Empty Promises of Sustainable Certification: Palm Oil Commodity Fetishization in Indonesia Annie Wang

Empty Promises of Sustainable Certification: Palm Oil Commodity Fetishization in Indonesia

AUTHOR: Annie Wang

ABSTRACT: This paper argues that sustainable certification schemes like the RSPO and other forms of ethical consumerism are not effective in guiding sustainable development. They fail to address the social relations behind the production of palm oil, and rather the “greenwashing” development that is based on land-grabbing and labor exploitation. The booming palm oil industry in Indonesia exacerbates socioeconomic disparities, fails to deliver the benefits of development, and creates a massive environmental health and justice disaster. In place of RSPO and other “conscientious consumption” mechanisms, environmental justice movements, support for palm oil workers, changes in fiscal policies and transparency measures will be discussed as an alternative way forward. sustainable development panacea? This paper argues

INTRODUCTION

Under the guise of a “sustainable alternative,” palm oils have exploded into the biofuel industry, and become an overwhelming favorite for food and cosmetics companies due to its high versatility and relatively cheap cost of production. Now the most widely used vegetable oil in the world, palm oil has had its production increased five-fold in the last 20 years and is found in 50% of supermarket shelves. As of 2018, global consumption has reached 72 million tons, or 20 pounds of palm oil per person (Rosner).

Indonesia, the world’s leading producer of palm oil, is increasingly drawn to the economic benefits and that sustainability is discussed only through the lens

development potential of this booming industry (see fig.1). In 2016, Indonesia exported 22.8 million tons of palm oil worth 14.4 billion USD and was claimed to have drawn ten million Indonesians out of poverty (Tyson 423). However, as Indonesia is ravaged by wildfires, both international and local NGOs increasingly denounce the terrifying ecological and social impacts of palm oil: massive biodiversity loss, gigatons of climate change inducing emissions from deforestation, environmental health hazards, poor labor conditions, and land grabbing from indigenous populations.

In 2004, The Roundtable on Sustainable Palm Oil (RSPO) was established with the “aims to transform markets to make sustainable palm oil the norm” (“RSPO.org”). This “industry-led stake-holder initiative” sets cering to minimize the harmful environmental and social impacts and lead the way to sustainable development. Can the commodification of sustainability truly offer a that sustainable certification schemes like the RSPO and other forms of ethical consumerism are not effective in guiding sustainable development. They fail to address the social relations behind the production of palm oil, and rather the “greenwashing” development that is based on land-grabbing and labor exploitation. The booming palm oil industry in Indonesia exacerbates socioeconomic disparities, fails to deliver the benefits of development, and creates a massive environmental health and justice disaster.

UNVEILING RSPO’S SUSTAINABILITY CLAIMS

Driven by increasing pressure from the Global North to produce sustainable palm oil, the RSPO now certifies approximately 10% of global production (Pyre 219). Palm plantations receive the certification under certain ecological and social qualifications, including preserving “High Conservation Value Forest” and avoiding establishing new plantations in areas claimed by local communities (“RSPO.org”). However, the RSPO is a “multi-stakeholder initiative” dominated by agribusiness corporations, banks and investors, and consumer manufacturers, which means tain criteria for certified sustainable palm oil, promis

of economics of scale and profitability. Over 90% of “certified sustainable” palm oil comes from transnational corporations on the RSPO board, the majority of which are large-scale monocultures (219).

Fig. 1. “The palm-oil industry’s effort to curb deforestation has lots of flaws”; The Economist. Economist.com, 7 Mar. 2019, https:// www.economist.com/asia/2019/03/07/the-palm-oil-industryseffort-to-curb-deforestation-has-lots-of-flaws

climate change. Nearly 90% of deforestation in Indonesia was caused by palm corporations and RSPO members and only 15% of species found in primary forests were recorded in palm plantations (Petrenko et al., 28). Furthermore, it is estimated that the forest fires of 2015 that burned 2/6 million hectares, an area the size of Bali, tripled Indonesia’s annual greenhouse gas emissions. The fires produced more carbon emissions in three weeks than Germany did in a whole year (28). The thick, toxic smog lingered over 28 million people, producing an estimated 100,000 deaths due to respiratory illness and $47 billion in economic loss (28). Friends of the Earth (2015) were able to show that peatlands owned by Wilmar and Bumitama, both transnational corporations and RSPO members, contributed to the fires.

“DOUBLE FETISHISM” IN RSPO CERTIFICATIONS

The failure of RSPO is significant in that it exemplifies the fetishization of sustainability through consumption and highlights the weaknesses of conscious consumption and sustainable certifications. Conscious consumption is increasingly used as a tool for citizen-consumers to lobby for social and environmental standards (Richey et al. 156). Campaigners hope to pressure agribusinesses by mobilizing consumers to pay an extra 8-9% for sustainable palm oil (Pye 220), or engage in “conspicuous non-consumption” (Reichman 147). In doing so, sustainability and ethics become a commodity, rather than a political or social act. As quoted by Banet Weiser and Lapsanky, conscious consumption “has appropriated the lan- -guage of social action and rebellion and mixed it with a neo-liberal economic model of consumption in a way that...strengthens the pillars of…consumer culture on which it is premised.” (qtd in Richey 157). RSPO poses solutions for an over-simplified, decontextualized understanding of the issue and presents itself as a simple panacea for complex structural problems, perfectly exemplifying Marx’s idea of “commodity fetishism.” Marx’s idea states that under capitalism, commodity fetishism is “the necessary masking of the social relations under which commodities are produced from which capitalist commodity production gains much of its legitimacy” (qtd in Richey 172). In RSPO, corporations can hide labor abuse, environmental damage, and land grabbing. By focusing on the individual act of consumption, these sustainability models “make no attempt to grasp the system at its higher levels,” and present a “version of social justice [that] is too simple to truly “re-embed” exchange in social relations” (Reichman 154). Moreover, ethical consumption is inherently undemocratic because purchasing power and knowledge of issues are reserved for those who can afford it. The labeling and “codification of social and environmental concerns” create a “double fetishism--the masking of social relations production combined with the commoditization of the knowledge about the commodity itself” (Richey 174). Because RSPO fails to address social and political aspects, it simply entrenches existing systems of inequality and poverty by legitimizing it through “greenwashing.” In order to address the harmful impacts of palm oil, it is necessary to step away from the fetishized commodity and understand the structural dynamics behind it.

POST-FORDIST POLICIES

In the current post-Fordist era, increased competition creates relentless pressure on companies to reduce costs and increase productivity (Ritzer 1992). States also implement neoliberal policies that deregulate capital and financial markets and privatize public industries. In the palm oil context, the Indonesian government works with palm oil corporations to acquire cheap land and labor for maximized profitability (Pye 222). The intricate ties between the government and palm oil corporations lead to systematic, unequal distribution of wealth. In the name of development and with claims of poverty reduction and employment opportunities , the Indonesian government’s support of palm oil companies also seeks legitimization through economic benefits (Tyson 422).

In Indonesia, the government claimed state ownership over forested lands simply to sell them to private corporations such as RSPO board member Wilmar, despite protests from indigenous communities. About

80% of palm oil plantations are acquired in this manner, with about a quarter facing claims of customary land ownership (Pye 222). This form of land grabbing is also supplemented by the Nucleus Estate and Smallholder Schemes (NES). Under this scheme, smallholder farmers would give up a large portion of their land for a piece of palm oil plantation that is smaller than their original land. If smallholders can’t afford to give that much land, they must repay smallholding establishment costs to the company, often trapping them in perpetual debt (Rist 1011).

Indonesia’s decentralized government allows local governments to provide fiscal incentives for new palm oil plantations. As local governments compete to collect more land, more taxes, and more investment, the palm industry profits off of low taxation and ease of licensing and permits through informal transactions with these governments (Tyson 435). However, “if resource rents are managed by state actors for personal gain, and for the benefit of their distributional coalitions [it will] leave local communities behind” (437). As predicted, due to corruption and lack of tax compliance, only approximately 14% of palm oil tax revenues are redistributed to local governments (Santika et al. 115).

Furthermore, post-Fordist policies with limited welfare and labor unions allowed Indonesia to provide cheap labor. In addition to paying indigenous workers low wages, palm oil companies have been tied to trapping migrant workers into debt patronage schemes (Pye 224). Labor subcontractors lure migrant workers with the promise of a steady income, but once they are on the plantation, the workers’ passports are taken away from them. They are told that they have incurred an ever-increasing debt for transportation, housing, and food. In order to pay off the “debt”, the workers have to work for the subcontractors without receiving any wage. Because workers never received any work permits and have no form of identification, they are unable to escape (224).

DEVELOPMENT FOR WHOM?

The Indonesian government and leaders of palm oil industries claim that palm oil expansion serves the best interests of Indonesians through its economic development. Mona Surya, the chair of the GAPKI palm oil conference, claimed that 24 million Indonesians depended on the palm oil sector and tens of millions have been lifted out of poverty (Tyson 428). However, calculations from the World Bank estimated that only 2-3 million Indonesians are in some way “involved” in the sector (428). Anyhow, claims to poverty alleviation is a powerful political tool, which is utilized by President Joko Widodo to aggressively defend palm oil as contributing to the Millenium Development Goal of eradicating poverty (428). However, given the mutually beneficial wealth-power relationship the state has with the palm oil industry, these claims are questionable (see fig. 2).

Though research on poverty alleviation has varied results, there is enough evidence that palm oil has increased inequality. Several studies have noted that absolute poverty decreased for rural communities and smallholders (Rist 1014). However, between 2008 and 2013 rural poverty rates decreased by 3.5% in palm oil areas, while decreasing by 6% in non-palm producing areas (Pye 223). A survey conducted in 2016 noted positive income growth but significant environmental costs, high rates of indebtedness, and “persistent vulnerabilities to poverty” from overdependence on palm oil, participation in volatile markets, growth through expansion rather than intensification and rising inequality (Tyson 434). Another study conducted by Santika et al. (2018) noted that despite an overall increase in basic, physical and financial indicators of well-being, there was an overall decline in social and environmental measure of well-being. Socioeconomic factors such as access to secondary schools, electricity, sanitation, and energy for cooking were markedly reduced. This study also noted that “local communities are burdened with socioeconomic and environmental costs of poorly planned and implemented development, while a small number of rural and urban elites take the largest share of economic benefits” (113).

Fig. 2. Jarryd de Haan. “Consequences of Inequality in Indonesia: Extremism, Corruption and Economic Costs”; Future Directions Interntional. 4 Jul. 2017, http://www.futuredirections.org.au/publication/consequences-inequality-indonesia-extremism-corruption-economic-costs/

Meanwhile, smallholders often struggled to pay back incurred debt from planting palm trees. Under the interest rates and debt repayment schedules, the highest-earning smallholder would need 12.5 years to repay their debt while the most are free after 18 years; yet oil palm trees have a limited commercial lifespan of 25 years (Rist 1015). Despite promises of wealth, smallholder income dropped from 700,000 rupiahs (47 USD) a month to 300,000 (20 USD) after switching to palm development.

Indigenous populations “became discontented spectators of the modern economic developments taking place within their own lands” (Tyson 435). Many simply sold their land, using about 30% to pay off debts, but found their ability to earn income significantly reduced. They survived as poor day laborers without livelihood security or worker protection (Pye 223). Meanwhile, Wilmar made profits of over one billion dollars in 2015 (224).

The inequalities and negative impacts on smallholder communities and their landscapes problematize the representation of palm oil as a persistent source of livelihood benefits and socioeconomic uplift (Tyson 435). According to Sen’s concept of development, development is not just economic development, but also the expansion of citizen capabilities and access to things they value, as well as the removal of unfreedoms (Sen 10-23). This framing of development as alleviation of poverty and inequality rather than economic growth highlights the need to remove systematic inequalities and enhance social well-being. In this sense, the palm oil industry, which provides no significant alleviation to poverty or inequality but rather poses significant unfreedoms such as land-grabbing, illegal labor practices, environmental health disasters, water and air pollution, is not a valid development mechanism. Furthermore, RSPO certifications and conscientious consumerism, which lack the ability to remove such systematic failures, are ineffective to regulate the industry for it to be a viable sustainable development option.

CONCLUSION

Sustainable certification schemes like the RSPO Certification fail to deliver its claim to minimize harmful environmental and social impacts and bring sustainable development. Under the guise of “sustainability,” it delivers an oversimplified and decontextualized solution that does not address the structural inequality behind the production of palm oil. As the palm oil industry continues to exacerbate socioeconomic disparities, the ineffectiveness of RSPO in regulating the industry is evident.

In place of the RSPO, potential steps forward could include an adjustment of fiscal policies to be more distributively just and effectively monitored, increased transparency and data sharing between different government sectors and NGOs, forgiveness of smallholder debts, and increased mechanisms for public participation in issuing land permits and environmental governance. Supporting local environmental justice movements, land rights and land reform by smallholders, and improvement in labor conditions and wages of palm workers could also be promising. Though rarely documented, approximately 65% of land conflicts in West Kalimantan region of Indonesia were won by local community protestors (Pye 225). Enhancing smallholder economic and social interests and supporting agroecology knowledge sharing could also have tremendous environmental and social effects. Although these steps are difficult, it shifts the focus from sustainable certifications that “legitimizes the depoliticisation of necessary regulation” (Pye 225), towards new structural strategies that help redistribute power and bring truly sustainable development.

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