Palm oil is now a ubiquitous international commodity. It’s a key ingredient in a wide range of consumer products—foods, cosmetics, soaps, pharmaceuticals and biofuel. The demand for palm oil is strong. The World Bank has estimated that an additional 28 million metric tons of vegetable oils will have to be produced annually by 2020. Oil palm will be a major contributor to this tonnage. By 2050 palm oil demand is forecast to be 240 million metric tons per annum, nearly twice the tonnage in 2009.

Most global consumption of crude palm oil is from large-scale monoculture plantations that clear large areas of land and plant a single species as a crop. To meet the steep growth in global and domestic demand, the area of land in producer countries now dedicated to large-scale palm oil production has increased dramatically. This expansion has come by clearing extensive areas of native forest, displacing communities, contributing significant levels of green gas emissions, endangering many species and devastating levels of biodiversity.

When properly developed and managed, oil palm plantations can play an important role in improving livelihoods and eradicating poverty in rural areas. Yet, assumptions are often made, by consumers and regulators, that large-scale, monoculture, oil palm should be the focus.

In our article that was recently published in the Journal of Environmental Management, we argue that large-scale oil palm production erodes, rather than contributes to biodiversity conservation and food security. Instead, the global palm oil industry must embrace the potential of rural smallholder environmental, social and economic sustainability, and establish a certification of socially just and environmentally benign palm oil production.

Monoculture plantations are highly homogenized (see photographs below, right). They disrupt beneficial functions of biodiversity and create impoverished landscapes that isolate wildlife and natural biodiversity functions. By contrast, small-scale farmers and are characterized by diverse, low impact farming (see photographs below, left). Substantial biodiversity benefits can and do come from smallholdings, including independent or managed farmers, that account for 14 percent of the five million hectares of oil palm land.

Managed smallholders are regulated by government farming rules that resemble plantation management (e.g. planting one type of crop). They are not allowed to plant anything but oil palm on their farms and must sell their harvest to government-linked mills.

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Photographs: Smallholdings (top left) and large-scale plantations (top right) represent two different palm oil production systems in Indonesia and Malaysia. Besides oil palm, other crops such as bananas are planted in the field (top left). Independent smallholders (bottom left) depend on manual labor while plantation companies recruit thousands of foreign workers and use machines (bottom right) to grow oil palms. (credit: Badrul Azhar)

Independent smallholders are where the biodiversity gains can be derived. Levels of biodiversity within and around many oil palm independent smallholdings are significant and important. These landscapes host a diversity and density of trees and understory native flora. These farmers manage multiple age stands of oil palm, and interplant them with other crops and indigenous fruit trees. Their agricultural practices create complex mosaics of small cultivated areas that are integrated with livestock to increase the sources of protein for local consumption. This is polyculture farming. Wildlife visiting polyculture landscapes move easily and depend, occasionally, on resources and habitats inside the smallholdings. In return, elements of biodiversity flourish.

Smallholding oil palm agriculture also makes a substantial contribution to poverty alleviation, equity improvement, and economic growth in rural areas, lifting hundreds of thousands of people out of abject poverty, giving them a decent standard of living. Independent smallholders have the freedom to diversify their marketable crops and improve food security in their communities. The steady income ensures a transition towards minimal deforestation and reduces rural migration. By contrast, large-scale plantation companies, particularly in Malaysia, usually employ a large number of foreign workers as laborers on the plantations, often because there is a labor shortage among locals.

The backbone of global food security in the developing world is agriculture practiced under smallholder farmer-dominated landscapes, not large-scale farming. In the event of crop failure or a drop in the market price of commodity crop, smallholders can withstand economic uncertainties by selling secondary crops to the market or using them for domestic consumption. They are not specialized and dependent on one species, and can switch to alternative crops easily. By contrast, plantation companies with monoculture systems are vulnerable to increasing operational costs and changes in market prices. When times are difficult, they sell agricultural lands for urban development or shift their upstream plantation to countries with cheaper labor costs.

Despite this evidence, the true value for biodiversity of agricultural lands under smallholder farmer-dominated landscapes is inadequately acknowledged or understood. Oil palm certification schemes are prohibitively expensive for smallholders, particularly those identified as independent growers. These schemes are characterized by top-down approaches that don’t consider the smallholder socio-ecological perspectives, and as a consequence they fail to include these dynamic and diverse farming practices. In turn, by focusing of existing certification schemes, consumer markets undermine smallholding systems of palm oil production as important sources of genuinely sustainable palm oil in producing countries.

Global oil palm must change to save biodiversity and improve food security. Scientists and policy makers should recognize the contribution of oil palm smallholdings to farmland biodiversity conservation and rural poverty reduction. Palm oil producing countries must still have clear policies and strong law enforcement to protect the ecological integrity of existing protected areas, and require that oil palm growers maintain farmland biodiversity in production landscapes, but consumers of palm oil should be able to consciously choose palm oil from smallholdings and scrutinize policies adhered to by certified plantations. This is not currently possible.

Obviously, large plantation companies must improve their damaging agricultural practices. But, ultimately, big is not the answer. It is crucial that global palm oil changes, and embraces the potential of rural smallholder environmental, social and economic sustainability and establishes a certification of socially just and more environmentally benign oil palm production.