Billion-dollar trade war fuels vegetable oil politics

THE US$40 billion (RM124.4 billion) global palm oil trade makes up almost 60 per cent of the world's vegetable oils market. The bigger the palm oil industry becomes, the easier it is a target for smear campaigns by rivals via political means.

This is evident as Malaysia and Indonesia capture more market share in the vegetable oils trade, faster than rivals in Europe and North America, oil palm planters have had to endure false allegations of massive deforestation and lies about orangutan killings from western environmental non-governmental organisations (WENGOs).

Every year, Malaysia earns around US$20 billion (RM62.2 billion) and Indonesia US$15 billion (RM46.65 billion), from selling 32 million tonnes of palm oil all over the world, data from industry regulators of both countries revealed.

Oil World, a trade journal, confirmed that last year, Malaysia and Indonesia shipped out the bulk of 36.8 million tonnes of palm oil or 58 per cent of the 63.5 million tonnes of vegetable oils traded globally.

Soyabean, rapeseed and sunflower oils, however, commanded 26 per cent of market share.

Oil World's data show that while the vegetable oils market had doubled in size since 1990, people around the world have chosen palm oil over other oils. Among 17 major vegetable oils traded in the world, palm oil consumption exceeded soft oils like soyabean, rapeseed and sunflower.

Oil World stated that in the last two decades, global palm oil consumption expanded three times. Rapeseed oil purchase, however, only increased by 2.5 times and soyabean oil's popularity just doubled.

While global palm oil usage increased, so has the smear campaigns on oil palm planting.

In recent months, Australian zoos initiated a "Don't palm us off" campaign claiming oil palm plantings in Malaysia and Indonesia caused forest destruction of the equivalent of 300 soccer fields every hour and decimation of over 1,000 orangutans a year. Zoo visitors were told to petition to the Food Standards of Australia and New Zealand to label palm oil on all food products.

When asked to comment, Sarawak Land Development Minister Datuk Seri Dr James Jemut Masing said: "It's not true, we do not kill and eat orangutans. It is a taboo to do that.

"Sarawak thrives on eco-tourism, it is in our interests to protect our national treasures. I spent 10 days and nine nights trekking at Lanjak Entimau National Park. There were many orangutans swinging from tree to tree."

He said orangutans are not found throughout the state. These primates are only found in the Lanjak Entimau Wildlife Sanctuary, Maludam and Batang Ai National Parks. No development can take place in these three zones since they are already gazetted as totally protected.

"Therefore, it is not possible for oil palm plantations to encroach into virgin forests," he told Business Times in an interview in Kuching.

On top of that, Malaysia's environmental laws and Malaysian Palm Oil Board regulations designate oil palms to be planted on degraded land that had been subjected to extensive shifting cultivation and logged-over forest.

Oil palm cultivation has actually transformed many rural villagers' lives. "It is through planting of oil palm trees and selling of fresh fruit bunches that smallholders can save enough money for their children to further their tertiary education and become successful professionals. We have palm oil exports to thank for this," he said.

Estates in Malaysia plant oil palm, rubber and cocoa trees to produce cooking oil, margarine, rubber gloves and cocoa butter for global trade. This is part of the same early-stage growth pattern adopted by every major developed economy in the world, from North America to Europe.

"Now, the very same people who have already achieved developed status, cite fear that such development in Asia will exacerbate ecological degradation and global warming. The European Union (EU) argue against tropical forest conversion for oil palm and rubber tree planting," Masing noted.

In pushing for a halt in oil palm plantation expansion in Malaysia and Indonesia, European lawmakers and WENGOs had repeatedly said clearing of tropical forests harms biodiversity and emits carbon dioxide into the atmosphere, worsening global climate change.

"Many people believe Greenpeace, Friends of the Earth and Wetlands International are protectors of the world's forests but ... let me ask you ... are they bringing their own governments to justice for clear-cutting temperate forests?

"Are they lobbying for reforestation of deciduous forests in their own countries? Are these activists completely altruistic and selfless in their devotion to the world's forest, wildlife and indigenous people?" Masing asked.

He then adduced reports of Sarawak government spending RM10 million every year to care for and protect orangutans.

While WENGOs campaigned passionately for the fate of orangutans, until today, they had not contributed any money for the rehabilitation of orangutans and the upkeep of their sanctuaries at Maludam, Lanjak Entimau and Batang Ai. "I wish they'd walk their talk."

By criticising the virtues of oil palm planting and ignoring the evidence that economic development leads to better environmental protection, Masing said it is questionable whether these WENGOs' true commitment is to the environment or to erection of trade barriers to benefit European rapeseed farmers who are already heavily-subsidised by the EU government.

He then cited findings at www.farmsubsidy.org, run by a European journalists grouping that tracks the EU Common Agricultural Policy (CAP) beneficiaries.

For the past 50 years, European farmers had benefited from an exceptional set of protection and subsidies. From 1995 to 2010, the cumulative budget expenditures for European farmers had been in order of more than €600 billion (RM2.5 trillion).

The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.

Although the EU has gradually reduced subsidies to farmers in recent years, at an average of €55 billion (RM238.15 billion) a year or 42 per cent of the CAP's budget, it remains the world's largest agricultural support scheme.

On top of that, there are also export subsidies for EU-based food multinationals like Unilever, Nestle and Danone. Last year, the EU spent about €350 million (RM1.5 billion) on export subsidies.

Masing then argued that the EU government's covert use of taxpayer funds to facilitate environment activists to lobby against the growth of oil palm plantations, in the name of "saving rainforests", is a blatant violation of international norms and Malaysia's sovereignty.

"We see these activists holding demonstrations claiming to save rainforests. But are there independent audits to determine the effects of these WENGOs policies and practices on the orangutans and my fellow Bumiputeras they claim to be helping?"

"Who are better placed to speak on behalf of the poor, voiceless and marginalised? The WENGOs and their local affiliates self-proclaiming to be stakeholders or our elected Members of Parliament?" he asked.

He described the WENGOs as whistleblowers, judge and jury, all rolled into one - a stark contrast to check and balance that elected Parliamentarians face.

Masing then referred to the European Commission website at http://ec.europa.eu/environment/funding/intro_en.htm, which revealed the Directorate-General for the Environment had, in the last 10 years, handed out over €66 million (RM285 million) to green NGOs.

In 1998, the EU funding to these NGOs was just over €2 million (RM8.66 million) but last year, the amount nearly topped €9 million (RM350 million). These fundings were advanced by European corporates and labour unions in an effort to protect domestic rapeseed oil farming which, in turn, receive massive CAP subsidies, Masing noted.

One Response to Billion-dollar trade war fuels vegetable oil politics

  1. These environmental activists, while appearing to fight for smallholders like myself, are actually humiliating us.

    What smallholders want is a hand-up to make a decent living, not handouts by these European environmental groups who are actually seeking to control global palm oil and timber trade via their own narrowly-defined "sustainability" criteria.

    Oil palm planting has given me the opportunity to save enough money to allow my daughters to pursue their tertiary education. I'm proud to say one is an entrepreneur, another.. a lawyer and the other an architect.

    Education is the way out of poverty, not promises of handouts by environment groups and the European governments.

    I'm a simple smallholder but I'm definitely not simple-minded.

    These environmental and human rights activists are no different from self serving politicians who say what people want to hear in front of cameras and reporters.

    As for Dato James Masing, I'm glad that despite him being Sarawak's Land Development Minister, he recognises the need for sustainable development. I support his stand to bring to justice those sub-contractors who over-logged in the upper region of the mighty Sg Rejang and caused a logjam.

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