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The world's biggest producer and consumer of palm oil plans to increase its production of the commodity to meet rising global demand. Indonesia claims it can reach its goal of producing 40m tonnes a year by 2020 without sacrificing sustainability, but campaigners have their doubts.
Demand for palm oil, which is used in products as varied chocolate bars, chewing gum, lipstick and washing powder, has grown steadily over the past decade. According to data from the UN Food and Agricultural Organisation, total global production reached 50m tonnes in 2012, almost double the amount produced in 2002.
Roughly half the global supply of palm oil comes from Indonesia, home to the world's third-largest swath of rainforest, after the Amazon and the Congo basin.
A Greenpeace report released last week claimed that palm oil production was the single biggest cause of deforestation in Indonesia between 2009 and 2011, accounting for about a quarter of all forest loss over that period. That means the destruction of critical habitat for endangered species such as the orangutan and the Sumatran tiger, as well as a major release of carbon into the atmosphere.
But from Indonesia's perspective, the economic upsides of palm oil are strong. It accounted for 11% of total export earnings last year, second only to oil and gas, and generated $5.7bn in export taxes for the government. Officials insist the economic gains of palm oil are not just going to big multinationals: more than a third of Indonesia's palm oil production comes from smallholder farmers, according to Fadhil Hasan, executive director of the Indonesian Palm Oil Association.
But how to balance the economic benefits against the environmental losses? The government has taken steps to ensure sustainability, but activists say it has not gone far enough.
In May 2011, the government introduced a moratorium on the clearing of new forest. The two-year ban was extended this year, despite protests from some domestic industry groups. It will now be in place until at least 2015.
Activists say the moratorium, which bans the approval of new licences to cut primary forests, leaves much to be desired. "It's got a lot of loopholes to it," said Ashley Leiman, director of the Orangutan Foundation. "A lot of the land that was set aside was not land that you could have converted [to oil palm plantations] anyway … and there was definitely a rush to give a lot of permits out beforehand."
But Rosediana Suharto, chair of the Indonesian Sustainable Palm Oil Commission, insists the moratorium has been effective, though she concedes that some level of deforestation is inevitable with palm oil production.
"Many NGOs say 'Why not go for zero deforestation?'" Suharto said at a conference on Indonesian palm oil production in London on Tuesday. "But Indonesia is a country of forests. Where are we going to plant our palm oil, in our front garden? You had the same deforestation in your country in the 18th century."
Indonesian officials say hitting the production target of 40m tonnes does not necessarily mean putting huge new tracts of land into production. Shifting to newer planting materials on existing plantations can increase yields dramatically, according to Derom Bangun, chair of the Indonesian palm oil board. Palms planted 25 years ago produce an average of four tonnes of oil per hectare annually, he said, while newer varieties can generate nearly double that under the right conditions.
Another potentially sustainable path to increasing production would be to establish plantations on what is known as "degraded land" – grassland and other cleared areas that are not in active use. The World Resources Institute (WRI) has identified 14m hectares of such land in the four provinces of Kalimantan, the Indonesian portion of the island of Borneo.
Almost all of this land would potentially be suitable for palm oil production, says Fred Stolle, a senior associate at WRI. The only hurdle, which would not necessarily be a small one, would be negotiating access to the lands with local communities. If that can be managed, the 14m hectares could represent a real opportunity for Indonesia's growing palm oil industry. "That should be enough land for all of their expansions over the next 20 years," Stolle said.
