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Research Report

The impacts and opportunities of oil palm in Southeast Asia: What do we know and what do we need to know?

Douglas Sheil
Anne Casson
Erik Meijaard
Meine van Noordwijk
Joanne Gaskell
Jacqui Sunderland-Groves
Karah Wertz
Markku Kanninen
Copyright Date: Jan. 1, 2009
Pages: 80
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Table of Contents

  1. (pp. 1-2)

    Few developments generate as much controversy as the rapid expansion of oil palm into forest-rich developing countries such as Indonesia (Koh and Wilcove 2007; Stone 2007). Oil palm expansion can contribute to deforestation, peat degradation, biodiversity loss, forest fires and a range of social issues. But oil palm is also a major driver of economic growth and a source of alternative fuel.

    Since the early 1980s, the total area of land allocated to mature oil palm has more than tripled globally, reaching nearly 14 million hectares in 2007 (Figure 1). Most of this expansion has occurred in Indonesia, where the...

  2. (pp. 3-10)

    Elaeis guineensis is a tropical forest palm native to West and Central Africa. Grown in plantations it produces 3–8 times more oil from a given area than any other tropical or temperate oil crop. Oil (triacylglycerols) can be extracted from both the fruit and the seed, crude palm oil (CPO) from the outer mesocarp and palm-kernel oil from the endosperm (Figure 2). Most crude palm oil is used in foods. In contrast, most palm-kernel oil is used in various non-edible products, such as detergents, cosmetics, plastics, surfactants, herbicides, as well as a broad range of other industrial and agricultural...

  3. (pp. 11-20)

    Once harvested, fruit deteriorates rapidly and must be processed within 48 hours, so access to a mill is a major factor in determining where palms can be commercially established (Vermeulen and Goad 2006). The development of small-scale or even portable mills would allow communities and companies to plant and process oil palm fruit in remote areas. At present, large mills processing at least 30 tonnes of fruit per hour are more profitable and require less energy per unit of oil produced than the current generation of small mills (Jekayinfa and Bamgboye 2007). Thus, small mills are not considered viable and...

  4. (pp. 21-24)

    An evaluation of FAO (2005) land cover data suggests that between 1990 and 2005, some 55–59 per cent18 of oil palm expansion in Malaysia (that is 834 000–1 109 000 ha of a total of 1 874 000 ha), and over 56 per cent of that in Indonesia (1 313 000–1 707 000 ha of a total of 3 017 000 ha) occurred at the expense of natural forest cover19 (Koh and Wilcove 2008a).20

    Palm oil producers in Malaysia state categorically that primary forest is no longer converted into plantations—expansion only occurs on land already used...

  5. (pp. 25-30)

    Tropical deforestation contributes around a quarter of anthropogenically released greenhouse gases (FAO 2005). Environmental changes, whether for timber extraction or plantations, the destruction of forests by fire and the degradation of peatlands, mean that Indonesia is the fourth largest contributor to the overall greenhouse gases causing global warming in the world (World Resources Institute 2009).

    To offer benefits, alternatives to fossil fuels need to:

    have more environmental benefits than the fuel they replace

    be economically competitive

    be produced in sufficient quantities to make a meaningful impact on energy demands

    show a net energy gain (Hill et al. 2006).

    With palm...

  6. (pp. 31-36)

    Most concern about biodiversity loss is directly related to forest loss (discussed above). Indonesia’s and Malaysia’s lowland forests are among the Earth’s most species-rich terrestrial habitats. The loss of Southeast Asia’s lowland forests threatens the region’s exceptional29 conservation value (Tinker 1997; Curran et al. 2004; Sodhi et al. 2004, 2006) and has long been the principle conservation concern in the region (Jepson et al. 2001; Gaveau et al. 2007). A number of species, including orangutans (Pongo spp.) and Sumatran tiger (Panthera tigris sumatrae), are the focus of international concern. Several NGOs have campaigned against plantations on the basis of threats...

  7. (pp. 37-44)

    Reports on the impacts of large-scale oil palm plantations on local communities differ greatly. Most information, often highly conflicting, is disseminated by companies or by NGOs. Most is based on anecdotes or a small number of selected cases, and objective research is limited. Large-scale oil palm production has documented benefits. The plantation sector in Malaysia is one of the country’s largest employers, providing income and employment for many rural people. Basiron (2007) comments that ‘involvement in cultivation or downstream activities has uplifted the quality of life of people’.

    In Indonesia, 1.7–2 million people work in the oil palm sector...

  8. (pp. 45-49)

    The negative media stories about the oil palm industry are seen as a threat to an industry that earned Malaysia $14.1 thousand million in exports in 2007. Concerns about wider opinions and media campaigns provide important incentives for improved practices.

    The Malaysian oil palm industry is adopting self-regulating environmental management tools, such as ISO 14000 EMS and life cycle assessment (LCA), to reduce environmental impacts (Yusoff 2006). In addition, the Malaysian Palm Oil Council (MPOC) is striving to change negative views of oil palm, with the message that ‘oil palm is sustainable’; however, their practices have been challenged by environmental...

  9. (pp. 49-50)

    Clearly, the biofuel boom boosted speculation and encouraged investors to open new oil palm plantations. But it seems the biofuel bubble has already burst. High CPO prices made palm biodiesel economically unviable in 2008 and Indonesia’s state-owned oil palm company ceased developing palm biodiesel capacity because of the cost. Thanks in large measure to NGO-led information campaigns, Western countries are concerned about the relationship between oil palm and tropical deforestation, and are reviewing their biofuel targets. Overall, the outlook for palm oil as a major source of biofuel is not wholly positive—at least in European and North American nations....

  10. (pp. 51-55)

    Here we summarise some key conclusions: first, regarding what appears well established, and second, what we need to know. These generally arise from the references discussed above and from our many discussions with colleagues and experts (see Acknowledgements).

    The global area of productive oil palm plantations is in the order of 9.1 million hectares, of which about 3.8 million hectares are in Malaysia and 4.6 million hectares are in Indonesia. (However, many commentators question the accuracy of these figures.)

    The total area of planted oil palm in Indonesia is estimated at about 6.5 million hectares, less than 4 per cent...