Malaysia's Sabah aims to win big as world's first green palm oil state

Sandakan, Malaysia | Fri, January 28, 2022

Ettol Kumpilon’s tiny family farm in Malaysia’s eastern province of Sabah has allowed him to remodel his home, send his eldest child to school, and build up a solid savings account by switching from rice to oil palm. However, as a result of rising temperatures caused by climate change, which are affecting his yields, the 40-year-old has joined an innovative scheme aimed at raising sustainability standards among all palm oil growers across Borneo’s state. Its objectives include protecting animals and forests, resolving land disputes and worker abuses, improving harvests, and attracting premium-paying palm oil consumers from throughout the world.

The father of two told the Thomson Reuters Foundation, “Palm oil has altered my life, especially monetarily.” “However, compared to the 1980s, there is definitely a temperature difference in my hamlet now.” When the weather was colder, our land was more fertile.” Palm oil is the world’s most frequently used edible oil, found in everything from margarine to soap, but its production has been criticized by environmentalists and consumers, who blame it for forest destruction, fires, and labor abuse. According to the WWF, Sabah generated over 5 million tons of palm oil in 2020, accounting for roughly 6% of worldwide output, making it the second-largest state in Malaysia, which is the world’s second-largest producer.

According to officials, Sabah’s palm oil business, which depends on smallholders for 20-30% of output, contributes 1 billion ringgit (US$238.7 million) to state coffers each year, with plantations covering 1.7 million hectares. Despite this, luxuriant forests occupy 65 percent of Sabah, home to often-endangered fauna including as wild boar, orangutans, proboscis monkeys, and pygmy elephants. With the goal of producing exclusively ethical and green oil by 2025, Sabah launched the Jurisdictional Certification of Sustainable Palm Oil (JCSPO) project in 2015 to strike a balance between natural conservation and supporting its palm oil economy. Recruiting smallholders like Kumpilon, who owns a six-hectare farm outside of Sandakan’s seaside city, is a major task and critical to the project’s success. “We’ve learned how to manage our fields and finances, and it’s helped us when dealing with palm [oil] mills,” said Kumpilon, who joined the scheme about five years ago. “I am not alarmed or freaked out by climate change but something needs to be done,” he added.

Industry backing

Frederick Kugan, the state forestry department’s chief conservator, is helping to lead Sabah’s palm oil business toward a greener future under the project, which brings together growers and customers, local communities, and conservation groups. Due to an inflow of Chinese migrants during the previous century, Sandakan has earned the nickname “Little Hong Kong.” Before being a major grower and exporter of palm oil, it was dominated by the timber trade. Felda and IOI Corp of Malaysia, Singapore-based agribusiness Wilmar International, and consumer goods giant Unilever all have operations in the state. According to Kugan, the palm oil program has identified crucial conservation areas, enacted supportive laws and mandates, talked with business and environmentalists, and examined how to address issues faced by smallholders through certification research and development.

This year’s focus will be on expanding pilot projects that have helped small farms become more environmentally conscious and ethical. That involves meeting a national green standard before applying for certification from the Roundtable on Sustainable Palm Oil (RSPO), a worldwide watchdog with over 4,000 members including producers, dealers, merchants, and advocacy groups based in Kuala Lumpur. The RSPO guidelines, which are backed by big buyers, include a ban on destroying forests and converting peatland for plantations, as well as increased labor and land rights protection.

“It all costs money, which is why we need the assistance of the industrial players in Sabah,” said Kugan, who has been involved in the state-led project since its inception. “We are here to defend the industry [and] to ensure that whatever palm is produced in Sabah is accepted by the market,” he said. The objective, according to Kugan, is to extend the sustainable palm oil technique to other Sabah commodities such as lumber, but he admits that meeting the 2025 target will be difficult. “We’re halfway there [and] there are so many additional concerns,” he added, adding that certification may take another five years. The pioneering jurisdictional approach could be replicated in other places, if the political will exists, he noted.

Since 2001, Malaysia has lost roughly a fifth of its old-growth forest. In 2019, it announced a five-year cap on total palm oil plantation area, as well as intentions to increase fines and prison sentences for unlawful deforestation. At the United Nations climate summit in November, more than 100 countries promised to end deforestation by 2030, with Kugan and other conservationists believing the Sabah effort might help accomplish such global goals.

Journey of improvement

Joannes Wasai, a field coordinator with the organization Forever Sabah, works with roughly 300 smallholders in five communities to assist them acquire land tenure, enhance farming techniques, improve worker health and safety, and manage their finances. If farmers infringe on protected forest, Wasai, who is a farmer himself, can connect them to a state-led assistance program that will allow them to relocate to a permitted planting area or cultivate alternative crops. “It’s critical to share the profit and environmental balance with the villages,” Wasai remarked.

“Our earth is our home, and if our environment is unhealthy, we are unhealthy as well.” According to Robecca Jumin, head of conservation in Sabah for WWF-Malaysia, which supports the JCSPO, Sabah will likely struggle to compete in the global palm oil market with growing producers in Indonesia, Africa, and South America. She believes that the greatest choice for Sabah is to encourage good governance and sustainable production, which can only be achieved through RSPO certification. While achieving this target by 2025 is “an ambitious ambition,” she said that the process is already beginning.

Sustainable Sabah

Wilmar International began its Malaysian oil-palm plantation operations in Sabah in the 1980s and is now a part of the state-wide initiative. In Sabah, its palm oil has previously been verified by the national system and the RSPO. According to Perpetua George, a Sabah native and sustainability manager at Wilmar, the agribusiness giant sees “the clear benefits” of the state’s whole supplier base following suit. She went on to say that the key to success is having a fully enclosed and controlled supply chain from the plantation to the mill and refinery. This is made easy by the fact that the state government oversees the issue of all oil palm plantation licenses.

The two years lost due to the COVID-19 epidemic, as well as repeated changes in the Sabah administration, have caused delays, according to George. Unilever, the developer of Dove soap, is also behind the effort, collaborating with WWF-Malaysia to obtain 70,000 hectares of Sabah plantations certified by the RSPO, conserve forest conservation zones, and rehabilitate elephant and orangutan habitats. According to Kugan of the forestry department, 24 percent of palm oil produced in the state is now RSPO-certified.

Other regions of Malaysia are taking notice, with Johor, in the south, in talks with the RSPO to become the country’s second state to adopt a jurisdictional approach to sustainable palm oil. Bidin Angau, a 60-year-old retired schoolteacher who now works on his six-hectare farm in Sabah with his two sons, is hoping to receive green certification soon. He claims that tending to his oil palm trees keeps him healthy and gives a more consistent income than other crops. “Many stories – especially in Western newspapers – have been critical of palm oil,” he remarked, alluding to the industry’s environmental record.

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