Palm Oil – The Green Development Oil Newsletter – Issue 14, July 2011

Australian Senate Endorses Green Global Campaign for Punitive Labelling of Palm Oil 

The Australian Senate has passed a Bill requiring mandatory labelling of products sold in Australia containing palm oil.  A Senate Committee opposed the Bill observing “almost every argument [in support of mandatory labelling] presented to the committee was countered by alternative evidence from other witnesses.”  The Bill will not make palm oil labelling mandatory.  That will be decided by Australia’s State Governments later in the year.

African Palm Oil Continues to Attract Foreign Expertise and Investment
An emerging trend has taken place in Africa in recent months of attracting foreign investment for its growing palm oil industry.  This has specifically been the case in Liberia, Uganda and Nigeria who have all looked to Malaysia for technical expertise, financial assistance and support for local infrastructure development.

Oxfam Countered on Biofuel Claims
The United Nations Food and Agriculture Organisation (FAO) have countered claims from Oxfam that biofuels are threatening global food security.  A report from the FAO has found that the increasing demand for biofuels could “spark much needed investment in agriculture.”

Supply Chain Rules Undermine Viability of RSPO
The Roundtable on Sustainable Palm Oil has launched its trademark for RSPO certified goods.  However the new RSPO rules downgrade CSPO purchased through GreenPalm certificates from ‘sustainable’ to ‘mixed.’  This development demonstrates again doubts about the viability of the RSPO certification system to continue to maintain demand for CSPO.

WWF Researcher Admits REDD+ Could Increase Poverty
A researcher from WWF and Princeton University, Brendan Fisher, has found that the payments for reducing deforestation under the REDD+ scheme are likely to increase poverty, rather than reduce it. The study finds that the data used by climate change negotiators for the REDD+ scheme was ‘coarse’ and failed to consider many of the opportunity costs for people living in and relying on tropical forests.

EU Approves Certification Schemes – Complaints Continue Over Potential Breaches of WTO by EU
The European Union has approved seven schemes which will officially be accepted under the EU Renewable Energy Directive (RED) as capable of proving a biofuel meets RED’s sustainability criteria.  The World Trade Organisation, however, continues to hear strident criticism of the EU’s trade policies as breaching their obligations under WTO.

Smallholders Protest Against Australian Anti-Palm Oil Bill
In a spirited protest in front of the Australian embassy in Kuala Lumpur, Malaysian oil palm smallholders have launched a stinging protest against the Australian mandatory palm oil labelling Bill supported by Senator Nick Xenophon, the Australian Greens and the Liberal/National Party Coalition.

Australian Senate Endorses Green Global Campaign for Punitive Labelling of Palm Oil
The Australian Senate has passed a Bill requiring mandatory labelling of products sold in Australia containing palm oil.  A Senate Committee opposed the Bill observing “almost every argument [in support of mandatory labelling] presented to the committee was countered by alternative evidence from other witnesses.”  The Bill will not make palm oil labelling mandatory.  That will be decided by Australia’s State Governments later in the year.The Bill resulted from lobbying by Greenpeace as part of a global campaign to have products containing palm oil labelled so Greenpeace and other s can greenmail producers to stop using it. Green groups presented exaggerated claims that palm oil was a leading cause of deforestation, reduction of biodiversity and threatened survival of Orang-utan. The committee found other evidence discredited the claims.   A Malaysian Government delegation gave evidence to the Senate.The Committee majority report recommended that the Bill not be passed and that the issue should be considered as part of a current review of food labelling.  Extreme politicking (Australia’s federal Labor Government does not have a majority in the Parliament and the Opposition is campaigning to destabilize it) resulted in the normally conservative opposition party allying with the proponents of the Bill to secure tactical parliamentary advantage.The Government does not support the Bill (generally it only favors compulsory labelling for health and safety reasons) and would not welcome the complications it will cause in relations with Indonesia and Malaysia which are currently sensitive for other reasons.  Green groups also attempted to have RSPO principles recognized in the Bill as the only acceptable sustainability standard.  It is a global strategy of WWF to secure Government endorsement of its preferred sustainability standards, but this was rejected by the Opposition parties.The Committee concluded that there was no sufficient evidence to support mandatory labelling.  However, they did suggest that the Food Standards Authority Australia New Zealand reconsider the issue in light of the anti-palm oil campaigns by several Australian Zoos in collaboration with Greenpeace.The measure will not become Federal law until the House of Representatives adopts it.  That will not change Australian labelling laws.  State Governments have constitutional responsibility for food standards.  They will meet later in the year.It is expected green groups will intensively lobby state Governments to support palm oil labelling, even if the Federal Bill fails.

African Palm Oil Continues to Attract Foreign Expertise and Investment
An emerging trend has taken place in Africa in recent months of attracting foreign investment for its growing palm oil industry.  This has specifically been the case in Liberia, Uganda and Nigeria who have all looked to Malaysia for technical expertise, financial assistance and support for local infrastructure development.Africa is a very logical human capital and investment destination for agricultural development.  After all, Columbia University economist Jeffrey Sachs has stated, “Leading agronomists have been saying for years that tropical Africa can produce vastly more food; enough to end food insecurity and import dependence.”Countries like Malaysia see Africa is a positive example for how palm oil can contribute to economic development, create new jobs and raise living standards.  Liberia has recently attracted $3.1 billion from Malaysia’s producer Sime Darby over the next fifteen years to help cultivate and develop its palm oil plantations.  These funds will also be used to support local hospitals that have benefited from Sime Darby’s previous $17 million investment to date.Importantly, Sime Darby has committed support and technical assistance for Liberia’s smallholder association, the Outgrowers Scheme.  This association seeks to develop a new plantation, which will boost local employment for 35,000 previously poor small harmers.  Malaysia’s Federal Land Development Authority (FELDA) was an inspiration for this development.Uganda and Nigeria have similarly sought Malaysia’s expertise and support for their palm oil industries.  In Uganda, the leading palm oil producer Bidco operates an 8,000-hectare palm oil plantation, which has attracted considerable investment and human capital from Malaysia.The oil palm species (Elaeis guineensis) was first discovered in West Africa in the 19th century and exported to South East Asia to support its agricultural growth and development.  It will serve Africa’s poor communities well to boost their national palm oil industries for the benefit of economic growth in countries such as Liberia, Uganda and Nigeria.

Oxfam Countered on Biofuel Claims
The United Nations Food and Agriculture Organisation (FAO) have countered claims from Oxfam that biofuels are threatening global food security.  A report from the FAO has found that the increasing demand for biofuels could “spark much needed investment in agriculture.”The report is an embarrassment for Oxfam which has been desperately seeking to justify its anti-poverty alleviation stance against the palm oil industry.  It also comes as a blow to environmental NGOs which have sought to discredit biofuels as a sustainable option for reducing greenhouse gas emissions.The FAO released its Bioenergy and Food Security Analytical Framework, which helps governments judge the potential benefits and pitfalls of biofuels.  The FAO stated that “under-investment in agriculture is a problem that seriously handicaps food production in the developing world, and that this, coupled with rural poverty, is a key driver of world hunger… Done properly and when appropriate, bioenergy development offers a chance to drive investment and jobs into areas that are literally starving for them.”The FAO report comes on top of a report by the Global Bioenergy Partnership which found that “when done rationally and thoughtfully, sustainable modern bioenergy creates a virtuous cycle that improves agricultural productivity and draws investments in to expand associated infrastructures and promote economic and social development.”These reports make it clear that the simplistic and blanket claims by Oxfam and ENGOs are unsustainable.  Rather than stretching agricultural and land resources beyond their limits and sacrificing global food security, the biofuel market has the potential to increase investment and productivity in the agriculture sector.

Supply Chain Rules Undermine Viability of RSPO
The Roundtable on Sustainable Palm Oil has launched its trademark for RSPO certified goods.  However the new RSPO rules downgrade CSPO purchased through GreenPalm certificates from ‘sustainable’ to ‘mixed.’  This development demonstrates again doubts about the viability of the RSPO certification system to continue to maintain demand for CSPO.The RSPO recently released the new trademark which will signify sustainably produced palm oil. The RSPO believes that the trademark will enable consumers to base their purchasing decisions on solid information, and according to the RSPO, eliminate the need for mandatory labelling of palm oil.In 2009, the RSPO created two different standards of supply chain – ‘certified’ and ‘mixed’ CSPO.   ‘Certified’ CSPO is defined as “contains certified sustainable palm oil.” ‘Mixed’ CSPO is defined as “contributes to the production of certified sustainable palm oil.”After the announcement of new trademarks, the ‘certified’ trademark will apply to all identity preserved CSPO and to all segregated supply chains.  The ‘mixed’ trademark will apply to mass balance CSPO and to ‘book and claim’ CSPO, including GreenPalm certificates.GreenPalm certificates have recently come under significant pressure recently both environmental groups and retailers for falsely claiming that products use CSPO when they have only purchased a certificate of sustainability from GreenPalm.The latest trademark rules from the RSPO will be a clear disadvantage to those processors and retailers who purchase sustainability off-set certificates through GreenPalm who will no longer be able to claim that they are purchasing CSPO, rather they will have to claim that they are ‘supporting’ sustainable palm oil.This appears to be a deliberate tactic from the RSPO to attract purchasers of CSPO through the relatively simple GreenPalm system and then force purchasers towards ‘identity preserved’ and ‘segregated’ supply chains.   As stated in 2010 RSPO Market Strategy, after the success of GreenPalm “RSPO hopes to encourage more buyers to begin sourcing sustainably produced palm oil products.”This move is particularly important for smallholders who are highly reliant on GreenPalm certificates as a mechanism to sell their CSPO, because the burden of segregated and identity preserved supply chains is too costly for smallholders to be viable.The downgrading the GreenPalm certificates to “mixed” certification is another clear indication of RSPO’s willingness to shift the goalposts in the middle of the game.  The next question is what will they change next?

WWF Researcher Admits REDD+ Could Increase Poverty
A researcher from WWF and Princeton University, Brendan Fisher, has found that the payments for reducing deforestation under the REDD+ scheme are likely to increase poverty, rather than reduce it.The study finds that the data used by climate change negotiators for the REDD+ scheme was ‘coarse’ and failed to consider many of the opportunity costs for people living in and relying on tropical forests.The study also shows that charcoal production – usually ignored in estimates of the cost of slowing deforestation – makes up one-third of the profit of converting Tanzanian forests and woodlands to agriculture.  The researchers concluded that there was an ‘intractable’ problem with the REDD+ scheme – that ceasing or slowing the conversion of forestland to agriculture will necessarily constrict food supply.Fisher found that in Tanzania the cost of implementing programs to raise agricultural productivity and subsiding efficient stoves to compensate for the lack of access to charcoal would be almost $6.50 per tonne of carbon, compared to the current funding level of just $3.90 per tonne of carbon to merely compensate local landholders for the lost opportunity cost of using the land.This report is the first concrete recognition by WWF affiliates that payments under REDD+ are severely undervalued and as a result, ultimately unsustainable.  Payment schemes which consistently undervalue the benefit of the forestland, as well as the development path followed from cultivating forestland, will ultimately fail to slow or stop deforestation.It is also the first time that an affiliate of WWF has recognised the entrenched conflict between the ‘no conversion’ position of WWF and the growing global food security problem.

EU Approves Certification Schemes – Complaints Continue Over Potential Breaches of WTO by EU

The European Union has approved seven schemes which will officially be accepted under the EU Renewable Energy Directive (RED) as capable of proving a biofuel meets RED’s sustainability criteria.  The World Trade Organisation, however, continues to hear strident criticism of the EU’s trade policies as breaching their obligations under WTO.

Under the EU RED, Member States can only count  biofuel consumption towards their mandatory renewable energy targets if the biofuel is deemed ‘sustainable.’ The Commission proclaims that the voluntary schemes accepted so far will aid this process.  The schemes will be automatically recognized in all 27 Member States.  A combination of NGO and industry proposed schemes were accepted as well.The European commissioner for Energy, Günther Oettinger, when presenting the schemes made it clear that the EU is currently unable to implement criteria for ‘indirect land use change’ (ILUC) stating “we can’t quantify it.”  Despite this, the EU has indicated that it intends to continue to develop criteria for ILUC in the future and likely into legislation. There is continuing concerns that the EU is considering dramatic expansion of sustainability benchmarks that could include feedstock specific carbon default values. This will further boost the case that the RED contravenes WTO rules.Meanwhile, the recent WTO Trade Policy Review has criticized the European Union for its high levels of trade barriers and subsidies, particularly in relation to agriculture, food standards and regulatory practices.While the nations of the WTO recognized the difficult economic conditions in the European Union, the WTO strongly criticized the EU’s food quality and technical import standards and warned that these standards should not create “unnecessary obstacles to trade.”Over 40 nations complained about the EU’s restrictive trade policies.  Brazil’s ambassador Roberto Azevedo stated that “European producers have systematically and unfairly, in our view, competed with farmers from the developing world, inducing and aggravating food dependency in the poorest countries.”The most recent Trade Policy Review is a clear warning to the European Union that blatant uses of technical standards and the Common Agricultural Policy to protect local industries will not be tolerated by their trading partners.  This should be a strong warning as the EU considers implementing sustainability criteria over ILUC even though the EU recognises that it “can’t quantify it.” 


Smallholders Protest Against Australian Anti-Palm Oil Bill
In a spirited protest in front of the Australian embassy in Kuala Lumpur, Malaysian oil palm smallholders have launched a stinging protest against the Australian mandatory palm oil labelling Bill supported by Senator Nick Xenophon, the Australian Greens and the Liberal/National Party Coalition.The National Association of Smallholders, Malaysia (NASH) which represents over 1,000,000 small farmers and their families has protested that the “Truth in Labelling – Palm Oil” Bill has the potential to harm the livelihoods of over 1 million Malaysians.The Truth in Labelling Bill is aimed at singling out palm oil for mandatory labelling as distinct from other vegetable oils based on erroneous and misleading claims about the environmental impact of oil palm plantations in Malaysia and Indonesia.NASH expressed particular disappointment at the actions of the Australian Liberal/National Party Coalition, whose representative recommended against adopting the Bill while it was being considered by a Senate Committee, yet later sided with Senator Xenophon for their own political purposes.NASH also indicated their dismay that the livelihoods of hundreds of thousands of smallholders were being threatened for a purely political campaign being run by environmental NGOs such as Greenpeace, WWF and Friends of the Earth.Protests must be just the beginning.  Developing nations and the millions living in poverty across the world cannot continue to be held to ransom by self-interest environmental NGOs, whose business survives on running campaigns such as this anti-palm oil campaign.  NASH should be congratulated for showing their displeasure at the actions of Senator Xenophon, the Australian Greens and the Australian Liberal/National Party Coalition Leader, Tony Abbott.

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