Sri Lankan sustainable oil palm producers to target growing opportunities in 1H2020

International market conditions are anticipated to generate extremely lucrative opportunities for Sri Lanka’s sustainable oil producers through the first half of 2020 (1H2020). 

According to the most recent data obtained by the Planters’ Association of Ceylon (PA), these favourable conditions are likely to arise from of a combination of weaker production in Malaysia and Indonesia, a continuing rally in global export prices, as well as national and consumer-level boycotts against the world’s top two producers taking hold.  

Despite being one of the most profitable crops to be grown anywhere in the world, locally, oil palm production has been a largely uphill battle over the past year, owing to a frenzy of misinformation around Sri Lankan oil palm production. A lot of the negative sentiment around this crop is a direct result of the totally unsustainable slash-and-burn methods used to clear virgin forests in Malaysia and Indonesia – practices which are strictly prohibited in Sri Lanka.  

On average, an oil palm harvester working on the Nakiyadeniya estate – Sri Lanka’s first oil palm estate – has been able to bring home an average wage of as much as Rs. 50,000 per month

At present, our nation is one of a handful of global producers who can make an authentic and verifiable claim to producing oil palm sustainably with zero-deforestation. By replacing unproductive rubber with oil palm, we are able to do exactly what consumers and environmentalists are demanding globally. It will be a tragedy if we allow this unprecedented economic opportunity to go to waste merely to pander to the ignorant and inflammatory claims of vested political and commercial interests that have no basis in objective facts. 

In that context, the PA notes that a de facto ban on sustainable oil palm cultivation in Sri Lanka would only support the continuation of unsustainable practices taking place in Malaysia and Indonesia.  Both nations account for 90% of global production, which is exported across the globe – either directly as crude palm oil, or refined palm oil for cooking, or as an ingredient in everything from chocolates and biscuits to shampoos, cosmetics and medicine. 

Sri Lanka’s importation of vegetable oil rose to 220,000 MT at a cost of approximately Rs. 30 billion in 2019. Crucially, opponents of oil palm cultivation in Sri Lanka remain totally silent on this fact. The expansion of sustainable oil palm cultivation through the replacement of unprofitable rubber cultivation in Sri Lanka was triggered as a response to the large and growing volume and value of vegetable oil imports to the island. 

Half a century of uninterrupted cultivation in Sri Lanka prior to 2015

Oil palm has been cultivated in Sri Lanka’s southern wet-zone for the past 51 years, but over the past five years, resistance to existing cultivation and further expansion through the replacement of rubber has become more entrenched – primarily driven by false accusations that oil palm depletes groundwater and causes droughts, as well as a range of anecdotal and unproven claims spanning everything from causing mange in dogs to driving an increase in the population of serpents in and around estates.

By contrast, those actually employed on oil palm cultivating estates and living in the communities directly surrounding oil palm estates remain firmly in support of the crop, owing to the drastic improvements in livelihood and quality of life that these estates have created. 

On average, an oil palm harvester working on the Nakiyadeniya estate – Sri Lanka’s first oil palm estate – has been able to bring home an average wage of as much as Rs. 50,000/- per month. Such substantial incomes have over time positively transformed the communities around the estate. By contrast, the average wage of a rubber tapper today is Rs. 18,000/- per month.

Today, Sri Lanka’s rubber industry is facing an existential crisis, as the bottom has essentially fallen out of the international market. This does not mean that we wish to simply abandon rubber cultivation, as there is still strong earnings potential through vertical integration of production with local value-added industries. However, we cannot simply ignore the incontrovertible fact that Regional Plantation Companies currently makes a loss on every kilo of rubber that is produced.

By contrast palm oil earns large profits per kilo, while our strongest performing RPCs are those which have successfully diversified into oil palm. The sole reason we can’t do more with this lucrative opportunity is misinformation. Repeatedly we have called on opponents of this crop to show us any objective scientific data to substantiate their outrageous claims, and in the five years, not a single one has stepped forward with so much as a shred of credible evidence.

Instead they speak of deforestation, loss of habitats for orangutans, and many other tragedies that are unique to Indonesia and Malaysia and have no bearing whatsoever on Sri Lanka. This is a travesty and an economic injustice to our nation. However, we have confidence that the new regime will act swiftly to correct this major misstep by the previous Government.

Growing international consensus on sustainable oil palm 

Meanwhile, in Sri Lanka’s closest and largest neighbour, the Indian Government has already given the green light for the expansion of oil palm cultivation. Following numerous rounds of consultation with all stakeholders, including agricultural, environmental and scientific authorities, India announced a Special Program on Oil Palm Area Expansion as part of an aggressive push for edible-oil security, aiming to augment domestic palm oil production capacity by 300,000 metric tons within five years.

These efforts of the Government involve massive investments to expand oil palm production in 12 of the 29 Indian states via huge subsidies to farmers, including up to 85% of seedling costs, and 50% of outlay on irrigation, chemical inputs and processing units. 

Currently, India is the world’s biggest importer of edible vegetable oils – purchasing its requirement of palm oil from Malaysia and Indonesia while also importing soy oil from Argentina and Brazil, and sunflower oil from Ukraine.

Suspicions of ulterior motives behind agitation against oil palm 

Importation of edible oil is another highly lucrative business in Sri Lanka, and together with regional exporters, Sri Lankan importers have a strong commercial interest in maintaining the island’s dependency on imported vegetable oils, which may also have a hand in organising domestic agitation against oil palm cultivation, as such a development would threaten existing lines of business.   

Globally, palm oil is more efficient to produce as it requires the least amount of land to generate the same quantity relative to all other vegetable oils known to man. While oil palm consumes more water per tree than rubber, when considered in total across a hectare, rubber depletes water at similar levels to oil palm whilst tea, which has substantially more plants per a hectare, actually depletes more water than oil palm. Yet we don’t see accusations of rubber or tea causing droughts. 

Moreover, the real cause of extreme weather events like droughts and floods is undoubtedly man-made climate change. Greenhouse gas emissions from animal agriculture, energy generation, transportation and many other sources are all proven to be exacerbating extreme weather conditions. Opponents of oil palm don’t even consider these globe-spanning trends, and instead absurdly blame droughts – primarily in the dry zone – on oil palm, despite these crops being grown in the wet-zone where no droughts have taken place. 

These facts are supported inter alia by findings published 2018 by the International Union for Conservation of Nature (IUCN) in a report titled ‘Oil Palm and Biodiversity’ which stated that: “Half of the world’s population uses palm oil in food, and if we ban or boycott it, other, more land-hungry oils will take its place. Palm oil is here to stay, and we urgently need concerted action to make palm oil production more sustainable, ensuring that all parties – governments, producers and the supply chain – honour their sustainability commitments. If it is replaced by much larger areas of rapeseed, soy or sunflower fields, different natural ecosystems and species will suffer. 

“To put a stop to the destruction we must work towards deforestation-free palm oil, and make sure all attempts to limit palm oil use are informed by solid scientific understanding of the consequences. Solutions need to focus on improved planning of new oil palm plantations to avoid the clearing of tropical forest or peat land areas, and better management of forest patches left untouched in plantations.”

In that context, the PA urges policy makers to urgently convene a meeting of all stakeholders in order to make a final determination on the subject of oil palm cultivation in Sri Lanka, after having fully considered all available and verified scientific and economic data on the subject.