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Indonesia’s Palm oil economy drives human fortunes–And orangutan misfortunes

The views expressed are those of the author and are not necessarily those of Scientific American.

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oil palm fruitThe net worth of Indonesia’s 40 richest men has doubled to $42 billion in the past year, driven in no small part by the growing demand for palm oil, according to Forbes magazine’s annual examination of the country’s top richest people.

Global demand for palm oil is now more than 40 million tons per year, making it “central to the economies of Malaysia and Indonesia,” according to the Jakarta Globe.

Palm oil is a common ingredient in many processed foods. Around 90 percent of the world’s palm oil comes from Indonesia and Malaysia. And much of the land used for oil palm plantations is former rainforest. The rainforests’ destruction is devastating the habitat for orangutans (Pongo pygmaeus) and other endangered Indonesian species, and is a contributing factor to global warming due to the loss of the carbon sink provided by the trees, as well.

But palm oil is cheap compared with other vegetable oils—and the market craves it. As a result of increasing demand, the companies involved in palm oil production have seen their profits soar. For example, palm oil company Wilmar International enjoyed a 24 percent increase in net profits in the first nine months of this year, allowing the company’s director and joint chief operating officer, Martua Sitorus, to become Indonesia’s second-richest man, with an estimated net worth of $3 billion, according to Forbes.

Another palm oil executive, Eka Tjipta Widjaja, ranks number five on the Forbes list thanks to his holdings in palm oil producer Golden Agri-Resources. His net worth was estimated at $2.4 billion. Putera Sampoerna and Sukanto Tanoto, who come in at numbers seven and eight, have palm oil among their numerous holdings, as do several others on the Indonesia top 40. Showing up on the Forbes list for the first time, Ciliandra Fangiono is chief executive of palm oil firm First Resources. The 33-year-old came in at number 18, with a net worth of $710 million.

All of this new income comes at a price. According to the Jakarta Globe, 85 percent of Indonesia’s Sumatran forests have already been cut down. That destruction isn’t likely to slow down anytime soon. High demand is expected to drive Malaysian palm oil prices up 21 percent the first quarter of 2010 and Indonesian exports are expected to grow between 7 and 10 percent next year, according to analysts.

That may be good news for Indonesia’s economy, but it does not bode well for orangutans and the rest of the environment. But with so much money at stake, it doesn’t seem like the orangutans have much say in the matter.

Image: Oil palm fruit, via Wikipedia

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  1. 1. denispotify 3:52 am 12/8/2009

    Palm oil is cheap compared with other vegetable oils and that is why it is a common ingredient in many processed foods. DID YOU KNOW that palm oil is not only cheap, but also one of the most dangerous vegetable oils together with coconut oil and palm kernel oil? Why does the market not crave olive or walnut oil and prefers palm oil instead? Because healthy oils are expensive and processed foods do not care about the health of their customers, only their pockets. Saturated fats are mainly found in animal products. Some plant foods are also high in saturated fats such as coconut oil, palm oil and palm kernel oil. I am sorry for the orangutans and the rainforests’ destruction, but to see the world poisoned by money making processed food is just as sad. God bless. Denis

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  2. 2. Miriam Ross 5:50 am 12/8/2009

    Orangutans are not the only ones suffering the effects of the destruction of rainforests for palm oil production. The Penan people of Sarawak, in the Malaysian part of Borneo, are seeing the forests they rely on cleared to make way for oil palm plantations, without their consent. The Penan have been trying for twenty years to keep logging companies off their land, and have seen many of their rivers polluted and the animals they hunt disappear. But now that the palm oil companies are starting to move in, the forests are being cleared completely, leaving the Penan with nothing. For more information see Survival International’s webpage:

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  3. 3. KatoXiao 7:04 am 12/8/2009

    I am like every human on this planet earth. I care and value what god have blessed this mother earth with diversity, beauty and life. I live in Asia and is no less concern with the health of mother earth than every other globle citizen. The way most articles protray palm oil appears to me that only Palm oil pollutes or cause missery to orangutans as if that there are no other wildlifes more imporant than orangutans or Palm oil results in rain forest destruction as if rainforest only exist only in place where Palm oil are cultivated, or that only Palm Oil poison the world and not other agricultural produce such as Olive Oil, Walnut Oil, Soybean Oil, Rapeseed Oil, Sunflower Oil, Groundnut oil, Cotton, Maize, wheat or Butter (cattle grazing and the production of cereals/gains used to produce cattle feeds and all its GHG), they are all produce of land. Also they are so many other activities that pollutes mother earth much more severely and whose reduction would have more beneficial effect than tjose from cheap palm oil which i was given to understand help to feed the poorer and hunger in the world. I am not defending palm oil but just feel that everyone and everypart of the world can play its part in order to achieve the desired effect, we are not speaking the truth if we focus overly on Palm oil alone, the burning of fossil fuel that drives the many industrial activities and the resulting pollution are much much more damaging and need to be reign to save our planet earth.

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  4. 4. anairhoads 9:55 am 12/8/2009

    Thank you for highlighting this issue, John, and for doing it so well.

    To the poster who suggested olive or walnut oil. Two things, olive oil is expensive and too many people have tree-nut allergies to be able to tolerate walnut oil.

    I fully agree that using palm oil is precarious (on many levels), not just for our wildlife but for ourselves. Although it offers more omega 3′s per serving than a single egg, which is not often found in non-nut/vegan foods, it is a real danger to our health. Palm oil has slivered its way into our food much like processed soy has. The best way to help lessen the demand for palm is to avoid all products that contain it.

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  5. 5. eco-steve 11:52 am 12/8/2009

    Biodiversity loss is just as, if not more important than, the survival of orang-utangs.
    Also, when there is no more timber left, there will be a huge crisis in the construction and furniture industries.
    Moreover, It is probably more efficient to collect biomass in the forest and pyrolyse it to obtain hydrogen , biofuels, biogases and biochar fertiliser. This would make use of all the trees which are simply burnt! Biomass can be obtained by simply pruning trees, therefore maintaining biodiversity…

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  6. 6. denispotify 6:11 am 12/9/2009

    This world is ruled by money and not by principles. Money first, principles always after, often when it is too late. Money first, consequences can be dealt later. Narrow sighting is destroying our children’s world.

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