Palm Oil's Dilemma

IN THE THREE COUNTRIES THAT MAKE FOR 90% OF GLOBAL PRODUCTION (MALAYSIA, INDONESIA AND SINGAPORE), THIS INDUSTRIAL CROP GUARANTEES THE LIVELIHOOD OF THOUSANDS OF PEOPLE BUT ALSO DEPLETES RESOURCES THAT ARE CRUCIAL FOR GLOBAL ENVIRONMENTAL SUSTAINABILITY. IN FACT, PALM OIL HAS BEEN ACCUSED OF BEING A DRIVER OF DEFORESTATION BY WESTERN ENVIRONMENTAL ACTIVISM

by Valeria Giacomin, Associate Professor at the Department of Social and Political Sciences

When browsing through supermarket shelves, you might have noticed the label "no palm oil", a trend that has become common in Europe, especially in Italy, since the mid-2010s. However, it's essential to note that palm oil is not inherently worse than alternative iproducts. In today's market, palm oil ranks as one of the most traded vegetable oils globally, securing its position as the third-largest agricultural commodity by volume. Notably, among its direct substitutes, palm oil is the most land-efficient crop, exhibiting ten times the productivity per hectare compared to oil coming from soybean, coconut, and rapeseed, while also requiring fewer chemicals and fertilizers.
Why then the “no palm oil label” despite palm oil's remarkable land efficiency?
The oil’s geographical limitation to three degrees of latitudes north and south of the equator has consistently pitted plantation expansion against local rainforests. Critics express concerns about its adverse impact on tropical ecosystems crucial for global climate stability. Between 1980 and 2010, palm oil acreage surged, with global production skyrocketing from 5 to 55 million tons, propelled by increasing demand from India and China. This surge has accelerated rainforest clearing since the 1980s, leading to significant biodiversity loss. Consequently, since the 1990s, the industry has faced scrutiny from environmental campaigns led by global NGOs like Greenpeace and Oxfam. These campaigns targeted both producing countries and major buyers, Western corporations such as Ferrero, Unilever, Procter and Gamble, resulting in the "no palm oil" label and a general stigma towards the product and the industry.
The crop's exclusive suitability for tropical regions has naturally favored specific countries for its production. Currently, palm oil production is predominantly concentrated in a limited area of maritime Southeast Asia. Malaysia, Indonesia, and Singapore collectively contribute to 80% of global production and 90% of world exports. Before the Covid pandemic, palm oil constituted 8% to 10% of the GDP of these nations. These countries organize production through large-scale plantations, and the industry operates as a geographically concentrated cluster, highly specialized in agribusiness operations. This local specialization adds complexity to the controversy surrounding the use of palm oil which is often overlooked in the West. A comprehensive understanding can be gained by examining the historical development of this industry since colonial times.
The crop is native to Western Africa. Its introduction to Southeast Asia in the mid-19th century led to domestication for plantation agriculture, gaining prominence in the early 20th century. However, it wasn't until the 1920s and 1930s that palm oil emerged as a significant alternative to the region's dominant crop—natural rubber. Similarly to palm oil, rubber trees were introduced in the British and Dutch Southeast Asian colonies to meet the growing demand of the fledgling automotive industry and, later, the war effort. In less than two decades, this demand transformed the region into a plantation cluster that nearly monopolized world rubber production.
In the 1920s, as the rubber industry grappled with overproduction and diminishing demand, Western companies overseeing plantations in the region shifted to palm oil, seen as an ideal diversification strategy. By the 1960s, with the ascendancy of synthetic rubber and the decline of natural rubber for car tires, palm oil became the primary crop for this countries. Simultaneously, Malaysia and Indonesia's independence led to land redistribution to local farmers, leveraging plantation agriculture for economic development and political support.
While maximizing profitability, clustering production yielded exploitative outcomes, concentrating knowledge and capital in colonial companies' hands, subjecting labor to the prolongation of semi-slavery conditions, and causing environmental damage and uneven distribution of the fruits of growth. Throughout this history, plantation expansion consistently threatened forest resources, prompting the introduction of conservation measures. In response to rising concerns and aggressive environmental campaigns by international NGOs, Southeast Asian governments countered the accusations by means of a neocolonial narrative, contending that they had inherited an industry shaped by colonial exploitation.
Coming under criticism from Western NGOs, producing countries had to grapple with a tropical dilemma—ensuring industrialization and the livelihoods of thousands while balancing resources crucial for global environmental sustainability. However, this situation is the result of the way the industry was organized and developed under European colonial governments and multinational corporations. They started disengaging from the area only in the 1960s and have often remained involved as buyers until today. So far, only partial solutions to these problems have been designed, as all alternatives to plantations fail to meet the needs of huge global demand. The most promising solutions involve the breeding of tree varieties that can grow at different latitudes, promising higher yields per plant.