Deforestation, climate change and land rights abuse: the palm oil industry has a troubled track record. But proponents say it can be a force for good

The palm oil industry is one of the world’s biggest, projected to be worth $88bn (£70bn) by 2022. While it has pumped billions into the local economies of countries like Indonesia and Malaysia, the aggressive expansion of the industry has also become synonymous with widespread environmental and community destruction.

With global demand increasing, Africa has become the new frontier of industrial palm oil production. As much as 22m hectares (54m acres) of land in west and central Africa could be converted to palm plantations over the next five years.

As the industry sets its sights on Africa, how can we ensure the mistakes of the past are not repeated? Is it possible to establish a sustainable palm oil industry that operates in a way that protects environmental and human rights and provides local communities with genuine opportunities?

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These questions formed the heart of a seminar discussion, hosted by the Guardian and supported by the Roundtable on Sustainable Palm Oil (RSPO), that brought together a panel of experts from civil society and the private sector, chaired by journalist Eliza Anyangwe.

“Investment and expansion in palm oil is growing – and growing fast – in Africa,” said Abraham Baffoe, Africa regional director at Proforest, an environmental rights and responsible sourcing NGO. “If palm is planned and implemented very well then it has the potential to provide jobs and economic development – but if planning and implementation is poor, it has the potential to create deforestation, loss of habitat and loss of livelihood in local communities.”

Last month at the UN climate conference in Marrakesh, ministers from seven African countries pledged to implement sustainable palm oil production, saying that while Africa was open for business, palm oil investment must comply with the principles of sustainability, transparency and the protection of human rights.

Baffoe acknowledged this as an important and significant step, but raised concerns that the high-level commitments at COP22 are not yet reflected in the way large-scale oil palm plantations are being established in countries such as Liberia and Cameroon.

A new African model?

The agri-industrial model used by many palm oil producers in south-east Asia usually involves companies leasing land from the government. Local people are then asked for their consent and offered development incentives and jobs at the plantations. This, warned Baffoe, was being unhesitatingly replicated in Africa by companies racing to secure concessions without acknowledging the issues it could raise at local community level.

“When land is legally owned by the government, communities still have traditional-use rights and that is a form of ownership,” he said. In Baffoe’s experience, palm oil companies in Africa are striking land deals with the government first, before speaking with local communities. “This is how you get conflict,” he said.

The concept of Free Prior and Informed Consent (FPIC) is at the heart of the sustainability agenda for the palm oil industry. The principle – that a community has the right to give or withhold its consent to proposed projects that may affect lands that they customarily own, occupy or use – is now a key doctrine in international law and central to the RSPO’s principles and criteria.

Tom Lomax, a lawyer and human rights coordinator at NGO Forest Peoples Programme, was highly critical of the tactics he had witnessed palm oil companies using to secure the consent of local communities in Liberia. “I could write a book about palm oil companies’ methods for manipulating consent,” he said.

Lomax described examples of palm companies offering local people jobs before they had secured the consent of the whole community. “Division within communities has been pursued by companies to undermine the principle of consent. You can really undermine [the community’s] cohesion, their collectability, their ability to make their own decisions as a whole – and once this has been done, cohesion is almost irreparable.”

What benefits does palm bring?

In response to the assertion by other panelists that palm oil investment brought development and helped lift local people out of poverty, Lomax argued that economic analysis (pdf) had shown that the palm oil industry had contributed very little to the south-east Asian economy.

Facebook Twitter Pinterest A palm oil worker in Riau province in Indonesia’s Sumatra island. Indonesia is the world’s biggest producer of palm oil. Photograph: Adek Berry/AFP/Getty Images

“What we need is a palm oil industry [in Africa] based on secure land rights – and this is something we don’t currently have,” he said. “We need a palm oil industry based on a mixed economy that will satisfy [local people’s] food needs, their cultural needs and their income needs. Yes it will take investment, but not the extractive kind that treats local land as freely available and local people as cheap labour.”

All the panelists agreed that identifying “the community” from which consent was required presented serious challenges: both to those groups looking to protect local people from exploitation and to the palm oil companies seeking approval.

“Often, people who are considered a community [by the palm oil companies] are not a community at all,” said Lomax. In places like Liberia, whole administrative districts have been labelled as one coherent community by palm oil companies, he said, when the people in a potential palm oil concession are, in fact, culturally, economically and socially diverse.

Christopher Stewart, head of corporate responsibility and sustainability at Singapore-listed agribusiness Olam International, agreed this presented private sector companies with a complex challenge: “Companies often have to make very difficult decisions and are very pressed internally about how to address these very difficult problems [with consent]. The intermediaries that often operate between themselves and the communities are not necessarily fully trustworthy either.

“It’s very complex. We need to keep an open mind and encourage partnership – and encourage local players especially – to participate in this debate.”

However, Stewart insisted that the agri-industrial model could still work to the benefit of local communities if sustainable palm oil production remained at the heart of a company’s investment model.

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He cited the example of Olam’s palm oil operations in Gabon – where the company has planted almost 50,000 hectares of palm – as evidence that sustainable production can be implemented in Africa. He pointed out that even though the company had leased land from the government of Gabon for 15 years, anyone from the local community who didn’t want the land they were using for farming to be converted to palm could have it excluded from the concession.

Transforming communities

“We have seen an incredible transformation in the communities we have reached out to,” Stewart said, pointing out that when Olam first arrived in one rural community it had malnourished children, people subsisting on bushmeat and no electricity, healthcare or employment opportunities. When Olam offered the local people employment, 95% said yes.

“The town now has a thriving market and Olam is putting $1.6m a month into the local community,” said Stewart. “Whatever problems come with palm oil development, doing it right can be a win-win situation.”

However, Stewart conceded that the company’s self-proclaimed success implementing sustainable frameworks in a country such as Gabon won’t necessarily translate to other countries.

Facebook Twitter Pinterest Palm oil workers in northwestern Liberia, where two thirds of the population live on less than a dollar a day. Photograph: Anne Chaon/AFP/Getty Images

Another panelist, Rachel Barré, sustainable sourcing manager at L’Oréal, said that the company’s experiences in south-east Asia had convinced her of the need for strong leadership from the top of the supply chain. “We rely on these [raw] materials to manufacture our products and we are convinced it can contribute to the whole economy if it is well done and well managed,” she said.

However, Barré acknowledged that as an “upstream” link in the palm oil supply chain, L’Oréal was far removed from the communities affected at plantation level.

With more than 40% of global palm oil production coming from smallholder farmers, could a focus on developing a smallholder model, instead of just rolling out large agri-industrial plantations, work for the expansion of palm oil across Africa?

Not without a lot of investment from the private sector, said Baffoe, who claimed governments were often not willing to provide the necessary support for farmers to participate in the palm oil boom. “Palm oil development has a very significant initial cost and that cost has been a constraint for smallholders, he said. “Civil society must look at how it can support smallholders in meeting the costs of establishing their own plantations.”

Given that average smallholder palm oil yields are significantly lower in Africa than in other palm regions, such as Malaysia or Indonesia, smallholder farmers in Africa will need support from the private sector if they are to see the benefits of palm oil expansion into the continent, said Barré.

“You need to put in the investment and technical assistance so farmers can get their palm to the market at the right price in the right conditions,” she said.

With governments keen to continue granting palm oil companies large-scale concessions across Africa, the race to ensure that this is an industry that develops along sustainable guidelines seems far from won.

On the panel