"The Bitter Fruit of Oil Palm"

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Oil Palm: The Expansion of Another Destructive Monoculture
by Ricardo Carrere

Over the past few decades, oil palm plantations have rapidly spread across the South. They are causing increasingly serious problems for local peoples and their environment, including social conflict and human rights violations. In spite of this, a number of actors -national and international- continue actively to promote this crop, against a background of growing opposition at the local level.

The oil palm (Elaeis guineensis) is native to West Africa, where local populations have used it to make foodstuffs, medicines, woven material and wine. Today's large-scale plantations are mostly aimed at the production of oil (which is extracted from the fleshy part of the palm fruit) and kernel oil (which is obtained from the nut).

Oil palm plantations composed of specially selected and cloned varieties of palm trees start to produce fruit after four to five years and reach maturity and the highest rate of productivity when the trees are 20 to 30 years old. The fruit bunches, each weighing between 15 and 25 kgs, are made up of between 1000 and 4000 oval-shaped fruits, measuring some three to five cms long.

Once harvested, the fleshy part of the fruit is converted into oil through a series of processes, while the palm kernel oil is extracted from the nut itself. The processing of the crude oil gives rise to two different products: 1) palm stearin and 2) palm olein. The stearin (which is solid at room temperature) is used almost entirely for industrial purposes such as cosmetics, soaps, detergents, candles, lubricating oils, while the olein (liquid at room temperature) is used exclusively in foodstuffs (cooking oil, margarines, creams, cakes and pastries).

Oil palm plantations are being established principally in tropical regions where, by 1997 they occupied 6.5 million hectares and produced 17.5 million tonnes of palm oil and 2.1 million tonnes of palm kernel oil.

In Asia, the two main oil palm producing countries are Malaysia and Indonesia (both with more than two million hectares of plantations), which have become the world's principal producers of palm oil. Malaysia generates 50 per cent of world production (of which 85 per cent is exported), while Indonesia is the next largest producer with almost 30 per cent of global production (of which 40 per cent is exported). However, other countries are joining them in large-scale oil production. The most important of these are Thailand (with more than 200,000 hectares) and Papua New Guinea (which is the world third-largest palm oil exporter). Ambitious plans also exist for the Philippines, Cambodia and India, as well as the Solomon Islands.

In Africa it is difficult to obtain precise figures for industrial plantation areas, due to the fact that the oil palm is native to many West African countries. For instance, in the case of Nigeria, production is obtained from an area of three million hectares of oil palm, among which there are some 360,000 hectares of industrial plantations. Other countries also hold large areas covered by oil palms, such as Guinea (310,000 ha) and Congo Democratic Republic (formerly Zaire) (220,000), with important areas of industrial plantations particularly in Ivory Coast (190,000), Ghana (125,000), Cameroon (80,000), Sierra Leone (29,000), and smaller areas in Benin, Burundi, Central African Republic, Republic of Congo, Equatorial Guinea, Gabon, Gambia, Guinea Bissau, Liberia, Senegal, Tanzania, Togo and Uganda.

In Latin America, oil palm plantations are covering increasing areas in Ecuador (150,000 ha), Colombia (130,000) and Brazil (circa 100,000), as well as spreading over numerous other countries such as Honduras (50,000), Venezuela (30,000), Costa Rica (30,000), Peru (15,000), Guatemala (15,000), Dominican Republic (9,000), Nicaragua (4,000), Mexico (4,000) as well as areas in Panama, Suriname and Guyana.

As the areas under plantations increase, so do the negative impacts on the environment and on local societies. This is because, as is the case with monoculture plantations of pine and eucalyptus, the problem is not the tree itself but the plantation model under which it is grown.

Yet the promoters of this model insist on presenting palm plantations as a solution to unemployment problems and even try to demonstrate environmental benefits. The Colombian oil palm producers' federation puts it thus: "oil palm plantations are forests which protect our ecosystems". At the same time, a director of the International Finance Corporation (the branch of the World Bank which grants loans to the private sector), stated that the establishment of IFC-financed oil palm plantations in Ivory Coast "would lead to more employment and higher living standards [and] promote exports that will earn foreign currency, while supporting agricultural production with maximum sensitivity to the environment" (Africa News Online). A Malaysian minister went so far as to declare that palm plantations are in fact "better than the developed nations' pine trees in terms of absorbing carbon gases" (Lohmann 1999).

However, as will be shown in more detail below in the cases of Indonesia, Ecuador and Cameroon, the cultivation of this palm is bringing with it a series of negative impacts affecting people and the environment wherever it is established.

One of the principal impacts is the appropriation of large areas of land which have hitherto been in the hands of indigenous or peasant populations and have provided their livelihoods. This dispossession commonly generates resistance from local people, which is in turn confronted by repression by state forces as well as that of the oil palm companies themselves. The violation of land rights is thus typically followed by other human rights violations, including even the right to life.

Against the background of a world increasingly concerned about the loss of tropical rainforests, it is worth noting that almost all these industrial monoculture oil palm plantations are established in forest areas. Large oil palm plantation companies, which found it convenient to "clear" forest areas for plantations by setting them on fire, were responsible for the gigantic forest fires in Indonesia which shocked the world in 1997. Behind nearly every industrial oil palm plantation lies some such process of deforestation, even if it is usually not so extreme.

The tropical forests which are eliminated to make way for these plantations are the habitat for an enormously diverse range of species. Studies in Malaysia and Indonesia have shown that between 80 per cent and 100 per cent of the species of fauna inhabiting tropical rainforests cannot survive in oil palm monocultures (Wakker 2000). Those few species that do manage to adapt often become "pests" since, having lost their normal food supply, they begin to make a meal of the young palm plants. This in turn necessitates the application of pest "control" methods which include chemical pesticides, causing further damage to biodiversity as well as to fresh water supplies and the health of local populations.

Oil palm monocultures are also associated with soil erosion: forest clearance leaves soils bare and exposed to heavy tropical rainstorms. Erosion, in turn, causes contamination and sedimentation in watercourses, affecting supplies of drinking water and fish on which the local communities depend.

Oil processing industries also have an impact on water quality because of the large quantities of effluents which they release into rivers -2.5 tonnes for each tonne of oil processed. Pollution control laws are seldom complied with.

Despite all this, proponents insist on presenting oil palm plantations as the solution to all the social ills of the region in which they wish to establish them, declaring that they will generate employment, wealth, infrastructure, educational opportunities etc., in an effort to gain the support of local people.

Despite their negative impacts, oil palm cultivation continues to expand across more and more countries. The reason for this expansion is, in the first place, that oil palm can be very lucrative for both foreign and domestic investors. Profits are assured by cheap labour, low-priced land, a lack of effective environmental controls, easy availability of finance and other support, and a short growth cycle. In addition, the market is expanding, particularly in the North. Palm oil is the world’s best-selling vegetable oil, representing 40 per cent of the total global trade in edible oils. It is much more important than soya, which represents 22 per cent of the world market (FAS Online 1998). Moreover, it is expected to eventually increase its share of the world market to 50 per cent.

In addition, the fact that oil palm is a crop usually aimed at export markets makes it attractive to governments overwhelmed by external debt and seeking new sources of foreign exchange. External agencies (such as the World Bank, the International Monetary Fund and the United Nations Development Programme) also support oil palm, as do international banks which finance and profit from it. According to one recent study (Wakker 2000), the main Dutch banks (ABN-AMRO Bank, ING Bank, Rabobank and MeesPierson) all maintain close financial links with large oil palm enterprises in Indonesia.

Other, less visible proponents include the overseas conglomerates which benefit from the international palm oil trade. There is nothing new in their method: massive promotion of a crop in order to reduce world prices and stimulate consumption, thus entrenching a commodity in society in a way which ensures profits from marketing and reprocessing. A recent report on palm oil markets from ARAB (a Malaysian-based research and consulting institution) notes that "palm oil prices are generally lower than that of soybean oil" -which "is the dominant oil and serves as the price leader for trade in vegetable oils":

"The existence of the discount for oil palm arises from the large increases in the supply of palm oil in the last two decades and the need for the trader to offer a discount in order to compete with soybean oil in existing and new markets."

The reason for the increase in the supply of palm oil is quite simple: oil palm "is now being planted on a widespread basis in the tropics."

The peoples of the South have suffered from such strategies before, as in the cases of coffee, cocoa, bananas, sugar cane and many other crops. As the prices of such commodities drop, many producers are ruined. At the same time, trade in the industrialized nations benefits and consumption increases.

Further depressing international oil palm prices is the fact that in some markets, palm oil must compete with oils whose price is subsidized by various US and EEC programs, including soybean, sunflower and rapeseed oils (ARABIS 1996). This economic disadvantage is compounded by the fact that "palm oil differs from its major competitors (soybean, sunflower seed, and rapeseed oil) in that it is obtained from a perennial tree crop. Thus its supply is relatively stable as growers will continue to harvest the fruits even during short periods of depressed prices."

While growers of annual oil crops can easily reduce their hectarages during hard times, switching to another crop is not so easy for oil palm growers. Nor are the latter likely to benefit much from price rises, which will cause an increase in the hectarages of competing soybean, sunflower and rapeseed oils. As economists would put it: clearly a lose-lose situation.

In sum, while oil palm plantations are being promoted in the South, prices will be established by a Northern-dominated and subsidized "free market" which is, in fact, anything but free. Industries in the North and elsewhere will be assured of a continuous supply of oil while Southern producers face economic risk.

In the final analysis, the real reasons for the expansion of this crop have nothing to do either with improving living standards in Southern countries nor with environmental protection. Rather, the boom in oil palm plantations mainly serves local elites and the transnational companies with which they ally themselves to obtain mutual benefit. These firms include Unilever, Procter & Gamble, Henkel, Cognis and Cargill. Some are involved in both production and trade. For example, the Anglo-Dutch Unilever produces in Malaysia while acting exclusively as a buyer of oil in Indonesia.

The following studies carried out in Africa (Cameroon), Latin America (Ecuador) and Asia (Indonesia) demonstrate that the local effects of this new wave of investment include an increase in social injustice and in environmental degradation.

The Case of Cameroon: 
Oil Palm Plantations, Yet Another Threat to Cameroon’s Native Forests?
by Hervé Sokoudjou

The oil palm is a tropical plant native to the intertropical humid zone of Africa. During the pre-colonial period, oil palm's distribution expanded from tropical West Africa to Central Africa (Jacquemard 1995). It was traditionally used by local populations for oil and palm wine.

Oil palm was enthusiastically cultivated in Cameroon mainly because of its large number of uses, which are deeply embedded in local cultures.

The flesh of the palm fruit is used to produce palm oil, which, in its natural state, is rich in carotene, a pigment which is the precursor of Vitamin A. The palm’s kernel provides another kind of oil which, in its natural state, is used as an unguent and for cooking. It has sedative and healing properties as well as being useful against fungal and microbiotic infections, and occupies a prominent place in the traditional pharmacopeia. It is particularly appreciated as an ingredient in the manufacture of beauty products.

The sap of the oil palm, meanwhile, forms the basis for the production of palm wine, much appreciated by local populations who, after it has been distilled, transform it into "arki" or "odontol", a home-made and highly alcoholic beverage. The stems of the palms' leaves, in addition, serve as firewood and for making brooms. The fibre obtained from its leaves is also used to make brooms and matting, while the fibres around the kernels, as well as their skins, are used for firewood. The cakes left after the oil has been pressed from the kernels serve as cattle fodder. Even the dead palm tree trunks are useful as homes for bumblebee larvae, a much-appreciated delicacy for the inhabitants of forest areas.

Demand from international markets, however, has also played a great part in convincing Cameroonians to cultivate oil palm.

Industrial exploitation of the tree began back in 1907, under the German administration. In fact, the first industrial plants, established in Edéa, were promoted by German settlers. More were then set up on the coastal plains and around Mount Cameroon. The crop was further developed under the Franco-British regime until, by the 1960s, national annual production had reached 42,500 tonnes of palm oil and 37,200 tonnes of palm kernel oil. Seventy per cent of this production came from palm groves in village communities and the remaining 30 per cent from the industrial plantations of the Cameroon Development Corporation (CDC) and Pamol Plantations Limited, two firms under majority state control.

Up until the beginning of the 1990s, the main oil palm plantations were to be found in Southern Cameroon, and these did not affect the country’s forest areas. However, today new plantations are increasingly replacing native forests.

The Promotion of Oil Palm Plantations
State Policy and State firms

To respond to strong demand from national and international markets, as well as to control the product's price and obtain a profit, the Cameroonian government has long played a key role in national palm oil production, particularly through the involvement of public-sector companies such as the Société Camerounaise de Palmerais (SOCAPALM). For many years, such public-sector firms, together with a few private sector agroindustrial companies, have monopolized large-scale cultivation of oil palm.

This is no accident. Big plantations require big financial, technical, physical and political resources. Preparing land for a plantation requires, for example, an area of native forest or an area which has lain fallow for more than six years. Obtaining such parcels of land requires strong political links with government. Once the terrain has been selected, moreover, it must be prepared, which involves felling trees, usually with chain saws, which are expensive. Pesticides and plantation maintenance are also costly. In addition, palm oil stock must be purchased from specialist organisations (the Institut de Recherche Agronomique pour le Développement and PAMOL) or from NGOs such as the Centre de Développement AutoCentré (CEDAC) of Sangmélima. These specially-bred palms are shorter than native varieties (which makes maintenance and harvest of the fruit easier), mature more quickly, and have higher yields.

It was in 1963 that the Cameroonian government decided to promote the development of palm oil, in view of increasing national and international demand by setting up the state-run firm SOCAPALM. By 1975, annual national production of palm oil was estimated to be 60,000 tonnes. Of this amount, 39,000 tonnes came from industrial plantations (FAO 1975). However, national production continued to be insufficient to cover the local demand for palm oil.

State support for palm oil extended to measures to organise peasant producers and favour the establishment of small plantations. Such small plantations are contractually obliged to deliver, at market prices, their entire production to the processing plants of any of the three state-owned agroindustries (SOCAPALM, CDC, and PAMOL). The "market price" is obviously established by these enterprises which at the local level constitute absolute monopolies.

Village plantations, which date back to the first Cameroon State Palm Oil Plan, have been promoted by several different mechanisms. First, community cooperatives within the PAMOL area of influence were encouraged to plant oil palm with no additional subsidies or credits from outside. Second, oil palm plantations set up by villagers received technical and financial assistance in the form of subsidies or long term credit facilities from a partner agro-industrial firm. At the beginning of the 1990s, SOCAPALM set up a third mechanism through which planters receive what they require directly from the agro-industrial firm without any form of credit or subsidy, with costs repayable in the future. As of January 1 1999, these plantations were situated in Ndian, (1,629 ha), Lobé (2,508 ha), Bota (191 ha), Bénoé (508 ha), Dibombari (3,574 ha), Eséka (2,024 ha) and Edéa (1,963 ha). In total, they covered an area of 12,397 ha.

The following table shows some of the characteristics of these village plantations.

Source: HIRSCH, 1999

Two macro-economic factors also explain the prodigious development of the cultivation of oil palm in Cameroon.

The first of these was the drop in the price of other crops in the mid 80's, in particular cacao, which is cultivated in the same ecological area as oil palm. This encouraged the peasants of the meridional region of Cameroon to diversify their agricultural production. The strong local demand for oil palm and the availability of improved seeds contributed to the interest of small and medium-sized agricultural producers in oil palm.

The second factor was the devaluation of the CFA franc in January 1994, which caused exceptional levels of inflation. Within weeks, the price of a litre of palm oil rose by around 100 per cent. Many agricultural producers became interested. New plantations were set up not only in the Littoral, Centre and Southwest provinces (where they had been concentrated), but also in the South and East provinces. As a result, the monopoly of the agroindustrial sector in the national production of palm oil was seriously weakened. Oil palm was increasingly cultivated in the forest areas of Cameroon, posing a direct threat to the country's forests.

Over the years, many members of the local and national administrative and political elite have entered the sector, establishing plantations of between 10 to 20 ha which fall in size between those of industrial firms and those of smallholders. Many of these entrepreneurs use their administrative and political positions to obtain plantation land, leading to conflicts with local people.

Oil palm plantations in Cameroon are estimated to cover 80,000 hectares. The area under industrial palm plantations -not including small and medium-sized plots- has reached 58,300 ha, divided into 18 plantations. Sixteen of these belonged to public enterprises prior to the privatization of SOCAPALM and represented 87 per cent of the cultivated area. The size of these plantations ranged between 549 ha (Edéa) and 7,459 ha (Kienké). They are characterized by their age, which poses the question of whether they can be renewed or whether new plantations will have to be established which aggravate the threat to the forests.

SOCAPALM, which, following privatization, was purchased by a consortium of national capital and a Belgian firm, owns the largest plantations: its six plantations cover a total area of 25,748 ha. These plantations are principally located in the Center and Littoral provinces. Cameroon's largest palm plantation, that of Kienké, belongs to SOCAPALM. It is also one of the youngest plantations -only 15 years old.

The two remaining state-owned agroindustrial enterprises -CDC and PAMOL- whose plantations are all in the Southwest, cover a total area of 25,100 ha. CDC's seven palm plantations take up 15,545 ha, and PAMOL's three cover 9,555 ha.

These three firms alone supply nearly 80 per cent of the crude oil production of the agroindustrial sector. The remaining 20 per cent comes from two private firms: Société Anonyme des Fermes Agro-industrielles du Cameroun (SAFACAM) and Société des Plantations de la Ferme Suisse (SPFS). SAFACAM exploits 4,316 ha of palm plantations, and SPFS 3,138 ha. All of these palm plantations are located in the Littoral province and are controlled by French capital.

It is officially acknowledged that by the year 2010, 65 per cent of the 1999 plantation area will no longer be under exploitation, 32 per cent will be in the final stage of its cycle, and only 2.3 per cent will still yield fruit. The average age of these plantations was, in 1999, 19.3 years for SOCAPALM, 20.7 years for CDC, 14.9 years for PAMOL, 17.6 years for SAFACAM and 15.9 years for SPFS (Hirsch 1999). In global terms, the yield of these agroindustrial plantations per hectare is low. Only SPFS, with an average yield of 14.47 tonnes of palm oil per hectare (1997-98) and SAFACAM, obtaining an average 10.86 tonnes per hectare (1997-98), are above the average. The low production level of the three major agroindustrial enterprises -SOCAPALM, CDC and PAMOL- is due to the continued exploitation of old plantations (as is the case of CDC) combined with the influence of diseases (gadonerma and fusariosis) and the significant losses arising from theft at the time of harvest.

In addition, there is a very dynamic "informal" sector in the cultivation of oil palm. Some studies say that this sector established some 10,000 hectares of plantations between 1994 and 1998. According to most credible predictions, the contribution of informal sector plantations to national production will continue increasing at a rate of around 5,000 ha/year (Hirsch, 1999). Although there are no reliable data yet, the productivity of these plantations seems to be close to nine tonnes per hectare. In addition, more than 12,000 hectares of oil palm are in village plantations promoted by the major oil palm agroindustries.

The main beneficiaries of oil palm cultivation are plantation owners and big firms which buy the production of small growers. Until recently, the near-monopoly of the State over the production of palm oil ensured it an important share of the sector’s income. The arrangement by which harvests from village plantations went exclusively to agroindustry reinforced the profitability of state-controlled firms. The recent privatization of SOCAPALM -and the scheduled privatization of CDC- will increase the influence of the foreign private sector on the oil palm sector in Cameroon. At present, small and medium-sized producers are also obtaining significant benefits from the cultivation of oil palm, as compared with those they could obtain from other cash crops. This high profitability helps explain the boom in oil palm cultivation and the support of the state. State support is, as mentioned before, also linked to its interest in promoting an export-oriented activity which could supply it with the hard currency it needs for external debt payments.

Other present and future beneficiaries include private capital looking for profits in the oil palm sector and large transnational companies using palm oil as raw material for its own products.

The main "benefit" of oil palm cultivation, according to promoters of the crop, is the generation of employment (planting, maintenance and harvest). Yet most jobs are only temporary. Workers on industrial plantations experience the same problems as other agricultural workers in the country: extremely low wages and poor work conditions. Besides, the establishment of these plantations has often been preceded by the expropriation of land of neighbouring villages without adequate compensation. According to Cameroonian law, peasants do not have customary rights to land, and thus expropriation does not require indemnification by the state. Already in colonial times, land was expropriated from peasants and then transferred free to new settlers. After national independence, this practice continued but for the benefit of local elites, including palm plantation firms or the elites who have recently established medium-scale plantations. Since colonial times, therefore, peasants have been losing land to the state. The old dispute between CDC and the communities neighbouring its plantations in Southwest Cameroon over the lands confiscated during colonization demonstrates the continuity of this process. This conflict is likely to continue following the privatization of CDC. Here the argument of "social utility" can hardly be invoked to justify dispossession. In another example, local elites, if they cultivate an evergreen plant like oil palm, are entitled under the law to permanent customary rights, to the detriment of the local population.

Palm plantations located near villages also often threaten subsistence crop development and access to forest products by much of the community.

The development of palm plantations poses serious environmental problems in Cameroon. These include:

• Threats to forests and fields left fallow over six years. These are the preferred sites for establishing palm crops. Evidence shows that both in the East and South of Cameroon, plantations are replacing native forests (Engola Oyep & Bayie Kamada 2000). This is alarming news for the stability of forest ecosystems of these areas - already in bad condition as a result of intensive logging. Even if old plantations are renewed, an expansion of oil palm hectarage into more forested areas is on the cards.

• Intensive use of chemicals. This is standard operating procedure in industrial and individual medium-size plantations. Such chemicals generate long-term negative effects, such as the contamination of underground water, a decrease in soil fertility, a perturbation of soil fauna, and air pollution from spraying. Near large plantations, contamination has reached alarming levels. The only barrier to its spread is the low purchasing power of peasants who own small plantations, who have to settle for less intensive use of chemicals.

• Impact on biodiversity. As with any other large-scale monoculture, oil palm plantations’ impact on biodiversity is disastrous. This is even more markedly the case in Cameroon, where most plantations are established at the expense of highly-diverse forest ecosystems, than elsewhere.

The promotion of large scale oil palm plantations is a major cause of deforestation in Cameroon. Given that most existing plantations are aging, and that new plantations are most likely to be set up in forest areas, this threat is likely to expand in the future. Deforestation and replacement of diverse ecosystems by large-scale palm monocultures will thus deprive local people of the products and services they obtain from the forest.

The widespread use of agrochemicals in oil palm production will increasingly affect local populations' health as well as local ecosystems.

Plantation investors acquire land at the expense of local communities' customary land rights, which are not recognized by a state that claims ownership over all land. Consequently, any increase in oil palm plantation area is likely to result in increasing land conflicts.

The current profitability of this crop -compared to that of alternative cash crops- is due to drop in the future as a consequence of similar plantations being established throughout the tropics.

Oil palm’s ability to generate employment is very limited and the jobs provided are of low quality in all respects. Employment losses resulting from deforestation and substitution of fallow lands by palm plantations will almost certainly be greater than the jobs generated by this activity.

The main beneficiaries of the oil palm boom will be the large enterprises -increasingly foreign- which control production, industrialization and commercialization at all levels.