Article published exclusively on the Institut économique Molinari’s website.
The use of palm oil is aggressively decreed for deforestation in Asia by environmentalist groups such as Greenpeace and WWF. The issue has progressively become more intense and firms became the focus of criticism by these activists, as they use palm oil in their food processing. The one after the other they all committed themselves to stop the use of this oil and/or promote oil certified by the Roundtable on Sustainable Palm Oil (RSPO). Such decisions are understandable given the noise these activist have been able to make in order to ruin their reputation. However, one might wonder if French firms are not playing a dangerous protectionist game that might harm French consumers and developing countries as well.
Campaign against the use of palm oil is not new, as the World Wide fund (WWF) launched a petition in November 2008[[WWF, 24/11/2008, http://www.wwf.fr/s-informer/actualites/une-petition-pour-reclamer-l-engagement-des-entreprises-contre-la-deforestation-liee-au-soja-et-a-l-huile-de-palme]]. According to this organization, “each year the consumption of soy and palm oil in the North increases dramatically deforestation in the Amazon, Indonesia and Malaysia. Companies in France can play a role, but most do nothing at the moment. To break this impasse, WWF-France calls on all citizens-consumers to sign its online petition on www.protegelaforet.com.”
Last year, in October 2009 and before the climate summit in Copenhagen, Greenpeace was showed in a France 3 broadcast protesting against the use of palm oil considered as a climate crime.
The use of palm oil is not decreed only for the deforestation it induces but for its presumed ill consequences on health as well. It is claimed that it should be banned in many if not all food processing because it is accused of being rich in saturated fatty acids. They can cause high cholesterol and cardiovascular problems.
Because the green initiative to make sure that palm is produced on a “sustainable basis” is very aggressive, French food retailers are ahead of the legislative game in order to make sure their reputation is safe. Announcements have already been made that for instance food retailer Casino will remove palm oil from its own-branded products. By the end of 2010, it promises that more than 200 food products would be guaranteed to be palm oil-free by the end of the year. Second largest food retail in France Carrefour is committed to promote oil certified by RSPO. French leader on frozen food Findus announced in March 2010 that it will be the first French company to entirely ban palm oil in its products.
Reputation is key for companies that compete on markets and one can perfectly understand why these companies under such aggressive actions decide to comply with what is perceived as “sustainable development.” However, one should not ignore that green activist statements are debatable and their action is highly protectionist.
Indeed, it is worth mentioning that the Food and Agricultural Organization of the United Nations (FAO) was promoting oil palm in Kenya for its environmental and health benefits in 2003. On its website on can read that the palm species produce more oil per hectare than any other oil crop and that “Oil palm is environment-friendly.” According to Peter Griffee, FAO Senior Officer for Industrial Crops, “it doesn’t compete with native vegetation or food crops in western Kenya. There’s no need to turn the soil over every year, so there’s less erosion and soil compaction.” After the oil has been extracted, empty fruit bunches can be used as mulch to enhance moisture retention, soil nutrient content and soil organic matter. In addition to stabilizing the soil, the trees harbor a great diversity of wildlife.
They even point out that palm oil is a healthy choice. It is an excellent source of vitamins A and E — much-needed dietary supplements in the region. Another benefit: red palm oil has a longer shelf-life than most other edible oils due to its high level of anti-oxidants, which make it especially resistant to rancidity.[[«Hybrid oil palms bear fruit in western Kenya», FAO, 23 November 2003,
It is also argued that palm oil requires little fertilizer in comparison with soybean, sunflower or rapeseed[[Fall, Amadou, «Ces intérêts contre l’huile de palme», Le Soleil, 20 April 2010. http://www.lesoleil.sn/article.php3?id_article=58205 ]] and that if palm oil is added to milk for infants, it is because its nutritional profile is close to breast milk!
Given this debate and the possible benefits of palm oil, it is arguable that activists promote a ban on palm oil that will have as a consequence to increase the price of oil for consumers. Palm oil is indeed the cheapest oil on the market. It will also impoverish producers in developing countries that export palm oil to our countries.
While the ban on palm oil for food purposes is in process, the ban for energy purpose is already implemented. The EU Renewable Energy directive adopted in 2009 use indeed a criteria that disqualify palm oil biodiesel and soybean biodiesel – the main foreign competitors to European rapeseed biodiesel. Indeed, to qualify for the tax-excise exemption for biofuels, the greenhouse gas savings of shifting to biofuels must be higher than 35 percent for which palm oil biofuel does not qualify. The principal effect of the directive is that it effectively closes future market expansion for the main biodiesel competitors.
Scientific arguments against palm oil used by green activist and bureaucrats are highly dubious. What is more questionable is that science is used to pick winners and losers. On the winner side, one finds the EU agro-industrial sector (producers of rapeseed). On the loser side, one can count the European consumer that will have to face higher prices and developing countries that are imposed import taxes or bans on their products. One should not let activists promote protectionist measures that allocate resources very inefficiently and French food industry should know better than playing a game that could probably hit them back!
Cécile Philippe is Director of the Institut économique Molinari.