Oil palm in Sri Lanka: Cornucopia or a Pandora’s Box?

The declining coconut industry increased the use of palm oil. Coconuts were cultivated for thousands of years and is most desirable from a smallholder farmer perspective. Sri Lanka must invigorate the coconut sector

The introduction of oil palm has created much controversy and polarisation in Sri Lanka in recent times, especially with the decision to remove oil palm in a phased manner and replace it with rubber. The banning of oil palm cultivation may be an environmentally sound decision but it has ruffled many feathers. Lack of in-depth understanding of the critical issues related to oil palm and biodiversity and climate change, unsupported assertions and political imperatives led to this misunderstanding. 

Sri Lanka must adopt a broad development approach to many current issues in agriculture such as fertiliser use, organic farming, and oil palm using the Sustainable Development Goals (SDGs) framework of the UN. SDGs may be a big conceptual leap for many policy makers in Sri Lanka but the SDGs give a holistic view of where things currently stand in Sri Lanka so that better policies to provide tangible ways to accelerate progress could be identified. It is a framework to understand the complex interdependencies in economics and agriculture, that highlights priorities and dilemmas, and offer solutions. 

Under the SDGs all developmental issues are interconnected. Issues such as food security, plantation crops, health, environment, climate change and poverty are intertwined with the oil palm debate. Sri Lanka must cast the oil palm debate within environmental sustainability concepts based on experience in large scale cultivation of commercial crops (tea, rubber) that created extractive enclaves based exploitation of natural resources.

SDG perspective for oil palm 

Growers of oil palm in Sri Lanka need to understand the critical interrelationships between ecological and economic systems. Oil palm plantations are an important source of foreign exchange, food supply and economic growth for several countries such as Malaysia, Indonesia and Thailand but it is of marginal significance for Sri Lanka. 

Oil palm growth is rooted in rapacious use of critical natural resources such as water, land and forest resources. Economy and ecology have the same roots, but the economy grew away from ecology due to intense focus on markets and profits dealing a death blow to nature’s work in providing goods and services to ensure sustainability and enhanced human welfare of millions of poverty-stricken people. Oil palm is a good example in this regard. There is severe depletion of land, soils, water, and biodiversity. Deforestation generated excessive greenhouse gases (GHGs). The heaviest logging of forest between 1981 and 1990 was in South East Asia for oil palm. 

The UN-proposed SDGs agenda has 17 goals including ending poverty (SDG 1), ending hunger (SDG2), ensure healthy lives (SDG 3, ), ensure quality education (4), reduce gender inequality (5), ensure availability of water (6), reducing income inequality (SDG 10), ensure sustainable use of worlds resources (15), and combat climate change (SDG 13). These are eminent Development Goals based on the intersection of economic, environmental, and social dimensions. 

Sri Lanka is a signatory to the SDGS. But weak political will and poor institutional capacity to analyse complex issues, governance problems, and policy incoherence have become major obstacles for sustainable development in Sri Lanka  (Gamini Herath, 2017, Asian Survey, Can Sri Lanka achieve the SDGs). Hence, a deeper understanding of the interconnectedness of the environmental, social, and economic aspects of oil palm is essential to evaluate its potential for Sri Lanka. 

Dilemmas of the oil palm debate 

The sections below examine the environmental, social and economic dimensions of oil palm and their relevance for Sri Lanka. 

Environmental issues of palm oil 

Oil palm grows best in biologically rich terrestrial ecosystems. But oil palm production and consumption violate ecological intelligence, and the interconnectedness and systems thinking. Expansion of oil palm has led to loss of tropical forest cover and biodiversity, water pollution, land degradation and waste generation in processing in many countries. 

Biodiversity decreased by about 85% in Southeast Asian oil palm plantations. Oil palm plantations are almost devoid of forest-dwelling species. Oil palm will have many negative impacts on biodiversity including vertebrate diversity (Central Environment Authority CEA 2018). Although oil palm is grown in 43 countries, Malaysia and Indonesia are by far the largest producers, representing over 80% of global production. 

In Malaysia, at least 1,040,000 ha of forest were converted to oil palm from 1990 to 2005, which accounted for 94% of the total extent of the nation’s deforestation. In 2005, at least 56% of oil palm expansion in Indonesia and 55-59% of that in Malaysia is estimated to have been at the expense of forests. In Malaysia and Indonesia, the rapid expansion of oil palm plantations degraded the ability of watersheds to regulate water flow. 

Across Indonesia, trees were cut down at a rate of three acres every minute to make room for oil palm. A study of forest cover in oil palm and rubber plantations in watersheds in Jambi Province, Indonesia found that 30% of the forest cover must be maintained to ensure sustainable ecosystem services. 

Water scarcity and oil palm 

Oil palm results in an imbalanced ecosystem damaging ecosystem services such as the availability of clean water in rivers. Oil palm requires 280 to 350 L of water per plant per day (Carr, 2011). Rainfall alone is insufficient and supplemental irrigation may be needed. When the forests in Jambi Province, Indonesia were converted to oil palm plantations, many people experienced water shortages and increase in flooding frequency. Babel et al. (2011) found that expansion of oil palm plantations in Thailand increased nitrate loading (1.3 %–51.7 %) in surface water. Plantations can affect surface runoff and base flow processes. 

Carlson found that in Gunung Palung National Park in Indonesia water temperatures in streams draining recently cleared palm oil plantations were 4C warmer than forest streams (Carlson et al 2014,  Influence of watershed-climate interactions on stream temperature, sediment yield, and metabolism along a land use intensity gradient in Indonesian Borneo). Sediment concentrations were nearly 550 times greater and this collapse of freshwater ecosystems can cause significant social and economic hardships for the poor. The use of excess fertiliser and pesticides (often subsidised).

A review done by the Central Environment Authority of Sri Lanka on oil palm 2018 highlights the following: Fertiliser use/requirement with oil palm is eight to 10 times more when compared to rubber and nutrient outflow is 10 times more when compared to rubber. Evapotranspiration is three times more with oil palm when compared to rubber, soil erosion also will be high in oil palm when compared to rubber, Treatment of effluent and disposal of biomass will be problematic with oil palm. 

Water and land are most scarce in Sri Lanka and efficiency of water usage across all sectors is essential. The Government must prevent water stress from any expansion of oil palm plantations in the future. An estimate of erosion indicated approximately 30 cm of topsoil loss after forest conversion to oil palm (see Jennifer et al 2015, Water scarcity and oil palm expansion: social views and environmental processes; Vandana Shiva, 2015, Soil and not oil: environmental  justice in an age of climate crisis).

 Socio-economic impacts of oil palm

Very little research is reported on the socio-economic impacts of oil palm in Sri Lanka. Can oil palm help alleviate poverty and hunger, ensure availability of the same or greater volume of natural resources for future generations, and support economic development? Further, oil palm is not easily amenable to the needs of poorer families who suffer from hunger and malnutrition in Sri Lanka. 

Oil palm is capital intensive and does not contribute to expansion of employment for many although there are 1.4 million workers in palm oil and related industries. Palm oil yields among smallholder farmers in Indonesia are much lower than yields among plantations. Around two to three coconut trees in a family farm can help a poor family but two to three oil palm trees cannot do much. 

The poor bear higher environmental costs and environmental injustice of environmentally unsound activities. They cannot compete for forest resources or land which are acquired easily by oil palm interests. Weak national forest land terminology in Sri Lanka and the effort to develop additional oil palm plantations could pose serious challenges to the poor in the long term. 

Palm oil plantations have created conflict with local communities in Indonesia by denying land rights and evicting people from their customary land holdings thereby impoverishing local communities. This can occur in Sri Lanka too in the long term. Sri Lanka is dominated by politics and the power of capital and land sorely needed by the poor can be arrogated by plantation interests.

Nearly 100 acres of the Muthurajawela wetlands are being filled now to establish a LNG power plant despite serious protests by many people. According to news reports, nearly 12,000 acres of Yala game sanctuary are being acquired for other purposes. Nobody can guarantee that in the future, oil palm in Sri Lanka will not encroach into additional land for expansion. Who could stop it if it happens in the long term in a society where money and power talks?

Thus oil palm development can exacerbate pre-existing income and social inequality. Twenty-five families in Indonesia owned one-third of the country’s oil palm in 2013. Since 1968, the Nakiadeniya Estate in Galle has planted oil palm as a commercial plantation crop. Oil plan has been grown for more than 50 years in Nakiyadeniya. The Watawala estate and many other estates grow oil palm. In these tea estates, the workers live in crowded conditions without sanitation, running water, medical facilities or schools for children.

In Sri Lanka many plantation workers are below the absolute poverty line. According to a 2017 World Bank report on Sri Lanka, plantation communities have the lowest education levels and these children are less likely to complete both primary and secondary education. They have higher levels of poverty within the plantation community. They are the most marginalised people in Sri Lanka and they continue to be so even now in the country. Many young children are being employed as domestic helpers and the recent death of a 16-year-old girl who came from a tea plantation family is a case in point. We do not need any more evidence of their utter state of deprivation and Sri Lanka should not continue down this path. 

We do not want this sordid saga to continue under oil palm which is grown under plantation conditions unless these plantations can show that absolute poverty has been averted in plantations with oil palm. We have changed only the crop but not the system of production. It is important to get similar data from plantations growing oil palm on income and poverty levels, conditions of their housing and toilet facilities and education of their children their health conditions and nutritional deficiencies to see if oil palm plantations are doing a better job in alleviating poverty amongst their workers. 

The dangers of encroachment, declining biodiversity, and intensifying climate change must be a wake-up call for Sri Lanka to transform her relationship with nature under any crop. SDGs are designed to find a path that revitalises the economy, conserve the environment and bring people in from the margins to build long-term resilience and sustainability. Most of the commercial palm oil in international trade comes from more or less organised production settings where fair and equitable sharing of benefits, and sustainable livelihood opportunities for the poor communities is more complex. 

Myth of the productivity argument 

Protagonists of oil palm cling on to the comforting myth that a tonne of palm oil is at least $200 cheaper than rapeseed oil. A hectare of oil palm produces five tonnes of palm oil and gives almost five times and 10 times higher yield/ acre than rapeseed and soybean respectively. Behind this wholesome productivity façade lies the apocalypse. 

But, in reality, commercial profitability of oil palm is deceptive because it generates serious environmental and social impacts. In computing productivity of oil palm we must take into account all inputs used including environmental inputs, loss of biodiversity, soil erosion, loss of nutrients, water pollution. Evaluating and weighing these factors is challenging due to limited information, context dependence and the complexity of trade-offs and the difficulties in quantifying some of the adverse environmental effects. Changes in price of oil palm can alter this relationship. 

For coconuts, some argue that a fivefold increase in area is required to obtain what is produced in one acre of oil palm. But this is in pure coconut land, but often coconuts are grown with many other crops such as pepper, etc., which are intercropped and the total yield is much higher than pure coconut stands. 

I know that several researchers at CRI completed Ph.Ds on intercropping and I am not sure what happened to this research. But self-sufficiency is not necessarily desirable and absolute productivity must be replaced by comparative advantage. We do not have any comparative advantage in oil palm production compared to Malaysia, Indonesia or Thailand.

World trade in palm oil

It is incorrect to focus on Sri Lanka’s oil palm without a proper understanding of the dynamics of the global oil palm industry. Global area under oil palm has quadrupled from 3.6 million ha in 1961 to 13.9 million ha in 2007. Between 1997 and 2018, oil palm plantations expanded from 10 to 21 million hectares. The global production of palm oil was around 72.27 million metric tons in 2020/21. 

In Indonesia area of oil palm plantations increased from 1.1 million ha in 1990 to 11.2 million ha in 2015 with average rate of expansion between 1995 and 2015 of around 450,000 ha/yr (Austin et al., 2017). In Indonesia, which is currently the largest palm oil producer in the world, a further 28 million ha of palm oil production has been planned between 2020 and 2050.

In 2008, Malaysia announced plans to establish oil-palm plantations in Kalimantan (20,000 ha), Aceh (45,000 ha), Papua New Guinea (105,000 ha), and Brazil (100,000 ha). In May 2009, Syme Darby, the world’s largest oil-palm company, also announced plans to invest $ 800 million in oil-palm and rubber plantations in Liberia, covering some 200,000 ha (80% for oil palm). In June 2009, Malaysian oil-palm developers announced plans to establish a 100,000 ha oil palm plantation and an extraction facility in Mindanao in the Philippines. 

International demand has increased from countries such as India, China and the European Union. Between 1997 and 2018, crude palm oil production increased from 100 to 300 million tons (Mt). In 1983, palm oil comprised 12% of global vegetable oil production which rose to 26% in 2003. FAO estimates that vegetable oil demand, supply and trade are projected rise by around 30%. The global demand for palm oil increases by about four million tons/year. In the European Union oil palm consumption increased by 140% since 1994/95 to 13% of global usage. 

The use of palm oil in biofuel, feed and livestock industries will further increase international demand for palm oil. Palm oil accounts for 11% of Indonesia’s export earnings and is the most valuable agricultural export. Sri Lanka in not a significant player in the global oil palm industry. Currently Sri Lanka has about 10,000 ha developed by private companies. 

Why Sri Lanka cannot compete with Malaysia and Indonesia 

In Malaysia and Indonesia the palm oil sector is dominated by large, multinational corporations where foreign ownership is allowed. Singaporean conglomerates control nearly half of the global palm-oil trade. They planned to convert more than 13 million acres of additional forest to industrialised palm production. 

Palm oil yield/ha has increased at least 10% per decade. Malaysia had introduced sustainable development of the oil palm by adopting reduced open burning, industrial waste management and environmental impact assessment (EIA) and environmentally benign technologies, best management practices and mechanisms. There is increase in the volume of certified oil available for purchase in the market. India and China are the biggest markets for oil pam but they are not concerned about certified palm oil because it is 8-15% more expensive than uncertified palm oil.

Malaysia adopted ISO 14001 certification, to enhance environmental and economic benefits through sustainable palm oil production. Nearly 30% of the oil imported to the EU is certified as originating from sustainable production approaches. The Round Table for Sustainable Palm oil Production (RSPO) is another initiative to enhance stakeholder dialogue and negotiation. The RSPO however (it may have around 900 members) is dominated by business interests and RSPO activities and decisions need to be properly evaluated. 

The opposition to unsustainable practices come from Europe, the USA and Australia, who consume only about 19% of global palm oil. However, what is the role of Sri Lanka in this global industry. Sri Lanka is almost insignificant and global trade and exerting any effect on competition with major producers is out of the question. 

New impetus for the coconut industry 

Increase in oil palm cultivation has resulted in notbable contraction in the land under coconuts. Coconuts were cultivated for thousands of years and is most desirable from a smallholder farmer perspective. Thus coconuts must be encouraged and the recent decision of the Government to stop cutting coconut trees is welcome news. Sri Lanka must invigorate the coconut sector which has more than 400,000 hectares at present. Coconut accounts for approximately 12% of all agricultural produce in Sri Lanka. Indonesia and India are largest coconut producers in the world. The Philippines, Indonesia and Thailand were able to raise productivity of coconut plantations but Sri Lanka is far behind despite multiple institutions for coconuts. Strengthening the coconut industry in Sri Lanka to infuse greater vigour is a top priority. We can import palm oil when needed at cheaper prices.

Coconut is a more sustainable crop than oil palm because it is very much a socio-economic crop. But the Brahmins of the coconut industry in Sri Lanka such as the Coconut Research Institute (CRI), the Coconut Cultivations Board (CCB) and Ministry of Coconut Industries have failed to optimise their potential. 

Further, after globalisation the demand for housing and construction skyrocketed and most of the coconut lands were partitioned and sold, which caused a rapid decline of the coconut industry. Coconut is a sustainable crop because there is a better balance across the environmental economic and social dimension. The recent decision get a permit to cut coconuts trees is a step in the right direction. Also recently I saw the program to plant 40 million coconut saplings which will give a shot to the arm of the industry.

Western views that coconut oil is unhealthy gave a boost to soya and other vegetable oils but these views have been debunked by many scientists. The health promoting effects of coconut oil exceed palm oil’s by a large margin.

According to Mike Foale, a coconut consultant in Queensland, Australia, and retired agronomist at Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO), “Many studies on coconut oil were flawed because coconut oil lacks the essential omega-3 fatty acids. Animals fed coconut oil were suffering from a dietary deficiency, rather than from negative effects of the oil per se. Coconut users of the tropics generally eat fish, rich in omega-3 fatty acids. So the combination has always been a healthy one, and heart disease isn’t an issue among traditional coconut users.”

I wish to quote verbatim the following paragraph from the report by the CEA 2018 on oil palm which highlights the merits of coconut over oil palm: 

“Felda Global Ventures, the third largest oil palm estate operator in the world is planning to diversify part of their (450,000 ha) oil palm plantations to coconut (personal communication: Dr. Then Kek Hoe, Felda Global Ventures, Research & Development) due to following reasons: Coconut is more profitable than oil palm in the Malaysian context: Yields are getting low with successive rotations and hence their companies are moving to Indonesia seeking new land. Labour requirement is less with coconut when compared to oil palm. Coconut is disease free: It is alarming to note that Ganoderma Basal Stem Rot (BSR) is fast becoming a major threat to oil palm cultivation and palm oil production in Malaysia. Present in more than 50% of the oil palm plantations in Peninsular Malaysia. Without treatment, more than 80% of the affected plants may die by the time they reach less than halfway through their life span. The losses can amount to a reduction of 25% to 45% yield in fresh fruit bunches. There is currently no effective measure to eliminate it. Ganoderma fungus is reported in some coconut plantations in Sri Lanka. According to Malaysian sources coconut is resistant to Ganoderma when compared to oil palm.”

The Government must focus on more clearly-defined research objectives, paying more attention to the socio-economic importance of coconuts. The mandate given to the Coconut Research Institute to undertake necessary research and development of oil palm must be withdrawn because other countries have raised yield levels of oil palm 10% every decade. But Sri Lanka did not raise coconut yields through research although other countries such as Indonesia and the Philippines have done so. 

Sri Lanka has a repository of highly-qualified academics and researchers in agriculture; about 500 PhDs in agriculture in Sri Lankan universities, research institutes and other organisations. The Government must use this treasure trove of expertise and scientific knowledge and experience to carefully balance the conflicting dimensions in agricultural development and economic growth. 

We need a new kind of thinking and a new kind of policy-making. We need bold policy choices on poverty, gender equality, and climate action or food security. Our problems today – whether it is oil palm, coconut industry, COVID-19, climate change or poverty – they all cut across society environment and the economy, and require long-term strategies for transformation.

Focusing on any single sector cannot be a substitute for a holistic approach to problem-solving, which simultaneously addresses economic, social, and environmental objectives. The major stakeholders across society must coalesce around sustainable alternatives which must replace cynicism and deeply-entrenched views. Give up oil palm and focus on restoring the humble coconut to its romantic pre-eminence.

(The writer can be reached via [email protected])