retaliation to the palm oil ban, Ramli says, “I believe the government knows what is best for the smallholders, so I will be with them every step of the way.”

Palm Oil Lifted Many Farmers Out Of Poverty

Speaking with National Association of Smallholders (NASH) president, Datuk Aliasak Ambia, he highlighted that smallholders are farmers who own less than 50 hectares of oil palm plantation and harvest it as their principal source of income, with its labour force made up of mainly their family members.

“The palm oil industry has given many benefits for more than 650,000 smallholders. Typically, these farmers have a relatively large family, with at least five family members. If we take that into account, that means around 3.2 million Malaysians are relying from the profits of palm oil,” he said.

Datuk Aliasak Ambia.Datuk Aliasak Ambia.Aliasak explained that the EU is the second largest buyer of palm oil, at 2.06 million tonnes last year worth RM10bil, preceded only by India. Hence, losing such a huge export market in the future will reduce the price of palm oil, while highlighting that this will have a huge impact on smallholders.

“Palm oil is our golden crop after rubber. When palm oil was introduced into our country in the 1960s, smallholders in rural areas were quick to grab the opportunity to plant the crop and lift themselves out of poverty.

“In 1970, poverty rate among the rural communities was at 45 per cent. At 2009, the poverty level saw a massive decrease to 3.6 per cent, thanks to palm oil plantations,” he told Malaysian Digest, adding that the ban by EU could reverse the effect and increase the poverty level.

He further reiterated that the government has invested heavily in the palm oil plantations to lift rural communities out of poverty through organisations such as Felda, so there would be a huge impact on the Malaysian socioeconomic status as a result of the ban.

And while Malaysia is able to find other markets for our palm oil if the ban takes place, he stressed that it will take a large amount of resource to campaign for our palm oil in other foreign countries.

While advocates of the ban are pushing for less land cultivation of palm oil, claiming that plantations are hurting the environment through a series of deforestations and land clearing, Aliasak suspects that many Western countries, including the United States, who are exporters of other vegetable oils such as soy and corn which are main competitors of palm oil, are trying to make it harder for Southeast Asian countries to sell our export.

“Their vegetable oils are much more expensive than our palm oil, hence it is harder for them to sell their oils to overseas markets. This ban is their effort to increase the sales of their vegetable oils,” he speculated.

“Why is palm oil getting all the flak?,” he questioned while adding “If we are talking about negative environmental impact, the cattle farming industry all over the world is much worse than palm oil.”

True enough, statistics from Union of Concerned Scientists revealed that palm oil deforests 270,000 hectares of land annually, while cattle farming destroys forests at a much faster rate, with 2.71 million hectares of land every year.

“They are saying that consuming palm oil is bad for the health due to trans fat, when the fact is that palm oil contains more nutrients than animal fat, and comes from palm oil trees which are more environmentally friendly than animal farming,” he justified.

The NASH president has since met with MPIC to discuss the possibility of boycotting EU goods as a response to the palm oil ban, though he admits that proper research must be done before doing so, especially since some EU countries like France, Sweden, the United Kingdom, Netherlands, and recently Spain, have opposed the impending ban.

“Hopefully, the European countries can see how bad the palm oil ban would affect the livelihood of our smallholders,” concluded Aliasak.

Malaysia Committed To Make Palm Oil More Sustainable

In light of the impending ban and to support the image of the industry globally, smallholders have been urged to speed up the process of obtaining the MSPO certification – which was introduced in January 2015.

The MPIC has announced that all palm oil plantations must be certified with the MSPO by end of 2019. The certificate provides general guidelines for sustainable palm oil farming, independent smallholders, plantations and mills.

Before the MSPO, there was also a certificate by the Roundtable Sustainable Palm Oil (RSPO), a non-profit organisation that unites stakeholders from various sectors of the palm oil industry, such as producers, manufacturers and banks. RSPO places its concern on protecting areas with high biodiversity and local communities.

According to the organisation, there is still no suitable alternative for palm oil and the crop will most likely remain as a golden crop for smallholders.

“Due to the high yields of oil palm, alternative vegetable oils will likely require more land, and might cause further environmental damage, and impact the livelihood of smallholders.

“Seven billion people consume palm oil every day, with smallholders accounting to more than 40 per cent of the world’s palm oil production,” an RSPO representative told Malaysian Digest.

The organisation recognises the importance of smallholders to the industry, and are committed in supporting more of them to meet the RSPO certification by producing more oil with less land, raising their level of income and reducing the risk of land conversion which could threaten forests and biodiversity.

Through the RSPO Best Management Practices, more than 92,300 RSPO certified smallholders are now reducing or eliminating the use of harmful pesticides and chemicals, and replacing them with more ecologically sound alternatives.

They are also collaborating with industry partners and NGOs to teach farming communities on the importance of protecting their natural resources and sustainable palm oil production through RSPO standards.

“We remain committed in creating a space where oil palm plantations, the environment, and local communities can co-exist in harmony,” the representative said, adding that the market also plays a role in ensuring sustainability by demanding only sustainably produced products.

As for MPOB’s role in assisting the smallholders, the government has agreed to allocate RM130 million as an incentive to enable smallholders to obtain the MSPO certification for free, and is aiming for 500,000 hectares of oil plantation to be MSPO-certified by this year.

However, according to a recent report by Bernama, only four per cent of about 244,622 hectares of plantations, including 7,113 hectares owned by smallholders and 22 mills, had voluntarily obtained the certification.

In realising that not all smallholders were able to afford the cost of certification, RSPO had also set up a variety of support channels to help them, such as RSPO Smallholder Support Fund (RSSF), RSPO Smallholder Engagement Platform (RSEP) and the endorsement of the RSPO Smallholder Strategy.

Despite already certifying 92,398 smallholders who contribute more than one million tonnes of certified sustainable palm oil (CSPO) to the market, RSPO recognises that they have yet to provoke a large-scale inclusion of smallholders which the organisation and its stakeholders desire.

Having said this, while Malaysia is doing a lot to ensure that the cultivation of palm oil does not destroy the environment, smallholders also need to show that they are committed in sustainably producing the most efficient and cost-effective crop in the world.

-- Malaysian Digest