Thursday, February 10, 2011

Palm Oil: How Greenies Threaten Jobs and Food Security

The Malaysian palm oil industry earned a healthy RM60 billion last year. This was an increase of RM 10 billion compared to 2009. Most plantation companies doubled their last quarterly profits compared to the previous year. The income generated by high prices as experienced by the palm oil industry led to rural townships around the country undergoing a mini economic boom. Clearly, the rural population benefited the most from the high prices of palm oil, rubber, cocoa and even pepper which form the major plantation commodities produced in Malaysia.

The economic contribution of palm oil and other plantation commodities provided the assurance of a remunerative source of income and unlimited employment opportunities throughout the year for the people of Malaysia. A day’s work of harvesting oil palm fruits or tapping rubber trees for latex can provide a person with an income of more than US $30. In a country where two meals per day would cost only US $4, such an income is rather remunerative. Nobody should be deprived of a better life or even resort to begging as long as he or she is willing to put in a few hours of work in a day in our oil palm or rubber plantations. Malaysia enjoys almost full employment which also means that labour shortages exist especially in the plantation sector.

In contrast, rural population of many developing countries often earns a mere US$2 per day, and employment is limited or seasonal. Food is often unaffordable and as previously mentioned in my blog , one billion people on this planet suffer from food insecurity where daily meals are not assured. This is where employment opportunities offered by the plantation industries in Malaysia also benefit labour from other countries. The income earned by the 300,000 foreign workers employed in the Malaysian oil palm industry, ensures that there is food on the table on a daily basis for 1 million of their family members living back home in Indonesia, Bangladesh, the Philippines and other neighbouring developing countries. In simple terms, the oil palm industry not only provides an income to Malaysians, but shares this benefit with an additional one million family members of workers who now do not need to go hungry to bed thus bringing cheer to so many poor people . How many industries can claim to do this?

The oil palm industry is also a major source of income for the government through the collection of corporate taxes. The benefits from such income will be more pervasive as the multiplier effects of government spending will impact education, health and infrastructural development. Essential food items are subjected to price control or subsidized in Malaysia, and this includes cooking oil for the public. The government taxes the palm oil industry in the form of a windfall tax and uses the money raised to make cooking oil affordable to the public. It is clear that palm oil provides solutions on many fronts: affordable food, lucrative income and overall stability to the country (bear in mind that high food prices and poverty have led to uprising in many developing countries recently).

Releasing the importance of the palm oil industry to the country’s economy, the Hon. Prime Minister of Malaysia recently spoke of the narrow view taken by the greenies and their followers who want to tarnish the image of palm oil by linking it to deforestation. No country in the position of Malaysia or Indonesia which benefits from the palm oil industry would tolerate the unsubstantiated allegations made by the greenies to denigrate palm oil. Viewed on a broader perspective, palm oil is a saviour to the current global shortages in oils and fats as a result of insufficient production of soyabean and rapeseed oils. For these oilseeds, lack of new land and unfavourable weather conditions have prevented any substantial expansion in planted areas or yield improvements. The future will see a widening gap between supply and demand of oils and fats. Consumers will face the prospects of escalating prices. Low income consumers from developing countries will be the most affected as they are the least able to afford expensive soyabean or rapeseed oils. Furthermore these oils are mostly burned in the EU for biodiesel, thereby further reducing the availability for world food requirements.

Palm oil plays a critical role in supplying affordable cooking oil to most developing countries which have to depend on imported supplies. The greenies have influenced the EU to discriminate against palm oil from being used as biofuel to protect the local rapeseed industry from competition by creating trade barriers through the implementation of the RED regulation. This leaves palm oil generally available for the food sector globally. As shortages are unavoidable, it does not matter what oil is used for which sector. What is important is that the growth in supply is matched with projected demand. Since oil palm is the most capable crop to meet the increasing demand, its production should be logically increased. Because of its high yield (10 times more than soyabean oil), it will require ten times less land to supply the world’s increasing needs.

The greenies are threatening the world’s food security. On the one hand, they are encouraging the EU to convert inefficient rapeseed oil for biodiesel and on the other hand they are campaigning to limit the production of palm oil, fearing that it would compete with rapeseed as a raw material for the EU biodiesel industry. Inadvertently, their wish to restrict the growth of palm will accelerate the shortage of oils and fats in the world market. While current palm oil producers will benefit from escalating prices created by the greenies anti palm oil campaigns, other consumers, especially those in the developing countries, will be burdened by unaffordable cooking oil and escalating food prices. It would threaten jobs which would otherwise be created through the expansion in the oil palm sector as operations are labour intensive as compared to other oil seeds.

All these potential calamities are being created by the greenies out of their perverted and narrow views of deforestation. Without resorting to scientific evidence or even considering broad macro view of world requirements, they (the greenies) have opposed the expansion of oil palm cultivation fearing that rapeseed oil will be out-competed by palm oil for biofuel use in the EU. They use deforestation as an excuse for campaigning against palm oil without any scientific justification.

How can oil palm be blamed for deforestation in Indonesia when the country only uses 5% of its land area to plant oil palm which is one of its agricultural crops. In comparison, the UK has deforested up to 72 % of its land area for planting of agricultural crops. If the total land area under oil palm globally is compared to the total agricultural land of the world, the oil palm share is only 0.22%. Any scientist or non scientist would know that the utilization of 0.22% of the world agricultural area to plant oil palm, does not constitute massive deforestation. The fact is more than 60 and 80 % of the oil palm areas in Indonesia and Malaysia respectively were from non virgin forest areas. In addition, both countries have huge forest reserves which will cater to the need to conserve biodiversity.

How can such a small figure of land use be associated with habitat or biodiversity loss, or even be a cause of major contribution to GHG emission and global warming. I keep challenging the greenies and their fanatic followers to provide clear evidence or proof of any allegations they wish to throw at the palm oil industry. This includes allegations of indigenous people being robbed of their land. Let me correct the misinformation again. Indigenous people have been given ample land reserves by the British when they ruled the country. Their land is mostly cultivated with rubber or oil palm. Many are thankful that they have been given land to enable them to become prosperous smallholders. Obviously, we have laws in place that would address any attempt to rob people of their land.

Consumers in developing countries and also those in the developed countries must be alerted to the potential damage to the economy, food security and escalating food prices which will result from the anti palm oil campaigns orchestrated by the greenies. It is even immoral to support them in their campaign which will ultimately bring misery in the form of food shortages and high prices to the rest of the world. It is even more mind boggling to ask why the EU continues to blatantly fund the greenies to pursue their indefensible intentions to deny developing country consumers with an improved food security for the future.

1 comment:

Anonymous said...

Keep up the good work of putting the good words on palm oil front and centre.