Palm Oil Industry Costs Outweigh Benefits: NGOs

The palm oil industry may be contributing billions of dollars to Indonesia’s economy, but environmentalists say the country’s vast forest areas are paying a dangerously steep price.

Elfian Effendi, executive director of policy development institute Greenomics Indonesia, said economic losses due to forest conversion would be bigger than the contributions of the palm oil industry if ecological costs were taken into account.

“For forest conversion, the country loses at least Rp 52.07 million [$ 5,481] per hectare every year, and that does not includ e the ecological costs,” he said.

Based on data from nongovernmental organization Sawit Watch, the palm oil industry contributed to 12 percent — or Rp 720 trillion ($75.8 billion) — to the state budget in 2008. This year, that rate could go up to 14.2 percent. This, however, was at the expense of as much as 100,000 hectares of peatlands and as much as 300,000 hectares of natural forests converted to palm oil plantations every year.

Elfian said 8.3 million hectares of the country’s forested areas had already been classified as nonforested areas, which means it could be converted into plantations, and an additional 11 million hectares of forests had also been reserved for a similar purpose.

“If these 19.3 million hectares of forested areas are eventually cleared, including for the palm oil industry, then the country would lose $105.78 billion per year in terms of ecological loss and biodiversity,” he said.

Joko Arif, a forest campaigner for Greenpeace Southeast Asia, on Wednesday said his group has been pushing for a moratorium on the clearing of natural forests and peatlands to give government, palm-oil companies and even NGO’s time to identify which areas were suitable for conversion into oil palm plantation.

Joko said he wasn’t denying the lucrative nature of the palm oil industry. “We’re fully aware of the industry’s contributions to the economy. We’re not anti-industry or anti-palm oil,” Joko said. “But the current methods being used to clear forests and peatlands are not sustainable.”

Jefri Saragih, head of advocacy and public education of Sawit Watch, said the industry could use idle lands, such as former forest concessions, instead.

“If grassland was converted, it would only emit around 3.3 tons of carbon dioxide per hectare per year. And if we could plant palm oil [in the grassland areas] then it could absorb 5.3 tons of carbon dioxide per hectare per year. So, palm oil can even contribute to [Indonesia’s] emission reduction targets,” he said, adding that data from National Land Agency showed the country had 7.3 million hectares of such idle lands.

By contrast, he said converting peatlands into palm oil plantations released at least 380 tons of carbon dioxide per hectare per year.

But Jefri said palm oil companies preferred not to use idle lands to avoid “social costs,” such as conflicts with local villagers, a charge the Indonesian Palm Oil Association (Gapki) denies.

“For plantations, peatlands are the last option because it is costly. It would take at least Rp 45 million [to develop] each hectare. So it is not true that peatlands are cheaper,” Gapki secretary general Joko Supriyono said.

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