Addressing the gathering of world leaders at the 26th session of the Conference of the Parties (CoP26) to the United Nations Framework Convention on Climate Change (UNFCCC) in Glasgow, Prime Minister Narendra Modi announced India’s five major commitments to combat climate change. These commitments are: India will achieve net-zero emissions by 2070, India will bring its non-fossil energy capacity to 500 GW by 2030, India will bring its economy’s carbon intensity down to 45 percent by 2030, India will fulfill 50 percent of its energy requirement through renewable energy by 2030, and India will reduce 1 billion tonnes of carbon emissions from the total projected emissions by 2030.
While such a focus on environmental issues gives hope for a promising future, it is pertinent to situate this against the background of domestic policy priorities. While the policymakers continue to address issues such as access, health, nutrition, and others, there is a need to strike a balance between human development and environmental commitments. Here, it becomes necessary to remember that India is still at the planning stages of addressing the environmental impact resulting from consuming certain vegetable oils, despite being a key player in their market.
Environmental challenges associated with palm and soy
Palm oil and soybean have been identified as the major reasons for driving deforestation, ecosystem loss, and environmental degradation in Southeast Asia and South America, respectively. According to a recent WWF report, between 1990 and 2010, oil palm expansion contributed to a forest cover loss of around 3.5 million hectares in Indonesia, Malaysia, and Papua New Guinea. The large-scale devastation of the world’s most biodiverse forests has led to the loss of critical habitat for endangered species such as orangutans, Sumatran elephants, and Sumatran tigers.
Palm and soy oilseed crops are very productive and remunerative for farmers in developing contexts. The thrust of the problem lies in the fact that palm oil continues to sustain the developing world despite the environmental challenges associated with it. Three billion people across developing contexts including India, sub-Saharan Africa, and Southeast Asia consume palm oil due to relatively low prices and the neutral taste/odour profile. The factors that have made palm oil a success have also brought with it well-documented environmental and social challenges. The most prominent among these are links to deforestation, labour rights, and damaging effects on nature and the environment, particularly when grown unsustainably.
In order to clear land to make way for palm oil plantations, many farmers have been using the slash-and-burn method, which leads to forest fires, and as a result, haze pollution has become a common occurrence in these areas. In 2015, one such forest fire outbreak in Indonesia caused almost 500,000 people to suffer from respiratory ailments and wreaked havoc on the region’s economy. Furthermore, oil palm is incredibly water-intensive and can put an excess burden on groundwater.
The global demand for soybean oil has been expanding rapidly in recent decades as well. This demand has led to a crisis in the Amazon rainforest. It was reported that forest fires in the Amazon were more likely to occur in the areas near industrial meatpacking plants and soybean silos than in other areas.
Despite these concerns, it was reported that palm and soy have become prevalent in recent decades and have grown to dominate the global production mix as well as the world’s consumption basket of edible oils.
India’s agency and responsibility
India is the world’s largest importer of vegetable oils and imports around 15 million tons every year, and palm oil accounts for 60% of this, which is primarily imported from Indonesia and Malaysia. The rest is mostly made up of soybean oil and sunflower oil, mainly sourced from Argentina and Brazil. The Covid-induced economic slowdown did hit India’s import of vegetable oils, but the demand is expected to revive to pre-Covid levels.
Figure 1: Palm Oil Imports of the World’s Major Importers of Palm Oil (in Thousand Metric Tons)
Source: United States Department of Agriculture
Figure 2: Soybean Oil Imports of the World’s Major Importers of Soybean Oil (in Thousand Metric Tons)
Source: United States Department of Agriculture
Analysis by Chain Reaction Research found that more than 50% of India’s crude palm oil imports were not covered by ‘No Deforestation, No Peat, No Exploitation’ (NDPE) policies, making India a massive market for unsustainable palm oil imports. Recently released WWF’s 2021 Palm Oil Buyers Scorecard assessed 227 major palm oil purchasing companies to evaluate their contribution and commitment to supporting ethical supply chains. Out of the five companies headquartered in India that the study identified, only one actually had a score. This points to the fact that there is a lack of disclosure about their purchases by companies in India.
The reductive approach of banning/substituting oil palm fails to consider that it gives a significantly higher yield per hectare as compared to any other oilseed and is therefore likely to cause more deforestation and damage. Therefore, shifting to alternatives will require more land to meet the global demand and will likely lead to more deforestation. One of the major reasons for palm oil’s popularity is that it is cheap, and therefore, it cannot be ignored that palm oil remains a viable and sometimes the only option for cooking for millions of people. Discussions on vegetable oils need to consider not just the impact on the environment but also the implications on food security. Therefore, measures must be taken to source environmentally sustainable palm oil.
Since a large number of Indian consumers buy unbranded, loose palm oil, it becomes difficult to ensure transparency and traceability in palm oil supply chains. The first step in ensuring sustainable supply chains would be to improve transparency across the value chain. Additionally, companies must be encouraged to disclose information so that they can be evaluated on how they are contributing towards creating a more sustainable edible oils industry.
There is now some traction on this being made by voluntary certifications like Roundtable on Sustainable Palm Oil (RSPO) and Roundtable on Responsible Soy (RTRS), which have has developed a set of criteria that companies have to comply with in order to produce Sustainable Palm Oil and to promote more responsible production and sourcing of soy. However, the uptake of Indian stakeholders has so far been limited.
Additionally, the achievements of the suppliers towards their sustainable edible oil commitments need to be monitored on a regular basis, and trade relations should be maintained with those meeting minimum import standards. The Government of India could also use trade distortion policies such as import tariffs to encourage certified suppliers.
There has also been a push towards producing palm oil domestically in recent years. Through the National Mission on Edible Oils-Oil Palm, the Centre aims to bring an additional 6.7 lakh hectares of land under oil palm by 2025-26. Therefore, India needs to prioritize the policies for sustainable palm and soy before it starts experiencing the environmental costs of the edible oil industry closer to home.
With Neha Chauhan, a Research Associate at the Social and Political Research Foundation.