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The Worst (Haze) is Yet to Come

haze-palm-oil

14 Feb The Worst (Haze) is Yet to Come

The severe haze episode that Singapore experienced in June 2013 may not be the worst we have seen. This is one of the key takeaways by CHUA Chin-Wei, Singapore Institute of International Affairs (SIIA) Deputy Director and Fellow (Environment and Resources) after attending the ICOPE 2014 Meeting in Bali last week. ICOPE is a series of conferences focused on sustainable palm oil.

Among the meeting’s findings: That land-based industries in Indonesia such as palm oil will continue to expand in scale. Palm oil is a key component of the country’s export economy, accounting for a significant share of government revenue and rural employment. Domestically, its use as a bio-fuel could lower the cost of energy and enable Indonesia to rely less on fossil fuel imports. State-owned electricity firm PT Perusahaan Listrik Negara (PLN) will increase the use of palm oil to feed its power plants, buying first from PT Sinar Mas Agro Resources and Technology. PLN is expecting to conclude similar deals with more palm-oil producers. The fundamental demand for palm oil continues to be strong.

Palm oil is widely regarded as one of the most profitable edible oils, with the highest yield per unit area of land utilised. Indonesia sees the industry as a natural competitive advantage on the global stage; the country is now the world’s biggest producer of palm oil, followed by Malaysia.

The fragmentation of the palm oil industry is a cause for concern as the industry expands. Smallholders are interspersed within concessions of the major plantation groups. Often lacking in capital and capacity, some resort to slash-and-burn techniques during new planting cycles. The problem is especially acute in Riau Province, where there is a higher than average number of smallholders. The fall in palm oil prices in recent years is likely to bring lower returns to the farmers, potentially increasing the impetus to use fire as a cheap way of clearing land.

Indonesia’s Agriculture, Forestry and Environment Ministers were present, and equivocally called for the need to obey the no-burn policies.

However, local enforcement on the ground is often seen as the key to save the region from future bouts of haze. There are limits on what the central government can make the local authorities do.

The complexities surrounding palm oil have increased over the years. The underlying causes are best understood by the Indonesian government, the private sector and non-governmental organisations operating on the ground. Voluntary and mandatory standards have been developed to steer the palm oil industry towards sustainability, but the industry is a long way from a universal certification scheme that is cost effective and easily adapted by even the smallholders.

With this in mind, the SIIA is organising a Singapore Dialogue on Sustainable World Resources (SDSWR) in May this year. The event will bring together policy makers, business leaders and non-government experts from around the region to work collectively on finding a long-term solution to the haze.