Openings session 

"Sustainability: Challenges & Opportunities for Palm Oil" - M.R. Chandran

September 19, 2011

As sustainability was on the agenda for the first time it got significant attention. The conference was opened by Mr Chandran (former Chief Executive of the Malaysian Palm Oil Association and Advisor to the Executive Board of the Roundtable on Sustainable Palm Oil (RSPO)) who spoke on sustainability challenges and opportunities for palm oil.

Palm Oil, the most efficient vegetable oil crop, has according to Chandran the opportunity to fulfil the fast growing global demand for vegetable oil. The challenge for the industry is to meet this demand by expansion of the production area with 12 million hectare in a sustainable manner. The 21st century will be driven by emerging economies like China and India. This will lead to change in the composition of global trade & consumer behaviour. China and India require enormous resources and emerging nations will increasingly trade among themselves. The only show stopper to the economic rise will be the environment and not geopolitics. Sustainability is in their self-interest and important for economic survival. There will be growing criticism of those, including the agro-based industries, that may appear to have increased Greenhouse Gas (GHG)emissions by their actions.

Chandran gave a snapshot of the palm oil industry. Malaysia has 4.85 million (2010) ha of oil palms and limited expansion possibilities. Its industry is well organized and is currently the global leader in plantation management and production of palm products. The current planted palm oil area in Indonesia is 7.8 million ha and they have an additional available land bank of 16 million ha, enough to expand production area with 300,000 ha per year. Malaysia and Indonesia together produce more then 85% of global palm oil. Palm oil is used in more then half of all supermarket products in many countries in the world. With a market share of 33% of total vegetable oil consumption, palm oil is the most used vegetable oil. The palm oil industry provides work to more then 1 million people. 3 Million smallholders and many more household members depend on its production. With an average yield of approximately 4 mt/ha/yr palm oil production is far more efficient then rapeseed, sunflower seed or soybeans. Vegetable oil demand is predicted to increase from 120 mt (2010) to 240 mt in 2050. According to Chandran palm oil has the opportunity to fulfil largely this demand because palm is the most efficient vegetable oil crop, producing 30% of world production on 5% of the land occupied by vegetable oil crops. Palm oil demand is expected to increase from 45.8 mt in 2010 to 63 mt (38%) in 2015 and 77 mt (69%) in 2020. The challenge is to develop additionally 12 million ha of oil palm to meet predicted increases in demand with respect for sustainability. Extensive and poorly managed expansion to meet growing global demands for food and fuel could have grave consequences.

The Roundtable for Sustainable Palm Oil (RSPO) is the first global multi-stakeholder initiative addressing sustainability for an agricultural commodity. The RSPO is a robust standard for sustainability and has huge commitment and support from the industry. The four main industry challenges are: I increasing yields, II reducing labor intensity and raising productivity; III functional obstacles to use palm oil in cooler climates; IV presence of non-tariff barriers, in the form of sustainability, GHG (Greenhouse Gas) emission and life cycle analysis criteria that restrict the use of palm oil in high income markets. Science and especially genomics could be helpful on a number of issues like: yields, palm height, stalk length, disease resistance, drought tolerance, salinity tolerance and iodine value.

Palm oil development is faced with competition between ecology and economy. There is no absolute benchmark or standard, but there remains the requirement to establish a reasonable equilibrium between these competing factors. The fact that the industry has expanded and flourished over a century is clear evidence of its economic sustainability & relevance to society at large. According to Chandran oil palm plantations could be sustainable for the next hundred years, provided the industry acts responsibly. He quoted Dr David T. Suzuki, World Leader in Sustainable Ecology, 'Sustainability means doing things better not doing things without…". Chandran ended his interesting presentation with his call to industry that creating sustainable natural resources is an inevitable and necessary process: 'The environment is too important to be left to environmentalists alone'.

Click here to download the presentation of this openings session. 


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