“How the World Got Hooked on Palm Oil”

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The Story

“How the World Got Hooked on Palm Oil”
https://www.theguardian.com/news/2019/feb/19/palm-oil-ingredient-biscuits-shampoo-environmental
by Paul Tullis
The Guardian, February 19, 2019

The Pitch

INVISIBLE UBIQUITY: How Palm Oil Conquered the Globe

The amount of palm oil produced worldwide has been climbing steadily for more than five decades; today every person on earth consumes an average of 17 pounds of the stuff annually. It’s in virtually every shampoo, liquid soap or detergent, and cosmetic, and increasingly popular in food. Public concern over cholesterol and trans fats motivated processed food manufacturers in Europe and the U.S. to replace hydrogenated soybean oil and butter with refined palm oil, which is free of both and is the only other edible fat that stays semi-solid at room temperature (a necessity for baked goods), and millions in China now use it as a cooking oil instead of animal fat. It’s also a growing feedstock for biofuel. Three billion people in 150 countries use palm oil, and plantations to produce it now account for 10% of global cropland.

No single development or innovation caused palm oil consumption to spike. No grocery or food-manufacturing executive or plucky immigrant who saw a market opportunity and leapt on it. The story of palm oil is much more complex. At a number of junctures, it has been the perfect commodity at a key inflection point for a particular industry, several of which have adopted it in succession, replacing alternatives and never going back. When science revealed the harms of trans fats to human health, palm oil could perform the same role in a range of foods, and cheaply. When the mad cow scare hit Britain, cosmetics manufacturers turned to palm oil to replace animal tallow; its enduring low price compared to other vegetable oils meant they would never go back. When the EU mandated in 2003 that a certain amount of transport fuels come from renewable sources, palm oil was a less expensive alternative to soy, rapeseed (a.k.a. “canola”), and everything else. When the environmental benefits of palm oil compared to fossil fuels came into doubt, refiners switched to rapeseed—and the subsequent jump in its price sent yet more food manufacturers into palm oil’s embrace. After the 2012 earthquake and tsunami that shut down the Fukushima nuclear plant, Japan instituted incentives for renewable power production; with palm oil-burning plants cheaper to build and placing a smaller footprint in the crowded nation than wind or solar, four years later they were generating 38% of the country’s electricity from biomass. The most complex sequence of events leading to increased palm oil production started when speculators sent the price of oil to record levels in 2008. Futures for corn and soy, feedstocks for alternative transport fuels and the principle ingredients in US animal feed, soared, so animal feed manufacturers replaced them with palm kernel meal, a byproduct of palm oil refining. Plantation owners’ profits rose, spurring them to grow more.

Consumers are barely aware that they are using palm oil. The story of many successful products is one of a company giving people something they didn’t know they wanted—the iPod, iPhone, and Alexa are prime recent examples. Palm oil’s growth has been about companies needing an ingredient that performed a particular role in their product and giving it to consumers without their knowing they were buying it. It’s like a vending machine where the different snacks keep getting replaced with the same thing but all we see is “G8” and “D5”, without looking at the packaging. Palm oil sneaks into the things we buy because it’s often not labeled as such: Glyceryl, Stearate, Stearic Acid, Sodium Laureth Sulfate, and Sodium Lauryl Sulfate are just some of the ingredients made from palm oil you might find listed on a shampoo bottle (check yours). Palm oil is ubiquitous, yet invisible.

Facilitating these changes were characteristics of the oil palm tree: It’s perennial and evergreen, so it produces fruit year-round. It can be grown in a range of soils, including those inhospitable to other crops. It’s three-to-eight times more productive than other vegetable-oil crops and needs little tillage, reducing operational costs. And its many byproducts can be sold for everything from fish meal to mushroom compost to building materials to the composite body of Malaysia’s national automobile, so plantation owners can either take more profits and invest in more land or reduce the price of the primary commodity, making it more attractive to customers.

Alongside consecutive strong and sustained pulls from the market, producers have pushed adoption of palm oil through research & development. Malaysia and Indonesia, which today account for more than 80% of global supply, began in the 1970s to finance research that led to scientific and technical advances, such as new planting techniques, the mulching of palm fruit peels for fertilizer (which lowered costs while increasing yields), and improvements in milling and processing technologies that enabled palm oil to be cut-and-pasted into more and more applications. Malaysian investments in the oleochemical industry expanded the applications of palm oil into industrial products. My favorite palm oil R&D anecdote involves a Scot named Datuk Leslie Davidson, who oversaw Unilever’s plantations in Malaysia: In 1981, he noticed that no bugs constantly hovered over the fruit bunches, like he’d seen on palm plantations in Africa. He hypothesized that an insect pollinated the fruit, and experiments proved him right. Davidson struck from his budget wages for the 500 laborers who’d been hand-pollinating the trees on its plantation, and a year later Malaysian yields jumped by 700,000 tonnes.

Macroeconomic trends, especially soaring incomes in India and China, have also contributed: As people get richer, fat becomes a greater part of their diet. At the same time, government and international donor group policies have encouraged palm oil production. World Bank loans in the 1960s assisted Indonesia’s investment in state-run palm-oil companies and enabled it to offer cheap land and financing packages to private plantations, and after the 1998 Asian debt crisis, the IMF required Indonesia, as a condition of its multibillion-dollar loan package, to generate revenues through the cultivation of natural resources. Oil-palm under till there grew twelvefold by 2003. All along, weak law enforcement and judiciaries in the archipelagic nation’s remote corners have made it easy for agribusiness to burn forest for new plantations.

None of this comes without costs borne by the rest of us. Fires to clear forests are the #1 source of GHG emissions in Indonesia, a country of 261m people, helping to push the climate to the brink while driving the extinction of orangutans along with Sumatran tigers and rhinos. Top producer Wilmar Int’l., of Singapore, is recognized as an industry leader in sustainability, but that’s faint praise in this business. It helped form the Fire Free Alliance, which claims to have helped reduce fires for palm-plantation development by half since the disastrous 2015 burning season, and more than half of Wilmar’s mills are certified by the Roundtable on Sustainable Palm Oil—but the Environmental Investigative Agency two years ago found RSPO to be “woefully substandard” and “in some cases…colluding…to disguise violations.” Only in the last year have major producers begun trying to trace palm fruit to the farms where they’re grown to ensure it isn’t coming from newly-burned land; the efficacy of this effort is still very much in doubt. Indeed it’s not clear that palm oil can ever be produced sustainably at scale in the globalized economy of multinational supply chains and intermediaries.

Palm oil is the perfect commodity for developing Global South economies and for globalized markets, and the perfect ingredient for refiners, processors, and manufacturers across a range of sectors and industries. I’ll trace the numerous confluent factors, occurring across the globe at just the right moment, that pushed its slow, inexorable rise to the top of the $95 billion vegetable oil market. I can see this in a five-section structure following a brief anecdotal lead: (i) market pulls; (ii) market pushes; (iii) macroeconomic trends and the role of international finance and donor groups; (iv) environmental degradation that’s resulted; (v) solutions.

I can also contribute a 35-point timeline tracing palm oil’s development from 3000 B.C. to the present day.

On-the-ground reporting opportunities include (in order of cost):

*Boulder CO (where I live), HQ of Natural Habitats, which produces identity-traced palm oil (the highest level of sustainability)

* soy/corn farmers in Eastern Colorado/Western Nebraska

* Natural Habitats palm plantations in Ecuador

* Wilmar plantations in Malaysia/Indonesia to see its newly implemented traceability solution

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