The Green Development Palm Oil Newsletter – Issue 24, October 2012

RT 10 – what is WWF celebrating?

At the end of October, the 10th anniversary of the Roundtable on Sustainable Palm Oil (RSPO) will be commemorated in Singapore.  What is planned would seem to underline how WWF sees RSPO as part of its strategy to “Transform Markets” in key commodities.

Normally RSPO Roundtables receive a review of the years’ work, plans for the future, and reports on key issues.  For the tenth anniversary, there will be special Plenary Session, labelled as a “Multi Stakeholders Initiative – CEO Forum”.  Key participants will include Darrel Webber, CEO of RSPO; Alistair Monument (Asian  Pacific Director of the Forest Stewardship Council – FSC); Agustin Mascotena (Roundtable for Responsible Soy Association); and Sebastien Haye (Roundtable on Sustainable Biofuel).

This seems an odd activity for the members of the RSPO, but it is consistent with the current strategy of WWF to use, as it has proclaimed, the sustainability roundtables it has set up and fostered, including these three, to advance its goal of “transforming markets”.

Darrel Webber is a former employee of WWF and Alistair Monument is a former WWF consultant.  The WWF’s Senior Vice President of Market Transformation, Dr Jason Clay – who has co-convened multi-stakeholder roundtables for such products as salmon, soy, sugarcane, and cotton and helped draft the RSPO principles and criteria for sustainable palm oil – is the originator of the Market Transformation program.  He has declared the WWF “Transforming Markets” strategy also embraces other Roundtables set or fostered by WWF for Marine products and Aquaculture. WWF has ambitions for Roundtables as well for dairy and beef products.

WWF is quite overt now  in its intention to see these sustainability roundtables used not simply to enable producers to demonstrate they are sustainable, but to enlist producers as agents to advance WWF sustainability policies and supplant national sustainability policies set by governments.

WWF makes much of the “multi-stakeholder” character of its roundtables.  Producers in the Forest Stewardship Council, the model on which the other roundtables are based, regularly complain they are outvoted.  Palm Oil producers found themselves marginalized at RT9 when the meeting had to be reconvened for want of quorum, and when it was reconvened, Board sponsored resolutions cut the necessary quorum for meetings from 50 percent to in effect a slim 11 percent of membership and every resolution advanced by producers, including for greater representation, were voted down.

Before the RT9 meeting, GAPKI, the representative of Indonesian Palm Oil growers withdrew from RSPO.

In the lead up to that meeting, WWF sponsored advertisements in ‘The Economist’ attacking palm oil at large.

It has been announced that the Deputy Prime Minister of Singapore will open the forum.  The Singapore Government expressed its dissatisfaction when earlier in the year, WWF declared Singapore had the highest ecological footprint in Asia, relying on a measurement of carbon emissions per capita.  WWF has a dubious record with statistics, as a recent World Growth report showed.

Importance of sound management in orang-utan conservation

A recent study published in academic journal PLOS one confirms sustainably managed forest resources and plantations can co-exist with healthy orang-utan populations.

Increasing evidence shows sensible conservation policies – such as implementation of sustainable forest management by local authorities – can conserve orang-utan populations. At the same time, ENGO claims that agricultural industry is threatening species extinction, and subsequent NGO demands for boycotts of agricultural products grown in South East Asia, appear increasingly disconnected from facts on the ground.

The authors of the report examine whether regional incentives for sustainable forest management will be effective in improving conservation outputs. Using data for orang-utan nest counts for Sabah, Malaysian Borneo, the authors found strong quantitative support for the Sabah government’s proposal to implement sustainable forest management over the next decade.

The study commends plans for better forest management, without calling for moratorium on forestry or agricultural production. Instead the authors refer to “a growing body of evidence suggesting that orang-utan can occupy degraded, even agricultural, landscapes, albeit at lower numbers”.

These findings were echoed by an op-ed published in the Jakarta Globe by respected scientist – Dr Erik Meijaard. The orang-utan expert recently praised the example set by Malaysia in achieving conservation outputs.

According to Meijaard, one area such example – Kinabatangan – consists of degraded forest areas dispersed amongst plantations and in proximity to human settlements; yet the area maintains populations of “incredible wildlife”, including endemic Borneo pygmy elephants, and a population of some 800 orang-utans.

Growing evidence indicates that agricultural production and conservation can occur side by side when both are well managed. The Malaysian model praised by Meijaard exemplifies this approach.

The more urgent challenge to orang-utan conservation appears to come from local populations that threaten animal populations either through hunting practices or as a result of human-wildlife conflict.

Meijaard recommends that effective awareness and education programs can result in reduced wildlife killing from human-wildlife conflict.

The Malaysian experience shows that agricultural production can expand to meet demand for food without compromising biodiversity. Threats to orang-utan from plantation development have been exaggerated by NGOs. Evidence is emerging that NGOs have oversimplified the facts. Examples of palm oil management in Malaysia demonstrate conservation and industry are not intrinsically at odds with one another, as illustrated when resources are managed appropriately.

Annual OECD/FAO joint Global Agriculture Outlook warns about constraints on production

This year’s Global Agricultural Outlook projects an easing of food prices from near-record levels but warns that if with rising global demand a number of existing constraints will need to be addressed.

Each year the OECD and the FAO publish a joint Outlook Report on world agricultural markets.  The latest one looks at the markets for biofuels, cereals, oilseeds, sugar, meats, dairy products, fish and seafood over the period from 2012 to 2021.

Assuming normal weather conditions, the OECD and FAO are projecting world prices for agricultural commodities to ease from near-record levels due to a substantial rebound in global supply for the major crops, on the one hand, and weaker economic growth, slower population growth, and much higher energy prices, on the other.  Although food prices should decline, they consider that the level of food prices will remain a concern for developing countries.

In doing so, however, the OECD and the FAO question whether the global supply response to higher commodity prices will be sufficient to meet the future global demand for food, feed, fuel and fibre.

They pointedly ask whether rising input costs, increasing resource constraints, growing environmental pressures and the uncertainties associated with climate change will have an adverse impact on world agricultural output.  If so, the most pressing issue facing global agriculture is how to increase productivity in a more sustainable way.

The OECD-FAO outlook uses a model of how world agricultural markets behave over the medium term. (This is the “AGLINK-COSIMO” partial equilibrium mode.)

The model has limits. For technical reasons it cannot account for either commercial innovation — to develop new products, new markets for existing products and new production processes — or the extension of the area under agriculture by conversion of forestry and other non-agricultural land.

Historically, together these two factors drive the growth in world agricultural output.

The warning in the report is plain.  If factors like rising input costs, limits on resources such as availability of land, and environmental policies such as limiting production and land use are not addressed, the natural capacity of producers to meet rising demand will be curbed.

Subsistence agricultural key driver of deforestation

A new report published jointly by the UK and Norwegian governments finds that agriculture is the main driver of deforestation, responsible for around 80 per cent of all deforestation globally. Yet close analysis of the data indicates that subsistence agriculture is a larger driver of deforestation than commercial agriculture in Asia and Africa. By linking commercial agriculture with deforestation,

European governments are pushing for policies that will ultimately lead to greater food insecurity in developing countries.

One of the report’s key messages is a warning that commercial agriculture is the dominant proximate driver of deforestation in the majority of developing countries. While this may be true in some areas in Latin America, data presented in the report conflicts with this generalised conclusion.

According to the report, FAO data shows that in both Asia and Africa commercial agriculture plays a smaller role in driving deforestation than local and subsistence agriculture. This data appears to have been ignored when forming the key policy messages.

The report was published jointly by the UK’s Department for International Development (DFID), Department for Environment and Climate Change (DECC) and the Norwegian Government. It is a meta-analysis of drivers of deforestation not unlike the landmark study undertaken by Geist and Lambin in 2002, which looked at drivers of deforestation in tropical countries.  The report’s findings support the contention that weak governance is the key underlying driver of deforestation, followed by land tenure insecurity and poverty. International factors (e.g. commodity prices and foreign investment) are considered the lowest underlying driver.

The UK Government has been previously criticized for pursuing a policy that will exacerbate food insecurity. DFID claims that food security and supporting agricultural growth is a major component of their agenda. However, World Growth research recently demonstrated that the UK’s aid program has neglected economic aid for agriculture for a number of years.  The UK Government has also actively pushed policies that encourage developing countries to put curbs on land use, restricting the availability of land for economic purposes.

These policies ignore key long-term solutions to the global food security crisis: encouraging economic growth and increasing agricultural output in developing countries. Falling food security is chiefly driven by lack of income to purchase food. Policies that restrict the availability of land or resources to increase agricultural output can only contribute to lower levels of food security.

EU Vegetable Oil producers and Germans object to proposals to extend land use change assessment for rapeseed biofuel

UFOP (Union for the Promotion of Protein Plants) and the German Government have objected to proposals being developed in the EC Climate Change Directorate to extend to EU producers regulation of biofuel according to how much change in land use occasioned by the production generates greenhouse gases.

The EU Renewable Energy Directorate (RED) already requires imported biofuels, such as palm oil biodiesel and sugar ethanol, to demonstrate they meet EU greenhouse gas emission standards caused by direct or indirect land use change in the production of the seed, vegetable of cane. To date, EU producers of rapeseed do not need to do so.

UFOP has warned that imposing this restriction on EU vegetable oil producers will harm French and German rapeseed producers and ruin the industry.

The EU Renewable Energy Directive foreshadowed extension of its terms to cover all direct and indirect changes in land use of all producers.  This was the result of pressure from environmental NGOs who opposed promotion of biofuels to reduce emissions of greenhouse gases because they wanted the brunt of change to fall on carbon based energy.

UPOV has proposed that the existing right provided to EU rapeseed producers to supply a specific share of the EU market (this is guaranteed under the RED directive which imposes a higher carbon standard to be met by importers than EU producers) be “grandfathered”, that is permanently regulated.

It has also contended that the assessment used by the EU set its emissions standards have never been subject to a scientific review.  This is also the complaint of the biofuel importers who argue there is no scientific justification for the emission standard imposed on them.

UPOV has argued that if the European Commission wants to limit deforestation in other countries they should negotiate bilateral treaties, rather than impose even more stringent restrictions on land use impacts by producers in non-EU economies.  This the course of action the EU should have taken, rather impose a discriminatory trade restriction on biofuel producers outside the EU.

It was always expected this extension of the Directive would be opposed by EU agricultural producers.  They may not have to worry.  There are clear signs the US will challenge the validity of the EU Directive for conflicting with its obligation as a member of the WTO.  The US soy bean industry has reportedly secured its agreement to lodge such a challenge in the WTO.

Indonesia and Brazil have already indicated similar objections to the Directive and legal experts consider a challenge likely to succeed.

This may not suit UPOV members. They will lose the guaranteed market for biofuel which RED currently provides them.

In a related development, the European Commission recently proposed a policy shift that would allow food-based biofuels to contribute no more than half of the 10 per cent target stipulated under the RED. The remaining supply would be restricted to advanced biofuels, known as ‘second generation’ biofuels. The commission is also proposed to increase the efficiency targets that biofuels must reach before they receive subsidies.  Biofuels must currently account for 35 per cent less greenhouse gas (ghg) than the fuels they replace; the proposal will eventually extend the ghg savings threshold  to 60 per cent.

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