Sunday, July 12, 2009

Palm Oil - Destroying Ancient Forests

Why is oil palm replacing tropical rainforests?
Why are biofuels fueling deforestation?

In a word, economics, though deeper analysis of a proposal in Indonesia suggests that oil palm development might be a cover for something more lucrative—logging.

Recently much has been made about the conversion of Asia's biodiverse rainforests for oil-palm cultivation. Environmental organizations have warned that by eating foods that use palm oil as an ingredient, Western consumers are directly fueling the destruction of orangutan habitat and sensitive ecosystems.

So, why is it that oil-palm plantations now cover millions of hectares across Malaysia, Indonesia, and Thailand? Why has oil palm become the world's number one fruit crop, trouncing its nearest competitor, the humble banana?

The answer lies in the crop's unparalleled productivity. Simply put, oil palm is the most productive oil seed in the world. A single hectare of oil palm may yield 5,000 kilograms of crude oil, or nearly 6,000 liters of crude according to data from JourneytoForever. For comparison, soybeans and corn—crops often heralded as top biofuel sources—generate only 446 and 172 liters per hectare, respectively.

Beyond biofuel, the crop is used for a myriad of purposes from an ingredient in food products to engine lubricants to a base for cosmetics. Palm oil is becoming an increasingly important agricultural product for tropical countries around the world, especially as crude oil prices top $70 a barrel. For example, in Indonesia, currently the world's second largest producer of palm oil, oil-palm plantations covered 5.3 million hectares of the country in 2004, according to a report by Friends of the Earth-Netherlands.

These plantations generated 11.4 million metric tons of crude palm oil with an export value of US$4.43 billion and brought in $42.4 million (officially) to the Indonesian treasury. Since then, the value of palm oil has only climbed. The price of palm oil currently stands at more than $400 per metric ton [by 2007 prices were more than twice this figure], translating to about $54 per barrel—quite cost competive to petroleum.

Beyond the loss of forest ecosystems, the production of palm oil, as currently practiced, can be quite damaging to the environment. In 2001 Malaysia's production of 7 million tons of crude palm oil generated 9.9 million tons of solid oil wastes, palm fiber, and shells, and 10 million tons of palm oil mill effluent, a polluted mix of crushed shells, water, and fat residues that has been shown to have a negative impact on aquatic ecosystems.

For palm oil or something else?
On paper, given the vast area of tropical forest in the region and the relatively high value of palm oil, the plan may seem like a viable option from an economic standpoint. However, closer analysis of the suitability of the land for oil-palm cultivation has green groups questioning the stated purpose of the plan, suggesting that there may be other intentions.

Surveys of the region commissioned by WWF found that much of the land is poorly suited for oil palm. Mountainous terrain combined with inappropriate altitude and climate for oil palm means that only 10 percent at most can be considered adequate for cultivation and lends credibility to claims by environmental groups that the entire plan may be a cover for a massive logging scheme to harvest the area's rich timber resources.

Greenomics, an Indonesian forestry non-governmental organization, has calculated the timber value in the border region at $26 billion. Logging the area set aside for oil-palm plantations would net substantial amounts of revenue for logging firms and considerable tax income for the Indonesian government. Further, since the oil palm project calls for extensive road construction, the infrastructure would be in place to deliver valuable—albeit previously inaccessible—timber to market. Read More...