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Extinction Countdown

Extinction Countdown

News and research about endangered species from around the world

Indonesia's Palm oil economy drives human fortunes--And orangutan misfortunes

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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

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

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