In this week’s edition, we interview Jack Lam, a palm oil trader. Jack has been a palm oil trader for 7 years and he has been based in Kalimantan, Indonesia for a 2 year tenure. During those 2 years, he spent much of his time understanding the workings of palm oil companies and how exactly the palm oil business runs. He has spoken to government officials, businessmen and even plantation workers, acquiring an understanding beyond a theoretical sense.
The world condemns the palm oil industry for its environmental nuisance, and rightly so. The Indonesian government faces constant pressures from all directions to clamp down on unethical business practices like the slash and burn technique. Therefore the government has passed laws to ban such practices, however according to Jack, these laws are not enforced for two reasons: first, the sheer size and number of the plantations in Indonesia makes it impossible for government officials to constantly monitor every hectare of land. Secondly, officials are routinely paid off by firms to allow the slash and burning the forests. In the palm oil industry in Indonesia, there is a practice where large palm oil firms have to outsource their production to the locals. Plantations owned by the company are called Nucleus, while plantations owned by locals are called Plasma.
Having spoken to some Plasma plantation owners, Jack reiterates that they are fully aware that slashing and burning is an illegal practice, but they fail to understand the problem that it causes on a large scale; they believe that fumes simply disappear into the clouds. Furthermore, there is no incentive whatsoever for these plantation owners to chope down trees. Chopping trees can cost up to a staggering 300 times more than slashing and burning. Moreover, the byproduct of the illegal process is soil that is extremely fertile for growing palm trees. “It is basically bad for business in every sense.” Chopping down trees in the legal manner simply offers no upside benefits for these farmers, thus proves senseless for them to do comply.
Jack remains cynical that Indonesia will be able to curtail the environmental damage from this industry anytime in the near future. The onus is on the government to enforce environmental laws, but they too do not have much impetus other than the pressures they face from other countries like Singapore. However, weather changes are in fact affecting plantations more than what they expect. El Nino, which is a dry and hot season, can even cause long-term damage to trees, reducing palm oil production from its fresh fruit bunches. El Nino’s are recorded to be worsening year after year but farmers fail to see the correlation between their pollution and climate change. However, Jack believes that it would take an extreme weather event to drive radical change and education in Indonesia, else, things are likely to remain just the way they are.
the balancing act 