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Oil’s Well

Oil palm (Elaeis guineensis) has become the plantation crop of the 21st century. Due to phenomenal growth in its demand for its use as a bio-fuel the oil palm prices have increased by 88 percent and continue to rise. A $48m (£24m) palm-oil bio-diesel plant opened in Australia’s Northern Territories in 2006 and three 50 megawatt power stations are currently planned in Holland. A study by Fauna & Flora International (FFI) launched at Myanmar’s first workshop on the development of a sustainable plantation sector on 28 June, 2014 that most biodiversity-rich forests in Myanmar’s Tanintharyi region are located inland along the Myanmar-Thai border, while most land suitable for palm oil cultivation is located along the coast, where forests are already too degraded to support threatened species.

Derived from the palm fruit, grown on the African oil palm tree oil palms are originally from Western Africa, but can flourish wherever heat and rainfall are abundant. Today, palm oil is grown throughout Africa, Asia, North America, and South America, with 85 percent of all palm oil globally produced and exported from Indonesia and Malaysia; but most of the time not using sustainable measures.

According to an official of the Myanmar Edible Oil Dealers Association (MEODA), there are 2,978 edible oil plants registered in Myanmar. Edible oil is made from locally cultivated peanuts, sesame seeds, beans and sunflowers and the products imported are usually from palm oil in Malaysia and Indonesia. Myanmar is the world’s biggest producer of sesame seed and sesame oil, the sixth biggest producer of peanuts and the fourth biggest producer of peanut oil. Myanmar currently exports a small amount to China and Japan; other seeds and derived products are consumed on the domestic market. Myanmar imports around 400,000 tonnes of palm oil annually to fill the gap between national edible oil consumption and production.

Domestic production of edible oil made from peanuts is around 500,000 tonnes a year while the country’s edible oil consumption is around 900,000 tonnes. A survey conducted by the Myanmar Marketing Research and Development in Yangon, Mandalay and Mawlamyine found that peanut oil is the preferred cooking oil of housewives aged between 25 and 50, but they mostly choose to buy palm oil due to lower price. Peanut oil is priced at 7,000 or 8,000 Kyats a viss (1.6 kilograms) while palm oil can be bought at a price of around 1,500 Kyats a viss.

“Myanmar is in the early stages of palm oil expansion and in the very fortunate position to learn from other countries and avoid their mistakes” said Gary Paoli, an expert in sustainability from Daemeter Consulting with experience in the Indonesian palm oil sector. Indonesia is one of the two largest palm-oil producers and exporters in the world. Another is Malaysia. The two account for 83 percent of production and 89 percent of global exports. Each decade since 1980, Indonesia’s palm oil production has doubled due to its rising demand. New research shows there is hope to conserve Myanmar’s unique biodiversity as its palm oil industry expands – if the country can learn from the experiences of its neighbours.

“Plantation crops play a critical role in Myanmar’s national development strategy, and are a potential source of significant benefits. However, the social and environmental impacts of the plantation sector, particularly palm oil, have drawn criticism across Southeast Asia. The introduction and promotion of sustainable practices in plantation development can help maximize economic, social and environmental benefits and secure future access to international markets and finance which is increasingly linked to sound social and environmental practices,” said FFI’s Myanmar director Frank Momberg.

The internationally traded vegetable oil is found in thousands of popular products used in everyday life, including ice cream, chocolate, biscuits, crisps, margarine, toothpaste, soap, detergents and cosmetics. The demand for the edible oil is forecast to double by 2020 as it is being seen as a cheap alternative to other healthy but expensive oils such as soy, olive and canola, which are supposed to prevent heart diseases. World Health Organization and other health authorities have urged though, reduced consumption of palm oil, which is harmful for health. Besides, over the last year and a half, crude palm oil has become even more valuable in the global rush for environmentally sustainable bio fuels.

Oil palm can be grown perfectly well on degraded land or disused agricultural land, of which there are millions of hectares available in Southeast Asia. But this is not happening. Despite an abundance of such types of lands available for oil palm plantations, many palm oil companies are deliberately targeting forest areas for conversion. Legitimate palm oil companies prefer first to cut down the forests, as this provides them with an immediate and extremely profitable source of income from logging before a single palm tree is planted. Less reputable companies secure a permit to clear rainforest to make way for new palm-oil plantations (the only reason why they are granted a permit), but as soon as they have logged the forest, they disappear without trace, having made no attempt to cultivate the ground for oil palms. Many such companies have destroyed hectors of rain forests in Tanintharyi Region of Myanmar.

Palm oil has spelled controversy across Southeast Asia for its environmental and social impacts. But – if planned right – palm oil development and biodiversity conservation in Myanmar could happen together. Deforestation for palm oil production also contributes significantly to climate change. The removal of the native forests often involves the burning of invaluable timber and remaining forest undergrowth, emitting immense quantities of smoke into the atmosphere and making Indonesia the third highest greenhouse gas emitter in the world. Forest- clearing leaves huge amounts of dry branches and other wood litter on forest floors; a small spark can ignite enormous forest fires, particularly in times of drought. During the 1997-98 El Niño droughts, approximately 25 million acres got burned in Indonesia in which a third of the wild orangutan population perished. Scientists say that the global warming caused by the release of this carbon is drying the forest floor, making it easier to burn and adding to the devastation.

“”Land clearing for oil palm and rubber plantation has been the driving force of deforestation and biodiversity loss in Tanintharyi. Myanmar has an opportunity to develop its palm oil sector sustainably by planning for agricultural conversion in areas that are already severely degraded and leaving forested habitat untouched,” said FFI’s Momberg. Supporting palm oil production was Darrel Webber, secretary general of the Roundtable on Sustainable Palm Oil (RSPO), who said in his keynote speech that sustainable palm oil is legal, environmentally appropriate, socially acceptable and profitable.

“We need to promote the production of further edible oil as well as work on exporting it to markets such as Japan and China,” said Thein Han, Chairman of Myanmar Edible Oil Dealer’s Association (MEODA).