The last few months have seen our region afflicted by bad haze which, if left unchecked, is set to become the worst in recorded history. In the midst of this crisis, we recognise that unsustainable production practices within the plantation sector, in particular forest fires, have contributed to the haze.
Thus, we cannot ignore the fact that the palm oil industry - whether fairly or unfairly - has been thrust into the global spotlight. In tandem with our ongoing efforts to fight the fires, the government of Indonesia is taking the lead in setting up a Council of Palm Oil Producing Countries(CPOP). This multinational council is a new platform to ensure the sustainable development of the palm oil industry while also protecting and promoting the industry for the benefit of all stakeholders.
The palm oil industry is at a crossroads. While the rising demand for palm oil products has led to exponential growth over the past three decades, this has also presented new challenges on how to ensure the sector's sustainability and competitiveness.
For one thing, the conversion of forests into plantations has contributed to environmental risks such as forest fires. Such operations have also contributed to increased conflicts between palm oil firms and indigenous communities, who struggle to defend their land rights against expanding plantation development.
As a 30 per cent growth in the industry is expected by 2020, it is anticipated that even more land will be cleared for oil palm estates. It is imperative - now, more than ever - that this growth be managed such that it is socially responsible and environmentally sustainable.
Against this backdrop, Indonesia's President Joko Widodo and Malaysia's Prime Minister Najib Razak announced on Oct 11 that the two nations would form the CPOP - a culmination of several years' worth of discussions between the two countries which collectively produce 85 per cent of the world's palm oil.
Hence, Indonesia and Malaysia, via CPOP, will seek to build on the commitments made by the corporate sector. These include the Indonesia Palm Oil Pledge - a collaborative pledge by the industry's major private actors to develop sustainable palm oil along the lines of zero deforestation, respect for community rights and cooperative multi-stakeholder efforts.
However, the global palm oil industry - which produced over US$40 billion (S$56 billion) of palm oil last year - is not just the preserve of large corporations.
Oil palm smallholder households, which account for four million in Indonesia and 500,000 in Malaysia alone, are highly dependent on the industry for their livelihoods.
Despite contributing 40 per cent to the world's palm oil production, smallholders lack the capacity to meet standards set out in existing sustainability conventions and thus their inclusion has been greatly limited. As the global consumer market raises its demand for sustainable products, the exclusion of these smallholders from the global production chain will only continue to rise.
President Joko, who recently celebrated his first anniversary in office, has been steadfast in his commitment to ensure that the best sustainability practices are adopted while safeguarding the welfare of smallholders.
Hence, CPOP will aim to provide a more encompassing sustainability model for smallholders under its convention known as e+POP. This model will essentially focus on the principles of ecology (e) and welfare (+) for palm (P) oil (O) production standards (P).
Through a comprehensive but suitable framework, the e+POP seeks to encourage green initiatives within production methods while simultaneously preserving the welfare of smallholders. We will do this by building on the commitments made under the Indonesian Sustainable Palm Oil and Malaysian Sustainable Palm Oil frameworks, alongside other existing conventions on sustainability.
As CPOP grows its membership, e+POP will also evolve to take into account newer technologies and concepts as well as the socio-economic circumstances of the new entries.
However, it must be emphasised that the better integration of smallholders within the global production chain via e+POP will not lower internationally accepted sustainability standards. On the contrary, the new convention will seek to provide smallholders with better guidance on how to implement the industry's best production practices.
Therefore, we aim to show smallholders that their livelihoods can be enriched with the adoption of greener production methods. This will equip them with a better capacity to reduce the risks of environmental hazards such as forest fires while promoting a cleaner future for the industry.
As Indonesia's Coordinating Minister for Maritime Affairs and Resources, I am certain that CPOP will also prove instrumental in the Joko Widodo administration's efforts to transform our economy.
This is as CPOP also seeks to develop the palm oil industry's downstream sector along eco-friendly standards with the establishment of a green
economic zone in Indonesia. In this zone, we will prioritise the production of environmentally friendly energy sources and other value-added palm oil products.
Ultimately, CPOP will contribute to the emergence of an all-encompassing industry better equipped to cater to the demands of environmentally conscious consumer markets.
Establishing the CPOP will admittedly be a long-term proposition.
It will be a marathon, not a sprint. It will require the support of all our stakeholders, including both upstream and downstream producers and buyers, to say nothing of the governments involved.
But with greater coordination and co-operation, we would have done more than just create a game changer for the palm oil industry.
We will also improve the welfare of the millions of smallholders who labour on the soils around the globe, while ensuring that our actions today do not deprive future generations of clean air, water and other precious natural resources.
The writer is Coordinating Minister of Maritime Affairs and Resources, the Republic of Indonesia.
This article was first published on Oct 31, 2015.
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