Borneo
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The Impact of Oil Palm in Borneo

By Rhett A. Butler

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Palm oil plantations used to 'reforest' parts of Brazil despite being wildlife deserts
(06/30/2015) A recent study systematically documented bird biodiversity within oil palm plantations, finding they contain fewer species than secondary forest and even cattle pasture. As oil palm grows as a commodity in Brazil – and can legally even be used to "reforest" land – how can a country that has made big gains in reducing deforestation in recent years balance this powerhouse industry with environmental welfare?


Corporations rush to make zero-deforestation commitments, but is it working?
(06/29/2015) Every year, more companies pledge to stop using ingredients whose production cause tropical deforestation. Retailers and brands making voluntary commitments – mostly involving palm oil – include Johnson & Johnson, Unilever, Colgate and Wilmar, the world's largest palm oil trader. Among 2014 joiners were Cargill, Krispy Kreme, Dunkin's Donuts and Baskin' Robbins, with 2015 bringing the addition of McDonald's, Archer Daniels Midland and Yum! Brands (owner of Pizza Hut, KFC, and Taco Bell).


Illegal forest clearing spotted in Aceh's biggest peat swamp
(06/26/2015) Encroachers have been clearing forest at three locations in Aceh's biggest peat swamp since February, the Rawa Singkil Wildlife Reserve, analysis of Landsat satellite imagery by environmental group Greenomics-Indonesia shows. The area is home to the densest population of critically endangered Sumatran orangutans in the Leuser Ecosystem.


Do we need to move 'beyond certification' to save forests?
(06/25/2015) Over the past two years dozens of companies have established 'zero-deforestation' or 'deforestation-free' policies for the commodities they source, trade, and produce. The pace of adoption has been staggeringly fast for a business that have been historically slow-moving relative to other industries. Some sectors, like the Indonesian palm oil industry and the Brazilian soy industry, even appear to be nearing a critical mass where the majority of international buyers and traders are now bound by such agreements.


Bunge: if you clear peatlands, we won't buy your palm oil
(06/23/2015) Palm oil growers who plan to convert peatlands and rainforests for new plantations have been warned: one of the world's largest agribusiness companies is not interested in your palm oil.


Bunge palm oil supplier plans to clear peatlands for plantations
(06/22/2015) BLD Plantation Bhd, a Malaysian palm oil company, plans to clear some 14,000 hectares of peatlands in Sarawak, on the island of Borneo, potentially putting it in conflict with the deforestation-free sourcing policy established by American agribusiness giant Bunge, say campaigners who filed a grievance over the matter.


Palm oil giants to investigate company found razing Papuan rainforest
(06/18/2015) Agribusiness giants Cargill and Golden Agri-Resources (GAR) are pledging to investigate a palm oil supplier after an Indonesian environmental group presented evidence of rainforest clearing in New Guinea.


FDA bans artificial trans fats, paving way for more U.S. palm oil consumption
(06/16/2015) The U.S. Food and Drug Administration (FDA) today ordered food manufacturers to stop using trans fats within three years, potentially paving the way for increased palm oil consumption in the United States.


Consumers willing to pay sharp premium for wildlife-friendly palm oil, claims study
(06/15/2015) Shoppers may be willing to pay a 15 to 56 percent premium for palm oil produced without the destruction endangered species' habitat, asserts a study published today in the Proceedings of the National Academy of Sciences.


A toad's relationship with its prey endures in the face of deforestation for palm oil
(06/15/2015) Biologists and conservationists have studied the effects of habitat degradation on individual species, but have rarely investigated how logging and conversion of rainforests to oil palm agriculture change interspecies relationships. A study of a toad and its ant prey found that while the toad dwindled in disturbed habitats, a shortage of food was not the reason.


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