One of the letters I received about my recent palm oil piece questioned whether palm oil was a really a significant component of deforestation in Indonesia.
In researching this piece, one of the pieces of Overmatter I did not use was an unpublished report by McKinsey (which was leaked to me by a source) that is pretty clear about what is known about the state of Indonesian forests. A large number of its contributors are the Indonesian forestry ministry.
The report states that deforestation of Indonesian forests peaked in the late 20th century at a rate of 1.9 million ha per year, and decreased to the current rate of 1.1 million ha between 2000 and 2005
However, it goes on to say that an increasing demand for pulpwood, palm oil, food crops will drive around 21-28 million ha of land conversions till 2030 along with mining and infrastructure. Further, that government plans for increasing pulp and palm oil production will require 11-15 million ha of currently forest covered areas to be converted.
Finally it says that deforestation and degradation is taking place across all regions and in all types of Indonesian forests--including protection and conservation forests.
We already know that between 1967 and 2000 the area under cultivation in Indonesia expanded from less than 2,000 square kilometres (770 square miles) to more than 30,000 square kilometres.
What we cannot say from these figures is exactly how bad the problem is right now. As recently as 2007 UNEP said deforestation in Indonesia for palm oil and illegal logging was so rapid that most of the country’s forest might be destroyed by 2022.
In considering how bad the problem might be, these factoids are useful:
1. each hectare of land can produce an average yield 4-5 tonnes of crude oil
2. the current average price of crude palm oil per tonne is about 800-900 US dollars. This is down from a peak two years ago of 2,000 dollars a tonne. (Oil World, and figure quoted by us)
3. although palm oil can be planted on degraded land, the conversion of forested land allows palm oil producers to use the sale of timber to fund plantations, providing up front capital prior to the first crop.
Given all these facts and figures, trying to argue that such a valuable crop is not a significant contributor to deforestation in a very poor forested country seems a tough call to me. One might as well nail $50 bills to tree trunks and expect them to stay there.
The one thing that our piece did not have the scope for was to ask that given that palm oil is such a significant contributor to economic growth in poor countries like Indonesia how does one get improvements in living conditions without causing environmental devastation? Its not easy to answer, but the fact that the government has announced a moratorium on deforestation thanks to a huge dob of cash from the Norwegian government suggests that minds are at least focusing on the problem.