20/04/2023 (The Manila Times) - PALM oil is one of the biggest agricultural commodities in Southeast Asia, and up until a couple of years ago, was viewed — despite there being no rational justification for doing so — as a key ingredient in various emissions-reduction ideas, such as using it as an additive in diesel fuel. However, with much of the rest of the world slowly coming to the realization that palm oil is actually environmentally horrifying, a potential economic headache is brewing for two of the Association of Southeast Asian Nations' (Asean) biggest economies and the largest producers of the stuff — Indonesia and Malaysia.

Those two countries are responsible for about 88 percent of palm oil exports, or about 45 million metric tons of the slightly less than 51 million MT produced for export globally in 2022. Indonesia is the biggest producer, exporting 28.5 million MT of its roughly 46 million MT annual production, while Malaysia produces about 18.5 million MT and exports about 16.5 million MT. The biggest importers of palm oil globally are India; China; the EU, of which the Netherlands is the biggest individual importer; Pakistan; and the US.

The Philippines makes the top 10 with annual imports of about 1.15 million MT, about 55 percent of that from Indonesia and the rest from Malaysia. Despite being capable of producing palm oil — there are about 90,000 hectares of palm oil plantations in Mindanao — the Philippines' domestic production falls well short of demand, and even at the current import levels, according to data from an industry group reported back in February, the country still has a deficit of about 186,000 MT of vegetable oil, whether that would be palm oil or an alternative.

So, in short, palm oil is a big business, no matter which end of the trade path one happens to be on, but it is a business that is increasingly being recognized as "the elephant in the greenhouse," as one environmental activist put it. Two recent developments are threatening to put a huge dent in Indonesia's and Malaysia's palm oil business, as well as scrub any pretensions of building up the Philippines' domestic production. The biggest blow is a new EU anti-deforestation law, which requires imported palm oil to be verifiably certified as having been produced on land that has not been deforested.

That eliminates almost all of Malaysia's export supply and the majority of Indonesia's, because existing certification schemes, such as the Roundtable for Sustainable Palm Oil (RSPO), are rendered invalid. Under the EU law, producers must certify down to the level of individual farm plots that they are not planting on land that contains any peat, or has been cleared of any forest; the existing RSPO standards permit land cleared of secondary forest, or containing a peat layer less than a meter thick.

https://www.manilatimes.net/2023/04/20/opinion/columns/the-palm-oil-problem/1887843