Palm Oil: Progress or a Pitfall for Latin America?

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Palm oil is a common ingredient found in everything from shampoo to processed foods, including about half of all products at supermarkets. It is extremely cost-effective to produce, leading to its high prevalence in consumer goods. However, in the vast majority of instances palm oil production is unsustainable. In most cases, rain forests are slashed and burned in order to plant oil palms, which is particularly damaging to local biodiversity and the entire world’s climate. In the future, the repercussions of palm oil farming could drastically spread and increase if the industry does not change its production methods. As this type of unsustainable farming spreads into tropical Latin America, it has the potential to impact local communities and the global climate significantly if it is not appropriately managed. There needs to be institutional support, management, and enforcement based upon more sustainable palm oil production in Latin America before its production increases, and a balance needs to be struck among communities, governments, and palm oil producers to make palm oil in Latin America a model of sustainability for the rest of the world.

To understand why palm oil threatens Latin America, it is important to understand the damage that its production entails. Since tropical rain forests are the richest terrestrial biomes, their destruction leads to an extreme decrease in species diversity. This can cause entire ecosystems to collapse, resulting in the loss of ecosystem services that intact tropical rain forests provide to communities like non-timber forest products, flood control, water quality and ecotourism opportunities. On a much larger scale, rain forests are major carbon ‘sinks’, which means they absorb and store carbon released from human activities. Oil palms are planted on peat-land, which are the largest terrestrial carbon sinks. It is estimated that deforestation in these tropical areas accounted for 10 percent of climate change emissions in 2013. If Latin America does not deviate from this path, communities will suffer locally and the world’s climate will be negatively affected.

While Latin America is not currently a major producer of palm oil, its land endowment and trends in palm oil production suggest that it can be. In 2011, Indonesia and Malaysia were responsible for approximately 90 percent of palm oil production. However, in 2015, about 84 percent of palm oil was produced in Malaysia and Indonesia. Clearly a shift is occurring and more palm oil is being produced in other regions of the world, including Latin America. In 2018, it was estimated that Brazil had the third fastest rate of production growth, with Ecuador in sixth and Colombia in eighth. Brazil leads the way, with nearly half the land in the country suitable for palm oil plantations that could potentially help it become the biggest producer in the world. On a positive note, some of this land is currently being used to produce less cost-effective crops, and switching to palm oil could provide benefits to both the economy and the environment. However, most production thus far has taken place in the Amazon region, where land is cheaper. The future of Brazilian palm oil, similarly to other Latin American nations, rests in its potential for sustainability or for an expansion of the problems palm oil can cause. As Brazil demonstrates, Latin America will start playing a larger role in the palm oil discussion as it has one of the newest and fastest growing industries.

While palm oil production begins to permeate Latin America, it is critical to look at the impact that its intensive farming has had on its largest producers: Indonesia and Malaysia. In Indonesia, the toxic smoke from deliberately set forest fires, many of which were burned to plant oil palms, accounted for at a minimum 12,000 deaths nationally in 2015. In Indonesia alone, mono-culture palm oil plantations cover an area around the size of the U.S. state of Maine, most of which was converted from rain forests. Furthermore, a report released by Amnesty International in 2016 links production in Indonesia with numerous human rights abuses, ranging from child labor to toxic chemical exposure. In Malaysia, palm oil production has led to similar problems, including high rates of deforestation, biodiversity loss, water pollution, and land rights violations. Although there has been more a shift towards sustainable practices in Indonesia and Malaysia, there is much work to be done. If Latin America hopes to avoid the myriad of problems that can come from palm oil production, it needs to learn from the mistakes of Indonesia and Malaysia and shift its focus to sustainable palm oil farming research before it becomes a major producer.

The key to palm oil in Latin America lies in its potential. Countries like Indonesia and Malaysia now need to focus on solving the problems created by unsustainable palm oil production. Since oil palms are not grown in Latin America on a large scale yet, the area has the opportunity to implement more sustainable palm oil farming and become a model for the world. Despite all the common negative effects of palm oil harvesting, this is not to say that in and of itself it is terrible. In many different cases it has been critical in alleviating poverty in the nations where it is grown and its production is virtually unavoidable in a world that is now highly dependent upon it. For example, if different forms of agricultural land are converted to palm oil plantations, as is possible in Brazil, its production could be far more cost-effective. However, there needs to be institutional support, management, and enforcement based upon more sustainable palm oil production.

If unsustainable production becomes large scale in Latin America, it will likely result in long-term negative effects that will offset short-term economic gains. A balance needs to be struck among communities, governments, palm oil production, forest preservation, and other forms of agriculture. While finding this balance may be difficult, it is essential for Latin American nations to aim for sustainable palm oil farming to mitigate the potential disastrous negative side effects it could have. If Latin America can accomplish this goal, its sustainability could perhaps serve as a foundation for remedying the problems palm oil has caused in other nations.

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