Palm oil giant Wilmar caught in forest scandal


Palm oil, produced from the oil palm, is a basic source of income for many farmers in South East Asia, Central and West Africa, and Central America. It is locally used as a cooking oil, exported for use in many commercial food and personal care products and is converted into biofuel. It produces up to 10 times more oil per unit area than soyabeans, rapeseed or sunflowers.

Oil palms produce 38% of the world’s vegetable-oil output on 5% of the world’s vegetable-oil farmland. Palm oil plantations are under increasing scrutiny for their effects on the environment, including loss of carbon-sequestering forest land. There is also concern over displacement and disruption of human and animal populations due to palm oil cultivation.


An estimated 1.5 million small farmers grow the crop in Indonesia, along with about 500,000 people directly employed in the sector in Malaysia, plus those connected with related industries.

As of 2006, the cumulative land area of palm oil plantations is approximately 11,000,000 hectares (42,000 sq mi). In 2005 the Malaysian Palm Oil Association, responsible for about half of the world’s crop, estimated that they manage about half a billion perennial carbon-sequestering palm trees. Demand for palm oil has been rising and is expected to climb further.

Between 1967 and 2000 the area under cultivation in Indonesia expanded from less than 2,000 square kilometres (770 sq mi) to more than 30,000 square kilometres (12,000 sq mi). Deforestation in Indonesia for palm oil (and illegal logging) is so rapid that a 2007 United Nations Environment Programme (UNEP) report said that most of the country’s forest might be destroyed by 2022. The rate of forest loss has declined in the past decade.

Global production is forecast at a record 46.9m tonnes in 2010, up from 45.3m in 2009, with Indonesia providing most of the increase.

Social Issues

Oil palm is a valuable economic crop and provides a source of employment. It allows small landholders to participate in the cash economy and often results in improvements to local infrastructure and greater access to services such as schools and health facilities. In some areas, the cultivation of oil palm has replaced traditional practices, often due to the higher income potential of palm oil.

However, in some cases, land has been developed by oil palm plantations without consultation or compensation of the indigenous people occupying the land. This has occurred in Papua New Guinea, Colombia, and Indonesia. In the Sarawak state of Malaysian Borneo, there has been debate over whether there was an appropriate level of consultation with the Long Teran Kanan community prior to the development of local land for palm oil plantations. Appropriation of native lands has led to conflict between the plantations and local residents in each of these countries.

According to a 2008 report by NGOs including Friends of the Earth, palm oil companies have also reportedly used force to acquire land from indigenous communities in Indonesia. Additionally, some Indonesian oil palm plantations are dependent on imported labor or undocumented immigrants, which has raised concerns about the working conditions and social impacts of these practices.

Enviromental Issues

In Indonesia, rising demand for palm oil and timber, have led to the clearing of tropical forest land in Indonesian national parks. According to a 2007 report published by UNEP, at the rate of deforestation at that time, an estimated 98 percent of Indonesian forest would be destroyed by 2022 due to legal and illegal logging, forest fires and the development of palm oil plantations.

Neighboring Malaysia, the second largest producer of palm oil, has pledged to conserve a minimum of 50 percent its total land area as preserved forests. As of 2010, 58 percent of Malaysia land was forested.Palm oil cultivation has been criticized for:

  • Greenhouse gas emissions. Deforestation in tropical areas accounts for an estimated 10 percent of manmade CO
    emissions, and is a driver toward dangerous climate change.
  • Habitat destruction, leading to the demise of critically endangered species (e.g. the Sumatran tiger,the Asian rhinoceros, and the Sumatran Orangutan.)
  • Reduced biodiversity, including damage to biodiversity hotspots.
  • Cultivating crops on land that belongs to indigenous people in the Sarawak and Kalimantan states on the island of Borneo and the Malaysian state of Sabah.

Water pollution

In some states where oil palm is established, lax enforcement of environmental legislation leads to encroachment of plantations into riparian strips, and release of pollutants such as Palm Oil Mill Effluent (POME) in the environment.More environment-friendly practices have been developed. Among those approaches is anaerobic treatment of POME, which can be a good source for biogas (methane) production and electricity generation, if carefully managed to maintain optimum growth conditions for the anaerobic organisms that break down acetate to methane (primarily Methanosaeta concilii, a species of Archaea).

Greenhouse gas emissions

Damage to peatland, partly due to palm oil production, is claimed to contribute to environmental degradation, including four percent of global greenhouse gas emissions and eight percent of all global emissions caused annually by burning fossil fuels, due to the clearing of large areas of rainforest for palm oil plantations. Many Indonesian and Malaysian rainforests lie atop peat bogs that store great quantities of carbon. Forest removal and bog drainage to make way for plantations releases this carbon

Environmental groups such as Greenpeace claim that this deforestation produces far more emissions than biofuels remove. Greenpeace identified Indonesian peatlands, unique tropical forests whose dense soil can be burned to release carbon emissions, that are being destroyed to make way for palm oil plantations. They represent massive carbon sinks, and they claim their destruction already accounts for four percent of annual global emissions. However, according to the Tropical Peat Research Laboratory, at least one measurement has shown that oil palm plantations are carbon sinks because oil palms convert carbon dioxide into oxygen just as other trees do,and, as reported in Malaysia’s Second National Communication to the United Nations Framework Convention on Climate Change, oil palm plantations contribute to Malaysia’s net carbon sink.


Greenpeace recorded peatland destruction in the Indonesian province of Riau on the island of Sumatra, home to 25 percent of Indonesia’s palm oil plantations. Growers plan to expand the area under concession by more than 28,500 square kilometres (11,000 sq mi) which would deforest half of the province. Greenpeace claims this would have devastating consequences for Riau’s peatlands, which have already been degraded by industrial development and store a massive 14.6 billion tonnes of carbon, roughly one year’s greenhouse gas emissions.

Research conducted by Greenpeace through its Forest Defenders Camp in Riau documents how a major Indonesian palm oil producer is engaging in large-scale destruction of peatland in flagrant violation of an Indonesian presidential order and national forestry regulations. Palm oil from peatland is fed into the supply chain for global brands. FoE and Greenpeace both calculate that forests and peatlands that are replaced by palm oil plantations release more carbon dioxide than is saved by replacing diesel with biofuels.

Environmentalists and conservationists have been called upon to team up with palm-oil companies to purchase small tracts of existing palm plantation, so they can use the profits to create privately owned nature reserves. It has been suggested that this is a more productive strategy than the current confrontational approach that threatens the livelihoods of millions of smallholders.

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