JAKARTA, Indonesia — Few people who have scoffed down fries at Burger King have likely given any thought to what they’ve been sizzling in.
The answer is palm oil, something Burger King has found problematic of late.
Palm oil has long been one of the most ubiquitous commodities that no one has ever heard of. It’s in everything from cooking oil to soaps to biscuits — 50 percent of all packaged supermarket products according to environmental groups. Thanks to that booming demand, prices are surging, and palm oil is emerging from obscurity — but not without controversy.
In Indonesia, the world’s largest palm oil producer, the issue is land clearing. In the late 1960s, less than 800 square miles were under oil palm cultivation. By the start of this century, it was more than 11,000 square miles, a figure that continues to increase.
On the Indonesian islands of Sumatra and Borneo, where palm oil production is most common, environmentalists say that companies clearing and burning forests to make way for palm oil plantations are releasing so much greenhouse gas into the atmosphere that Indonesia now ranks, by some estimates, as the world’s third-largest emitter after the United States and China.
And so a growing list of international companies, most recently Burger King, are severing ties with one of Indonesia’s largest palm oil producers, a subsidiary of agribusiness giant Sinar Mas, called PT Smart, which Greenpeace has accused of illegally destroying large tracts of rainforest and peatland to make way for palm plantations.
Bustair Maitar, Greenpeace’s forest campaigner in Indonesia, said producers here tend to favor clearing fresh tracts of forests rather than making their own plantations more efficient. In bureaucratically opaque and corruption-plagued Indonesia, this frequently means bending, breaking or skirting the law.
“What’s happening now is that companies are not trying to minimize the impact. What they are trying to do is just expand their plantations with land grabs to force up production of palm oil now and in the future,” Maitar said.
Naming and shaming companies, however, is proving to be an efficient strategy. Sinar Mas said an independent audit refutes the accusations — but both environmentalists and the auditors themselves say the company has misrepresented the findings. As a result, Burger King dropped Sinar Mas as a supplier of palm oil — joining a list of companies that includes Unilever, Nestle and Kraft.
“Companies don’t want to associate themselves with illegality, wherever they source their product,” Maitar said.
Although palm oil has also been touted by some as a cheap source of biofuel, critics of its environmental toll are growing in numbers. Late last year, the World Bank’s private investment arm, the International Finance Corporation, announced it was suspending funding and investment assistance for palm oil projects. The Finance Corporation’s palm oil policy is now under review, and advocates for the crop fear such squeamishness could be permanent.
Still, the palm oil industry is a growing one. Thanks to unmet demand, prices are about $900 per ton, well above historical levels of about $500. Multinational companies routinely say they want to source sustainable palm oil, but that is proving difficult. A regulatory body, called the Roundtable on Sustainable Palm Oil, has been set up, but still only includes a small number of producers. Many critics have denounced the group as toothless and say is still too difficult to determine what is truly sustainable in such a dizzyingly complex supply chain.
And while companies may be sensitive to the opinions of Western consumers, growing demand in Asia is proving insatiable, said Thomas Mielke, director of Oil World, a German-based consultancy company.
“There are campaigns and they are having some impact on consumption in some European countries, but most of the growth takes place in India, China, Pakistan, in other Near East countries, in African countries,” he said.
Palm oil accounts for 37 percent of the world’s vegetable oil market, Mielke said, while being grown on just 5.5 percent of the land used for such crops.
“Satisfaction of world consumption of vegetable oils, which is a crucial item of the food diet, is not at all possible without palm oil,” he said. “For the same tonnage you need 10 times more land for soybeans in the Amazon.”
While the conversion of large swaths of rainforest into palm plantations has displaced traditional farmers and indigenous people who rely on the forests for their livelihoods, some argue that palm oil is essential for overcoming poverty. As a cash crop, oil palms earn farmers far more than regular staples such as rice.
World Growth, a free market advocacy group that supports the development of palm oil, argues that growing more of the crop will in the long run curb deforestation by cutting poverty and hence cutting down incentives for illegal land clearing. The group is reviled by environmental activists for pursuing an unabashedly pro-corporate and anti-regulation agenda .
“It is widely recognized that environmental sustainability is improved as a nation becomes more developed and poverty is reduced,” Alan Oxley, the group’s chairman, said in a recently published open letter to Britain’s Secretary of State for Environment, Food and Rural Affairs. “Conversely, restricting the growth of oil palm will hinder efforts to reduce poverty, which as we have previously observed, is the leading driver of deforestation.”
It is an argument that cuts little ice with environmentalists and will do little to calm companies skittish about their reputations with Western consumers.