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The Impact of Oil Palm in Borneo

By Rhett A. Butler

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Malaysia at risk of falling behind in push for more sustainable palm oil
(04/17/2014) The Malaysian state should play a more active role in supporting the transition toward less environmentally destructive palm oil production, says a coalition of Malaysian NGO's. In a statement issued Sunday, the Malaysian Palm Oil NGO Coalition (MPONGOC) urged Malaysian banks, palm oil associations, and other government-backed institutions to commit to 'improving social and environmental standards in the palm oil industry'.


Forests in Indonesia's concession areas being rapidly destroyed
(04/10/2014) Forest clearing within areas zoned for timber, logging, oil palm, and mining accounted for nearly 45 percent of deforestation in Indonesia between 2000 and 2010, finds a new study that examined forest loss within industrial concessions.


A new face for palm oil? How a small co-op is changing the industry in Honduras
(04/10/2014) Expanding oil palm plantations are among the top reasons for deforestation globally, along with cattle ranching, timber, and soy. However, a small palm oil production outfit recently became the first cooperative in the world to achieve Rainforest Alliance certification for sustainable growth of African palms, employing a number of innovations to ensure the prosperity of both forests and local communities.


Cargill commits to zero deforestation, but environmentalists have questions
(04/09/2014) After years of criticism from environmental groups, Cargill says it will establish policies to eliminate deforestation, peatlands conversion, and social conflict from its palm oil supply chain. But activists aren't yet sure what to make of the agribusiness giant's pledge. On Tuesday Cargill released a letter it sent to the Roundtable on Sustainable Palm Oil (RSPO), a body that sets eco-certification standards, in response to a Greenpeace Report linking it to deforestation.


Procter & Gamble, Cargill pledge to cut deforestation linked to palm oil
(04/08/2014) Procter & Gamble (P&G) and Cargill today announced new measures to cut deforestation from their palm oil supply chains. P&G (NYSE:PG), a consumer products giant that owns brands like Head & Shoulders and Oil of Olay, pledged to establish traceability of palm oil to supplier mills by the end of 2015. The policy commits it to eliminate deforestation from its supply chain by 2020.


Featured video: Showtime releases first episode of major new climate change series online
(04/08/2014) Although Showtime's landmark new climate change series doesn't premiere until Sunday, the network has released an edited version of the first episode of Years of Living Dangerously to the public (see below). The nine-part documentary series is being billed as a "groundbreaking" exploration into the many ways that climate change is already wreaking havoc on the lives of people around the world.


Malaysian palm oil giant tied to social conflict, deforestation, says report
(04/03/2014) Unlike other palm oil giants that have recently made strong commitments to eliminating deforestation and social conflict from their supply chains, Malaysia-based Kuala Lumpur Kepong (KLK) continues to source palm oil associated with forest destruction and community conflict, argues a new report published by the Rainforest Action Network (RAN).


Grocery giant commits to zero-deforestation policy for palm oil sourcing
(03/25/2014) Safeway has become the latest company to establish a policy that excludes deforestation-linked palm oil from its products.


General Mills, Colgate-Palmolive announce deforestation-free policies for palm oil sourcing
(03/24/2014) Two consumer products giants have joined the wave of companies committing to deforestation-free palm oil. On Monday General Mills and Colgate-Palmolive both announced palm oil policies that go beyond standards set by the Roundtable on Sustainable Palm Oil (RSPO), the industry's main certification body. The policies include provisions to protect wildlife-rich rainforests and carbon-dense peatlands, while respecting the rights of local communities.


Community's push to clear forest for plantation challenges efforts to conserve in Indonesia
(03/20/2014) In the swampy peatlands of Basilam Baru in Sumatra's Riau Province a conflict between a community and a woodpulp company is illustrating some of the intractable challenges of conserving forests and addressing deforestation in Indonesia. On first glance the story seems depressingly familiar. One actor wants to preserve the forest, which serves as critical habitat for endangered Sumatran tigers and clouded leopards. The other wants to clear it for a plantation.


THE SOCIAL IMPACT OF OIL PALM IN BORNEO

For most of its history Borneo was scarcely populated by humans. The unforgiving climate and dense rainforest kept populations small and scattered. In the past half century this has all changed. The influx of more than half a million transmigrants into Borneo over the past thirty years has doubled the island's population and created tremendous demand for jobs. Initially the rubber and logging industries provided employment, but when this collapsed in the mid- (Malaysia) to late-1990s (Kalimantan), work opportunities dried up for most of the local population. Despite this, hundreds of new arrivals continued to show up in Borneo on a weekly basis.

Rising unemployment was a serious concern in Borneo in the late 1990s and early 2000s and ethnic conflict raged in parts of Kalimantan during this time. The sudden rise of the oil palm in the late 1990s and early 2000s was seen as a welcome opportunity for many residents and local governments. Observers are only now seeing the full-cost of rapid growth in the sector.

Environmental Impacts

Beyond the obvious deforestation that results from clearing lowland rainforest for plantations (86 percent of deforestation in Malaysia from 1995-2000 was for oil palm plantations), there are other environmental impacts of oil palm cultivation. Several studies have found a significant reduction (on the order of 80 percent for plants and 80-90 percent for mammals, birds, and reptiles) in biological diversity following forest conversion to oil palm plantation. Further, many animals will not move through plantations while others, like orangutans, become crop pests putting them at risk of defensive poaching by plantation managers. The use of herbicides and pesticides can also impact species composition and pollute local waterways. Drainage systems required for plantations (oil palm plantations in Borneo are often established in swamp forest) may lower water tables, affecting neighboring forest areas. Further, destruction of peat lands increases the risk of flooding and fire. Land-clearing fires set by large oil palm plantation owners were the single largest cause of the massive 1997-1998 fires in Borneo.

For more see Why is oil palm replacing tropical rainforests?

Social Impacts

The social impacts of oil palm plantations are just beginning to be understood, in a large part thanks to the work of Dr. Lisa Curran. While there is no doubt that oil palm plantations provide much needed employment opportunities in Borneo there are questions on the fairness of the existing system which appears to sometimes lock small plantation owners into conditions akin to slavery.

Given the scarcity of timber in parts of Borneo, much of its population has few economic options at present. Oil palm seems to be the best alternative for communities that are just eking a living off rubber cultivation, subsistence rice farming, and fruit gardens. When a large agricultural firm enters an area, some community members are often eager to become part of an oil palm plantation. Lacking legal title to their land, deals are often structured so that members of the community acquire 2-3 hectares (508 acres) of land for oil palm cultivation. They typically borrow some $3,000-6,000 (at 30 percent interest per year) from the parent firm for the seedlings, fertilizers, and other supplies. Because oil palm takes 3-4 years to bear fruit, they work as day laborers at $2.50 per day on mature plantations. In the meantime their plot generates no income but requires fertilizers and pesticides, which are purchased from the oil palm company. Once their plantation becomes productive, the average income for a 2 hectare allotment is $682-900 per month. In the past, rubber and wood generated $350-1000 month, according to Curran. The low level of income combined with large start-up costs and relatively high interest payments virtually ensures that small holders will be perpetually indebted to the oil palm company.

Curran said this debt, combined with almost total dependence on entities they barely trust, has a psychological impact on communities. Because there are no ways to contest actions by the company, conflicts invariably arise within communities, especially when a large part of the community (Dayaks often oppose oil palm schemes) has opposed the plantation. At times under-the-table means are used to sway a community. For example, a gift of a motorbike can win over influential community leaders. Once the oil palm firm gets the approval, it may negotiate on a one-on-one basis with each household, eliminating any sort of bargaining power of the greater community.

Surveys by Curran suggest that communities in West Kalimantan are deeply concerned about flooding after the establishment of oil palm plantations. They also worry about loss of forest resources and culture -- older community members don't always like the idea of women and children working on plantations. Oil palm cultivation also makes local people more dependent on agricultural firms since they no longer grow their own food. Finally, some communities have expressed dissatisfaction for working for Malaysians. They would rather be working independently, according to Curran. While they have a litany of complaints, few see other alternatives.

Meanwhile oil palm firms are making a fortune. By Curran's calculations, some firms in West Kalimantan are seeing a 26 percent annual internal rate of return over a 25-year period, an astounding number. Because of booming demand for biofuels, they have little downside risk.

"Firms are making a lot of money without a lot of accountability," said Curran, speaking at Stanford University in January 2007.

For more see Oil Palm




PICTURES OF OIL PALM IN BORNEO  






REFERENCES  


  • Lisa Curran, personal communication
  • WWF Germany, Borneo: Treasure Island at Risk, June 2005 [pdf, 773 KB]
  • mongabay.com


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    Copyright Rhett Butler 2013