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The European Union’s ban on future deforestation-related imports has been hailed as the “gold standard” for climate change policy. This is a significant step towards protecting the world’s forests, which will help remove planet-destroying greenhouse gases from the atmosphere.
The law requires traders to trace the origins of a dizzying array of products, from beef to books, chocolate and charcoal, lipstick and leather. For the European Union, this obligation, due to come into force next year, is a testament to its role as a global leader on climate change.
But the policy is caught in intense crosscurrents about how to navigate the economic and political trade-offs demanded by climate change in a world where power is shifting and international institutions are collapsing.
Developing countries have expressed their anger, with Malaysia and Indonesia being the most vocal. Together, the two countries supply 85% of the world’s palm oil, one of seven key products subject to the European Union’s ban. And they say the law puts the economy at risk.
In their eyes, rich, technologically advanced countries and former suzerains are once again dictating terms and changing trade rules to suit their needs. “Regulatory imperialism,” declared Indonesia’s economy minister.
This view is consistent with developing countries’ complaints that the dominant international order ignores their concerns.
The palm oil dispute also encapsulates a central tension in the economics of climate change. The argument is that low- and middle-income countries are being forced to bear the costs of catastrophic environmental change, driven primarily by the world’s richest countries.
“We do not question the need to fight deforestation,” said Nik Nazmi Nik Ahmad, Malaysia’s environment minister. “But it is unfair for a country that has been logging its own land for centuries, and is responsible for much of our deforestation, to unilaterally impose conditions on us.”
Additionally, many government officials, industry representatives, and farmers believe that the European Union’s rules are actually a form of economic protectionism, protecting European farmers who grow competing oilseed crops such as rapeseed and soybeans. It claims to be a tool.
A European Union law passed last year bans products using palm oil and other products such as rubber and wood produced from forests converted to agricultural land after 2020.
For many small suppliers, proving compliance can prove complex and expensive.
In Malaysia and Indonesia, the prime ministers said their lives were under threat. They jointly vowed to fight what they called “very harmful discriminatory measures against palm oil.”
This concern is echoed by anti-poverty activists and some environmental activists.
Pamela Koch Hamilton, executive director of the International Trade Center, a United Nations agency set up to help poor countries build wealth through trade, said: “When this starts next year, many people will be on their toes.” It will be scooped up,” he said.
Koch-Hamilton said most small-scale farmers don’t even know about the impending ban, much less how to prove compliance.
Not a single smallholder farmer interviewed by The New York Times over the course of a week at a Borneo plantation in the Malaysian state of Sabah had heard of the deforestation rules.
“They will be forced out of the market,” Ms Cork-Hamilton said, which could have an even more negative impact on the environment. “We know that deforestation is linked to poverty.”
Endless rows of oil palms
Lunar New Year was a public holiday in Malaysia, but Awang Xuan, 77, had been up since dawn, swinging his hand-held mower around the oil palm trees on his farm with a roaring engine on his back.
“Plantation” is a bit of an exaggeration to describe the small patch of grassy land in Membakut, Sabah where Awan primarily farms alone. His holdings amount to 12 acres.
They switched from growing rubber trees to oil palms and have been growing them for over 50 years. Palm trees require less labor and are harvested frequently, about every two weeks throughout the year, providing a more stable income, he explained.
Working in the humid heat of Borneo’s equatorial region is physically exhausting. To build tall palm trees, farmers like Awan use a telescoping pole with a sickle on the end to cut through the spiny 50-pound bunches at the top of the trunk. Then they have to carry the fallen fruit to the road or put it in a cart.
According to Awan, in a good month, they can grow about eight tons of fruit.
Later, over sweet milk tea in a living room lined with six plush sofas, Awan explains that most property owners he knows grow oil palm. Many supplement their income by raising goats, fishing, taking on jobs, or doing government work.
In recent decades, global demand for viscous red oil has exploded. Approximately half of the products on supermarket shelves contain palm oil.
Much of it comes from multibillion-dollar corporations that have gobbled up miles of land.
In Sabah, oil palm trees stretch as far as the eye can see. The scenery is picturesque. But compared to the raucous diversity of a rainforest, formations like upright feather dusters can be as monotonous as elevator music.
Smallholders (defined in Malaysia as farmers owning less than 40 hectares, or nearly 100 acres) grow 27 percent of the country’s oil palms.
The palm oil gold rush reduced rural poverty and contributed to wealth building and job creation through exports. According to the World Economic Forum, around 4.5 million people work in this industry in Malaysia and Indonesia.
For a time, this oil was even touted as an environmentally friendly “super crop.” One acre can produce 4 to 10 times more oil than the same acre of soybeans, rapeseed, or sunflowers.
However, environmental benefits only arise when existing agricultural land is converted to oil palm. Instead, producers clear-cut or burn pristine rainforest and peatlands to plant crops. The removal of these valuable carbon sinks released vast amounts of greenhouse gases into the atmosphere, causing an environmental catastrophe.
According to the World Resources Institute, Malaysia lost nearly a fifth of its virgin tropical forests between 2001 and 2022. The habitats of thousands of species, including orangutans, sun bears and pygmy elephants, have been destroyed, with some animals on the brink of extinction.
In 2004, environmental watchdogs such as the World Wildlife Fund, a wide range of industry players, and multinational companies joined forces to form the Roundtable on Sustainable Palm Oil, a voluntary organization that sets standards to reduce destructive practices. Established a conference.
But critics say that despite improvements, voluntary agreements alone cannot protect and restore the world’s forests. A European Parliament report concluded in 2020 that self-regulation is “only a complement to binding measures”.
The European Union has introduced just that. To ensure that all products sold in the region’s 27 countries can be traced back to their source, the law applies to almost all producers of palm oil, coffee, cocoa, cattle, soybeans, rubber, and timber. It requires countries to mark their exact borders on maps. Inspect farmland to show that agricultural products are not linked to deforestation.
It is the exporter’s responsibility to demonstrate that regulations are complied with at every point in the supply chain.
But for many Malaysians, the European Union’s mandate reflects a deep misunderstanding. Tracing clusters of fat, acorn-shaped fruit to small, remote farms is far more complicated than Brussels politicians believe, small farmers’ groups say.
Sources that are difficult to trace
Smallholders primarily sell to traders, dealers and collectors, but there are layers of intermediaries who mix together the bunches of palm oil fruit collected from hundreds of plantations. Masu.
Reza Azmi, executive director of Wild Asia, a Malaysia-based non-profit that works with smallholder farmers to make improvements, says dealers are wary of competition and are “trying to find out where all their suppliers are coming from.” “We don’t want to tell the factory where it came from, which makes tracking it even more complicated.” Environmental practices.
Small independent producers and traders could be weeded out and the scope of agribusiness expanded.
“What we are hearing in Sabah is that independent factories are trying to sell to big companies because they don’t have the resources to ensure compliance,” Azmi said.
The challenge of tracing the source of oil can be glimpsed at the small collection stations in Gomantong, where farmers sell the palm oil they harvest daily or weekly.
Starting at 6 a.m., dozens of large plantation trucks and smallholder pickups rolled one by one onto large platform scales and then began unloading their cargo onto a single bulging pile.
When Riduan Amir’s turn came, he hopped onto the flatbed of his white Isuzu, which can hold about a ton of palm oil. Under the scorching sun, he used a sharp pike to throw each bunch into the jumble.
By the end of the day, about 80 tons of fruit will have been piled up. The harvest is then delivered to the factory.
As for the European Union’s obligations, an entire lot of produce produced on a single uncertified farm will no longer be available for export to the European Union, the world’s third largest importer of palm oil.
Olivier Tissit, director of sustainability at Indonesia’s Musim Mas Group, one of the world’s largest integrated palm oil companies, said the group buys fruit from up to 1 million smallholder farmers. Stated.
“If one thing is not compliant, we have to exclude the entire factory,” he said, adding that his company “takes no risk.”
A spokesperson for the European Commission said: “We are committed to providing smallholders with all the support they need to fully adapt to the changes.” The bloc has pledged 110 million euros to provide technical and financial support.
Farmers with less than 10 acres can use their smartphones to map their land. “GPS coordinates are easy and free to generate,” his EU primer explains.
But critics say mapping farms and then verifying the data is much more complex, time-consuming and expensive, and is plagued by a lack of documented land ownership and other complications. It goes without saying, he claims.
In Malaysia, government officials complain that the European Union law ignores the country’s existing licensing and deforestation rules. From January 1, 2020, all producers and companies are required to be certified by the Malaysian Sustainable Palm Oil Board. The standard aligns with many set by the European Union, but there is no requirement for geolocation mapping.
This effort met with some success. In its 2022 annual study, the World Resources Institute found that Malaysia is one of the few places where deforestation is not getting worse.
A new task force, including the European Commission and government ministers from Malaysia and Indonesia, is meeting to work on implementing deforestation rules. Malaysian officials urged the commission to accept the country’s own certification system and exempt smallholders from the law.
Still, the perception that European powers are dictating to the government stings.
“You can’t enact a law and then say, ‘Come and have a dialogue,'” said Belvinder Kaur Sulong, executive director of the Malaysian Palm Oil Council, a trade group.
There is also anger at the double standards that appear to be applied to wealthy countries.
Environment Minister Nik Nazmi said “we have been told to maintain strict standards” on free trade and climate change. However, rules are relaxed when the interests of more economically powerful regions are at risk.
“We feel like our voices are not being heard.”
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