Saturday, March 26, 2011

Discussion on Palm Oil

Recently, in the forum for Primate Conservation at my Alma Mater, someone posted a link to this report at the Adam Smith Institute.

I've read it, and a few furious replies came up. Mostly attacking it as a non-reviewed paper by a market research institute, and the admittedly sweeping statements behind it.

But I realised that all of the conservationist replies are missing the point. Often, there is no sense of reality of the situations, except that primates (or biodiversity) is there and they must be saved. I suspect it is something about being in Borneo too.

So I posted a reply and it follows here:

"Hi all,

My turn! I read the article, some very sweeping bits, for example in page 2, it says : Far from pristine rainforest being ripped out in favour of commercial crops, the majority of the country's virgin rainforest remains unspoilt and intact.".

But at the end of it all, they are fighting their corner, we are fighting ours. I don't think we should expect many economists to see our point. Not yet anyway. Our views are biodiversity-biased, their views are economics-biased, simply because we lack the training or background on each other's side. If we ran the economy, I'm sure we'd do a lot worse than what is going on now, and the economy is already very messed up. Ditto for if they were in charge of biodiversity.I think on our part as biodiversity conservationists/specialists, we should not be narrow-biodiversity scientists. Go around to the second-hand bookshop (tonnes of those in Southeast Asia - especially all you who are hanging around in my patch :P) pick out a textbook on economics; read about commodities, and about value of land - cropland, forestland; read about what drives the demand; find out why or how demand for crops hop around from one to another; look around to how land-use policies are or should be laid out, from the economist's perspective. I think a lot of times we tend to be dismissive of their views and they of conservationists.

He did make some valid points. Like mentioned by Marie, we do tend make things overblown, but that's how the way the world works. Threaten a double-dip recession and the government would bust their nuts trying to prevent it and end up with record economic growth instead. They do it, we do it. His point is valid, but I think where it differs from us, is that an economy might actually end up with record growth within the year, but we will not see record biodiversity growth within the same period of time. For the economy, it's "Yay, we did it!". For forests and biodiversity, it's "I don't see a difference, are you sure?".

A big sticking point, which he does point out, it that the VAST majority of oil palm forests is in Peninsular Malaysia, which only comprises 40% of all total land area in Malaysia. Also, there are no orangutans! Conservation should do something to address that point, because it is a good point, it is valid and we've all been silent about it, at least publicly.

I think the palm oil and forest issue is extremely tricky and complication. Firstly it does affect one of the main financial thrusts of a country run by a democracy which will fail if the government tries to change policies. The Malaysian electorate is FAR less educated and the power of the indigenous populations is too great for the government to deviate from current economic policies. I'm sure some of you will know about that having lived in Malaysia for a while.

A big big big problem is that conservationists are now increasingly viewed as anti-agriculture. The big point for economists and governments in this region who are trying to profit from the "green" movement is that palm oil are used in food, and that conservationists are worsening a global food crisis. Australia is having massive problems because of a drought that has been around for more than a decade in much of its agricultural area and then now it gets a drought which floods the fields AND the coal mines which produce theirs and many countries' power supply. All their freshwater there are increasingly turning saline. You may not feel it in Europe, but in this part of the world, all the way down to Pakistan, Australia feeds itself, Southeast Asia, and South Asia. China is facing a failed crop last year, this year, and probably the next year too. The pressures will begin to shift to Southeast Asia.

We cannot say, we are just targetting palm oil in Borneo. Economists will say, look, petroleum is expensive, the world's most populous country is running out of water, the 2 of the world's most populous countries in the world may face a food crunch from failed crops in China and possible failure in Australia, the world's most populous Muslim country in the world with a history of eruption into street violence may face in stability in the face of rising costs. Orangutans in Borneo VS palm oil/agriculture, not a difficult choice. Maybe the positions of the forests are much more unstable that we think. Also, the demand for oil palm IS increasing worldwide. The 2011 budget of Malaysia is 212 billion Malaysian Ringgit. Palm oil alone contributed 53 billion to gross national income, the value of this commodity to them is immense. Conservationists point to declining prices of palm oil, such as here:, but this is no longer valid. In March 2008, palm oil reached the height of $1,146,86 per metric ton. Then in declined to $522.19 in January 2009. There were many articles online about possibility of less oil palm plantations. The decline did not stay. Let me give you the trend over the last few months. By July 2010, it was up to $774.50, in August, $865.23, October $935.22. In November, it broke the psychologically important $1000 barrier, reaching $1059.01. Within the next two months, by January 2011 (this year!) it has reached $1,238.57. A record price. Today (23rd Feb) it eased off a bit, but is trading at $1107. There is another point: for Malaysia to sustain the industry, it only needs to sell the oil at around $400. So they were still quite profitable in the lean years, and they are getting close to three times cost price. What's not to like for the economist?

Yes, we know there are orangutans in the forests of Borneo. Many many many more other flora and fauna, we know about how the forests are the lungs of the world, how they contribute to the water cycle and flooding. That is why I am against the clearing of forests for palm oil. But the argument by conservationists about the bit of science here and there being wrong, and selling the orangutan like people will fall down dead the next minute, it doesn't work. Not here. Maybe in Europe and the US. Over here, getting out of the village and getting rich first is the priority. There is a country to run, mouths to feed, subsidies to give out for basic necessities. I think we have to change tack, we might also have to be less hardline.

Sorry this is very long, hopefully I've given it a different spin!"

Hope some readers will chime in with non-spam posts!

1 comment:

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