Inquiring into the political economy of oil palm as a global flex crop

Abstract

Oil palm production and consumption, and the trade of its multiple commodities, have expanded exponentially in recent decades. This paper argues that this expansion will continue due to, and along with, the rise of ‘flexing’ among its increasing multiple uses, especially for more industrial and energy purposes. Oil palm has been extensively analysed in the context of land grabs and agrarian change, land conversion and deforestation. However, its nature as a flex crop remains unexplored, especially with respects to the convergence of global food, fuel and environmental crises. This paper provides a preliminary discussion of how oil palm fits in the flex-crop framework to analyse its enabling material and ideational bases, as well as who informs, decides and controls the nature of flexing. This is done through an analysis of the different roles played by state, corporate (private) and social actors in the flexing of oil palm across the globe. We conclude by drawing some implications for further research.

Keywords:

• oil palm
• flex crops and commodities
• value web
• political economy of agriculture
• BRICS and MIC countries

Acknowledgements

This contribution is a result of the international workshop Problematizing and researching ‘flex crops & commodities’: Reframing issues, rethinking actions . The workshop was co-organized by the Transnational Institute (TNI) and the Institute of Social Studies (ISS) on 23 January 2014, at the ISS, in The Hague. The authors are most grateful to TNI for funding such a workshop, as well as to the two anonymous reviewers, and Jun Borras and Jennifer Franco, for their meaningful comments on earlier versions. Any remaining errors are our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹For a historical perspective on the development of the oil palm complex, see chapter 1 in Corley, Hereward, and Tinker (2003).

²At the First Latin American Conference of Oil Palm Growers, Guatemala, 17 October 2013.

³Biomass uses include empty fruit bunches, palm fronds, trunks, palm kernel shells and mesocarp fibers (see Pogaku and Sarbatly 2013).

⁴Neutraceuticals include chemicals ‘such as C5 and C6 sugar molecules in oil palm biomass [ … ] to construct medium and long chain (higher) hydrocarbon chain chemicals’ (Loh and Choo 2013, 12).

⁵According to multiple speakers at the First Latin American Congress of Oil Palm Growers, 17–18 October 2013, in Antigua, Guatemala.

⁶Borras et al. also consider ‘imagined flexing’ to mean ‘flexing that is not real, not actually happening and has no material or logical basis, yet it is invoked for some reason’ (2014, 9). We found no clear examples of this type of flexing in the case of oil palm but this, of course, remains an open empirical question.

⁷Building on an earlier analysis by Franco et al. (2010) on biofuels.

⁸On the dual and contradictory role of state actors in capitalism more broadly, see Fox (1993).

⁹Interview in Bogotá, 20 September 2013.

¹⁰Including three major palm oil companies (Sime Darby, IOI, Felda) with globally leading technology developers interested in biomass utilization like Purac (The Netherlands), Novozymes (Denmark), LG Chemical (Korea) and others (Be-Basic 2014).

¹¹Like the technical universities of Malaysia (UTM) and Delft (TU Delft-Netherlands), University Putra Malaysia (UPM), Standard and Industrial Research Institute Malaysia (SIRIM), Palm Oil Industry Cluster (POIC) Sabah, and Wageningen University (WUR-Netherlands) (Be-Basic 2014).

¹²Indeed, at least according to Latin American oil palm industry representatives, national markets are more stable and easier to influence. They allow for the strengthening of the companies’ capacities before going abroad, and save the insurance and freight costs associated with exports (Colombian Federación de Palmicultores/Oil Palm Growers Federation (FEDEPALMA) President at the XVII International Conference on Palm Oil in Colombia, 26 September 2012, and Guatemalan Gremial de Palmicultores/Oil Palm Growers Guild (GREPALMA) and Ecuadorian Asociación Nacional de Cultivadores de Palma/National Association of Oil Palm Growers (ANCUPA) Executive Directors, at the I Latin American Conference of Oil Palm Growers, Guatemala, 18 October 2013).

¹³Interview with the Biofuels Program Coordinator of the National Planning Department, Government of Colombia, in Bogota, July 2008.

¹⁴Cargill's own volume from its plantations accounts for 3 percent of the total global flow (Cargill 2013).

¹⁵So far, Julong Group has developed oil palm plantations with a total area of 100,000 hectares as well as reserve land with a total area of 100,000 hectares (partly in Indonesia and partly in Malaysia); an additional area of 10,000 hectares of oil palm is contracted with smallholders in the local communities (Julong China 2013).

¹⁶The Chinese General Office of the State Council (2007, 59) encouraged the establishment of futures market for palm oil.

¹⁷This framing builds on Borras, Franco, and Wang's (2013) discussion on competing political responses to land grabbing.

¹⁸Originally born as the ‘Roundtable on Sustainable Biofuels’, it was renamed in 2013 to include all sorts of biofuels and biomaterials.

¹⁹From Australia, The Netherlands, USA, UK, Kenya and Switzerland.

²⁰This is an example of how ‘NGOs [non-governmental organizations] involved in verifying compliance with CSR standards can become clients of the corporations they are supposed to be monitoring’ (O'Laughlin 2008, 950).

²¹Colombian FEDEPALMÁs President in XVII International Conference on Palm Oil in Colombia, 26 September 2012.

²²Nestle, PepsiCo, Unilever, Mondelez, Coca-Cola, Mars, Danone, Associated British Foods (ABF), General Mills and Kellogg's (Oxfam-Behind the Brands 2014).

²³For a meaningful analysis of the transnational campaign against oil palm expansion and palm oil-based biodiesel involving activists in Indonesia and the EU, see Pye (2010).

²⁴Oil palm industry representatives from Colombia, Ecuador and Guatemala, in I Latin American Conference of Oil Palm Growers, Guatemala, 18 October 2013.

Additional information

Notes on contributors

Alberto Alonso-Fradejas

Alberto Alonso-Fradejas is a PhD candidate at the International Institute of Social Studies (ISS) in The Netherlands, a research associate of the Transnational Institute (TNI), and a fellow of the Guatemalan Institute of Agrarian and Rural Studies (IDEAR). Email: [email protected]

Juan Liu

Juan Liu is an assistant professor at the College of Humanities and Social Development, Northwest A&F University, China, and a postdoctoral researcher at The International Institute of Social Studies (ISS), The Hague. She holds a PhD in development studies. Her research interests include internal migration and social policies, rural politics, land politics, and political economy of agriculture, environment and food. Corresponding author: [email protected]

Tania Salerno

Tania Salerno is a PhD candidate in the Anthropology and Sociology Department, University of Amsterdam. She is part of the research programme ‘(Trans)national Land Investments in Indonesia and the Philippines: Contested Control of Farm Land and Cash Crops’, funded by NWO–WOTRO. Her research interests include agrarian development, land, financialized corporate agriculture and the global food system. Email: [email protected]

Yunan Xu

Yunan Xu is a PhD candidate at the International Institute of Social Studies (ISS) in The Netherlands, funded by the China Scholarship Council (CSC). Her research interests include industrial tree plantations, land, agrarian development, rural capitalism and food safety. Email: [email protected]