Facing the EU Palm Oil Policy
The Jakarta Post
24 Jan 2018
Indonesia, the world’s largest palm oil producer, should understandably be outraged by the European Parliament’s approval last week of the draft measures to ban the use of palm oil in biofuels in 2021. First, 40 percent of the country’s 11 million hectares of oil palm plantations are owned by smallholders, the industry directly employs almost 6 million workers and annually generates US$20 billion in export earnings.
However, protectionist the EU parliament’s move seems to be, Indonesia should not overreact, let alone resort to outbursts as inciting a trade war and other forms of retaliation because the lawmakers’ vote is only one step in a complex legislative procedure.
The executive European Commission has yet to formulate and agree on the final law, which will have to be ratified by each of the 27 national governments before the ban can become effective. The whole process could take two to three years. Moreover, the planned ban on the use of palm oil from the EU biofuel industry, even if enforced in 2021, is not the end of the commodity in Europe because palm oil, as a vegetable oil, will continue to be used for other food products, cosmetics etc.
The EU Parliament’s motion will not be able wipe out palm oil from the EU economy because this commodity, which now accounts for almost 50 percent of global vegetable oil consumption, has increasingly been leading the market as its yield per ha is estimated by agronomists at nine times higher than soybean, five times higher than rapeseed and eight times higher than sunflower.
Palm oil is now the world’s most widely used vegetable oil. Hardly a day goes by without a consumer using or eating something containing palm oil. Official data shows EU palm oil imports from Indonesia totaled $2.4 billion in 2016, making the EU the second-largest importer after India.
The most sensible and productive response to the EU campaign against palm oil is for Indonesia and Malaysia to work harder to address the main driver of the global negative campaign against the commodity: the extensive damage the palm oil industry’s expansion has allegedly done to the environment. EU lawmakers seemed to believe claims by international NGOs that palm oil has also been responsible for deforestation and other social conflicts.
True, Indonesia has imposed tougher and stronger rules on the palm oil industry to make it economically, socially and environmentally sustainable. But making the rules is one thing and enforcing them is quite another, and the most challenging one. And we should magnanimously acknowledge that both the government and the industry should work harder to gain international trust that palm oil is being subjected to best agricultural practices.
But EU politicians and green NGOs should also understand that the palm oil sustainability drive is a very challenging process, involving millions of farmers with complex poverty problems. EU should not let the palm oil issue stand in the way of the negotiations on the EU-Indonesia Comprehensive Partnership Agreement, which will enter their fourth-round next month.