Governing sustainable palm oil supply: Disconnects, complementarities, and antagonisms between state regulations and private standards
Governing sustainable palm oil supply: Disconnects, complementarities, and antagonisms between state regulations and private standards
08 November, 2018
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The global palm oil value chain has grown in complexity; stakeholder relationships and linkages are increasingly shaped by new public and private standards that aim to ameliorate social and environmental costs while harnessing economic gains. Regulatory initiatives in the emerging policy regime complex struggle to resolve sector-wide structural performance issues: pervasive land conflicts, yield differences between companies and smallholders, and carbon emissions arising from deforestation and peatland conversion. Identifying opportunities for more effective governance of the palm oil value chain and supply landscapes, this paper explores disconnects, complementarities, and antagonisms between public regulations and private standards, looking at the global, national, and subnational policy domains shaping chain actors conduct. Greater complementarities have emerged among transnational instruments, but state regulation disconnects persist and antagonisms prevail between national state regulations and transnational private standards. Emerging experimental approaches, particularly at subnational level, aim to improve coordination to both enhance complementarities and resolve disconnects.
Interactive map provides tools for corporate accountability and land-use planning in Papua
Interactive map provides tools for corporate accountability and land-use planning in Papua
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The contrast between oil palm plantation and forest is seen in Papua, Indonesia. Photo by Agus Andrianto/CIFOR
Scientists hope a new interactive atlas that tracks deforestation annually will enable local governments to plan for change and avert widespread destruction of the forests on which indigenous people depend for food and livelihoods.
Due to its remote location and sparse population, Papua, Indonesia, harbors one of the Pacific’s last remaining expanses of pristine tropical forest. However, recent spikes in deforestation rates, accompanied by the expansion of industrial oil palm plantations, are signs that rapid change is on the horizon.
The platform, due to launch in mid-2019, will track deforestation on a monthly basis over the long-term.
Local government officials in charge of spatial planning welcome the development of the atlas, which they can use to help plan land use as the local population grows and demand for roads and other services increases in tandem. For example, the annual data provided by the atlas will provide insight into the dynamics of forest loss and the expansion of industrial oil palm concessions, and roads into forested areas.
Old-growth forest in Indonesian Papua shrank by 2 percent, a loss of 600,000 hectares, between 2000 and 2017 (Fig. 1).
Annual forest loss in Indonesian Papua has accelerated gradually since 2000, reaching a peak in both provinces in 2015 and 2016, with 98,000 hectares and 85,000 hectares lost, respectively, before dropping markedly in 2017 (Fig. 1b & c).
Meanwhile, industrial plantations, mainly for oil palm, have nearly quadrupled since 2000, with the largest expansion in Papua province. Gaveau’s studies indicate that about 30 percent of all forest loss since 2000 has been due to clearing for industrial plantations.
Fig 1. Annual loss of forest area from 2001 to 2017 in (a) Indonesian Papua, (b) Papua province (b) and (c) West Papua province.
“The island of New Guinea is perhaps the last large equatorial island that is still pristine,” Gaveau says. “It is still 90 percent natural forest, and it is sparsely populated.”
Because of its distance from key trading routes, Pacific ports and cities, it is expensive to install industrial facilities, such as palm oil refineries in Indonesian Papua. But the island is not immune to the spread of the palm oil industry, which has expanded throughout other islands, such as Borneo.
“As prime land becomes scarce on other islands, companies are turning their eyes to Papua,” Gaveau says.
That’s where the Papua Atlas comes in.
The interactive map is similar to the Atlas of Deforestation and Industrial Plantations in Borneo, also known as the Borneo Atlas, which Gaveau, a landscape ecologist, and Mohammad Agus Salim a Geographic Information Systems expert with CIFOR, developed to monitor deforestation on that island. The Borneo Atlas allows users to verify the location and ownership of more than 460 palm-oil mills on Borneo and monitor deforestation in the surrounding area.
Data about ownership show which companies linked to plantations are encroaching on forests and peat lands.
“The principle of the Papua Atlas is the same,” Gaveau says. “The overarching idea is to hold companies accountable for the deforestation they might have caused, whether or not it is done legally. The idea is that the Indonesian local and national governments can check those deforestation footprints in concessions to review the permits.”
The arrival of industrial plantations is not the only change threatening to transform Papua’s pristine forest landscape. Logging for timber exports is increasing, tailings from a copper mine are destroying mangrove swamps, and people migrating from other islands are swelling urban populations.
As cities and towns expand, residents demand more public services, including better transportation. In planning everything from roads to housing, local government officials will have to assess the many tradeoffs that inevitably accompany development.
To ensure that the Papua Atlas is especially useful to land-use planners, Gaveau and Salim consulted extensively with local governments.
“New roads are being built to link the provinces of Papua and West Papua, and we know that with roads comes deforestation,” Salim says.
That could jeopardize the livelihoods of the indigenous people who live in the island’s forests and who depend on forest products for food, housing materials, fuel and their livelihoods.
Government officials are taking steps to put the brakes on some undesired impacts.
West Papua was declared a conservation province in October 2015. The government of West Papua has committed to keeping 70 percent of the province’s land under protection.
Only about half the province’s land is currently protected, so the challenge will be to increase that area.
In September 2018, Indonesian President Joko Widodo announced a three-year moratorium on new oil palm concessions on forest land managed by the national government, although the ban does not apply to forest within existing concessions or forest land controlled by local governments.
The Papua Atlas can help observers determine whether the moratorium is being respected, Gaveau says.
Government officials will also be able to use it to analyze land-use patterns and review licenses for agricultural concessions. Knowing which companies hold concessions and how they are using their land will enable government officials to adjust tax rates, Salim says.
“The atlas can be an important tool for conservation and land management,” he adds.
A settlement is seen from the air in Papua, Indonesia. Photo by Agus Andrianto/CIFOR
A LOCAL VIEW OF A GLOBAL
As the use of freely accessible platforms for tracking land use becomes more common, the Papua and Borneo atlases stand out for the degree of detail they offer.
Users can see which companies are clear-cutting old-growth forest, how much newly planted areas companies are adding, and where palm producers are moving into sensitive areas such as peat lands, which are crucial for carbon storage. The database also shows corporate relationships among companies, enabling users to better understand the market forces behind deforestation and to track corporations’ zero-deforestation commitments.
The atlas will provide a view of deforestation over time, with animations that show how plantations and roads have expanded, where land has been burned, where new land has been planted, and where forest and landscape restoration are under way.
“It’s important to be able to see both forest loss and the newly planted area, because you can then measure the conversion of forests to plantations,” Gaveau said “If forest was cleared and a plantation was established all within one year, there’s little question that both were the work of the company located in that place.”
The map can also be used to gauge impacts of those changes. When deforestation and planting occur near a river, for example, increased erosion is likely to affect aquatic life and ecosystems downstream.
Gaveau and Salim also hope it will solve a mystery. Deforestation on the island spiked in 2015 and 2016 even though no new concessions were granted in those years, which puzzles local government officials.
The interactive map can also link to platforms and databases developed locally, placing more useful information at the fingertips of local government officials.
“We are trying to develop ways of looking at the data that are important for analyzing impacts and planning for the future,” Gaveau said.
“These interactive platforms that promote corporate accountability and make it possible to trace products to their place of origin are just a start,” he added. “In a few years, we will have intelligent systems that will provide more detailed information, more frequently.”
Not only will that information provide a record of the past, but it will also give a glimpse of what lies ahead.
“Papua is important — it’s the last frontier of Indonesia, and one of the last in the tropical world,” Salim says. “The question is what do its people want for the future?”
The Papua Atlas will provide guideposts in the search for an answer.
By Barbara Fraser, originally published at CIFOR’s Forests News.
Good governance and sustainability incentives can provide alternatives to land conversion fires
Good governance and sustainability incentives can provide alternatives to land conversion fires
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During land burning, haze blankets the landscape in Riau Province, Indonesia. Photo by Aulia Erlangga/CIFOR
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During land burning, haze blankets the landscape in Riau Province, Indonesia. Photo by Aulia Erlangga/CIFOR
In Indonesia, palm oil is a hot industry in more ways than one. In 2015 alone, it contributed USD 20.75 billion to the country’s export revenue. Oil palm plantations cover more than 14 million hectares of the country and, together with Malaysia’s, dominate the global market.
However, fire is still widely used in the development and planting of oil palm, including in carbon-rich peatlands. Resulting smoke and toxic haze have impacted the economy, the health and the environment of Indonesia and other Southeast Asian countries. In 2015, Indonesia’s peatland fires contributed to an economic loss of at least USD 16.1 billion and more than 100,000 premature deaths around the region.
In light of this, a new study led by Center for International Forestry Research (CIFOR) scientist Herry Purnomo, which also forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), looks at the extent to which good governance principles are applied to Indonesia’s palm oil value chain and analyzes options to help reduce the use of forest and land fires in the industry.
“Palm oil is one of Indonesia’s main commodity exports, surpassing oil and gas,” says Purnomo. “But if we do not manage its sustainability, this sector can fail.
The research focuses on Indonesia’s Riau Province, which experienced massive forest conversion to have the largest area of oil palm plantations in the country. Now, it has the highest domestic frequency of fires too.
“We know that 20% of fire incidences happen in oil palm plantation areas, so we tried to find out what caused the fires and how to reduce them.”
In theory, the central government has power to influence the oil palm supply chain through law and policies; district-level governments have the most jurisdiction for law enforcement and information-spreading; and village governments are closest to plantation developers, thus having the responsibility of dealing directly with them.
However, good governance for the industry is not as simple as a top-down approach. From consumers to mills, refineries and developers, players in palm oil influence governance processes in different, sometimes unexpected ways.
“With the governance analysis, we looked at how existing powers contest,” says Purnomo. “Along the value chain, power is not at the landscape level but at the consumer level, or at the mills and refineries. The central government can only function through the district government, but mills can influence local government using incentives and coercion.
“Sometimes the Ministry of Environment and Forestry and the Ministry of Agriculture get the blame for forest and land fire incidences. While potentially, the problem starts from the Investment Coordinating Board (BKPM) welcoming investment for refineries without considering whether there is enough capacity to supply them from legal sources.”
Furthermore, the study found that illegal oil palm developers can hold a lot of influence at local levels and force village governments to support them, often through deceptive use of a Certificate of Land (SKT).
This imbalance between governance and supply chain capacity can drive actors at the landscape level to meet the mill demands in ways detrimental to landscapes.
“Now there are mills everywhere, even in national park areas. People respond by developing plantations everywhere. The fastest and cheapest way is by burning.”
Scientists observe a drone flying over burning peat outside Palangkaraya, Indonesia. Photo by Aulia Erlangga/CIFOR
ALT OPTIONS
When demand is high and burning has long been practiced, what reason do farmers and developers have to change their habits to more arduous land-clearing methods?
“We calculated whether existing incentives in the market are enough to change the situation on the ground,” says Purnomo. “The analysis looks at benefits distrubuted from oil palm plantation development using fire, who benefits, and what alternatives can be adopted to compensate.”
The first step is for the market to support certified producers, incentivizing them not to burn as well as to employ value-added farmers. This, however, raises production costs, as well as the cost of fresh fruit bunches (FFB) of oil palm fruits. As this price margin grows, the next step is to make sure that the financial benefits go back into the hands of the farmers, to incentivize their good practices as well.
“Intermediaries have taken the benefit from this margin until now. Farmers should unite to gain more bargaining power, so once they receive a delivery order, they can cut the middleman and go straight to the mill. This will increase their value added. It is important that palm oil businesses are not only certified but also fair.”
Another key step to fire reduction is agrarian reform. While many farmers possess an SKT, the land is still legally part of a state-owned forest area. The unclarity of land status dissuades farmers from investing resrources in land.
“Why should they spend money, when the government can take their land away at any time? The farmers should be guaranteed land legality at least for 25 years, so they can invest safely.”
Recently on the international stage, the European Union in January approved draft measures to ban the use of palm oil in motor fuels by 2020. While this sent Southeast Asian governments reeling, Indonesia’s included, Purnomo believes that this boycott will change little. Instead, he says the EU market should give incentives for sustainable production, and Indonesia should create an environment in which that can be done.
“Incentives can change the situation. The government of Indonesia should be more transparent with environmental problems faced by the palm oil industry, show real progress in improving the industry’s sustainability, draw a clear roadmap to meet international standards in three to five years and invite the EU to participate in palm oil in more constructive ways.”
Cleaning up supply chains will come at a cost, but market incentives combined with strengthened national policies and international regulators (namely the Indonesian Sustianable Palm Oil system and Roundtable on Sustainable Palm Oil) can together compensate to make this effort viable – and cool things down.
By Nabiha Shahab, originally published at CIFOR’s Forests News.
For more information on this topic, please contact Herry Purnomo at h.purnomo@cgiar.org.
This research was supported by the Department for International Development United Kingdom (DFID UK) and the United States Agency for International Development (USAID).
What a difference 4 decades make: Deforestation in Borneo since 1973
What a difference 4 decades make: Deforestation in Borneo since 1973
31 July, 2017
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In 1973, 55.8 million hectares (76%), of Borneo was old-growth rainforest. About 19.5 million ha of old-growth forest area was destroyed between 1973 and 2016 by fire and agricultural expansion. By 2016, 50% of the island remained forested.
Developing partnerships between CIFOR and the private plantation sector
Developing partnerships between CIFOR and the private plantation sector
24 November, 2016
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Presentation at the New Generation Plantations Annual Summit Cape Town 18-19 June 2016. The partnerships are formed under the CGIAR Research Program on Forests, Trees and Agroforestry.
Restoration 
Plantations and tree crop commodities 
Enhanced nutrition and food security 
Biodiversity, safeguarding and conservation 
Nationally determined contributions 
Bioenergy and biomaterials 
Blue carbon and peatlands 
Climate change adaptation 
Landscape governance 
Gender 
Silvopastoral systems 
Market-based agroforestry-forestry 
Farm-forest policy interface 
Agroecology 
Livelihood trajectory modelling and assessment 
Inclusive finance and business models 
Innovating finance for sustainable landscapes 
Public and private commitments to zero deforestation 
Orphan tree crops 
Effectiveness of approaches to sustainable supply 
Quality of FTA research for development 
Sentinel landscapes 
Foresight 
Seeds and seedlings delivery systems 
Smallholder tree-crop commodities 
