Palm oil production, good or bad for Africa?

Unsustainable palm oil industry practices—the result of large-scale land acquisitions (LSLA) across Africa's tropical belt—have resulted in a number of social and environmental concerns.

Sonni Nyumah, palm oil market seller, Liberia. Image credit Flickr user Hodag (CC).

Palm oil is one of the most rapidly expanding crops in Africa, and has been lauded as a valuable contributor to poverty alleviation and food independence in developing countries. But it has also been accused of producing harmful externalities; most notably bad health and environmental degradation. The African oil palm tree (Elaeis Guineensis) is native to West Africa, where it was originally used as a staple food crop, its use has been dated to as far back as 3,000 BC Egypt. During the 1800s, with the advent of the Industrial Revolution, it was brought to South-East Asia as a cash crop by European traders. Indeed, until recently, most cultivation took place in Indonesia and Malaysia. As an agricultural crop, oil palm trees are grown across tropical, high rainfall, low-lying areas, typically occupied by moist tropical forests and rainforests, particularly in Africa. This zone is one of the most biologically diverse ecosystems on earth.

Palm oil comes from the fruit of oil palm trees and is exceptionally versatile, used for everything from cooking oil and as a key ingredient in many processed foods—including bread and even ice cream, to non-edible products, like cosmetics and biofuel. It is also an extremely efficient crop, offering significantly higher yields and lower price of production compared to other oil crops. But at what cost to the environment and local communities in the countries in which it is cultivated?

Environmental and social concerns are amplified by the escalating expansion of palm oil plantations in tropical areas. The obliteration of the forests to make way for plantations and the devastating affect this has had on wildlife has received the most press, especially around the decimation of orangutan and chimpanzee populations and other endangered species through the loss of their habitat. Less publicized, but equally concerning, are the impact on climate change and severe soil erosion resulting from deforestation.

There are serious social consequences associated with the booming palm oil industry as well. From a human rights perspective, the alarming prevalence of abuses, including child labor and exploitation of workers, is gradually being brought into the open by organizations such as Amnesty International, however, conflicts between local communities and plantations on access to and ownership of land, as well as marginalization of smallholders in innovations in oil palm production and management, still receive little attention. In addition, local farmers are marginalized in the processing of palm fruit to oil, utilizing old technology resulting in low yields, and African governments have played a limited role in harnessing palm oil for value-added manufacturing to date.

Access to land is closely linked to food security, poverty alleviation, sustainable livelihoods, and rural transformation. Monitoring LSLAs, which can limit access to land, is therefore an important issue. But the controversial context and complex realities of LSLAs, as well as their potential for creating conflict, mean land deals often take place behind closed doors and information on land tenure is not always available. This lack of transparency can lead to the exclusion of local stakeholders and weaken their position in the process.

The Land Matrix is an independent global land monitoring initiative that promotes transparency and accountability in decisions over LSLAs in low- and middle-income countries. By capturing and sharing data about land deals on its online open access platform, including intended, concluded, and failed attempts to acquire land through purchase, lease or concession for agricultural production, industry, and mining, the Land Matrix aims to stimulate inclusive debate on the trends and impacts of such acquisitions and, in so doing, contribute to strengthening the positions of weaker stakeholders in the political and administrative processes that govern access to land.

Using Land Matrix data to compare family farms in Africa, which range from around 0.5 to a maximum of 10 hectares, with the 1.58 million hectares currently being used for palm oil concessions—an area similar to the size of the whole of East Timor in South East Asia, or equal to 2.2 million soccer fields—paints a stark picture of the situation the majority of local communities already face. Moreover, these land area figures only relate to land deals where palm oil is the only crop—if we consider all deals which contain palm oil (and produce several other crops), the concluded land area size swells to over 3.4 million hectares, and in fact is the crop with the largest concluded land area in Africa, with jatropha coming in second at 2.5 million hectares. Added to this, several countries have recently expressed interest in attracting increased investment in palm oil production and processing, such as Tanzania. Even more important than the size of the land area, however, is the location of the deals themselves, which, as the map depicts, is across the sensitive tropical belt.

Number of deals per country.

Palm oil sector-related LSLAs in Africa are dominated by foreign investors, from stock exchange-listed, public, and private companies, to individual entrepreneurs from countries across the globe. Investors from the United Kingdom, Ireland, Singapore, and Malaysia have concluded the highest number of deals, but regional investments by companies based in Kenya and Mauritius are also significant. Nevertheless, the lack of local investors is glaring. Furthermore, although contract farmers, or “outgrowers,” are used by foreign investors to increase their output, they are seldom given fair payment, and are subject to strict conditions for payment, such as when delivery should take place. In addition, foreign investors generally process fruit to oil in the country of origin, and then ship the oil to their warehouses in other countries for further processing. Few jobs are therefore created locally in the processing and manufacturing sectors.

In many ways, the debate around palm oil is futile, given that there is no better alternative currently. Other vegetable oils would be as, if not more, detrimental to the environment and surrounding communities since they require a lot more land for a lot less yield, and besides, palm oil is by no means the only culprit when it comes to the destruction of biodiversity and ecosystems; cocoa, coffee, and soy are just a few of the other perpetrators.

Number of deals per investor country.

But there are less harmful, more sustainable ways of cultivating and producing it, while maximizing the benefits to local populations, from economic development, to job creation and upskilling. Several sustainability initiatives have already been introduced in response to the social and environmental concerns, including the Indonesian Initiative for Sustainable Palm Oil (ISPO) and Roundtable on Sustainable Palm Oil (RSPO). Formed in 2004, the RSPO is a not-for-profit international initiative which has developed a set of environmental and social criteria that companies must comply with in order to produce Certified Sustainable Palm Oil (CSPO). These include not clearing primary forests or areas which contain significant concentrations of biodiversity or fragile ecosystems, minimizing erosion, and protecting water sources. Other RSPO principles stipulate a significantly reduced use of pesticides and fires, fair treatment of workers according to local and international labour rights standards, and the need to inform and consult with local communities before the development of new plantations on their land.

Consumers themselves also have an extremely important role to play. Firstly, they can educate themselves and make others aware of the environmental and social consequences of palm oil. Secondly, they can put pressure on companies to only use palm oil from CSPO certified companies or improve their environmental and social practices if they produce it themselves.

Ultimately though, despite the intervention of global conservation organizations and buy-in from major consumer companies, like Unilever and Nestlé, without government support in producing countries, the changes required to harness the benefits of palm oil and minimize the negative impacts will not be realized. But with the right data we can help influence the policy-making process around LSLAs for the palm oil industry and facilitate greater public involvement in critical decisions that affect the lives of all land-users.

About the Author

Angela Harding is the coordinator of the Land Matrix Africa Regional Focal Point, based at the University of Pretoria.

Danya-Zee Pedra is a writer and editor specializing in the development sector, with a particular focus on HIV and AIDS, poverty and inequality, land tenure, and social protection.

Further Reading