Oily Palms
I had not heard much about the palm oil trade for a couple of years. There was a flurry of interest in Hawaii in 2007 when proposals were made for biofuel power plants on Maui and Oahu that would be fueled by palm oil from Indonesia. Planners envisaged growing palms or other biofuel crops in Hawaii, but confessed that the power plants would need imported oil for the first few years. Environmental opposition to forest burning in Indonesia was one of several reasons the plans were dropped.
Reuters reported last week from Kuala Lumpur that South East Asia’s palm oil producers are refocusing their marketing on Asia in response to opposition to their product in Europe. European environmentalists have realized that palm oil producers are among the prime culprits in burning and flattening Asia’s rain forests and have ignited opposition among European consumer groups. The world palm oil market is expected to reach $45 billion this year, with nearly half of that being purchased by China, Pakistan and India.
Forests Burning On Borneo
The deforestation issue has caused Unilever to pull back from a $33 million/year contract with an Indonesian agribusiness firm that has been accused of large scale forest burning and wetland draining to make room for new palm oil plantations. Greenpeace charges the Indonesian company, PT Smart, with destroying peatland forests on Borneo, endangering orangutans. PT Smart denies the accusation, but palm oil growers fear that environmental pressure will force other big buyers, such as Nestle and Procter & Gamble to curtail their palm oil consumption. P&G, for instance, uses palm oil in some flavors of Ben & Jerry’s Ice Cream, a brand that touts environmental awareness in its marketing.
PT Smart is redoubling its sales efforts for palm oil as a cooking fuel in India, and is joined in its Asian marketing by Malaysia’s Sime Darby and IOI, and Singapore’s Wilmar. It will be interesting to see if reduced demand in Europe, and potentially North America, will put a dent in the rate of deforestation. Having breathed the smoke of Sumatran forests while living in Singapore, I certainly hope so.
