Australian Labelling Bill on Palm Oil Against WTO Provisions

If palm oil has to be labelled for all food products marketed in Australia, it is likely to disrupt trade. Imports of food products will be affected as the palm oil content of food manufactured overseas is not labelled specifically as required by the proposed bill. Local manufacturers will need to have new and specific labels to be used whenever palm oil is contained in a product. This will be a costly exercise for manufacturers.

One claim for justifying the palm oil labelling bill is to inform consumers on the presence of palm oil which has 50 % saturated fatty acids even though the total saturated fatty acid contents of the fats used would already be indicated in the nutrition panel of the food label. If palm kernel oil or coconut oil which has much higher (over 90 %) saturated fatty acid content is used, separate labelling for these oils is not required. The 'vegetable oil' label can continue to be used. This will be a discriminatory use of the labelling law against the interest of palm oil, and will violate the WTO provisions. Malaysia and Indonesia will be compelled to complain to the WTO to ask Australia to remove the discriminatory treatment on palm oil afforded by the palm oil labelling bill.

The Case of WENGOs Blindly Pushing for Labelling of Palm Oil

I was invited by the Senate Committee on Community Affairs in Canberra, Australia to give a testimony on the mandatory labeling of palm oil proposed under the Truth in Labeling – Palm Oil Bill. It seems that palm oil is now a target not only of Western Environmental NGOs (WENGOs), but also some ambitious Green Politicians of the developed world. On reflection, the WENGOs could be accused of taking the issue too far without thinking how their actions and allegations are un-justified and how these may affect the livelihoods of poor oil palm farmers in developing countries such as Malaysia and Indonesia.

I would not blame the Green Politicians for their lack of knowledge on the oil palm industry; the utterances that they made to support the Bill in Canberra clearly revealed their ignorance. They claim for example, that palm oil is a ‘fruit’ oil and should not be labeled as a ‘vegetable’ oil. Obviously, the WENGOs have diligently fed their Green Senators with the necessary cannon powder to debate on the Bill, but it was soon pointed out at the hearing that olive oil, produced as a fruit oil in the EU and Australia is also classified internationally as a vegetable oil because it comes from a plant or vegetable source as opposed to animal fats which come from animal sources.

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.

Critical Role of Palm Oil in Enhancing Food Security

The world population is estimated at 6.8 billion today. This is predicted to increase to 8 billion people in 2030 and 8.9 billion by 2050. There will be many more mouths to feed perpetually in the future thereby increasing the demand for food.

Over 1 billion, or 15% of the world still do not have enough food on a regular basis. At the turn of this century, United Nations expounded eight Millennium Development Goals. On top of the list is the goal to eradicate extreme poverty and hunger. The need to address this important issue was echoed, not too long ago, at the World Summit on Food Security that was held in Rome, Italy in November 2009. Very recently, in April 2010, World Bank launched the Global Agriculture and Food Security Program (GAFSP), which is a new multi-donor trust fund to improve food security and incomes in low-income countries through assistance to agriculture.

How Sustainable Production of Palm Oil Contibutes to Reduced Global Warming

At a recent forum organized by the Palm Oil Refiners Association of Malaysia (PORAM), it was revealed that there was no moral case for Western Environmental NGOs (WENGOs) campaigns against palm oil. Data indicates that the agricultural land occupied by the world palm oil industry is miniscule as compared to the total land allocated to growing grains and oilseeds. This is shown in Fig 1 below where the segment for oil palm area is only 1.56 % of the total grain and oilseed area (see arrow) and it is hardly visible in the bar chart.
 
Figure 1 - Oil Palm VS Total Grain & Oilseed Area

Biased Studies on Deforestation and Indirect Land Use Effect of Oil Palm

Western Environmental NGOs (WENGOs) often attempt to undertake studies to demonstrate the impact of deforestation on climate change or biodiversity losses in collaboration with universities in order to establish credibility in the final reports generated. However, many of these studies are not based on valid experimental designs or sound methodology.

Deforestation Moratorium and Future Shortages of Food Supply Will Require 10 Times More Forest Conversion

The world population of over 6 billion is increasing by 70 to 80 million people annually. Food supply needs to expand to keep up with the additional demand. Land to grow food crops is getting scarce. By 2020, arable land in the world is projected to decrease to less than 1 acre per capita which is hardly sufficient considering the same land is needed for producing enough grains, vegetables, fruits, meat, milk and oils and fats to feed a single person and his animals for a year. In terms of land utilization, priority will of course be given to the production of cereals and grains as these are staples in most countries and this will be followed closely by oils and fats production.

In the oils and fats sector, global demand is increasing at a rate of 5 to 6 million tonnes per year on average against a total consumption of 165 million tonnes annually. To produce an additional 5 million tonnes of vegetable oils and fats, 10 million hectares of land will be required to plant soyabean, as compared to 1 million hectares if oil palm is the choice. Cereals and grains such as rice, wheat and corn are also experiencing shortages due to population pressure and increasing affluence where more demand for meat will mean more intensive production of grains as feed for cattle etc. The world is facing an enormous challenge. It needs to have 10 million hectares of new land created every year to supply the additional 5 million tonnes of soyabean oil, considering additional land is also needed for grain and cereal production. The annual expansion of oilseed area if planted with soyabean is almost equivalent to the combined total oil palm area of Malaysia and Indonesia. Another 10 million hectares will be needed the following year and similarly, in subsequent years to maintain an additional 5 million tonnes of oils and fats supply annually. BUT if oil palm were to supply the annual increase, the land expansion is more modest, a mere 1 million hectares per year.

How Much Agricultural Development is Right for a Sustainable Future of a Country

Image source: Malaysian Palm Oil Council

For a tropical country such as Malaysia, every inch of land would be under forest or would have been under forest cover sometime in the past. I am always willing to acknowledge that all our agricultural activities, our industrial land, our towns, cities, highways and airports have replaced forests and have affected biodiversity or have released green house gases to the atmosphere . Every country has sacrificed some of their land for agricultural and other uses over the years when they undergo the process of development. Some use their land extensively for agriculture, others don't. Others have not yet the time or the funds to develop their land, as is the case with many developing countries.

Current debate by some NGOs is tending to link agricultural activities with deforestation. To have a healthy debate, there must be some definitions. For example, what percentage of our country's land area is allowed for agriculture, and what percentage should be conserved as forests. Would this percentage be uniform as an international benchmark, or should it be different for developed countries as compared to developing countries. If it is different who is to determine what is the right percentage, especially for those developing countries which since achieving independence from their colonial masters have not been able to develop their land for agriculture.

In Malaysia, oil palm and rubber are major agricultural crops. Some NGOs try to alledge that oil palm causes deforestation, but they never made such critisms on our rubber industry. If we cannot grow oil palm we surely will grow rubber, cocoa, coconuts etc on our agricultural land, and get on with our daily life. If we use 24 % of our land for agriculture, is that wrong. What if we use 30% for agriculture. Why cann't we follow the UK which used up to 70 % of their land for agriculture and enjoy a good standard of living as a result. Are we not allowed to enjoy a good standard of living? Put it in another way, if the UK were to only use 8%of the land for agriculture as in Sarawak, it is likely that their standard of living would be lower than what they enjoy for now.

Why don't we set up an international standard for the percentage of agricultural land allowed for each country. Let us start with a range of 30 to 50 % allowed for conversion to agriculture. In terms of carbon footprint, related to global warming, those countries keen to comply with the target and bring their agricultural land ratio to below 50% can reforest their land accordingly. Those countries still having less than 50 % of their land under agriculture can be allowed to develop according to their development needs. In times of food shortage, it is important to expand food production by making land available for agriculture. If 50% of arable land is allowed for agriculture and up to 50 % left as forest, there will be a fair balance for wildlife habitats and human food production capacity.

It will be good if the NGOs provide leadership in coming out with the guidelines. Otherwise, we argue on different assumptions and understanding on what constitute deforestation. Some even post personal criticisms from such misunderstanding. It is important to have an open debate. In our recent sustainability conference, I raised a few bold ideas in front of 500 attendees, but no one was bold enough to challenge my statements. Later some criticisms were raised in the NGOs websites. So much for being bold or otherwise.