Palm oil in Sri Lanka. Self sufficiency in sustainable economies
Update November 26, 2023
President’s instruction to permit replanting Oil Palm yet to be followed -POIA
Sri Lanka is the only country in the world to ban Oil Palm while its nearest neighbour India is expanding Oil Palm cultivation exponentially said President Palm Oil Industry Association (POIA) Rohan M. Fernando at their 4th Annual General Meeting at Cinnamon Grand yesterday.
Due to our representation to Government authorities an Expert Committee was appointed and at the Plantation Reform Committee meeting held on April, , 2023, under the Chairmanship of President Ranil Wickremesinghe it was confirmed that the Expert Committee report was positive. The President then instructed to permit replanting Oil Palm.”
Despite this positive development, the ban on Oil Palm still remains. “Those responsible for banning Oil Palm may not entirely agree that it was an ill-conceived decision. However many believe that at least the issue should have been examined carefully with advices from the experts, before hastily imposing the ban.” Daily NewsLK
President’s instruction to permit replanting Oil Palm yet to be followed -POIA
Sri Lanka is the only country in the world to ban Oil Palm while its nearest neighbour India is expanding Oil Palm cultivation exponentially said President Palm Oil Industry Association (POIA) Rohan M. Fernando at their 4th Annual General Meeting at Cinnamon Grand yesterday.
Due to our representation to Government authorities an Expert Committee was appointed and at the Plantation Reform Committee meeting held on April, , 2023, under the Chairmanship of President Ranil Wickremesinghe it was confirmed that the Expert Committee report was positive. The President then instructed to permit replanting Oil Palm.”
Despite this positive development, the ban on Oil Palm still remains. “Those responsible for banning Oil Palm may not entirely agree that it was an ill-conceived decision. However many believe that at least the issue should have been examined carefully with advices from the experts, before hastily imposing the ban.” Daily NewsLK
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Update June 02, 2022.
Palm oil industry wants ban lifted, liberalisation; says ready to support economy and Govt. to overcome challenges
Palm Oil Industry Association (POIASL) yesterday said its members are ready to support the economy and Government to overcome present challenges.
In a statement POISAL called for liberalisation of the palm oil industry which it emphasised will help to strengthen smallholder investment in oil palm cultivation, which will create massive opportunities for economic emancipation and rural development through oil palm cultivation by smallholders. “Allowing our local industry to flourish will help us reduce our dependence on foreign exchange for the import edible oils, while also helping to strengthen Sri Lanka’s food security,” it said.
The POIASL requested the authorities to repeal the bans and other negative policies in place against industry and allow to do its part to support the Sri Lankan economy, and the Government of Sri Lanka in its medium to long-term economic objectives. Financial Times LK
Palm oil industry wants ban lifted, liberalisation; says ready to support economy and Govt. to overcome challenges
Palm Oil Industry Association (POIASL) yesterday said its members are ready to support the economy and Government to overcome present challenges.
In a statement POISAL called for liberalisation of the palm oil industry which it emphasised will help to strengthen smallholder investment in oil palm cultivation, which will create massive opportunities for economic emancipation and rural development through oil palm cultivation by smallholders. “Allowing our local industry to flourish will help us reduce our dependence on foreign exchange for the import edible oils, while also helping to strengthen Sri Lanka’s food security,” it said.
The POIASL requested the authorities to repeal the bans and other negative policies in place against industry and allow to do its part to support the Sri Lankan economy, and the Government of Sri Lanka in its medium to long-term economic objectives. Financial Times LK
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Update May 19, 2022. India to share more information on palm oil smallholder model
A high-level delegation representing the Palm Oil Industry Association of Sri Lanka (POIASL), recently met with India’s High Commissioner to Sri Lanka, Gopal Baglay.
The meeting took place at Indian House where a productive meeting and discussion ensued. The POIASL discussed the progress made with regard to the oil palm industry in Sri Lanka, and provided the High Commissioner with a detailed overview of the history of oil palm cultivation in Sri Lanka. Statistical and other quantitative analyses demonstrating the potential of the industry were also presented.
India’s High Commissioner to Sri Lanka referenced the success of the palm oil industry in India, particularly with regard to smallholders, under the National Edible Oil Mission – Oil Palm (NEOM-OP), saying that it was a model for self-reliance on edible oils as envisaged by Indian Prime Minister Narendra Modi. Financial TimesLK
Update April 03, 2022. Sri Lanka is in an economic crisis. Here's what it's like for people on the ground
Colombo, Sri Lanka (CNN)For three straight nights last week, Upul took to the streets of Sri Lanka's capital city holding a candle or a placard as he protested the country's worst economic crisis in decades.
Like his neighbors, he was frustrated by the more than 10-hour power cuts that plunged Colombo into darkness, and a shortage of gas to cook with that made it hard for his family to eat.
Then on Thursday -- the fourth night -- the protest turned violent. CNN
Update April 18, 2021. Sri Lankan government decision to ban palm oil back-tracked as major consumer goods industries push back against the decision.
The Government has taken two steps back after the first step of banning the import of palm oil, the most popular cooking oil, which followed the Prime Minister’s directive of lifting the restriction on certain refined palm oil based products within 24 hours of the President’s prohibition order. SundayTimesLK
- Move aimed at achieving self-reliance with regard to vegetable oil production in Sri Lanka
A high-level delegation representing the Palm Oil Industry Association of Sri Lanka (POIASL), recently met with India’s High Commissioner to Sri Lanka, Gopal Baglay.
The meeting took place at Indian House where a productive meeting and discussion ensued. The POIASL discussed the progress made with regard to the oil palm industry in Sri Lanka, and provided the High Commissioner with a detailed overview of the history of oil palm cultivation in Sri Lanka. Statistical and other quantitative analyses demonstrating the potential of the industry were also presented.
India’s High Commissioner to Sri Lanka referenced the success of the palm oil industry in India, particularly with regard to smallholders, under the National Edible Oil Mission – Oil Palm (NEOM-OP), saying that it was a model for self-reliance on edible oils as envisaged by Indian Prime Minister Narendra Modi. Financial TimesLK
Update April 03, 2022. Sri Lanka is in an economic crisis. Here's what it's like for people on the ground
Colombo, Sri Lanka (CNN)For three straight nights last week, Upul took to the streets of Sri Lanka's capital city holding a candle or a placard as he protested the country's worst economic crisis in decades.
Like his neighbors, he was frustrated by the more than 10-hour power cuts that plunged Colombo into darkness, and a shortage of gas to cook with that made it hard for his family to eat.
Then on Thursday -- the fourth night -- the protest turned violent. CNN
Update April 18, 2021. Sri Lankan government decision to ban palm oil back-tracked as major consumer goods industries push back against the decision.
The Government has taken two steps back after the first step of banning the import of palm oil, the most popular cooking oil, which followed the Prime Minister’s directive of lifting the restriction on certain refined palm oil based products within 24 hours of the President’s prohibition order. SundayTimesLK
Update April 10, 2021. The President of Sri Lanka issued a 'midnight gazette' to ban the import of palm oil with further instructions to uproot palm oil plantations in the nation.
Reaction to this has come fast and furious as rising costs of Sri Lanka's "ban-nomics" has made staple food items including turmeric and sugar prohibitively expensive.
Latest coverage on the issue from Sunday Times Lanka reports "About-turn on palm oil ban fails to quell industry uproar"
Reaction to this has come fast and furious as rising costs of Sri Lanka's "ban-nomics" has made staple food items including turmeric and sugar prohibitively expensive.
Latest coverage on the issue from Sunday Times Lanka reports "About-turn on palm oil ban fails to quell industry uproar"
Update May 02, 2020. Sri Lanka’s oil palm cultivators can provide tangible support to the government’s efforts to promote local agriculture and import substitution as a response to the impact of the COVID-19 pandemic on the national economy, the sector’s apex industry association has said. Adaderana
Update January 17, 2020. Jan 17, 2020 (LBO) – Planters’ Association of Ceylon urges policy makers to urgently convene a meeting of all stakeholders in order to make a final determination on the subject of oil palm cultivation in Sri Lanka, after having fully considered all available and verified scientific and economic data on the subject.Full Statement
Update August 27,2019. ECONOMYNEXT – Sri Lanka’s palm oil plantations stand to lose 500 million rupees worth of fully grown plants in nurseries as the government dithers on approving new plantings the industry badly needs to expand production, an official said.
Read full article.
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Read our original commentary below.
Palm oil. As countries from South Asia to Africa look to sustain growing populations and their economies, environmentalists in Sri Lanka are warning that the palm oil industry will hurt traditional cash crops of tea and rubber. The debates for and against palm oil is on going and Plantations Minister Navin Dissanayake has called for evidence to support what he called an emotion based attitude.
Update January 17, 2020. Jan 17, 2020 (LBO) – Planters’ Association of Ceylon urges policy makers to urgently convene a meeting of all stakeholders in order to make a final determination on the subject of oil palm cultivation in Sri Lanka, after having fully considered all available and verified scientific and economic data on the subject.Full Statement
Update August 27,2019. ECONOMYNEXT – Sri Lanka’s palm oil plantations stand to lose 500 million rupees worth of fully grown plants in nurseries as the government dithers on approving new plantings the industry badly needs to expand production, an official said.
Read full article.
------------------------
Read our original commentary below.
Palm oil. As countries from South Asia to Africa look to sustain growing populations and their economies, environmentalists in Sri Lanka are warning that the palm oil industry will hurt traditional cash crops of tea and rubber. The debates for and against palm oil is on going and Plantations Minister Navin Dissanayake has called for evidence to support what he called an emotion based attitude.
Image credit: exploresrilanka.lk
“ There is growing opposition to palm oil cultivation in some districts with non-governmental organizations and political parties getting involved in protests, claiming that the environment was being harmed by oil palm."
The main arguments used by the anti-palm oil groups has been that it threatens traditional crops but the references made to the industry’s environmental impact in Indonesia is not relevant to Sri Lanka which the additional expansion of only 9,000 hectares is seen as a move towards self sufficiency and the preservation of foreign reserves.
No questions on sustainability of palm oil in Sri Lanka
Professor Asoka Nugawela who is the Chair Professor, Department of Plantation Management, Faculty of Agriculture and Plantation Management, Wayamba University of Sri Lanka responded to a CSPO Watch enquiry:
An oil palm industry in Sri Lanka is much needed for import substitution. Each year more than Rs. 30 billion in foreign exchange is spent on importing oil palm. It is following an increasing trend as well due to local coconut oil production is on the decline.
In making the case for Sri Lanka to develop its palm oil industry for the sake of self sufficiency, Professor Nugawela presents a convincing view. The article sent to CSPO Watch is published below.
An oil palm industry in Sri Lanka is much needed for import substitution. Each year more than Rs. 30 billion in foreign exchange is spent on importing oil palm. It is following an increasing trend as well due to local coconut oil production is on the decline.
In making the case for Sri Lanka to develop its palm oil industry for the sake of self sufficiency, Professor Nugawela presents a convincing view. The article sent to CSPO Watch is published below.
Sustainable oil palm cultivations to strengthen plantation and national economies
By Prof. A. Nugawela, Dr. Nayanie Aratchige and Dr. Indika Palihakkara
Apart from being used as a cooking oil, in products such as creams used for skin care, shampoos and soaps, detergents, margarine, confectionaries including biscuits & chocolates, bakery products, milk powder and drinks like cola palm oil is an important ingredient. With the increasing world population the demand for these products are also increasing. Thus, the demand for palm oil in the world is on an increasing trend. Collectively the global palm oil market’s value is projected to continue to expand from the present US$ 65.7 billion up to US$ 92.8 billion by the year 2021.
The world’s most efficient oil producing crop
While it is fairly common knowledge that palm oil is a vital, highly in-demand commodity in international markets, the efficiency of this crop tends to be less well understood. Particularly when juxtaposed with other popular vegetable oils, this picture comes into sharper focus.
Soya bean oil, the closest competitor to palm oil, accounts for approximately 22% of total vegetable oil production however, as a crop, Soya Bean produce only 0.38 MT of oil per hectare of land. Canola and Sunflower contributes to 13 and 7.5% of the global vegetable oil production respectively and their oil production efficiency is about 0.48 MT per hectare per annum. In comparison, Oil Palm far outstrips any of its competitors; producing 62.6 million MT or 31% of the total global requirement for vegetable oil with an efficiency of 3.74 MT per hectare per annum which is almost ten times higher than the efficiency or productivity of rest of the crops cultivated for the purpose. If we compare the vegetable oil production efficiency of oil palm with coconut, about four hectares of coconut land is needed to produce the same quantity of vegetable oil produced by just one hectare of oil palm.
Bridging the gap – the economic case for oil palm
In 2015, Sri Lanka’s annual edible oil requirement stood at 160,000 Metric Tons (MT). Conversely, the country produces a total of just 53,000 MT of coconut oil and 18,000 MT of palm oil, leaving a deficit of 89,000 MT in the island’s edible oil requirement. Notably, this data actually excludes all other vegetable and plant based oils, meaning that the country’s actual total requirement is even higher.
While these dynamics present notable challenges to the Sri Lankan economy, particularly in terms of the depletion of foreign exchange, they also speak to vast untapped potential for import substitution and export development. In 2015, Sri Lanka spent Rs. 20.8 billion on oil and fats imports with a significant majority of those imports being for palm oil. Collectively, palm kernel, palm olein, palm stearin and crude palm oil accounted for 164,835 MT or nearly 30% of all edible oil and fats imported into Sri Lanka.
Hence from purely a demand perspective, we can clearly see that there exists a clear, strong, pressing demand for oil palm, both locally and internationally. Similarly, the supply-side economics of oil palm are equally persuasive.
With this background the Government of Sri Lanka took a decision in 2010 to plant 20,000 hectares of land with the oil palm crop to achieve self-sufficiency in her vegetable oil requirement and thereby curtailing the draining of valuable foreign exchange earnings from the country. This accounts to only 2.8% of the total extent of around 700,000ha under traditional plantation crops in the country.
Current economic performance of traditional plantation crops
This phenomenal efficiency is a hallmark of the oil palm crop. When compared with Sri Lanka’s mainstay of plantation crops, oil palm has easily the lowest Cost of Production (COP) at just Rs. 15 per kilogram of Fresh Fruit Bunches (FFB), with a net sale average (NSA) of Rs. 45 per kg of same. By comparison Rubber commands a NSA of approximately Rs. 300 per kg, but is hampered by a substantially lower margin given the rubber COP of Rs. 250 per kg. This dynamic is further escalated when oil palm is compared with tea which has a NSA of Rs. 550 per kg but also accounts for the highest COP – both of Sri Lankan plantation crops as well as when compared with tea productions in competing countries – at Rs. 520 per kg. The fact that the average land productivity for tea and rubber in the regional plantation companies is only around 1,500 and 1,000 kg per hectare per annum respectively, also contributes to relatively low returns from these crops.
The superior potential of oil palm to reinvigorate the Sri Lankan plantation sector is undeniable. Growth in demand for palm oil in the world even surpasses that of tea and rubber. Unlike tea or rubber, palm oil is cheaper to produce and requires far less land, and far less investment. The only other close competitor for vegetable oil in Sri Lanka, coconut has a NSA and a COP of Rs. 50 and Rs.15 per nut respectively. However, coconut produces a yield per hectare (YPH) of only 7,000 nuts, whilst oil palm produces 18,000 kg per hectare annum.
In essence, oil palm is by far Sri Lanka’s most profitable crop. Coconut generates Rs. 245,000 per hectare per annum, while Tea and Rubber produce Rs. 45,000 and Rs. 50,000 respectively whereas oil palm generates Rs. 514,000 per hectare per annum. Higher profitability from the oil palm crop would enable the plantation sector to provide an opportunity for the plantation workers to improve their earning capacity and there by enhance their quality of life.
Given the stark differences in the profit making potential of these crops, the only remaining question for the Sri Lankan plantation industry is whether we have the ability to establish and manage oil palm in a manner that is sustainable for all stakeholders and for the environment as a whole.
The oil palm tree
The oil palm tree has originated in the tropics of African countries. This native land is characterized by the same weather conditions we experience in our wet zone of the country, i.e. annual mean rain fall of around 3000 mm, mean temperature of about 280 C and 5 to 6 hours of daily sunshine. When the palm is grown under such climatic conditions the environment is benefitted by the removal of greenhouse gasses, conserving soil and soil moisture and also by contributing to the natural water cycle. Hence, when the crop is domesticated and grown under conditions in which it was found naturally using sound agronomic practices the crop cannot harm our environment.
Environmental impact - dispelling myths and establishing facts
The health of the plantation economy is intrinsically and irrevocably linked to the health of the plantation environment. When dealing with the reality of the planation sector, we must first understand that the financial viability of investments into the estates hinges on the ability of such investments to generate returns sufficient for them to be sustainable. If we continue to confine ourselves solely to crops which have low margins, then investments will eventually begin to decline. No new investments mean no employment, and an inability to implement agricultural best practices. Therefore in a very real sense, low profitability can lead to environmental threats over time.
Crop diversification is also a widely accepted strategy for sustaining financial viability in plantations as it protects investors from unhealthy price fluctuations of plantation produce.
If we are to move into oil palm in a concerted and systematic manner, we need to guarantee the ability of these enterprises to not just continue, but drastically scale up their investments across the entire plantation sector. This is the most simple and holistically beneficial solution for all stakeholders to the plantation industry. Unfortunately, RPCs face serious obstacles in leading the industry towards this prosperous future.
The majority of these obstacles stem for myths as to the environmental impact of oil palm cultivation, some of which have basis in fact, others completely in fiction, but all of which can be effectively mitigated against. Having worked extensively in this area representing different government institutions we get the opportunity to participate in active discussions with various stakeholder groups who have repeatedly raised the same concerns about oil palm.
Among the most common concerns raised is that oil palm cultivation severely depletes water resources in the surrounding area while its thick canopy prevents undergrowth from taking root, negatively impacting the soil and the diversity of flora and fauna. Certainly with the type of ‘slash and burn’ cultivation of virgin forest that takes place in Indonesia, this is the case and we must all oppose such practices, but the situation in Sri Lanka is completely different.
Sri Lankan RPCs are bound to strictly adhere to rigidly enforced legal prohibitions on the clearing of existing natural forests. In that regard, all Sri Lankan RPCs are only able to plant oil palm on existing plantation land. To date, RPCs have only replaced unproductive rubber and tea in low lying regions of the country with oil palm, all of which is situated in Sri Lanka’s wet zone. With such diversifications RPCs need to endeavor to maintain production levels of both tea and rubber crops by enhancing land productivity of the remaining younger cultivations for which there is ample room.
With regards to water uptake, it is certainly true that each oil palm plant consumes more water. A typical mature oil palm plant requires 249 litres of water per plant, where coconut requires 130 litres and rubber consumes 63 liters. However, the requirement per plant must also be balanced against the fact that oil palm requires a significantly smaller number of plants per hectare than coconut, rubber or tea.
To get a true picture of the consumption of water resources, we must therefore analyze these crops in terms of daily water requirement per hectare. Coconut requires 20,800 liters per hectare per day while rubber requires 31,500 liters and oil palm, slightly more with 34,860 liters per hectare per day.
Given that oil palm is only cultivated in regions where annual rainfall averages 3,500 mm, and that the crop water requirement is around 1,300 mm per annum which is 37% of annual rainfall of oil palm cultivating areas, as compared 1,095 mm per annum for the rubber crop, there is no situation in which oil palm cultivation can lead to a deficit in water resources. In fact, while oil palm consumes more, it also contributes more to the water cycle as well, meaning that there is no real net change in water availability. Further, under water limiting conditions, caused either through long dry spells in wetter regions or by cultivating in drier regions, as for all other crops, oil palm also has the ability to regulate and lower crop water use leading to a decline in productivity. Oil palm and coconut have shallow and fibrous root systems and hence would sense soil water deficits and would also regulate their water use much quicker than crops possessing deep tap root systems.
When speaking of the environmental services performed by oil palm, it is therefore important to note that with regards to the fixing of atmospheric carbon-dioxide (CO₂), oil palm has a far greater capacity for absorbing carbon-dioxide from the air. As with the increased water consumption, there is an underlying cause for this, and that is the accelerated and higher productivity of an oil palm plant.
Similarly, the myth that oil palm causes an absence of undergrowth is one which is easily dismissed, and a visit to any estate that employs basic agronomic techniques will prove the reality of this fact.
The other fear for oil palm cultivation is the belief that it will erode employment opportunities for workers in the plantations. But the ground reality is that plantation management companies are presently handicapped from a severe shortage of workers. Diversifying plantations with economically more lucrative crops such as oil palm will definitely enhance the capacity of the plantation companies to offer higher wages and arrest the outmigration of plantation workers to other sectors.
Introducing oil palm to Sri Lanka
The palm oil tree had been introduced to Sri Lanka well over 100 years, but initially as an ornamental plant. However, subsequently in 1968 Gerry Wales introduced this palm to Nakiadeniya Estate in Galle as a commercial plantation crop. Since then this Estate had being engaged in cultivating and processing of this crop and to-day almost the entire estate is planted with this crop. Though the crop had been in existence for nearly half a century in Nakiadeniya, Galle no scientifically validated adverse environmental impacts have so far been reported.
Alternate uses of palm oil crop
Apart from obtaining palm oil and palm kernel oil, there are many other potential uses of this palm. Once the economic lifespan of the oil palm plantations are completed sap could be obtained from the uprooted palms. This sap could be used in the manufacture of sugar, alcohol and biofuel. Upon the harvesting of these produce from the felled palms, the remaining dried trunk could be used for manufacturing products like paper, pulp, furniture and particle boards. Further, the energy requirement of the palm oil processing factories is met solely by renewable energy derived from the fiber and the shells of the palm oil fruit. Hence, it’s a palm where every part of it has an economic value.
For alternate industries to develop sufficient quantities of the raw material is needed and hence cultivating 20,000ha of Oil Palm in the country would enable to maximize the economic benefits of this crop. Further, with 20,000 ha of Oil Palm the coconuts could be used for value addition generating more foreign exchange to the country.
Sustainability through diversity
When approaching this issue from a factual basis, it therefore becomes clear oil palm can easily be cultivated without depleting water resources or negatively impacting environmental habitats, simply through the adoption of proper land selection, planting, soil and moisture conservation practices. Given the substantial and rapid returns that oil palm is capable of generating those who plant would quickly recover their investments into proper agronomic practices. This in turn would only enhance the value of oil palm produced in Sri Lanka.
As with any crop however, we must take care, and employ careful planning and agricultural best practices when establishing a commercial scale plantation. In that regard, we would propose a few basic guidelines to ensuring that Sri Lanka’s oil palm plantations stay sustainable as they grow.
We must ensure that all oil palm plantations are established only in areas with average rainfall greater than 2,500 mm and at an elevation below 300 meters. They should not be established on steep slopes, hence terrain with a slope of above 22 degrees or 40% must be avoided. Similarly, RPCs must continue to avoid planting in catchment areas and in natural forests – a factor which is undoubtedly likely to continue given that RPCs are confined to existing plantation lands.
They must seek to replace crops with diversifications into oil palm where those crops have reached the end of their natural economic lifespan. Meanwhile, certain agricultural practices must become mandatory such as the establishment of ground cover, contour planting, correct stand per hectare, draining and terracing and; this will drastically improve soil and moisture conservation. Soil scientists in Sri Lanka has shown that lands with proper soil and moisture conservation will retain 30% more soil water than in lands without such practices. Apparently, the adoption level of soil and moisture conservation practices in our plantations are currently at very low level possibly due to financial reasons. Provided the basic guidelines listed above are followed, we see no reason Sri Lanka cannot embark upon a systematic, sustainable diversification into oil palm as part of a wider, winning strategy to secure the future of the entire plantation sector.
End. Prof. Asoka Nugawela article. Published September 2018
Update March 02, 2020. Oil palm. Reality vs public and political opinions. The media recently reported about an overwhelming public demand for banning of oil palm cultivation at a gathering you attended recently in the South and you connived to do so. However, if I got you right, you had a proviso in your statement and that was to ‘do so if this crop is damaging the environment’. DailyMirrorLK
Update December 29, 2019. The government of Sri Lanka has bowed to anti palm oil sentiment and decided not to expand planted areas. Professor Asoka Nugawela continues to argue for the expansion for self reliance. Read his comments as reported by The Sunday Observer, Sri Lanka.
Oil palm cultivation does not have an adverse impact on the environment rather it contributes to preserve the ecology. Banning the cultivation of the lucrative crop will be a major loss to the economy, said an agricultural expert.
Former Chair, Department of Plantation Management, Wayamba University, Prof. Asoka Nugawela said oil palm cultivation does not have negative impacts on the environment instead as other plantations crops such as rubber, it contributes to the environment by reducing atmospheric carbon dioxide levels, protecting the soil from the direct impact of rain fall and contributes to the natural water cycle.
http://www.sundayobserver.lk/2019/12/29/business/oil-palm-no-adverse-impact-environment-says-agricultural-expert
By Prof. A. Nugawela, Dr. Nayanie Aratchige and Dr. Indika Palihakkara
Apart from being used as a cooking oil, in products such as creams used for skin care, shampoos and soaps, detergents, margarine, confectionaries including biscuits & chocolates, bakery products, milk powder and drinks like cola palm oil is an important ingredient. With the increasing world population the demand for these products are also increasing. Thus, the demand for palm oil in the world is on an increasing trend. Collectively the global palm oil market’s value is projected to continue to expand from the present US$ 65.7 billion up to US$ 92.8 billion by the year 2021.
The world’s most efficient oil producing crop
While it is fairly common knowledge that palm oil is a vital, highly in-demand commodity in international markets, the efficiency of this crop tends to be less well understood. Particularly when juxtaposed with other popular vegetable oils, this picture comes into sharper focus.
Soya bean oil, the closest competitor to palm oil, accounts for approximately 22% of total vegetable oil production however, as a crop, Soya Bean produce only 0.38 MT of oil per hectare of land. Canola and Sunflower contributes to 13 and 7.5% of the global vegetable oil production respectively and their oil production efficiency is about 0.48 MT per hectare per annum. In comparison, Oil Palm far outstrips any of its competitors; producing 62.6 million MT or 31% of the total global requirement for vegetable oil with an efficiency of 3.74 MT per hectare per annum which is almost ten times higher than the efficiency or productivity of rest of the crops cultivated for the purpose. If we compare the vegetable oil production efficiency of oil palm with coconut, about four hectares of coconut land is needed to produce the same quantity of vegetable oil produced by just one hectare of oil palm.
Bridging the gap – the economic case for oil palm
In 2015, Sri Lanka’s annual edible oil requirement stood at 160,000 Metric Tons (MT). Conversely, the country produces a total of just 53,000 MT of coconut oil and 18,000 MT of palm oil, leaving a deficit of 89,000 MT in the island’s edible oil requirement. Notably, this data actually excludes all other vegetable and plant based oils, meaning that the country’s actual total requirement is even higher.
While these dynamics present notable challenges to the Sri Lankan economy, particularly in terms of the depletion of foreign exchange, they also speak to vast untapped potential for import substitution and export development. In 2015, Sri Lanka spent Rs. 20.8 billion on oil and fats imports with a significant majority of those imports being for palm oil. Collectively, palm kernel, palm olein, palm stearin and crude palm oil accounted for 164,835 MT or nearly 30% of all edible oil and fats imported into Sri Lanka.
Hence from purely a demand perspective, we can clearly see that there exists a clear, strong, pressing demand for oil palm, both locally and internationally. Similarly, the supply-side economics of oil palm are equally persuasive.
With this background the Government of Sri Lanka took a decision in 2010 to plant 20,000 hectares of land with the oil palm crop to achieve self-sufficiency in her vegetable oil requirement and thereby curtailing the draining of valuable foreign exchange earnings from the country. This accounts to only 2.8% of the total extent of around 700,000ha under traditional plantation crops in the country.
Current economic performance of traditional plantation crops
This phenomenal efficiency is a hallmark of the oil palm crop. When compared with Sri Lanka’s mainstay of plantation crops, oil palm has easily the lowest Cost of Production (COP) at just Rs. 15 per kilogram of Fresh Fruit Bunches (FFB), with a net sale average (NSA) of Rs. 45 per kg of same. By comparison Rubber commands a NSA of approximately Rs. 300 per kg, but is hampered by a substantially lower margin given the rubber COP of Rs. 250 per kg. This dynamic is further escalated when oil palm is compared with tea which has a NSA of Rs. 550 per kg but also accounts for the highest COP – both of Sri Lankan plantation crops as well as when compared with tea productions in competing countries – at Rs. 520 per kg. The fact that the average land productivity for tea and rubber in the regional plantation companies is only around 1,500 and 1,000 kg per hectare per annum respectively, also contributes to relatively low returns from these crops.
The superior potential of oil palm to reinvigorate the Sri Lankan plantation sector is undeniable. Growth in demand for palm oil in the world even surpasses that of tea and rubber. Unlike tea or rubber, palm oil is cheaper to produce and requires far less land, and far less investment. The only other close competitor for vegetable oil in Sri Lanka, coconut has a NSA and a COP of Rs. 50 and Rs.15 per nut respectively. However, coconut produces a yield per hectare (YPH) of only 7,000 nuts, whilst oil palm produces 18,000 kg per hectare annum.
In essence, oil palm is by far Sri Lanka’s most profitable crop. Coconut generates Rs. 245,000 per hectare per annum, while Tea and Rubber produce Rs. 45,000 and Rs. 50,000 respectively whereas oil palm generates Rs. 514,000 per hectare per annum. Higher profitability from the oil palm crop would enable the plantation sector to provide an opportunity for the plantation workers to improve their earning capacity and there by enhance their quality of life.
Given the stark differences in the profit making potential of these crops, the only remaining question for the Sri Lankan plantation industry is whether we have the ability to establish and manage oil palm in a manner that is sustainable for all stakeholders and for the environment as a whole.
The oil palm tree
The oil palm tree has originated in the tropics of African countries. This native land is characterized by the same weather conditions we experience in our wet zone of the country, i.e. annual mean rain fall of around 3000 mm, mean temperature of about 280 C and 5 to 6 hours of daily sunshine. When the palm is grown under such climatic conditions the environment is benefitted by the removal of greenhouse gasses, conserving soil and soil moisture and also by contributing to the natural water cycle. Hence, when the crop is domesticated and grown under conditions in which it was found naturally using sound agronomic practices the crop cannot harm our environment.
Environmental impact - dispelling myths and establishing facts
The health of the plantation economy is intrinsically and irrevocably linked to the health of the plantation environment. When dealing with the reality of the planation sector, we must first understand that the financial viability of investments into the estates hinges on the ability of such investments to generate returns sufficient for them to be sustainable. If we continue to confine ourselves solely to crops which have low margins, then investments will eventually begin to decline. No new investments mean no employment, and an inability to implement agricultural best practices. Therefore in a very real sense, low profitability can lead to environmental threats over time.
Crop diversification is also a widely accepted strategy for sustaining financial viability in plantations as it protects investors from unhealthy price fluctuations of plantation produce.
If we are to move into oil palm in a concerted and systematic manner, we need to guarantee the ability of these enterprises to not just continue, but drastically scale up their investments across the entire plantation sector. This is the most simple and holistically beneficial solution for all stakeholders to the plantation industry. Unfortunately, RPCs face serious obstacles in leading the industry towards this prosperous future.
The majority of these obstacles stem for myths as to the environmental impact of oil palm cultivation, some of which have basis in fact, others completely in fiction, but all of which can be effectively mitigated against. Having worked extensively in this area representing different government institutions we get the opportunity to participate in active discussions with various stakeholder groups who have repeatedly raised the same concerns about oil palm.
Among the most common concerns raised is that oil palm cultivation severely depletes water resources in the surrounding area while its thick canopy prevents undergrowth from taking root, negatively impacting the soil and the diversity of flora and fauna. Certainly with the type of ‘slash and burn’ cultivation of virgin forest that takes place in Indonesia, this is the case and we must all oppose such practices, but the situation in Sri Lanka is completely different.
Sri Lankan RPCs are bound to strictly adhere to rigidly enforced legal prohibitions on the clearing of existing natural forests. In that regard, all Sri Lankan RPCs are only able to plant oil palm on existing plantation land. To date, RPCs have only replaced unproductive rubber and tea in low lying regions of the country with oil palm, all of which is situated in Sri Lanka’s wet zone. With such diversifications RPCs need to endeavor to maintain production levels of both tea and rubber crops by enhancing land productivity of the remaining younger cultivations for which there is ample room.
With regards to water uptake, it is certainly true that each oil palm plant consumes more water. A typical mature oil palm plant requires 249 litres of water per plant, where coconut requires 130 litres and rubber consumes 63 liters. However, the requirement per plant must also be balanced against the fact that oil palm requires a significantly smaller number of plants per hectare than coconut, rubber or tea.
To get a true picture of the consumption of water resources, we must therefore analyze these crops in terms of daily water requirement per hectare. Coconut requires 20,800 liters per hectare per day while rubber requires 31,500 liters and oil palm, slightly more with 34,860 liters per hectare per day.
Given that oil palm is only cultivated in regions where annual rainfall averages 3,500 mm, and that the crop water requirement is around 1,300 mm per annum which is 37% of annual rainfall of oil palm cultivating areas, as compared 1,095 mm per annum for the rubber crop, there is no situation in which oil palm cultivation can lead to a deficit in water resources. In fact, while oil palm consumes more, it also contributes more to the water cycle as well, meaning that there is no real net change in water availability. Further, under water limiting conditions, caused either through long dry spells in wetter regions or by cultivating in drier regions, as for all other crops, oil palm also has the ability to regulate and lower crop water use leading to a decline in productivity. Oil palm and coconut have shallow and fibrous root systems and hence would sense soil water deficits and would also regulate their water use much quicker than crops possessing deep tap root systems.
When speaking of the environmental services performed by oil palm, it is therefore important to note that with regards to the fixing of atmospheric carbon-dioxide (CO₂), oil palm has a far greater capacity for absorbing carbon-dioxide from the air. As with the increased water consumption, there is an underlying cause for this, and that is the accelerated and higher productivity of an oil palm plant.
Similarly, the myth that oil palm causes an absence of undergrowth is one which is easily dismissed, and a visit to any estate that employs basic agronomic techniques will prove the reality of this fact.
The other fear for oil palm cultivation is the belief that it will erode employment opportunities for workers in the plantations. But the ground reality is that plantation management companies are presently handicapped from a severe shortage of workers. Diversifying plantations with economically more lucrative crops such as oil palm will definitely enhance the capacity of the plantation companies to offer higher wages and arrest the outmigration of plantation workers to other sectors.
Introducing oil palm to Sri Lanka
The palm oil tree had been introduced to Sri Lanka well over 100 years, but initially as an ornamental plant. However, subsequently in 1968 Gerry Wales introduced this palm to Nakiadeniya Estate in Galle as a commercial plantation crop. Since then this Estate had being engaged in cultivating and processing of this crop and to-day almost the entire estate is planted with this crop. Though the crop had been in existence for nearly half a century in Nakiadeniya, Galle no scientifically validated adverse environmental impacts have so far been reported.
Alternate uses of palm oil crop
Apart from obtaining palm oil and palm kernel oil, there are many other potential uses of this palm. Once the economic lifespan of the oil palm plantations are completed sap could be obtained from the uprooted palms. This sap could be used in the manufacture of sugar, alcohol and biofuel. Upon the harvesting of these produce from the felled palms, the remaining dried trunk could be used for manufacturing products like paper, pulp, furniture and particle boards. Further, the energy requirement of the palm oil processing factories is met solely by renewable energy derived from the fiber and the shells of the palm oil fruit. Hence, it’s a palm where every part of it has an economic value.
For alternate industries to develop sufficient quantities of the raw material is needed and hence cultivating 20,000ha of Oil Palm in the country would enable to maximize the economic benefits of this crop. Further, with 20,000 ha of Oil Palm the coconuts could be used for value addition generating more foreign exchange to the country.
Sustainability through diversity
When approaching this issue from a factual basis, it therefore becomes clear oil palm can easily be cultivated without depleting water resources or negatively impacting environmental habitats, simply through the adoption of proper land selection, planting, soil and moisture conservation practices. Given the substantial and rapid returns that oil palm is capable of generating those who plant would quickly recover their investments into proper agronomic practices. This in turn would only enhance the value of oil palm produced in Sri Lanka.
As with any crop however, we must take care, and employ careful planning and agricultural best practices when establishing a commercial scale plantation. In that regard, we would propose a few basic guidelines to ensuring that Sri Lanka’s oil palm plantations stay sustainable as they grow.
We must ensure that all oil palm plantations are established only in areas with average rainfall greater than 2,500 mm and at an elevation below 300 meters. They should not be established on steep slopes, hence terrain with a slope of above 22 degrees or 40% must be avoided. Similarly, RPCs must continue to avoid planting in catchment areas and in natural forests – a factor which is undoubtedly likely to continue given that RPCs are confined to existing plantation lands.
They must seek to replace crops with diversifications into oil palm where those crops have reached the end of their natural economic lifespan. Meanwhile, certain agricultural practices must become mandatory such as the establishment of ground cover, contour planting, correct stand per hectare, draining and terracing and; this will drastically improve soil and moisture conservation. Soil scientists in Sri Lanka has shown that lands with proper soil and moisture conservation will retain 30% more soil water than in lands without such practices. Apparently, the adoption level of soil and moisture conservation practices in our plantations are currently at very low level possibly due to financial reasons. Provided the basic guidelines listed above are followed, we see no reason Sri Lanka cannot embark upon a systematic, sustainable diversification into oil palm as part of a wider, winning strategy to secure the future of the entire plantation sector.
End. Prof. Asoka Nugawela article. Published September 2018
Update March 02, 2020. Oil palm. Reality vs public and political opinions. The media recently reported about an overwhelming public demand for banning of oil palm cultivation at a gathering you attended recently in the South and you connived to do so. However, if I got you right, you had a proviso in your statement and that was to ‘do so if this crop is damaging the environment’. DailyMirrorLK
Update December 29, 2019. The government of Sri Lanka has bowed to anti palm oil sentiment and decided not to expand planted areas. Professor Asoka Nugawela continues to argue for the expansion for self reliance. Read his comments as reported by The Sunday Observer, Sri Lanka.
Oil palm cultivation does not have an adverse impact on the environment rather it contributes to preserve the ecology. Banning the cultivation of the lucrative crop will be a major loss to the economy, said an agricultural expert.
Former Chair, Department of Plantation Management, Wayamba University, Prof. Asoka Nugawela said oil palm cultivation does not have negative impacts on the environment instead as other plantations crops such as rubber, it contributes to the environment by reducing atmospheric carbon dioxide levels, protecting the soil from the direct impact of rain fall and contributes to the natural water cycle.
http://www.sundayobserver.lk/2019/12/29/business/oil-palm-no-adverse-impact-environment-says-agricultural-expert