• Tuesday, June 25, 2024
businessday logo


Sustainability holds aces to funds, markets for Africa’s oil palm producers

Group trains 654 oil palm producers on RSPO’s principles in South-South

The oil palm tree has a reputation for producing high-quality oil that is used for cooking, mostly in developing countries. It also finds its way into several food products, detergents, cosmetics and, to some extent, biofuel.

To meet growing demand, plantations continue to spring up across Asia, Africa, and Latin America but at the expense of forests. These are critical habitats for many endangered species and a lifeline for some human communities in those areas.

It is said that there are less than 100 Cross River Gorillas left in that part of Nigeria’s south-south region. Poachers, illegal loggers, and those putting up plantations (like oil palm) and having to clear the forests have combined to, on one hand, make Nigeria lose what should be a source of tourism revenue. On the other hand, is the fact that these iconic species, which are native to Nigeria, are on the brink of extinction.

Like other wildlife and invaluable forestry, these Gorillas have been casualties of unconscionable agricultural activities, and in particular oil palm production. For years, environmentalists campaigned aggressively against the environmental damage that came with rapidly increasing palm oil production.

Oil palm producers that are not certified are increasingly at risk of being shut out of opportunities to either get funding or access certain international markets

The more consumers around the world could not get enough of the red oil and its dozens of by-products, the more the environment was at risk of further damage if something was not done. And urgently too.

Not just the environment but also people who lived in areas that had to be acquired and cleared as oil palm plantations expanded their footprints. Their rights were not guaranteed, and definitely no concerns about the hazards such activities could pose to their health or other living things in those ecosystems.

“There was a huge outcry about the destruction of orangutan habitats, one of the great apes,” said Elikplim Agbitor, head, Africa, at the Roundtable on Sustainable Palm Oil (RSPO). “They started saying even in Africa, Palm oil could be in areas where there could be gorillas. For example, Cross-River gorillas, which is a subspecies only found there.”

It was at this point he says a decision was made to come together and develop a set of requirements that would create a means of certifying sustainable palm oil producers. For those whose clear conscience was not enough reward, the certification would give them access to more markets, especially in Europe as well as institutional investors who would not touch any uncertified plantation with a million-mile-long pole.

“It gives proof that you are operating in a way that takes into consideration the environment and social equitability,” says Agbitor. Before then, there was large-scale clearing of forests, habitats of different species of plants and animals. “Now you cannot just go and clear, you have to do all manner of assessments and there are certain categories of vegetation you are not allowed to touch.”

Before RSPO standards were introduced, there were talks of banning or boycotting palm oil, mostly in Europe and parts of North America. But some producers like Unilever came together with NGOs such as the World Wildlife Fund (WWF) to become founding members of RSPO to develop a set of requirements that can be implemented in demonstrating palm oil was not being produced in a way that is damaging to the environment or infringing on the rights of local people.

One Monday in October 2022, palm oil producers gathered inside a hall at one of the posh hotels in Benin city, Edo state, a major location of oil palm production in Nigeria. There were government officials in attendance as well as civil society and RSPO representatives. It was the kick-off of a community outreach programme that brought all players in that value chain together.

If palm oil would be produced sustainably, members of the community also needed to know what principles operators were to be held accountable for, and how to go about it. A number of the producers seated were concessioners under the Edo State Oil Palm programme (ESOPP).

The state itself, according to a speech by Godwin Obaseki, Edo State Governor, had provided “100,000 hectares of unencumbered land and allocating in phases, a total of 65,000 hectares so far to 9 oil palm investors who are mandated to comply with RSPO standards for the development of their various concessions.”

With eyes on sustainability, the governor had said the goals through ESOPP is to ensure that palm oil is produced sustainably, ensuring that the rights of people (in areas of production) are respected as well as ensuring that their livelihoods are sustained.

He had further said the state was going further to ensure project communities under ESOPP are engaged using the FPIC guidelines co-developed by Proforest, which will be passed into law as a subsidiary regulation under the Edo State Investment Promotion law.

“Nigeria currently has about 10 million hectare of forests, representing about 10 percent of Nigeria’s forest land area which is well below FAO’s recommended national minimum of 25 percent,” said Governor Obaseki, and if palm oil palm and the expansions that come with it go unchecked, this would worsen.

PwC, in a report titled ‘X-raying the Nigerian palm oil sector’, noted that Nigeria being the fifth largest producer of palm oil in the world needs to take the issue of sustainability in the palm oil industry very seriously.

According to PwC, there is a need to make progress in the production of sustainable palm oil in the country. The country’s large and rapidly growing population will continue to be a major driver of demand and so the implementation of sustainable practices in the industry is important.

Whilst palm oil is an important source of revenue and livelihood and a source of cheap vegetable oil, its expansion is accompanied by serious social and environmental impacts, as RSPO noted. Major social challenges in the sector need to be addressed, including lack of effective legal protection of rights of workers, communities and indigenous peoples and lack of land security for indigenous peoples and local communities.

“RSPO is a regulation by choice, this is because we are not being forced to do it,” said Tunde Faturoti, in comments on behalf of the ESOPP chairman. He further said producers were coming to the realisation that they had to be sustainable in oil palm, keeping the future in mind.

However, as findings show, oil palm producers that are not certified are increasingly at risk of being shut out of opportunities to either get funding or access certain international markets. The choice may not be entirely devoid of commercial benefits, after all.

The first catch for palm oil producers in getting certified as Agbitor explains, is “to appeal to their conscience. We just can’t destroy everything, we have to keep some of those resources for posterity and protect the water bodies and the rest.”

Secondly, he says, is reputation, especially for big companies. If they do the wrong thing, the media could pick it up and may not be good for their corporate reputation.

The third factor, which he says is mostly important in Africa, is access to finance. “One of the main reasons most of them are motivated to come to RSPO is access to finance,” Agbitor says. A lot of financial institutions like the International Finance Corporation (IFC), would require a fund seeker to do an assessment against RSPO standards. With this, they will determine if the company is sustainable enough before they consider giving finance.

“They don’t want to be seen investing in a company that is not sustainable, a company that is doing the wrong things environmentally and socially,” he says. “Presently most financial institutions have signed on to sustainability ideas, and to access finance, you have to show proof that you are committed to sustainability.” Furthermore, if a palm oil producer in Africa were to be exporting to European or North American markets, such companies would be restricted unless they were certified.

Read also: Palm oil producers drawn to dollars amid unmet local demand

Beyond a company’s choice to be sustainable, Fatai Afolabi, managing consultant, Foremost Development Services Limited the local implementation partner of the RSPO programme emphasised the importance of community outreach, as was being done at the event at that hotel in Benin city.

“You are not the one to show that you have conformed to all these requirements. You have to be audited, and the auditors will still have to make recourse to the communities to verify certain claims,” he said. Locals in places where these plantations are established, must be able to substantiate any claims of sustainability in the operations of companies before they are certified ‘sustainable’.

It was important, he said, for the principles expected of producers to be broken down to a level that is easily understood by all stakeholders. Palm oil production in some cases is done close to water bodies and when agrochemicals are used, they are to be within a certain distance from water bodies.

The runoff from these chemicals could pollute the water for communities downstream who are dependent on it for domestic use or fishing for instance. If they were not made to know these provisions, they would be unable to ascertain if a company has been sustainable.

When companies decide to expand, “we are interested in having this expansion done in a way that is not environmentally damaging and socially equitable,” Afolabi further says.

For Felix Nwabuko, managing director, Presco Plc & SIAT Nigeria Limited – one of the largest oil palm companies in the country – outreach programs remain apt in getting both producers and the communities involved on the same page, in the journey towards sustainability in oil palm production.