Smear campaigns and non-tariff trade barriers are ruthless political tools in the world’s lucrative vegetable oils trade. Indonesia and Malaysia’s palm oil players must be more adept at positioning their roles if they want to grow their annual export earnings of US$40 billion, writes Ooi Tee Ching
Sarawak Land Development Minister Tan Sri Dr James Jemut Masing has urged the Federal Government to be more effective in tackling smear campaigns and barriers to palm oil trade in Malaysia’s free trade agreement (FTA) negotiations with developed nations.
The US$50 billion (RM168 billion) global palm oil trade makes up almost 60 per cent of the world’s vegetable oils market.
The bigger the palm oil industry becomes, Masing said, the easier it is a target for smear campaigns by rivals via political means.
This is evident as Malaysia and Indonesia capture more market share in the vegetable oils trade, faster than rivals in Europe and North America. Their oil palm planters have had to endure false allegations of massive deforestation and land grabbing as well as lies about orangutan killings hurled by green activists.
Last year, Malaysia and Indonesia earned US$40 billion from close to 50 million tonnes of palm oil exports, data from regulators of both countries revealed.
Masing warns of looming trade barriers under the guise of environmental protection.
“We must be more discerning. Otherwise, we would have an unacceptable situation where developed countries offer US$1 with one hand and deny us US$100 in business opportunities with the other.”
For the Trans Pacific Partnership Agreement and the European Union (EU) FTAs to be mutually beneficial, Masing said developed countries must not take trade-related measures such as carbon tariffs and border adjustment measures against products, services and investments of developing countries.
Estates in Malaysia plant oil palm, rubber and cocoa trees to produce cooking oil, margarine, rubber gloves and cocoa butter for global trade. This is part of the same early-stage growth pattern adopted by every major developed economy in the world, from North America to Europe.
“Now, the very same people who have already achieved developed status cite fear that Asia’s development will cause ecological degradation. The EU argues against rainforest conversion for oil palm and rubber tree planting,” Masing told Business Times, here, recently.
In curbing oil palm expansion, European lawmakers and their sponsored green activists allege that the clearing of rainforest harms biodiversity and emits carbon dioxide into the atmosphere, worsening global climate change.
Many people believe World Wide Fund for Nature (WWF), Greenpeace, Friends of the Earth and Wetlands International are protectors of the world’s forests.
“Are they bringing their own governments to justice for clear-cutting temperate forests? Are they lobbying for reforestation in their own countries? Are these activists completely altruistic and selfless in their devotion to the world’s forest, wildlife and indigenous people?” Masing asked.
He held up a book titled “PandaLeaks: The Dark Side of the WWF”, written by Wilfried Huismann, which tells of hypocrisy and shady deals done behind the green façade.
“I’m enhancing my knowledge on oil palm trade ethics by big traders like Wilmar, Bunge and Cargill, and green activists. I’m getting a better understanding of why barriers to palm oil trade are being erected.”
By criticising the virtues of oil palm planting and ignoring that economic growth leads to better environmental protection, he said it is questionable whether these green activists’ true commitment is to the environment or to the erection of trade barriers to benefit rapeseed farmers who are heavily-subsidised by the EU government.
He cited findings at http://farmsubsidy.openspending.org that tracks the EU Common Agricultural Policy (CAP) beneficiaries.
For the past 55 years, European farmers have benefited from an exceptional set of subsidies. From 1995 to 2015, the cumulative budget expenditures for these farmers is seen to surpass €900 billion (RM3.7 trillion).
The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.
Although the EU had reduced subsidies to farmers in recent years, at an average of €55 billion a year, it remains the world’s largest agricultural support scheme.
In contrast, oil palm planting is heavily taxed.
In recent visits, foreign journalists saw that oil palm planting have improved many villagers’ lives.
“It is through the selling of fresh fruit bunches that smallholders can save enough money for their children to further their tertiary education. The state government has palm oil exports to thank for this,” Masing said.
In a separate interview from Jakarta, Indonesian Palm Oil Board chairman Derom Bangun said oil palm planters had long been victimised by trade barriers disguised as environmental protection.
A frequently-used ploy to discredit palm oil-producing countries is to take satellite imagery of a small part of the country and magnify it as logged-over areas in an attempt to give an impression that the entire rainforest system is destroyed.
Derom said Indonesia’s oil palm industry consists only 5.6 per cent of landmass while forest area remains 51.7 per cent. Many of developed nations’ forest occupy less than 15 per cent of landmass.
To be fair, they should reforest to support mitigation of global warming, which is a collective responsibility of all nations.
These activists’ strident criticisms have manifested into barriers to palm oil trade. Deforestation slurs sit oddly with the fact that oil palm is one of the world’s most sustainable crops.
Oil World, a Hamburg-based trade journal, said oil palm is the world’s most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soyabean planted in the United States and five times more than rapeseed, Europe’s main oil crop.
The oil palm is seen as the national economic security crop for both Malaysia and Indonesia, Derom said.
The trees are cared for by millions of oil palm growers in both countries. At the same time, its nutritious cooking oil feeds billions of people in China, India and other developing nations.