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The Push for Palm: NMEO and the Asian Palm Oil Industry

Image Credit / Science

Elaeis guineensis, or “oil palm” as it is colloquially known, is a crop originating in the jungles of West Africa. Since its initial cultivation as far back as 5,000 years ago, oil palm has stood out as a highly sought-after commodity on the global market. Derived from the fleshy mesocarp of the oil palm fruit, palm oil is acclaimed for its versatile applications from cooking to industrial manufacturing. The crop is saturated with vegetable fats and high oxidative stability leading to several processed foods containing palm oil. Oil palm is typically sourced from Africa, Southeast Asia, and parts of Brazil. Indonesia and Malaysia were recorded to be the top producers of oil palm in the year 2022-2023.

In recent decades, global oil palm production has shown an abrupt increase, with almost 90% produced in Southeast Asia alone. A whopping 76 million metric tonnes were produced in 2020. Studies by environmental data researchers published in the Scientific Data Journal, in March 2021, suggest monocultural plantations dedicated to oil production are proliferating. To understand trends in oil palm plantation expansion and for landscape-level planning, accurate maps are needed. Palm oil yield development follows an archetypical pattern determined by the plantation life cycle; it is characterised by rapid growth, followed by a peak and a subsequent steady decline of productivity. Predictable harvesting patterns caused the widespread popularity of the plant in Asia’s vast fields available for plantations. Despite the promising exterior, palm oil carries with it environmental and humanitarian damage, making it a prime target of controversy. The impending doom of deforestation, monoculture plantations and corporate-controlled supply chains that many of us have come to associate with palm oil are a world away from the inventive innovations the agricultural industry boasts of.

The Indian Context

India has recently caught on to the palm oil craze within its own markets. The oil palm is a comparatively new crop in India but the Government of India has continuously been making efforts to increase the area production of oil palm. For increased availability of edible oils in the country and to reduce the import burden, various interventions since 1991-92 through schemes such as the Technology Mission on Oilseed & Pulses (TMOP), Integrated Scheme on Oilseeds, Pulses, Oil Palm and Maize (ISOPOM), Oil Palm Area Expansion (OPAE), National Mission on Oilseeds and Oil Palm (NMOOP) and currently the National Food Security Mission (NFSM)–Oilseeds & Oil Palm have taken place and was implemented in 13 States with the funding pattern of 60:40 in case of general States and 90:10 in case of North-Eastern States and hill States as per the Department of Agriculture and Farmers’ Welfare. The ongoing augmentation of palm oil production in India is considered a matter of debate.

The growing domestic demand for edible oils has ushered in the need for a new oil development programme. For harnessing the potential of palm oil production, an assessment has been made by the Indian Institute of Oil Palm Research (IIOPR) in 2020 for the cultivation of oil palm. The study revealed that oil palm can be cultivated on 28 lakh hectares in the country, out of which more than 9 lakh hectares lie in the northeast region. At present, only 3.70 lakh hectares are under oil palm. Oil palm’s potential is high in India but staggering deficiency and cost to the exchequer on account of imports clearly illustrate the necessity for a new vision.

In August of 2021, the Union Cabinet proposed a new scheme dedicated to palm oil production – the National Mission on Edible Oils – Oil Palm (NMEO-OP). A centrally-sponsored scheme, NMEO targets the North Eastern states and the Andaman and Nicobar Islands. The scheme places emphasis on increasing the domestic production of edible oils, in which the area and productivity of oil palm play a key part. A financial outlay of Rs.11,040 crore has been allocated for the scheme, according to the Parliament press release. The new scheme aims to cover oil palm in an additional area of 6.5 lakh hectares by 2025-26 and thereby reach the target of 10 lakh hectares. With this, the domestic production of crude palm oil (CPO) is expected to go up to 11.20 lakh tonnes by 2025-26 and up to 28 lakh tonnes by 2029-30. The new scheme is expected to benefit oil palm farmers, increase capital investment and generate employment. It may reduce the import dependence and also increase the income of the farmers.

Image Credit / Agriculture Post

To give impetus to the North-East and Andaman, the Government will additionally bear a cost of 2% of the CPO price to ensure that the farmers are paid at par with the rest of India. The states who adopt the mechanism proposed by the Government of India would benefit from the viability gap payment proposed in the scheme and for this, they will enter into MoUs with the Central Government. The second major focus of the scheme is to substantially increase the assistance of inputs/interventions. A substantial increase has been made for planting material for oil palm and this has increased from Rs 12,000 per ha to Rs.29000 per ha. A further substantial increase has been made for maintenance and inter-cropping interventions. Special assistance at Rs 250 per plant is being given to replant old gardens for the rejuvenation of old gardens.

India’s foray into the realm of palm oil works in conjunction with the booming, pre-established palm oil industry of Southeast Asian countries like Malaysia and Indonesia. The apex edible oil industry associations from five major palm oil importing countries of Asia -- India, Pakistan, Sri Lanka, Bangladesh and Nepal -- have come together to form the Asian Palm Oil Alliance (APOA). APOA held its first general body meeting on the sidelines of the Globoil Summit being held at Agra, India in 2022. The APOA aims is safeguarding the economic and business interests of palm oil-consuming countries and will work towards increasing the consumption of palm oil in member countries. The alliance works towards ensuring that palm oil is recognised as a high-quality, economical, and healthy vegetable oil and to change the negative image of palm oil. Membership of APOA would be further expanded to include companies or industry bodies associated with the production or refining of palm oil across the continent.

Corporate Power

Under the current neoliberal order of the world, goods and services must be produced for the sole purpose of profit maximisation. Revenue generated must feed the corporate sector and its beneficiaries to keep the economy alive. Consumer demand drives most of the consumption of palm oil in developing countries. According to the ITC Trade Map, palm oil is the main agricultural export of Indonesia and Malaysia, generating 10% and 5% respectively of their exports. The sector provides employment for 721,000 smallholders and labourers in Malaysia, and 4 million in Indonesia; a further 11 million in the two countries are indirectly dependent on it. At current growth rates, trade watchers predict the world's vegetable oil demand to grow to 280 million-290 million mt by 2030. However, the world's population is growing faster than expected, and along with climate shocks, conflicts and high costs, producers may have a tough time avoiding a deficit in vegetable oil supply, trade sources said. Therefore, the recent push for palm is nothing but a frantic attempt to salvage the sinking ship of global supply chains.

Nothing is off the table now, palm oil executives said – increasing smallholder yields, mechanisation of labour, reviving replanting programmes and even sharing research in a fiercely competitive industry. "There is no new land... We have to focus on high-value products and downstream development," said Lee Yeow Chor, managing director of IOI Corp Berhad, one of the largest palm oil companies in the world, and chairman of the industry group Malaysian Palm Oil Association. For the owners of these corporate giants, the external impacts of the agroforestry industry are null; they are singularly focused on the profit-generation aspect of palm oil. Reflecting on the growing commercial uses of palm oil, anyone can realise the power the industry holds. Once palm oil is given enough standing ground in the upcoming years, major palm oil corporations will seize and control all palm oil production from the farmer to the plantation.

Image Credit / National Maritime Museum, Greenwich, London

The production of palm is rooted in the imperial capital of the 19th century. Palm oil struggles to break free of its ties to colonialism, as neoliberal capital ensures countries like those in Southeast Asia continue to suffer from resource extraction. Much of the early development in Southeast Asia’s plantations is attributed to a Belgian entrepreneur, Adrien Hallet, who had acquired experience in industrial cultivation through the rubber trade in the Congo. Hallet noticed that Indonesia’s ornamental palms bore more fruit than those in Africa. Believing that conditions must be ideal for cultivation, he set out to establish his own plantations. He set up Indonesia’s first oil palm plantation at Poeloe Radja in Sumatra in 1911. When demand for rubber fell after World War I, palm oil stepped in as a diverse option. Years ago too, palm oil was a representation of investor’s anxiety. Hundreds of thousands of immigrants from South China and India were also exploited, having been directed to foreign-owned plantations around Malaysia and Indonesia.

Corporate power within the agricultural industry is notorious for its exploitation of farmers, workers, and the environment. Palm oil cannot exist separately from this truth. In the paranoia over socioeconomic development, environmental and humanitarian concerns regarding palm oil have been neglected. Imperial capitalism has stretched from the past to now. Until the obsession with commercial trade is dismantled, palm oil can never be sustainable. Governments like those of India have supported this tumultuous conflict, favouring short-term financial gain from foreign investments at the expanse of protecting their own people and resources. Though India is currently operating on a trade-protectionist philosophy, they are still obsessed with improving its self-sufficiency in relation to other countries. Rather than revolutionising the market model, colonial profiteering persists under the guise of “self-sufficiency”.

Humanitarian Concerns

Perhaps the most grave of repercussions with fall upon the shoulders of farmers and labourers, some of the people in the world most vulnerable to financial exploitation. Most oil palm jobs are in remote rural areas, where alternative employment is scarce, thus helping to promote rural development and alleviate poverty. However, not all have benefited indigenous communities often lack legal documents certifying their ownership of land, and there are legal conflicts between oil palm companies granted government concessions in forested areas and the people who have used the land for centuries.

In some cases, this has led to local people losing access to land and resources. Communities typically lose out. “The legal system is of little use, and there are far too few NGOs on the ground to cope with all these conflicts,” said Ward Berenschot, a postdoctoral researcher at the Royal Netherlands Institute of Southeast Asian and Caribbean Studies. As a result of such problems, in one survey nearly half of 187 villages in Indonesian Borneo were opposed to palm oil companies. They were mapped in Kalimantan using data gathered from online searches and local newspaper reports describing recent palm oil land use disputes.

These disputes arise over what researchers refer to as the “rightlessness” of the indigenous communities involved. An ineffective land tenure system results in a lack of protection of indigenous peoples’ land rights. Meanwhile, companies secure extensive concessions from government agencies to convert this community land into oil palm plantations. Pushed out of the negotiation and with limited legal rights, the communities are unable to resist the take-over of their lands. Land loss is the end result of non-consensual land-grabbing and no compensation for use. Indigenous land theft is further evidence of the palm oil industry’s colonial practices.

Image Credit / Nikkei Asia

When one pivots to India, the conversation becomes geographic; land development has always been focused on the mainland while areas like the North East have been terminally neglected. Upon implementation of the NMEO-OP programme, the Centre wished to bolster palm oil cultivation in the region, putting into perspective the economic potential of the North East. Nagaland was the epicentre of this strategy, increasing production by 3,000% since 2016, from April 2023. data collected by the Asia Pacific Foundation of Canada. Despite rapid growth in cultivation since these mission statements were activated, Nagaland farmers continually face water shortages, inadequate irrigation infrastructure, a lack of state support, and, more recently, a lack of buyers and processing capacity.

Farmers are more worried about water shortages, extreme weather, and pest attack than international price fluctuations. As a result, they have disposed of palm kernels – or used them as animal feed – as they look for other crop options. Furthermore, before such plantation drives, there must be a robust infrastructure and production system to ensure farmers get benefits from the plantations. In Arunachal Pradesh, it is already witnessed that the farmers switching to palm oil cultivation face a serious crisis. Additionally, for the farmers who practise subsistence agriculture, the large-scale adoption of palm oil cultivation, which has a long gestation period, can have a huge impact on the economic security of farmers who are already facing water shortages and erratic monsoons.

Serious concerns about abusive labour conditions on some palm oil plantations also arise. An Associated Press Investigation in September 2020 found an invisible workforce in plantations in Malaysia. Millions of the poorest labourers are subject to child labour, slavery, and sexual assault. Almost all had complaints about their treatment, with some saying they were cheated, threatened, held against their will or forced to work off unsurmountable debts. Others said they were regularly harassed by authorities, swept up in raids and detained in government facilities. The AP used the most recently published data from producers, traders and buyers of the world’s most-consumed vegetable oil, as well as U.S. Customs records, to link the labourers’ palm oil and its derivatives from the mills that process it to the supply chains of top Western companies like the makers of Oreo cookies, Lysol cleaners and Hershey’s chocolate treats. Investigations like this create a storm of doubt over claims of sustainability. If basic labour laws cannot be implemented by these palm oil giants, then the discussion of sustainability are moot.

An Environmental Hazard?

Human rights violations should hold precedence over environmental risks, but the destruction of the environment as a result of the agroforestry industry is harrowing. Palm oil is increasingly becoming a crop produced in monocultures. As a result, over 25% of Indonesia's rainforests have been deforested and replaced with vast palm oil plantations. Local wildlife can't survive and the palm trees' roots soak up huge amounts of water, destroying the soil. The World Wildlife Fund states that 90% of the world’s palm oil is grown in islands with the most biodiverse tropical forests found on Earth. In these places, there is a direct relationship between the growth of oil palm estates and deforestation. The conversion of tropical forests to palm oil plantations disrupts the natural ecology of the land. Human-wildlife conflict increases as both are squeezed into a miniature habitat. The species worst impacted are almost always rare or endangered. Biodiverse forests serve as these species’ only genetic corridors.

Image Credit /

When forests are cleared to make way for palm oil plantations, the natural web of nature erodes with the soil, washed away in infrastructurally destructive floods. The practice of draining and converting tropical peat forests in Indonesia is particularly damaging, as these "carbon sinks" store more carbon per unit area than any other ecosystem in the world. Additionally, forest fires used to clear vegetation in the establishment of oil palm plantations are a source of carbon dioxide that contributes to climate change. Due to its high deforestation rate, Indonesia is the third-largest global emitter of greenhouse gasses.

In 2019, Indonesia put in place strict rules for palm oil companies by issuing a permanent ban on turning natural forests into land for palm oil production. The government also put a three-year freeze on building new palm oil plantations. Because of these rules, deforestation and peatland clearing for palm oil plantations slowed down from 2019 to 2021, according to the October 2022 Earthqualizer report. However, government policies aren’t the golden ticket to making sure palm oil suppliers follow the rules. Companies in the supply chain also need to ensure that the regulations are being followed. When purchasing palm oil, any buyer must ensure that the product is sourced from sustainable practices. To do this, buyers must set up an accountable and transparent monitoring system. This system will provide an immediate response, such as freezing trade with non-compliant suppliers if the companies are proven to have damaged forests and peatlands in their supply chain.

While brainstorming possible policy-based solutions, though, the reality must be confronted – legal options have rarely been effective in the case of the palm oil industry. To tackle regulatory violations at the hands of the palm oil industry, a Roundtable on Sustainable Palm Oil (RSPO) Complaints Panel was established. Despite this, in more than two-thirds of conflicts, no resolution was achieved. In most of the remaining conflicts, improvements took over ten years, during which time community complainants endured harassment and intimidation. The favoured route pursued by communities and supportive NGOs was to appeal to local authorities, but these appeals were also rarely successful.

There were earnest efforts by local officials and members of the local legislatures to set up meetings, but companies would regularly decline to attend. Even when these meetings did agree that violations had occurred, government rulings were ignored. A remarkable aspect of these efforts of local governments to facilitate conflict resolution is their lack of teeth: while palm oil companies regularly refuse to participate constructively in such meetings involving allegations of serious licence violations, local governments generally avoid taking any kind of disciplinary action. Evaluating the endless amount of data, regulations must be more harshly enforced on the corporate palm oil sector and their various misgivings. Over commercial production, the people and the environment must be centred. An economic boom at the expense of people’s day-to-day lives is an opportunity cost too large to pursue. The grievances of indigenous communities, farmers, and the environment must be addressed promptly before further devastation can take place. Under capitalism, heavy regulation and empowerment of the underclass is the sole solution for justice.

Image Credit / Pulitzer Center


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