Dutch trade and biodiversity
Biodiversity and socio-economic impacts
of Dutch trade in soya, palm oil and timber

Dutch trade and biodiversity
Biodiversity and socio-economic impacts
of Dutch trade in soya, palm oil and timber

Ben Kamphuis
Eric Arets
Caspar Verwer
Jolanda van den Berg
Siemen van Berkum
Bette Harms

LEI report 2011-013
Alterra report 2155
March 2010
Project code 2272000005
LEI, part of Wageningen UR, The Hague

2

Dutch trade and biodiversity; Biodiversity and socio-economic impacts
of Dutch trade in soya, palm oil and timber
Kamphuis, B.M., E.J.M.M. Arets, C.C. Verwer, J. van den Berg, S. van Berkum
and B. Harms
LEI report 2011-013
Alterra report 2155
ISBN/EAN: 978-90-8615-500-2
Price € 29,25 (including 6% VAT)
146 p., fig., tab., app.

3

Project BO-10-001-001, ‘ Biodiversity and trade’
This research project has been carried out within the Policy Supporting Research for the Ministry of Economic Affairs, Agriculture and Innovation, Theme:
Scarcity and distribution, Cluster: International cooperation.

Photo cover: Marcel Silvius/Wetlands International
Orders
+31 70 3358330
publicatie.lei@wur.nl
© LEI, part of Stichting Landbouwkundig Onderzoek (DLO foundation), 2010
Reproduction of contents, either whole or in part, is permitted with due
reference to the source.

4

LEI is ISO 9001:2008 certified.

Contents

1

2

Preface

8

Summary

9

S.1 Key findings
S.2 Complementary findings
S.3 Method

9
10
11

Samenvatting

12

S.1 Belangrijkste uitkomsten
S.2 Overige uitkomsten
S.3 Methode

12
13
14

Introduction and methodology

16

1.1
1.2
1.3
1.4
1.5

16
18
18
20
23

Introduction and policy background
Objectives of the study
Selected commodities and focus countries
Methodology
Outline of the report

Soya

24

2.1
2.2
2.3
2.4

24
27
32
35
35
37
38
38
40
41
44
46

2.5

2.6
2.7
2.8

Introduction
Global trade flows and the Dutch trade position
Future trade developments
Land area used for Dutch import of soya products from Brazil
2.4.1 Main production areas and yields
2.4.2 Estimated land area needed for Dutch soya imports from Brazil
Biodiversity impacts
2.5.1 Direct effects on biodiversity
2.5.2 Indirect effects on biodiversity
Socio-economic impacts of soya production in Brazil
Options for mitigating biodiversity and socio-economic impacts
Synthesis

5

3

4

6

Palm oil

51

3.1 Introduction
3.2 Total oil palm area and palm oil production
3.2.1 Indonesia
3.2.2 Malaysia
3.3 Global trade flows and the Dutch trade position
3.4 Future trade developments
3.4.1 Drivers of supply and demand
3.4.2 Projections of palm oil exports and imports
3.5 Land area used for Dutch import of palm oil
3.5.1 Production methods and yields
3.5.2 Estimated land area needed for Dutch palm oil imports
from Indonesia and Malaysia
3.6 Biodiversity impacts
3.6.1 Introduction
3.6.2 Direct effects on biodiversity
3.6.3 Indirect effects on biodiversity
3.7 Socio-economic impacts of palm oil production in Indonesia
3.8 Options for mitigating biodiversity and socio-economic impacts
3.9 Synthesis

51
54
54
59
61
65
65
67
68
68

Tropical timber

90

4.1 Introduction
4.2 Global trade in wood and the Dutch trade position
4.2.1 Development of global trade in wood and wood products
4.2.2 The Dutch position in the global wood trade
4.3 Future trade developments
4.4 Land area used for Dutch import of tropical timber from Indonesia
4.4.1 Introduction to wood production methods
4.4.2 Major timber production areas and methods in Indonesia
4.4.3 Average yields by forest management type
4.4.4 Estimated area used for Dutch timber imports from Indonesia
4.5 Biodiversity impacts
4.5.1 Direct effects on biodiversity
4.5.2 Indirect effects on biodiversity

90
92
92
95
99
100
101
102
103
106
107
107
110

69
72
72
73
77
78
82
86

5

4.6 Socio-economic impacts of the timber industry in Indonesia
4.7 Options for mitigating biodiversity and socio-economic impacts
4.8 Synthesis

110
112
114

Key findings and options for sustainable use of biodiversity

119

5.1
5.2
5.3
5.4
5.5
5.6

119
119
121
122
124
125

Introduction
Global trade flows and the Dutch trade position
Future trade developments
Impacts on biodiversity
Impacts on rural communities
Options for mitigating biodiversity and socio-economic impacts

Literature and websites

130

7

Preface
Around the globe, biodiversity is in decline and the Netherlands plays a not insignificant role in this process. Besides a decreasing level of biodiversity in the
Netherlands itself, the import of products from other countries has an impact
on the biodiversity in those countries. To decrease the ecological impact of the
Netherlands, the Dutch government is striving for greater sustainability in production, trade and consumption in the Netherlands and abroad. It aims at integrating biodiversity aspects in all economic sectors through cooperation with
the private sector and societal organisations. For that purpose the Dutch government is supporting initiatives to achieve sustainable sourcing and processing
of agricultural commodities. The Ministry of Economic Affairs, Agriculture and
Innovation is actively involved in this process and, two years ago, commissioned
LEI and Alterra, both part of Wageningen University and Research Centre, to
strengthen its knowledge base and to provide up-to-date information about the
position of the Netherlands in the international trade in palm oil, soya and tropical timber, and about the socio-economic and biodiversity impacts of the production of these products in the major production regions for Dutch imports.

Prof Dr R.B.M. Huirne
Managing Director LEI

8

Summary
S.1

Key findings
The Netherlands is a large importer of soya, palm oil and tropical timber products. The total annual import value in the period 2007-2009
was around USD5.3b. The imports of soya from Brazil, palm oil from Indonesia and Malaysia and timber from Indonesia require in these countries roughly the same area as the total agricultural land area of the
Netherlands (see section 5.2).
Consequently, the Netherlands contributes to the loss of biodiversity in
these countries. In Indonesia and Malaysia, vast areas of forests are
converted into oil palm plantations and the expansion of soya cultivation
in Brazil is an important driver for large-scale forest conversion, leading to direct losses of biodiversity at the production sites and fragmentation of the remaining forests (see section 5.4).
The oil palm, soya and timber industry provides employment for millions of people in the exporting countries. The development of largescale operations, however, has negative effects on the local communities (see section 5.5).
To decrease the ecological and socio-economic impact of the Dutch
import, the Netherlands government could promote sustainable intensification of production, expansion of production in degraded areas, and
integrated land use planning in the exporting countries (see section 5.6).

9

Table S.1

Production area needed for the annual Dutch import in
the period 2007-2009

Commodity

Exporting

Dutch import

Production area

country

equivalent

x 1,000 ha

Soya bean and products

Brazil

4.3m tonnes

1,545

Palm oil and products

Indonesia

0.5m tonnes

141

Palm oil and products

Malaysia

1.0m tonnes

246

Wood and products

Indonesia

3

0.2m m RWE

104

Source: Various statistics plus own calculations, see report.

S.2

Complementary findings

Trade
In the period 2007-2009, the Netherlands imported annually about 4.3m tonnes
of soya products from Brazil. A large part of the imported soya beans is reexported to neighbouring countries, directly or after processing in the Netherland (see section 2.2).
In the same period the annual Dutch import of crude palm oil was 1.0m
tonnes from Malaysia and 0.5m tonnes from Indonesia. A major part of the imported crude palm oil is re-exported after processing, in particular to Germany
and Belgium (see section 3.3).
The European Union accounts for 45% of the total global wood imports.
About 30 % of the total total EU wood import from Malaysia enters the EU via
the Netherlands, for Indonesia it is about 20%. However, the import from these
countries account for only 11% of the total Dutch wood import. Two thirds originates from neighbouring EU countries (see section 4.2).
For the annual Dutch soya imports from Brazil in the period 2007-2009
an estimated production area of about 1.5m ha was needed (see sub section
2.4.2). For the palm oil imports from Indonesia and Malaysia the required area
was almost 0.4m ha (see sub section 3.5.2) and for the imported timber from
Indonesia around 0.1m ha (see sub section 4.4.4) (see section 5.2).

Biodiversity
The conversion of forests into soy fields and oil palm and timber plantations
leads to an almost complete loss of the original biodiversity. However, forest
10

remnants in the production regions often still harbour a substantial part of the
original forest species. Selectively logged forests also support fewer species
than primary forests, yet their species richness is still far above the values reported for agricultural crop or tree plantations (see section 5.4)

Socio-economic impacts
Soya production is an important economic driver for economic development in
Brazil, but the highly mechanised production of soya beans leads to a loss of
employment and increased poverty in the production regions (see section 2.6).
An estimated 6m people in Indonesia benefit from the palm oil production
and related activities (see section 3.7).
The loss of agricultural and forested land, however threatens the local food
security and the food supply to the increasing urbanised population (see section
3.7).
The intensive use of agro-chemicals in plantations can seriously affect the
health of the local population (see section 2.6 and 3.7).

S.3

Method
The Dutch Ministry of Economic Affairs, Agriculture and Innovation commissioned LEI and Alterra to provide updated information on the impact of the
import of palm oil, soya and tropical timber. The following research questions
are answered:
- What is the position of the Netherlands in the international trade in palm oil,
soya and tropical timber?
- What are the biodiversity and socio-economic in the major production regions for Dutch imports?
- What are the options for mitigating the negative effects of these imports?
The trade flows of soya from Brazil, palm oil from Indonesia and Malaysia
and timber from Indonesia have been analysed. To assess the biodiversity and
socio-economic impacts of Dutch imports a calculation has been made of the
area needed to produce these commodities following different production
methods in the exporting countries. The assessment of the biodiversity and
socio-economic impacts is based on an extensive literature analysis, supported
by previous field experience of the involved researchers (see Chapter 1).

11

Samenvatting
S.1

Belangrijkste uitkomsten
Nederland is een grote importeur van soja, palmolie en tropische houtproducten. De totale jaarlijkse waarde van de import in de periode
2007-2009 bedroeg ongeveer 5 miljard US dollar. Voor de import van
soja uit Brazilië, palmolie uit Indonesië en Maleisië en hout uit Indonesië
is in deze landen ruwweg dezelfde landoppervlakte nodig als de totale
oppervlakte aan landbouwgrond in Nederland.
Op die manier draagt Nederland bij aan het verlies van biodiversiteit in
deze landen. In Indonesië en Maleisië veranderen grote stukken bos in
oliepalmplantages en de uitbreiding van de sojacultuur in Brazilië is een
belangrijke oorzaak van de grootschalige conversie van bos in landbouwgrond, wat leidt tot een direct verlies van biodiversiteit op de productielocaties en tot een fragmentatie van de overblijvende bossen.
De palmolie-, soja- en houtindustrie biedt werkgelegenheid voor miljoenen mensen in de exportlanden. De ontwikkeling van grootschalige bedrijven heeft echter negatieve gevolgen voor de lokale
gemeenschappen.
Door duurzame intensivering van de productie, uitbreiding van de productie in gedegradeerde gebieden en geïntegreerde landinrichting in
de exportlanden te stimuleren, kan de Nederlandse overheid de ecologische en socio-economische impact van de Nederlandse import reduceren.

12

Tabel S1

Benodigd productiegebied voor de jaarlijkse Nederlandse
import in de periode 2007-2009

Product

Exportland

Nederlandse import

Productiegebied

Sojabonen en -producten

Brazilië

4,3 miljoen ton

1.545

Palmolie en

Indonesië

500.000 ton

141

Maleisië

1,0 miljoen ton

246

Indonesië

0,2 miljoen m3 RWE

104

x 1.000 ha

palmolieproducten
Palmolie en
palmolieproducten
Hout en houtproducten

Bron: diverse statistieken plus eigen berekeningen, zie rapport.

S.2

Overige uitkomsten

Handel
In de periode 2007-2009 importeerde Nederland jaarlijks ongeveer 4,3 miljoen
ton sojaproducten uit Brazilië. Een groot deel van de geïmporteerde sojabonen
wordt direct of na verwerking in Nederland geëxporteerd naar buurlanden.
In dezelfde periode was de jaarlijkse Nederlandse import van ruwe palmolie
1,0 miljoen ton uit Maleisië en 500.000 ton uit Indonesië. Een groot deel van de
geïmporteerde ruwe palmolie wordt na verwerking weer geëxporteerd, hoofdzakelijk naar Duitsland en België.
De Europese Unie neemt 45% van de totale wereldwijde houtimport voor
haar rekening. Ongeveer 30% van de totale houtimport van de EU uit Maleisië
komt van de import de EU binnen via Nederland, voor Indonesië is dat zo’n
20%. De import uit deze landen vormt echter slechts 11% van het totale volume
aan hout dat door Nederland wordt geïmporteerd. Twee derde is afkomstig van
EU-buurlanden.
Voor de jaarlijkse Nederlandse soja-import uit Brazilië in de periode 20072009 was naar schatting een productiegebied van zo’n 1,5 miljoen hectare nodig. Voor de import van palmolie uit Indonesië en Maleisië was er bijna 400.000
hectare nodig en voor de import van hout uit Indonesië zo'n 100.000 hectare.

13

Biodiversiteit
De conversie van bossen in sojavelden en oliepalm- en houtplantages leidt ertoe
dat de oorspronkelijke biodiversiteit bijna volledig verloren gaat. De resterende
bossen in de productieregio’s herbergen vaak een aanzienlijk deel van de oorspronkelijke bossoorten. Selectief gekapte bossen hebben een lagere biodiversiteit dan primaire bossen, maar hun soortenrijkheid ligt desondanks nog ver
boven de gerapporteerde waarden voor landbouwgewassen en boomplantages.

Socio-economische impact
De sojaproductie is een belangrijke drijver van economische ontwikkeling in
Brazilië, maar de sterk gemechaniseerde productie van sojabonen leidt tot een
verlies van werkgelegenheid en meer armoede in de productieregio’s.
In Indonesië profiteren er naar schatting zo’n 6 miljoen mensen van de palmolieproductie en gerelateerde activiteiten.
Het verlies van land- en bosbouwgrond vormt een bedreiging voor de lokale
voedselveiligheid en voedselvoorziening voor de in toenemende mate verstedelijkte bevolking.
Het intensieve gebruik van agrochemicaliën in plantages kan grote negatieve
gevolgen hebben voor de gezondheid van de lokale bevolking.

S.3

Methode
Het ministerie van Economische Zaken, Landbouw en Innovatie heeft LEI en
Alterra de opdracht gegeven om actuele informatie te verschaffen over de
impact van de import van palmolie, soja en tropisch hout. De volgende
onderzoeksvragen zijn behandeld:
- Wat is de positie van Nederland in de internationale handel in palmolie, soja
en tropisch hout?
- Wat zijn de gevolgen voor de biodiversiteit en de socio-economische impact
in de belangrijkste productieregio’s voor de Nederlandse import?
- Welke opties zijn er om de negatieve effecten van deze import tot een minimum te beperken?

14

Er is een analyse uitgevoerd van de handelsstromen van soja uit Brazilië,
palmolie uit Indonesië en Maleisië, en hout uit Indonesië. Om de gevolgen voor

de biodiversiteit en de socio-economische impact van de Nederlandse import te
bepalen, is er een berekening gemaakt van het benodigde gebied om deze producten te produceren volgens verschillende productiemethodes in de exportlanden. De beoordeling van de gevolgen voor de biodiversiteit en de socioeconomische impact is gebaseerd op een uitgebreide literatuuranalyse met ondersteuning van eerdere praktijkervaring van de betrokken onderzoekers.

15

1

Introduction and methodology
1.1

Introduction and policy background

Around the globe biodiversity is in decline, which ultimately threatens the welfare
of us all. Though a small country, the Netherlands plays a not insignificant role
in this process. That can be illustrated by the 'global ecological footprint' of the
Netherlands, which shows that for the Dutch domestic consumption in 2005 a
total land area was needed three times the total surface of the Netherlands
(PBL, 2008). Hence the Netherlands is a small country with a big global footprint, amidst most other developed countries. To decrease the ecological impact of the Netherlands, the Dutch government is striving for greater
sustainability in production, trade and consumption in the Netherlands and
abroad and aims at integrating biodiversity aspects in all economic sectors
through cooperation with the private sector and societal organisations. The
Dutch government focuses on the following commodities: coffee, cacao, tea,
soya, palm oil, fish products and tropical timber.
A key element in the policy of the Ministry of Agriculture, Nature and Food
Quality (LNV)1 is to achieve greater sustainability in international agricultural
trade, as is referred to in the following policy documents:
1. The Choice for Agriculture (LNV, 2005)
This policy document outlines a vision for the future of the Dutch agri-business sector based on a balanced concern for the economic, ecological and
social aspects of sustainable agricultural development. Product certification
is considered an effective instrument to increase the sustainability of the
production of products imported in the Netherlands.
2. Biodiversity Policy Programme (LNV, 2007)
One of the five priority policy tracks of this policy programme focuses on
sustainable production of all raw materials that are used in the Netherlands
and derived from natural resources or nature in the Netherlands or elsewhere in the world, with particular attention to conservation and sustainable
use of ecosystem functions and biodiversity. The envisioned points of action
are product certification and increasing market shares of certified products
in the Netherlands. In January 2009, the Taskforce Biodiversity and Natural

16

1

Since October 2010, LNV is part of the new Ministry of Economic Affairs, Agriculture and Innovation.

Resources was instituted by several Dutch ministries, among which the Ministry of LNV. In this Taskforce different societal groups are participating
(business, science, civil society organisations and the government. Together
these members are looking for the best ways and methods to use biodiversity sustainably.
3. Agriculture, Rural Economic Development and Food Security (LNV and the

Ministry of Development Cooperation,1 2008)
One of the five priority policy tracks in this policy document focuses on sustainable value chain development. Value chains (products, trade, processing
and consumption) should be made more effective and sustainable, with due
regards to People (income distribution), Planet (ecological sustainability) and
Profit (economic growth). Central to the implementation strategy of this policy is the support to and the facilitation of public-private partnerships such as
the Round Table for Responsible Soy (RTRS), the Round Table of Sustainable
Palm Oil (RSPO) and the Dutch multi-stakeholder platform Initiative for Sustainable Trade (IDH).2 Promising results of this strategy are the letter of intent signed by the cocao sector and the Ministry of LNV on sustainable
cacao in March 2010 and the establishment of Taskforce Sustainable Palm
Oil, in which all major stakeholders in the Dutch palm oil chain are represented. In November 2010 the Taskforce signed a manifesto in which the
participating parties announce to strive for all palm oil for the Dutch market
to be sustainable in 2015.
4. Action Plan Sustainable Trade 2011-2015 (LNV and Ministry of Foreign

Affairs)
In June 2010, the ministries of Foreign Affairs and LNV agreed to the 'Action
Plan Sustainable Trade 2011-2015', which includes more than 70 sustainability initiatives of companies and civil society organisations. This agreement underlines the importance that the Dutch government attaches to
collaboration with the private sector and civil society for stimulating sustainable agricultural trade.
5. International policy context
In the European and international context, the international objectives of the
Convention of Biodiversity (CBD), the Millennium Development Goals (MDGs)
1

The Ministry of Development Cooperation is in the new government part of the Ministry of Foreign
Affairs.
2
IDH was instituted in 2008 as a result of the Schokland Agreements (2007). This platform bundles
the knowledge and experiences on stimulating sustainable trade of business, social organisations and
trade unions for accelerating and up-scaling sustainability within mainstream commodity markets.

17

and the European Union's policies form the framework for Dutch policy
developments. The Dutch government calls for an integrated approach in
which the biodiversity, climate and food crises are addressed in coherence.
The Netherlands also plays an active role in this field in the UN.
Against this background, the Ministry of LNV asked Wageningen UR to
strengthen its knowledge base for promoting sustainable trade, in particular on
linkages between agricultural trade and biodiversity. The project, which was implemented by LEI and Alterra, focuses on three commodities: soya, palm oil and
tropical timber. This report presents the outcomes of the study.

1.2

Objectives of the study

The study aims at providing quantitative and qualitative information on:
- the position of the Netherlands in the global international trade in soya,
palm oil and tropical timber;
- future trade developments in soya, palm oil and tropical timber;
- biodiversity impacts of the production of soya, palm oil and tropical timber
in the major production regions for Dutch imports;
- socio-economic aspects of the production of soya, palm oil and tropical
timber.
The study builds upon existing knowledge, rather synthesising available
knowledge than creating new knowledge. The added value of the study is that
the economic importance of the trade in soya, palm oil and tropical timber for
the Dutch agri-business is directly linked to the socio-economic and biodiversity
impacts of the related production in the major production areas for Dutch imports.

1.3

Selected commodities and focus countries

The study concentrates on trade flows of soya, palm oil and tropical timber.

Palm oil
18

Palm trees are the world's second largest source of edible oils (after soya
bean). Globally, oil palm plantations cover over 15m ha (FAO, 2010a). Indonesia

and Malaysia account for 85% of the global palm oil production. In 2009, they
produced about 44m tonnes of palm oil, a tenfold increase since 1980 (FAO,
2010a). The expansion of the oil palm area is in most cases at the expense of
natural habitats; palm expansion is blamed for forest destruction, uncontrolled
forest fires and losses of environmental good and services (Aratrakorn et al.,
2006). The continuing expansion of oil palm plantations has led to a growing international concern about the social and environmental impact.

Soya
Soya is one of the world's major commodities. Soya is very rich in protein and in
Europe is used mainly for the production of animal feed. The USA, Brazil and
Argentina are the largest producing and exporting countries of soya beans. The
global area under cultivation of soya beans increased from around 50m ha in
1980 to almost 100m in 2009, most of the plantations were in South America,
where the total area increased in the same period from round 11m to almost
43m ha (FAO, 2010a). Soya bean cultivation is one of the major drivers behind
deforestation and the subsequent loss of biodiversity in the sub-continent and is
internationally associated with social problems such as land conflicts, displacement of small holder farmers, poor employment conditions, health problems
and the loss of local food security and employment.

Tropical timber
Worldwide, the use of wood for construction and furniture is increasing, leading
to a fast growing trade in wood and wood products; in the last decade the international trade doubled. Canada is by far the most important wood exporting
country, followed by the Russian Federation, both countries mainly exporting
softwood. Malaysia, Indonesia and Brazil are the main producers of tropical
wood and wood products. Part of the required wood is harvested under sustainable forest management systems, in particular in Europe and Northern America,
but a major part of the tropical timber is harvested in primary forests in an unsustainable way causing irreversible damage to the environment. The fast decreasing area of tropical forests causes great concerns about the future of
these forests and the ecological and social implications.

Selection of focus countries
In consultation with policy makers of the ministry of LNV the following selection
of countries has been made. For palm oil the analysis focuses on Indonesia and
Malaysia, being the two major producers of palm oil. Indonesia is in particular in-

19

teresting, because it is not only the largest exporter of palm oil in the world, but
has also the potential for further expansion due to the large availability of forest
land. Wood extraction (as part of deforestation) and development of oil palm
plantations are often part of a continuous process of deforestation for which it
is not always possible to assess which of the two is the driver for forest conversion. Conversion of forest to oil palm plantations is expected to have a strong
impact on biodiversity and the socio-economic living conditions in the areas
concerned.
For that reason, Indonesia is also selected as the focus country for the analysis on tropical timber.
Another reason for extra attention to Indonesia are the strong collaborative
networks of Wageningen UR and the Ministry of LNV in Indonesia, including the
Joint Working Group on sustainable development and the Working Group on agriculture, which offers opportunities for putting recommendations into practice.
With respect to soya the analysis focuses on Brazil, based on the notion
that for the Netherlands it is by far the largest trade partner for soya, while
at a global scale it is the second most important producer and exporter of
soya after the USA. Another reason is that Wageningen UR is collaborating
within many networks around soya, such as the Round Table on Responsible
Soy (RTRS).

1.4

20

Methodology

The strongest drivers of loss of biodiversity are associated with land-use change
from natural ecosystems to agricultural production, infrastructure and urban
areas (Alkemade et al., 2009; Pereira et al., 2010). A recent study of land-use
changes in tropical regions shows that between 1980 and 2000 55% of agricultural expansion was on previously intact forest areas, while another 28% was
on already disturbed forest areas (Gibbs et al., 2010). More intensive land use
systems have a stronger effect than more extensive systems. In a scenario
study ten Brink et al. (2010) indicated that the option of closing the yield gap,
i.e. reduce the difference between current and potential yields, could reduce
loss of original biodiversity by 2050 by 20% compared to the baseline scenario.
Hence, to assess the impact of Dutch imports of palm oil, soya and wood from
the selected countries on biodiversity it is necessary to relate the quantities
exported to the Dutch market to the area needed to produce the commodity
under different production methods and combine this with the biodiversity

impact of the various production systems. This methodology includes the following three steps:
A. Based on trade statistics, the volume of import of the three commodities by
the Netherlands from the focus countries is determined.
B. The imported volume combined with factors that determine both the production yields and the biodiversity impacts, such as production system, country,
region, biome and/or ecosystem form the basis for an estimation of the area in each region and ecosystem that is being used for the production of the
Dutch imports.
C. The impact of the production of the respective commodities on biodiversity
in the production regions depends on the original ecosystem and the used
production system, i.e. mainly the intensity of production. Combining this information with the area used for Dutch imports in each ecosystem under different production systems determines the total biodiversity impact of the
production for the Dutch market.
The methodology is detailed below.
A. Estimation of Dutch import
To determine the value and volume of Dutch import for the three selected
commodities UN Comtrade statistics and national statistics were analysed.
However, there is often a mismatch between the figures of the exporting
countries and those of the importing countries. For instance, the export statistics of Malaysia report an export of 2.0m tonnes of crude palm oil to the
Netherlands, while the Dutch import data show only 1.6m tonnes of imports
from Malaysia. The disparity of the trade data may be explained by the fact
that while a commodity is being shipped to the Netherlands, the load is not
cleared in the Netherlands, yet only re-loaded for further transport. Another
possibility is that the load is being sold while on sea and arrives at a different destination than planned when departing. The volatile market makes it interesting for the exporters to ship to Europe for the 'Rouen-Hamburg range'
and decide on the final destination in a late stage. Illegal trade may also influence the trade statistics as well as the time difference between export
and import clearance. The latter may cause registering exports in a specific
year while imports are recorded in the following year.

21

In this report, the UN Comtrade figures are taken as starting point for further
analysis. It needs to be noted here, that the biodiversity impact in this report is
estimated on the basis of the import figures and not adjusted for transit trade or
re-export after processing. A substantial part of the imported products to the
Netherlands, however, is re-exported to other countries, directly or after processing.
B. Estimation of related land area and production methods
To estimate the land area needed for the Dutch imports of the selected
commodities, it is necessary to link the imports with the related production
regions and production systems. The level of detail for such linkages with
regions, biomes and production methods, however, depends on available
data. Because trade statistics generally refer to country level, the production for the Dutch market cannot easily be traced to specific areas, biomes
and production methods in the producer's country. If more detailed information on the production areas or methods in the selected countries is
available, it is assumed in this study that the production for the Dutch market
follows the shares of the respective production factors in the country's total
production. For instance, if according to local production statistics 40% of
the total Malaysian palm oil production is from peat swamps in Sarawak, it
assumed that also 40% of the production for the Dutch market is derived
from the particular ecosystems in Sarawak.

22

C. Assessing biodiversity impacts of production
For the assessment of biodiversity several indicators can be used. It would
be straightforward to include species richness as an indicator. However, especially in more extensive land-uses, like selective logging, often the species
richness initially increases, because species that are better adapted to the
disturbed conditions may enter the area, while other species with decreasing
populations are still present in the area. Focusing only on species richness
as biodiversity indicator, thus, will hide part of the consequences of the production activities. In this study the following two indicators are used:
1. Relative species richness (RSR)
This is the species richness of the production systems as percentage of
the original ecosystem. To asses this indicator, information on original
species richness and species richness in the production system is needed. Total biodiversity in the production system may be relatively high, but
can consist of entirely different species than the original system. This dif-

ference is not visible in the RSR. In addition, this indicator does not include the abundance of a species.
2. Relative species richness of original species (SROS)
This species richness indicator refers only to species that were already
present in the original ecosystem before conversion into the new production purposes. To calculate this SROS, not only information on species
numbers in both the natural ecosystem and the respective production
system is required, but also information on which of the species observed in this production system were already present in the natural situation. Similar to the SRS, the SROS does not include the abundance of
the species.
For each of the three selected commodities in this study a limited number
of production categories were identified that enables differentiation between different production (land-use management) methods and production intensities
(e.g. clear felling, selective logging, reduced impact logging, plantations and
conversion for production of timber). Indicators have been assessed for different production regions, and as far as data are available a distinction has been
made between different ecosystems.

1.5

Outline of the report

The report is structured according to the three major commodities, i.e. soya
(Chapter 2) palm oil (Chapter 3) and tropical timber (Chapter 4). For each of
these commodities, the most important features of the trade flows between the
major producing countries and the major importing countries are described.
This description provides insights into the position of the Netherlands in the
global international trade in these commodities. It further indicates the origin of
the Dutch imports and the production area needed in the exporting countries.
After that, the biodiversity impacts are described and the effect of production
on local income, employment, access to land and human health discussed. Options for mitigating the negative biodiversity and socio-economic impacts are
described in a separate paragraph. Each chapter is concluded with a synthesis
of the findings.
In Chapter 5 the major findings of this study and options for achieving more
sustainable trade are presented.
23

2

Soya
2.1

Introduction

Soya is one of the most important agricultural commodities. It is a source of
protein and oil with multiple uses in both human food and animal feed products
and with numerous industrial applications. Figure 2.1 gives a schematic overview of the soya supply chain. Part of the soya beans is directly used in the food
industry, but the major part is processed in crushing mills to extract the oil.
About 18-19% of the soya bean consists of oil, which is further refined for different purposes in the food and non-food industry. Soya oil is also used for biodiesel. The remaining product, soya bean flakes, is further processed into soya
bean meal and cake, which is almost entirely used in the animal feed industry.
Around 100m ha of agricultural land in the world is used for soya bean
production. Soya beans are grown in sub-tropical and humid climate zones:
(the south of) the United States of America, Latin America (mainly Brazil and
Argentina) and Asia (mainly China and India). Over recent years, soya bean production has been increasing rapidly, a trend which is likely to continue. The
prime driver of soya bean production is the demand for soya products as ingredient for animal feed in the intensive livestock industry. The major part of the
soya beans are crushed in the production countries, in China mainly for own use
and in the other countries for a large part for export, too.
The soya industry is an important and still growing economic sector in Latin
America, but expansion of soya bean production is not by itself a reliable engine
for broad-based development that benefits the local rural population in these
countries (Pérez et al., 2008). The soya bean production is based on high-input,
industrialised monoculture farming, which leads to both employment and wages
declining in the production areas despite rising production.
In addition, the fast agricultural expansion has led to lasting ecological damage in some production regions, which has raised global concerns about the
environmental impact of further expansion.

24

Figure 2.1

Schematic outline of the soya supply chain

Source: Adapted from Berkum and Bindraban (2008).

The increasing concerns over the impact of the rapid soya expansion on the
local environment and local societies have led to the establishment of the Round
Table of Responsible Soy (RTRS) in 2006. The RTRS is a global platform to
promote the use and growth of responsible production of soya. All major actors
in the soya value chain are participating in this global platform, including soya
bean producers, industry and civil society actors. As a result of the consultations in the RTRS a standard for sustainable soya has been developed and RTRS
certified soya will become available on the global market at the beginning of
2011 (see Text box 2.1 for further information on the RTRS).
The RTRS has the continuous support of the Dutch government and also of
the Dutch Task Force Sustainable Soy in which a group of Dutch companies involved in the soya chain participate. In December 2009, the Task Force agreed
to ensure that at the end of 2015 the soya that is needed to satisfy the Dutch
market should be produced in accordance with the RTRS principles and criteria.

25

Text box 2.1

Round Table on Responsible Soy (RTRS)

The Round Table of Responsible Soy (RTRS) is an international multi-stakeholder initiative
founded in 2006 that promotes the use and growth of responsible production of soy, through
the commitment of the main stakeholders of the soy value chain (soy producers, traders,
processors, financial institutions and civil society organisations) and through a global
standard for responsible production.
The main objectives of the RTRS are to:

- Facilitate a global dialogue on soy that is economically viable, socially equitable and
environmentally sound.

- Reach consensus among key stakeholders and players linked to the soy industry.
- Act as Forum to develop and promote a standard of sustainability for the production,
processing, trading and use of soy.

- Act as an internationally recognised forum for the monitoring of global soy production in
terms of sustainability.

- Mobilise diverse sectors interested in participating in the Round Table process
In the RTRS participate 140 producer organisations, companies and environmental and
development NGOs from 21 countries.
The May 2007 General Assembly of RTRS agreed on 11 principles for criteria for
measuring the sustainability of soy production. In the 'Principle and Criteria document' of
October 2008 these principles are summarised into the following five:

-

Principle 1: Legal Compliance and Good Business practice;
Principle 2: Responsible Labour Conditions;
Principle 3: Responsible Community Relations;
Principle 4: Environmental Responsibility;
Principle 5: Good Agricultural Practice.
In May 2009, the Annual General Assembly approved a Principles and Criteria - field test

version and in June 2010 the RTRS standard for sustainable soy production was approved.
In 2011 it will be possible to obtain soy in accordance with the RTRS principles and criteria
in the international market.
Source: www.responsiblesoy.org

An important initiative in the development of sustainable soya is the Amazon
Soy Moratorium. In June 2006, Brazilian soya processors and traders, in consultation with the European soya industry and civil society organisations, among
others Greenpeace, announced that for a minimum period of two years they
26

would not trade soya from areas in the Amazon biome that were deforested
after 24 July 2006. In the meantime the moratorium has been extended until
July 2011. The moratorium that was originally an initiative of the private sector
and civil society, has received the support of the Brazilian government.

2.2

Global trade flows and the Dutch trade position

South America accounts for about 43% of the total world area under soya
beans of around 100m ha, the USA 32% and China and India each about 10%.
The United States of America is the largest producer of soya beans, with 41%
of the total world production in 2009, followed by Brazil (26%) and Argentina
(14%). China is also in the top five of the soya beans producing countries, yet
China is also the world's biggest importer of soya beans.
Figure 2.2

Development of the soya bean production in the USA, Brazil,
Argentina, China, India and the World (1970-2009)

250,0

Million tonnes

200,0

150,0

100,0

50,0

-

1970

1975

1980
World

1985

1990
USA

1995

2000

2005

2010

Brazil

Source: FAO (2010a).

The largest producing countries are also dominating world export flows (see
Table 2.1). The USA dominates the export of soya beans with about half of the
total trade (40.5m tonnes). Brazil is second with 28.6m tonnes. Argentina is by
27

far the major exporter of soya oil and oil cake (4.4 respectively 21.6m tonnes).
China is the largest importer, in particular of soya beans for further processing
domestically. In 2009, China imported more than half of the total global trade in
soya beans (42m out of the 81m tonnes). China is also an important importer of
soya oil, in particularly from Argentina (2m tonnes). The Netherlands is one of
the major destinations for soya beans and soya oil cake within the EU.
Table 2.1

Major exporters of soya bean products and their markets
(2009, million tonnes)

Exporter

Soya beans
world

Soya oil

major
destinations

USA

Brazil

Argentina

Other

Soya oil cake

world major

world major

destinations

40.5 China:

22.9

0.17

7.7 Canada:

Mexico:

3.3

Mexico:

0.17

Mexico:

0.9

Japan:

2.5

India:

0.16

Philippines:

0.7

28.6 China:

15.9

1.6 China:

0.54

12.2 Netherlands: 2.6

Netherlands: 2.4

India:

0.17

France:

2.4

Spain:

Bangladesh: 0.13

Germany:

1.2

4.3 China:

1.3 Morocco:

destinations

2.1

Algeria:

0.12

3.1

4.4 China:

1.98

Iran:

0.4

India:

0.64

Egypt:

0.2

1.1

21.6 Netherlands: 2.2

7.8

2.3

14.1

81.2

9.6

55.6

Italy:

2.0

Spain:

2.0

countries
Total

Source: UN Comtrade, LEI.

Dutch imports of soya products
There are substantial differences between the statistics from importing and exporting countries. Brazil and Argentina report quite different volumes of soya
products shipped to the Netherlands than what the Dutch import records register. While Brazil reports to export 2.4m tonnes of soya beans to the Netherlands in 2009, the Dutch statistics report no more than 2.0m tonnes. According
to the Dutch statistics, oil cake imports were 1.7m tonnes from Argentina and
1.6m tonnes from Brazil, while these volumes were 2.2 and 2.6m respectively
according to the export data files of the respective countries. Reasons for this
disparity are discussed in section 1.4. In the following sections about the trade
28

of the Netherlands, the Dutch reported figures are taken as starting point for
further analysis.
Trends in the Dutch imports of soya products are presented in Figure 2.3.
The total import value significantly increased since 2000 and adds up to more
than USD4b in 2008, and a sharp decline in the following year, caused by an increased competition in the global food market since 2007 (see FAO Monthly
Price and Policy Update).
Figure 2.3

Value of the Dutch import of soya products (1995-2009)

4,000

Million USD

3,500
3,000
2,500
2,000
1,500
1,000
500
1995

1997

Import soy total

1999

2001

Import soy beans

2003

2005

Import soy bean oil

2007

2009

Import soy bean cake

Source: UN comtrade, LEI

In the last three years, the Netherlands import of soya products accounted
for around USD3b per year (see Table 2.2). The Netherlands imports mainly
soya beans and oil cake in about the same amount and very little soya oil. The
Dutch import of soya beans is mainly from Brazil and in a lesser extent from the
USA. Imports of soya beans from Argentina were valued around USD100m in
the mid-1990s but are close to zero in recent years. Soya oil cake imports is
nearly only from Argentina and Brazil, both exporters taking a share of almost
50% in the Dutch import.

29

Table 2.2

Major exporting countries for soya products to
the Netherlands (average 2007-2009)

Commodity

Soya beans

Import value

Import volume

million USD

1,000 tonnes

1,497

3,344

Brazil

903

2,253

USA

358

858

Paraguay

98

224

Soya oil

165

165

Brazil

53

62

Germany

45

39

Belgium and Luxembourg

33

33

Soya oil cake

1,374

3,460

Argentina

649

1,684

Brazil

648

1,603

Germany

37

80

Source: UN Comtrade, LEI.

The soya beans are shipped into the Netherlands through Rotterdam and
Amsterdam harbours for further processing by the two only processors in the
Netherlands, ADM en Cargill. However, not all beans are being processed in the
Netherlands: about one third of the imported beans are being exported, mainly
to Germany and Belgium. The rest is crushed to extract the oil, which is (after
further refinement) partly exported to other EU countries. The other major output of the crushing process, soya meal and oil cake is being used in the feed
industry in the Netherlands and in other EU countries as well.
The average import and export figures in Table 2.4 show that the Netherlands had a negative trade balance for soya beans, a balanced trade for soya oil
cake and a surplus for soya oil over the period 2007-2009. A major part of the
imported soya beans are processed in the Netherlands and re-exported as soya
oil and cake to neighbouring countries or used for feed in the domestic livestock sector. Based on the data from the Dutch processing industry, Hoste and
Bolhuis 2010) estimate that in total about 2m tonnes of soya bean equivalents
are used in the Dutch livestock industry, which is less than import surplus based
on the UN Comtrade data used in Table 2.4.

30

Table 2.3

Major importing countries for soya products from
the Netherlands (average 2007-2009)

Commodity

Import value

Import volume

million USD

1,000 tonnes

Soya beans

471

1037

Germany

380

869

Belgium and Luxembourg

41

78

Soya oil

551

481

Belgium/Luxembourg

140

125

United Kingdom

135

115

Germany

131

121

1,315

3,459

Germany

634

1,736

Belgium and Luxembourg

179

455

Soya oil-cake

Source: UN Comtrade, LEI.

Table 2.4

Trade balance of the Netherlands in soya products
(average 2007/09)

Commodity
Soya beans
Soya oil
Soya oil-cake

Value in million USD

Volume in 1000 tonnes

import

export

balance

import

export

balance

1,497

471

-1,026

3,344

1,037

-2,307

165

551

+386

165

481

+316

1,374

1,315

-59

3,460

3,459

-1

Source: UN Comtrade, LEI.

EU trade policy
Imports of soya beans and oil cake are not charged by import tariffs (see
Table 2.5). Soya oil, on the other hand, is charged by an import tariff of 4.8%
maximum on crude oil and by 7.35% maximum on refined/processed oil.
Imports from Brazil and Argentina are subject to only 1.45% and 3.85% import
tariff respectively.

31

Table 2.5

Import tariff structure of soya commodities

HS-code and Commodity name

Tariff Countries

Soya beans

0% For all countries

Soya oil, crude

0% For all countries except:
1.45% Argentina, Brazil
4.80% Norway, Switzerland, USA

Soya oil, other than crude

0% For all countries except:
3.85% Argentina, Brazil, China, Morocco, Thailand
7.35% Canada, Norway, Switzerland, USA

Soya oil-cake and other solid residues

0% For all countries

Source: MacMAP tariff data.

Conditions for EU imports of soya bean and soya products have been set
in the GATT Dillon Round in the 1960s when the EU agreed to import oilseeds
(among others soya beans) and protein commodities free from tariffs and
duties. Yet, as soya beans is one of the major genetically modified organisms,
imports are condition to the European legislation on this issue (see www.ec.
europa.eu/food/food/biotechnology). According to Directive 90/220/EEC GM
seed varieties have to be authorised by the European Food Safety Agency
(EFSA) before they are included in the Common Catalogue and marketed in the
EU. Currently three GM soya varieties are approved in the EU: one since April
1996 (Monsanto's Roundup Ready) and two in 2008 (Roundup Ready 2 and
Liberty Link produced by Bayer Crop Science). The latter two are expected to
be produced in the USA in 2009 whereas introduction in Argentina and Brazil is
under consideration. These varieties are approved for being used as food and
feed ingredients in Europe. GM soya products (soya beans, soya oil and meal)
of these varieties are accepted as imports, yet there is no authorisation for GM
soya bean cultivation in the EU.

2.3

Future trade developments

Soya bean supply and demand projections by OECD/FAO (2009) and FAPRI
(2009) indicate that market developments are strongly influenced by the increasing demand for soya in the feed and energy sector (see also section 3.4.1
for a description of the major drivers of supply and demand). The price increase
of soya beans, meal and oil between 2000 and 2007 has stimulated production
32

to growth, especially in the Latin American countries, but as it is expected that
the demand will further increase (mainly in China but in the EU as well) both organisations expect that, on average, prices will be at higher levels in the years
to come than in the last decade.
Growing demand in China and some other South-east Asian countries is
largely due to rapid economic growth resulting in higher food consumption levels and a consumption pattern that includes more meat. To meet its increasing
demand for vegetable oil and animal feed China is expected to expand its imports to 56m tonnes in 2018, accounting for around 60% of total world imports
of soya beans (see Table 2.6, FAPRI, 2009:220). China has very limited possibilities to expand soybean production as there are many competing claims on
suitable agricultural land and other crops turn out to be economically more attractive. Therefore, it is plausible to expect an increasing import dependency.
FAPRI (2009) projections indicate an even slightly declining soya bean area harvested in China. The EU is traditionally a deficit region resulting in large import
flows of soya beans and meal. FAPRI (2009) does not expect that the EU imports will increase notably, as economic growth is modest, population growth
is stagnant, and livestock numbers rather constant over the projection period.
Yet, there may be a larger demand for vegetable oil for bio-fuel purposes. This
increasing demand stimulates next to domestic (EU) supply of rapeseed, the
import of sunflower and palm oil. Soya oil is less suitable for bio-fuels, so
FAPRI's projections indicate rather stable EU imports of soya beans and a
modest (10-15%) to significant increase in the imports of soya bean meal and
oil respectively over the period up to 2018/2019.

33

Table 2.6

Projections of soya exports and imports (million tonnes)
Soya beans

Soya bean meal

Soya oil

2008/09

2018/19

2008/09

2018/19

2008/09

2018/19

Argentina

11.3

13.3

27.4

36.3

5.6

7.3

Brazil

25.2

42.2

12.2

13.2

2.1

2.4

USA

29.7

31.0

7.5

11.9

0.7

1.9

Paraguay

4.0

8.0

1.1

1.5

0.3

0.3

China

35.5

56.4

0.4

0.5

2.3

4.1

EU

14.1

13.6

22.5

25.8

0.4

0.9

Total trade a)

71.4

91.7

54.6

72.2

9.8

11.4

Net-exporters

Net-importers

a) Excluding intraregional trade.
Source: FAPRI (2009), World Agricultural Outlook (2009: 220-237).

The USA, Brazil and Argentina are the main suppliers of soya beans, meal
and oil and dominate on the export side of international trade. A quick expansion
of production in the USA in response to increasing demand for soya beans is
not plausible: expansion has to come from increasing yields or from crowding
out other crops as there is no land in the USA presently unused that may be
easily used for agricultural purposes. Other crops such as maize are more attractive than soya beans from an economic point of view; the position of maize
has been enhanced in recent years due to the increasing demand for the crop
as bio-fuel. The increasing demand for soya bean products in China and other
Southeast Asian countries will not lead to much expansion of the area as other
crops are either more economically attractive (in combination with agronomic
circumstances). FAPRI (2009) therefore concludes that the supply response to
continuously increasing demand for soya products has to come from Latin
American countries like Brazil, Argentina and Paraguay, by applying new land for
agricultural purposes, shifts between crops and more intensive use of agricultural land. According to FAPRI's projections, the soya bean production areas in
Latin American countries will expand by 10m ha in the three major production
countries, of which 5m in Brazil (See Table 2.7). Their share in the total world
production area under soya beans will increase from 42% in 2008/09 towards
46% in 2018/19.

34

Table 2.7

Projections of soya bean areas in major producing countries
(million ha)
2008/09

2018/19

Argentina

18.0

20.7

Brazil

21.3

26.9

China

9.3

8.7

EU

0.3

0.3

India

9.6

11.2

Paraguay

2.4

3.6

USA

30.2

31.0

Total world

97.8

110.5

Source: FAPRI (2009), World Agricultural Outlook (2009: 220-237).

2.4

Land area used for Dutch import of soya products from Brazil

In this section an estimate is made of the land area that is needed for the Dutch
import of soya products from Brazil. Starting point for the calculations are the
above import figures of the Netherlands, which are combined with estimates of
yields per hectare for different production regions in Brazil.
2.4.1 Main production areas and yields
In an assessment of grain production in Brazil, CONAB (2009) divided the country in five regions (north, northeast, mid-west, southeast, and south), each covering 2 to 4 states. The northern region includes the states of Roraima,
Rondônia, Pará and Tocantins; the north-eastern region includes Maranhão,
Piauí and Bahia; the mid-west region includes Mato Grosso, Mato Grosso do
Sul, Goiás, Distrito Federal; the south-east region includes Minas Gerais and
São Paulo; and the southern region includes Paraná, Santa Catarina and
Rio Grande do Sul. By far, the most important soya producing regions are the
mid-west and southern regions (Table 2.8)

35

Table 2.8

Total soya area, productivity and production in five regions
in Brazil (averages of 2007-2008)

Region

Area

Productivity Total production

Production

million ha

tonnes/ha

million tonnes

% of total

North

0.5

2.86

1.5

2.5

North-east

1.6

2.91

4.6

7.8

Mid-west

9.7

2.98

29.0

49.1

South-east

1.4

2.84

4.0

6.8

South

8.2

2.44

20.0

33.8

Brazil

21.4

2.82

59.1

100.0

Source: CONAB (2009).

The Brazilian Atlantic forest is the region where mechanised soya bean cultivation first rapidly expanded in the 1970's (Fearnside 2001). After Matto Grosso
(5.8m ha of soya field in 2008, 6% of the total area of the state) in the Mid-west,
the southern states Parana (4.0m ha of soya field in 2008) and Rio Grande do
Sul (3.8m ha of soya field in 2008), are the states with the largest area and
production of soya bean in Brazil. Parana (20%) and Rio Grande do Sul (13%)
are also the leaders in terms of the percentage of the area of the state currently
covered by soya fields.
After soya varieties became available that could be cultivated at lower latitudes, soya expansion moved northwards into the Cerrado biome of the central
states, where currently about 60% of the Brazilian soya is produced (Bindraban
et al., 2009; Fearnside, 2001). The most recent expansion of the soya area occurs mainly in the northern states in the Amazon region on recently deforested
land or on grazing lands. At the moment the share of soya production from the
Amazon region in the total Brazilian production is still modest, but until before
the Amazon Moratorium on soya production this areas was expanding fast
(Cerri et al., 2005; Nepstad et al., 2008).
The soya production in the southern states is mainly done by small to medium sized farms; with in the states Rio Grande do Sul and Parana respectively
90% and 92% of the total soya production area on farms smaller than 1,000 ha
(Berkum and Bindraban 2008). In contrast, the farms in the mid-west are mainly
medium to large sized, with in the states Mato Grosso and Mato Grosso do Sul
respectively 78% and 51% of the soya production area on farms larger than
1,000 ha (Berkum and Bindraban 2008). Usually only larger farms (more than
1,000 ha) are able to implement technological improvements to achieve higher
36

yields, which can explain the lower productivity in the southern states as shown
in Table 2.7. Where increasing farm sizes is not feasible in the southern states,
farmers tend to focus on niche markets like organically produced soya and GM
free soya (Berkum and Bindraban, 2008).
2.4.2 Estimated land area needed for Dutch soya imports from Brazil
The following estimate of the land area needed for Dutch soya import from
Brazil is based on the annual average figures for the period 2007-2009. The
imports mainly consisted of unprocessed soya beans (on average 2.25m
tonnes during 2007-2009) and soya bean cake (1.60m tonnes). In addition a
small amount of soya oil (0.06m tonnes) is imported. Primary processing of
soya beans yields approximately 80% high protein cake (or meal) and 20% oil,
where the high protein meal is seen as the main product of soya bean processing, while the oil is a by-product (Elbersen et al., 2008). For the production
of the imported 1.6m tonnes of soya bean cake thus 2.0m tonnes of soya
beans were needed. In total during 2007-2009 thus annually 4.25m tonnes of
soya beans needed to be produced in Brazil for the Dutch market.
To assess the areas of crop land needed to produce these 4.25m tonnes
of soya beans it was assumed that the distribution of production across the different regions in Brazil followed the distribution for the total Brazilian soya bean
production by region as shown in Table 2.8. Combining the production and the
yield data per region (Table 2.9) gives the total area needed in each region for
producing the imports of the Netherlands, which is 1.54m ha. In comparison,
this area covers roughly one-third of the Dutch land-area and would seize 80%
of the cultivated area in the Netherlands in 2009.
It need to be noted here that these calculations are based on the total imports of soya products by the Netherlands, not taking into account that a major
part of it is re-exported, mainly to Germany and Belgium as explained above
(see Table 2.3). According to Hoste and Bolhuis (2010) around 400,000 ha are
needed for feeding the Dutch livestock industry.

37

Table 2.9

Estimated area needed for the Dutch imports of soya
products from Brazil a)
North

Total soya production

Northeast Midwest

1.5

4.6

29.0

Southeast

South

Total

4.0

20.0

59.1

(million tonnes)
Percentage by region

2

8

49

7

34

100

Annual Dutch import

0.10

0.33

2.09

0.29

1.44

4.25

2.86

2.91

2.98

2.84

2.44

37

114

701

102

590

(million tonnes)
Production per ha by
region (tonnes)
Area needed for Dutch

1,544

import (1,000 ha)
a) Based on average annual figures of 2007-2009.

2.5

Biodiversity impacts

2.5.1 Direct effects on biodiversity

38

The discussion on sustainability of soya production mainly focuses on the expansion of the soya bean area into undisturbed ecosystems. The most important
biomes that are affected by soya cultivation are the Brazilian Atlantic forest in
the south and south-east, the Cerrado savannah system in the Midwestern
states and the Amazon forest in the northern states (CONAB, 2009; Fearnside,
2001). Although there is much concern about deforestation in the Amazon, also
the Cerrado savannah ecosystem and Atlantic forests were identified as hotspot
areas for their high share of endemic species experiencing an exceptional loss
of habitat (Myers et al., 2000). The Cerrado covers 1.7m km2 in central Brazil,
providing habitat to more than 10,000 plant species, of which 44% is endemic
and 1,268 vertebrate species, of which 9% is considered to be endemic (Myers
et al., 2000). Primary vegetation in the Atlantic forest currently only covers
91,000 km2, or 7.5 % of its original extent 1.2m km2 and harbours 20,000
plant species (of which 2.5% endemic) and 1,362 vertebrate species (of which
41% are endemic) (Myers et al., 2000).
In addition, the soya related production is the single most important economic activity justifying the investments in massive infrastructural developments
(Laurance et al., 2004). In turn these attract other actors leading to forest

encroachment and contributing to forest degradation and further deforestation
(e.g. Asner et al., 2006). In this way the expansion of soya bean cultivation
becomes one of the most important driving factors in a whole chain of proximate and underlying causes for deforestation of tropical forests (Geist and
Lambin, 2001).
The expansion of soya cultivation promotes some large-scale forest conversion directly (Fearnside, 2001; Laurance et al., 2004), but more often it is
part of a whole chain of land dynamics. This often starts with (illegal) logging.
Although this often is selective logging, in which the forest structure remains
more or less intact, it opens up the forest and provides access for other actors.
After this initial logging the land is deforested by cattle farmers. On these farms
livestock densities are usually very low, while the grassland productivity is subject to degradation (Berkum and Bindraban, 2008). After 3 to 5 years soya production occurs on land that was used for cattle farming before. In those cases,
however, the expansion of soya cultivation pushes cattle farmers further into the
forest frontier, indirectly adding to the further deforestation (e.g. Laurance
et al., 2004). This can be illustrated by the fact that the hotspots for pasture
expansion into forests are often adjacent to the large-scale soya production
zones (Wassenaar et al., 2007).
Cattle herding is one of the most important direct drivers for deforestation in
the Brazilian Amazon. Although in the past economic profitability of cattle was
very limited, conversion of forest to pasture occurred at large-scale, mainly because of the fact that land titling depended on active use of the land. The
cheapest way to make land productive was to convert it into to pastures.
In the Amazon, the large land owners mainly have cattle ranches based on
extensive production systems (Pacheco, 2009). However, the soya bean cultivation is also expanding here (Nepstad et al., 2006), although still in a limited extent, which may be due to the Amazon Soy Moratorium that was agreed on in
2006 and has been extended until July 2011. This moratorium on the purchase
of soya from illegally logged rainforests in the Amazon is an agreement between
the major public and private stakeholders in the soya sector, including the Brazil
government, international soya traders and Greenpeace.
Besides the direct loss of biodiversity caused by forest into soya field conversion, large-scale soya fields strongly fragment the forest and Cerrado landscapes. A study near Manaus in the Brazilian Amazon showed that especially
trees surviving in forest edges are strongly affected (Laurance et al., 2004).
The tree communities changed dramatically within two decades after fragmentation, resulting in a remarkably fast degradation of the forest given the usually

39

slow and inert responses of trees. Another study in the Brazilian Amazon
showed that fragments of 100 ha lose half of the understorey forest birds within
15 years (Ferraz et al., 2003).
Large parts of the Cerrado are dominated by different agricultural activities
strongly altering the landscape structure. Analysis of the fragmentation patterns
showed that crop dominated Cerrado landscapes are much more fragmented
than pasture dominated landscapes (Carvalho et al., 2009), while small-scale
forest clearing maintain a more complex landscape than the large-scale clearing
for soya cultivation (Ewers and Laurance, 2006). At the same time the crop
dominated areas also contain fewer fragments that are able to sustain healthy
populations of endangered large mammal species like Jaguar, Giant Anteater
and Giant Armadillo (Carvalho et al., 2009; Silva and Diniz, 2008). A study in a
highly fragmented area in the Cerrado, however, showed that ten species of
carnivore mammals was able to explore the whole study area, including some
remaining patches of savannah, Eucalyptus plantation and sugar-cane agriculture (Lyra-Jorge et al., 2008). This area, however, did not include large-scale
soya cultivation and still included a complex landscape.
Currently only small fragments of Atlantic forest remain intact (e.g. Metzger,
2009), with more than 80% of the fragments being smaller than 50ha each
(Ribeiro et al., 2009). Although this is not only due to soya cultivation, but has
also other anthropogenic sources, this strong fragmentation of the forest leads
to further loss of biodiversity. Alvarenga et al. (2010) showed for instance that
patches of Atlantic forest that were able to host rich epiphytic flora were over
300 ha in size, which is larger than the area of most forest remnants (above,
Ribeiro et al., 2009).
2.5.2 Indirect effects on biodiversity
Next to the direct effects of deforestation and conversion of natural habitats into agricultural fields and subsequent fragmentation, also the wide-scale use of
fertilisers and other agro-chemicals adds up to the detrimental effect of soya
production on biodiversity. The use of genetically modified (GM) seeds that tolerate the Roundup Ready herbicide probably results in more intensive production. The increasing use of Roundup (glyphosate), a strong herbicide, will likely
directly affect biodiversity in and around soya fields. The use of large quantities
of this herbicide, however, also has become a major source of pollution, contaminating surface water and aquifers.
40

The ecological consequences of using GM soya versus conventional soya
production systems has been given in detail in Bindraban et al. (2009). The use
of GM crops in combination with intensive use of herbicide is expected to reduce diversity in field margins and to further reduce numbers of species associated with weeds (Bindraban et al., 2009). This loss in diversity may eventually
have a negative effect on the farming system due to the potential reduction of
pollinators depending on margins and forest edges. On the other hand
Bindraban et al. (2009) noted that increased use of GM may lead to implementation of zero-tillage.
Besides loss of biodiversity also other important ecosystem functions are affected, resulting in loss of services these ecosystems provide. In relation to
climate change mitigation especially carbon emissions due to land conversion
and lost possibility for sequestration are an important service that is lost
through conversion of savannah or forest systems to soya fields. Additionally
deforestation leads to increased erosion and increased water run-off into rivers.
This in turn will affect water cycling and rain fall in the Amazon that significantly
depends on water that is being recycled. Erosion and increased run-off will also
affect water quality in the rivers and may lead to changes in the course of
streams (more water and dissolved soil particles that settle on the river bed).
In turn, the subsequent reduction in precipitation may result in a negative feedback leading to water stress, trees dying and further degradation as a result
of further increasing drought and fires. Effects on river streams may result in
flooding of large areas and will affect the livelihoods of people that depend on
these rivers (drinking water, fishing, tourism, etc.).

2.6

Socio-economic impacts of soya production in Brazil

Soya production is an important driver for economic and rural development in
Brazil. In this section the impact of the development of soya production in Brazil
on rural communities is discussed in terms of: (a) employment, (b) income,
(c) access to land and (d) health. Where relevant, a differentiation will be made
in the type of production region (viz. established, expansion and frontier regions)
and the size of the farms (small-scale farms i.e. less than 1,000 ha and largescale farms i.e. larger than 1,000 ha).

41

Employment
The entire soya industry in Brazil is estimated to provide employment for about
5.4m people in 2000, of which about 0.9m on soya farms (D´Alembert et al.,
2003). The employment in the soya producing regions, however, is decreasing
due to the continuous up-scaling of soya bean production and the transformation from more labour intensive crops, such as sugar cane and cotton, towards
the highly mechanised soya bean production. Soya bean production in the frontier regions is characterised by large-scale producers, with more than 1,000 ha
per farm and the farm structure in the established regions is developing in the
same direction (Stickler et al., 2005; Patel and Cassel, 2003; Fearnside, 2001;
Carvalho et al., 2002). Already in 1996, one per cent of the landholders holding
more than 2,000 ha each, controlled 53% of the private land, while, in contrast,
83% of landholders with less than 100 ha each controlled only 11% of all agricultural land (Pacheco, 2009). Small-scale farms employ on average around one
worker per 5-7 ha of land, compared to about one worker per 200 ha on largescale farms. Kessler et al. (2007) estimate the rural employment in the soya
producing regions being declined from 740,000 jobs in 1996 to 335,000 in
2004.
The mechanised soya production does not only require less labour, but also
other type of labour, both leading to decreasing employment opportunities for
the local population. The large-scale farms employ more high skilled workers,
such as agronomists and mechanics, than low skilled workers. This leaves out
local farmers experienced with traditional agriculture (D´Alembert et al., 2003).
They have to rely for their livelihood on seasonal work and subsistence farming
or migration to urban centres. As a result soya producing regions are generally
characterised by a rural exodus (Patel and Cassel, 2003). On the other hand,
new employment opportunities are created in the other links of the soya chain,
in the supply, processing and food industries and logistics as well (D´Alembert
et al., 2003).

Income

42

The Brazilian government stimulates soya production as it boosts export
earnings and national income (Weinhold et al., in press). The soya industry in
Brazil generates around USD32b per year, i.e. 16% of the total Brazilian agribusiness (USD195b) and 6% of the national Gross Domestic Product (GDP)
(D´Alembert et al., 2003). A study of Kessler et al. (2007), however, shows that
the GDP in soya producing regions is decreasing. The conversion to large-scale
farming in combination with low employment has increased income inequality in

the respective regions, because the wages paid on soya farms are rather low
(Sawyer, 2008). It is expected that further development of large-scale soya
bean cultivation will lead to further increasing inequalities especially in the
frontier regions. In 2000, the poverty rates in the frontier regions were already
twice as high as the national average: 64% of the population lived in poverty, of
which 33% in extreme poverty (Kessler et al., 2007).

Access to land
In many studies the expansion of soya production is associated with land conflicts (Kessler et al., 2007; Sojacoalitie, 2006; Van Gelder and Dros, 2006;
Berkum and Bindraban 2008). Governmental policies for land distribution in
the Amazon lured many people to the region hoping to obtain land ownership
(Oliveira, 2008). Customary land rights of local communities are often not or only partially legally recognised. Local people who rely on small-scale crop production and cattle rearing for their livelihoods generally do not have official proof of
land ownership or land use rights. Because weak governmental capacities to
regulate the registering of land ownership (Berkum and Bindraban, 2008;
Oliveira, 2008) public (forested) land is often occupied without obtaining official
land titles. Soya companies often acquired land that was already occupied and
in use by local farmers or land was obtained without getting registered ownership (Sojacoalitie, 2006).
The expansion of large scale soya bean production either directly (through
forest conversion) or indirectly (through opening up forests) contributes to forest degradation and further deforestation. Decreasing availability of non-timber
forest products has a direct negative impact on local incomes and food security. In particular indigenous people depend for their livelihood on the availability
of wild life, fish, wild fruits, jungle rubber and other non-timber forest products.

Human health
The transition from a small-scale diversified agricultural production system
with maize, rice and cassava for the local market towards a large-scale soya
production system for export is not only threatening the local food provision
(Sojacoalitie, 2006), but also the food security of the increasing urbanised population (Carvalho et al., 2002). In the established and expansion regions food
security scores better than the national average, while the situation in frontier
region scores worse.
Intensive use of pesticides and fungicides in large sized farms is dangerously polluting land and water (Stickler et al., 2005). Pesticides run-off into the

43

rivers and creeks cause mortality of aquatic organisms and jeopardise the supply of drinking water and fish stock for local communities (ibid.). Many studies
report on cases of poisoning (Sojacoalitie, 2006; Steward, 2007; Van Gelder
and Dros, 2006; Stickler et al., 2005). Whyte et al. (2004) report that the use
of pesticides together with the loss of agricultural food production has led to increased occurrence of child illnesses.

2.7

44

Options for mitigating biodiversity and socio-economic impacts

The expected increasing world demand for soya products will lead to further
expansion of the area used for soya bean cultivation in Latin American countries, in particular in Brazil, Argentina and Paraguay. The estimated area under
soya bean in these countries will increase with about 10m ha, of which half in
Brazil. This development will certainly lead to further deforestation. The challenge, however, is to mitigate the negative biodiversity impacts by supporting a
shift of soya production from large plantations towards small and medium sized
farms, preventing unnecessary deforestation of high value forests, connecting
and managing forest remnants and improved environment oriented management
of the soya bean fields.
Small-scale soya producers can play an important role, particularly in a transition towards more sustainable agricultural systems that benefit both biodiversity conservation and sustainable rural development (Study et al., 2008).
Government support is needed to shift soya bean cultivation from large plantations to small and medium-sized farms, integrating them into broader programmes of land reform and crop diversification.
Ever since 1938, the legal reserve legislation in Brazil requires that 20% of
the area in a rural property (e.g. used for agricultural practices) should be left
as forest or its original vegetation. Later in the 1990, the requirements for the
Amazon region were increased to 80% of the area of each rural property
(Mueller and Alston, 2007; Pacheco, 2009). Initially, this legal reserve was introduced to secure supply of wood for fuel. When the need for such reserve became superfluous over time, the legislation remained in place but was not
actively enforced. Since the 1980's, the objectives of the legal reserve legislation have been changed based on mere environmental considerations. Also the
legislation change over time, reflecting the constant tussle between environmental and agricultural interests. For instance in 1997 properties below 100 ha
were exempted from the 80% limit (Mueller and Alston 2007). Yet, probably due

to slack enforcement not more land is divided into 100 ha plots (Mueller and
Alston, 2007). An explicit inclusion of the legal reserve in the Environmental
Crimes law, which would make deforestation of the reserve a crime with penal
and administrative sanctions, did not pass (Mueller and Alston, 2007).
A modelling study by Teixeira et al. (2009) showed that in the Atlantic rainforest area in south-eastern Brazil increasing deforestation leaded to a heterogeneous landscape with patches of forest mainly remaining near rivers, on
steep slopes and far from dirt roads. Of a number of modelled scenarios, including law-enforcement and agricultural intensification, showed that only the
law-enforcement scenario will eventually lead to the recovery of interconnected
forest area (Teixeira et al., 2009). This indicates that improved enforcement
of currently existing legislation, prohibiting agriculture on unsuitable land along
river margins and slopes, and the rule to keep at least 20% of land of each agricultural property as forest reserve would effectively conserve forest species in
the short term.
For that purpose, the Round Table on Responsible Soy (RTRS) agreed that
RTRS Certified producers should strictly abide the legal reserve legislation in
Brazil, to keep the original vegetation intact.
According to the Amazon Soy moratorium, soya bean cultivation should not
take place on land that has been deforested after 2006. This moratorium has
been extended to July 2011. This is not sufficient to prevent further deforestation, because soya bean expansion on former pasture land pushes the original
cattle ranchers further into the Amazon forest frontiers, indirectly leading to further deforestation. These potential leakage effects should also be taken into
consideration.
Furthermore, since fragmentation of the forest or savannah biomes may
have a strong effect on biodiversity, the establishment of the legal reserves and
High Conservation Value Areas (HVCAs) should be done in a coordinated way using an integrated land use planning approach. This would need to result in large
intact areas of remaining HCVAs and other forest over different properties that
are also as much as possible interconnected with corridors. Large soya farms
inhibit an effective establishment of reserves and HCVAs, because they easily
become isolated in a landscape with large-scale soya fields. Small and medium
sized farms in a mosaic agricultural and natural landscape can thus play an important role in the transition towards a more sustainable soya production. Economic sustainability of smaller farms can be achieved by adequate support in
increasing the yields per hectare.
45

Next to deforestation and fragmentation of natural habitats, soya bean production does affect biodiversity through the wide-scale use of fertilisers and
other agro-chemicals. Positive results are to be expected from a more environment oriented crop management. In this context the use of genetically modified
(GM) seeds that tolerate the Roundup Ready herbicide is controversial. The ecological consequences of using GM soya versus conventional soya production
systems has been given in detail in Bindraban et al. (2009). The use of GM
crops in combination with intensive use of herbicide is expected to reduce diversity in field margins and to further reduce numbers of species associated with
weeds (Bindraban et al. 2009). This loss in diversity may eventually have a negative effect on the farming system due to the potential reduction of pollinators
depending on margins and forest edges. On the other hand, Bindraban et al.
(2009) noted that increased use of GM may lead to implementation of zerotillage. The related increase of yields per hectare will also lead to less pressure
on conversion of forest into soya bean fields.

2.8

Synthesis

Production and trade

46

Soya is one of the most important agricultural commodities. Around 100m ha of
agricultural land in the world is used for soya bean production. The USA is the
largest producer of soya beans, with 41% of the total world production in 2009,
followed by Brazil (26%) and Argentina (14%). China is also in the top five of the
soya beans producing countries, yet China is also the world's biggest importer
of soya beans. The USA dominates the export of soya beans with about half
of the total trade (40.5 of 81m tonnes). Brazil is second with 28.6m tonnes.
Argentina is by far the major exporter of soya oil and oil cake (4.4 respectively
21.6m tonnes). In 2009, China imported more than half of the total global trade
in soya beans and is also an important importer of soya oil, in particularly from
Argentina. The EU is also a large importer of soya products. Within the EU, the
Netherlands is one of the major destinations for soya beans and soya oil cake.
The total import value significantly increased since 2000 and added up to more
than USD4b in 2008. Then the import declined substantially, caused by an
increased competition in the global food market since 2007. The average annual import value in the period 2007-2009 was USD3m. About one third of the
soya beans shipped into the Netherlands is re-exported, mainly to Germany and

Belgium. The rest is processed; the end products are used in the food and feed
industry in the Netherlands and other EU countries as well.
It is expected that the production of soya beans will further increase due to
the growing demand for vegetable oil and animal feed, in particular in China,
which is expected to account for around 60% of total world imports of soya
beans in 2018. According to FAPRI's projections the soya bean production
areas in Latin American countries will expand with about 10m ha, of which half
in Brazil. The share of Latin America in the total world soya bean area will increase to about 46% in 2018.

Biodiversity
The massive growth of soya bean production in Latin America has been realised
in till then undisturbed ecosystems such as the Brazilian Atlantic forest in the
south and south-east, the Cerrado savannah system in the Midwestern states
and the Amazon forest in the northern states. Soya cultivation has a dramatic
direct effect on biodiversity. The large-scale mono-culture soya fields lead to a
nearly 100% reduction of forest species on the fields themselves. In addition,
the soya production is the most important economic activity justifying the investments in massive infrastructural developments in these regions, attracting
other activities leading to forest degradation and deforestation. This often starts
with (illegal) selective logging, which leaves the forest structure more or less intact, but opens up the forest for other activities, in particular extensive cattle
farming. After a few years, the land is then taken over for soya cultivation which
pushes cattle farmers further into the forest frontier, indirectly adding to the further deforestation.
The large-scale soya fields strongly fragment the forest and savannah landscapes, leading to a remarkably fast degradation of the remaining forest. Often
only small fragments of forest remain intact, leading to further loss of biodiversity, because the disconnected fragments are not able to sustain healthy populations of endangered species, including some of the endangered large mammal
species like Jaguar, Giant Anteater and Giant Armadillo.
In addition to these direct effects, the wide-scale use of agro-chemicals adds
up to the detrimental effect of soya production. The use of large quantities of
fertilisers and herbicides is a major source of pollution, contaminating surface
water and aquifers and affecting biodiversity in and around soya fields. The use
of GM soya is increasing, due to higher yields and profitability. The ecological
consequences of GM soya versus conventional soya production systems are

47

controversial. The use of GM crops in combination with intensive use of herbicide is expected to reduce biodiversity in the field margins, but may also lead
to zero-tillage in the fields, with less impact on biodiversity.

Social and economic impacts
Soya production is an important driver for economic and rural development in
Brazil. However, from the perspective of the local communities the soya industry is often not so positive. The socio-economic impacts of soya production differ among regions in particular depending on the dominant farm structure. In
regions with large-scale soya production, the highly mechanised production
of soya beans leads to a drastic loss of employment, because per 100 ha in
large-scale production less than one worker is employed instead of around 1520 workers in small-scale production. In these regions, poverty is increasing,
in particular in the frontier regions, where according to some studies almost
two thirds of the population lives in poverty. As a result, local inhabitants rely
on seasonal work and subsistence farming or migrate to urban centres. On
the other hand, new employment opportunities are created in the other links of
the soya chain, i.e. in the supplying, processing and food industries and logistics as well.
The expansion of soya production is, according to many studies, linked with
land conflicts because of unclear land owner rights and weak capacities of the
government to regulate land ownership. As a result, soya companies often acquired land that was already occupied and in use by local farmers or land was
obtained without getting registered ownership.
The transition from small-scale diverse agricultural production systems with
maize, rice and cassava for the local market towards large-scale soya bean
production systems for export does not only involve risks for the local food provision, but also for the food security of the increasing urbanised population in
these regions.
Deforestation for soya production does also affect the possibilities for collecting of non-timber forest products which is one of the traditional food sources
for the local communities. In addition, the intensive use of agro-chemicals in
soya fields is seriously affecting the health of the local population, directly
through inhaling and contact and indirectly because of land and water pollution.

48

Estimate of the land area used for Dutch import of soya products from Brazil
The share of the Netherlands in the soya products from Brazil gives a rough indication on the impact of Dutch soya industry on biodiversity and the socioeconomic situation in Brazil. The Netherlands imports mainly unprocessed soya
beans and oil cake and a little amount of soya oil. Taking into account the net
yield of oil and oil cake per tonne of soya beans, the total Dutch annual imports
of soya beans and soya products in 2007-2009 is equivalent to about 4.3m
tonnes of soya beans. That is about 7.5% of the total production in Brazil. It is
not possible to trace back the Dutch soya imports to the specific production areas, so only a rough estimate can be made of the land area that is
needed for the Dutch import of soya products from Brazil. Assuming that all
production regions contribute to the export to the Netherlands and taking into
account the average soya bean yield per hectare in these regions, the total area
that is needed for the Dutch import of soya beans from Brazil is equal to about
1.5m ha of land. In comparison, this area covers roughly one third of the Dutch
land-area or almost 80% of the total cultivated area in the Netherlands. This estimate is based on the total gross imports of soya products of the Netherlands,
not taking into account that a substantial part of it is re-exported, directly or after processing.

Options for mitigating biodiversity and socio economic impacts
The expected further increasing area used for soya bean cultivation will certainly
lead to further deforestation. The challenge, however, will be to mitigate the
negative impact on biodiversity by preventing unnecessary deforestation of high
value forests, connecting and managing forest remnants and improved environment oriented management of the soya bean fields. The legal reserve legislation in Brazil provides an instrument to prevent large areas of natural habitats
in the forests and savannah regions to be converted into agricultural areas.
However, improved law-enforcement measures are required to combat an insidious conversion process. In this context, it is promising that the Round Table on
Responsible Soy (RTRS) agreed that RTRS Certified producers should strictly
abide the legal reserve legislation in Brazil and that the Amazon Soy moratorium
does not allow soya bean cultivation on land that has been deforested after
2006. This moratorium gets support from the Brazilian government and has recently been extended to July 2011.
49

Since fragmentation of forest or savannah biomes may have a strong effect
on biodiversity, the establishment of the legal reserves and High Conservation
Value Areas (HVCAs) should be carried out in a coordinated way, using integrated land use planning approaches, resulting in interconnected areas of HCVAs
and other forests. Small and medium sized farms in a mosaic landscape of agriculture and natural areas could play an important role in the transition towards
a more sustainable soya production.
Another option for mitigating the biodiversity impact of soya production is
to further increase the yields per ha, so that less land is required for the same
production. Adequate support to small-scale farmers is required to achieve
higher yields and increase sustainability.
In addition to that, positive results are to be expected from a change from
the currently wide-scale use of fertilisers and other agro-chemicals towards
more environment oriented crop management systems.
Into what extent the use of genetically modified (GM) seeds will contribute to
a decreasing impact of soya production on biodiversity is controversial: there
are positive and negative ecological consequences of using GM soya beans.

50

3

Palm oil
3.1

Introduction

Palm oil has become a major agricultural commodity which is used in a multitude of food and non-food products, such as cooking oil, soaps, detergents,
lubricants, cosmetics, oleo-chemicals, animal feed and biodiesel. In general, the
raw material passes through various stages of processing before it reaches the
consumer. Figure 3.1 gives a schematic overview of the palm oil supply chain.
In the chain from producers to consumers various actors are involved and the
product provides employment and income for millions of people along the chain.
Figure 3.1

Schematic outline of the palm oil supply chain

Source: Adapted from Van Gelder (2004).

In recent years, the global demand for palm oil products has increased tremendously, resulting in a rapid development of oil palm plantations, in particular
in Southeast Asia. Vast forest areas have been converted into oil palm planta-

51

tions, leading to increasing concerns over its impact on the local environment
and local societies. These concerns have led to the establishment of the
Roundtable on Sustainable Palm Oil (RSPO) in 2004. To achieve its goal of a
growing use of sustainable palm oil, the RSPO has introduced a RSPO Growers
Certification and a RSPO Supply Chain Certification. All major global traders and
processors are in the process of approval for a supply chain certification and
the first consignment of certified sustainable palm oil came on the market in
November 2008. As by September 2010, 1.7m tonnes of RSPO certified palm
oil was available on the market, of which around 60% was purchased. (see Text
box 3.1 for further information)
In 2009, Greenpeace has pursued a campaign for sustainable sourcing of
palm oil by multinationals. Unilever, the world's largest buyer of palm oil, responded by blacklisting two major Indonesian members of the RSPO for being
engaged in 'unsustainable' practices.
Following a recent audit of investments of the International Finance Corporation (IFC) in the oil palm sector by the Office of the Compliance Advisor/
Ombudsman (CAO), the World bank Group ordered a moratorium on investments
in palm oil until a comprehensive sector strategy has been developed.
An important milestone in the development towards sustainable palm oil in
the Netherlands is the establishment of a Taskforce Sustainable Palm Oil, which
represents all major stakeholders in the Dutch palm oil chain. In November
2010 the participating parties signed a manifesto in which they announce to
strive for all palm oil for the Dutch market to be sustainable in 2015.
The following sections provide a description of the developments in production, in particular of Indonesia and Malaysia, the volume of trade in particular to
the Netherlands and the related impact on biodiversity and the social economic
situation in the production areas. This chapter will end with a synthesis of the
major findings.

52

Text box 3.1

Roundtable on Sustainable Palm Oil (RSPO)

The RSPO is a not-for-profit association that is aiming at promoting the development of sustainable palm oil production. It provides all stakeholders in the palm oil industry a platform for
developing and implementing global standards for sustainable palm oil. Currently the RSPO
has 363 ordinary and 82 affiliate members and 12 supply chain associates. The members
can be divided into seven groups: oil palm growers (85 members), palm oil processors
and traders (141 members), consumer goods manufacturers (87 members), retailers
(22 members), banks and investors (8 members), environmental or nature conservation organisations (NGOs) (11 members) and social or development organisations (NGOs) (9 members). All major producers, processors, traders and manufacturers are RSPO member

(RSPO website, September 9, 2010).
To achieve its goal of a growing use of sustainable palm oil, the RSPO has introduced a
RSPO Growers Certification and a RSPO Supply Chain Certification. To receive this certification the companies' production process needs to be approved by RSPO approved Certification Bodies. As by September 2010, 17 oil palm growers with 66 mills in total are certified.
They cover a production area of about 576,000 ha and produce around 2.9m tonnes of Certified Sustainable Palm Oil (CSPO) and 0.7m tonnes of Certified Sustainable Palm Kernels
(CSPK).
Nine growers in Indonesia are certified, with a CSPO production of 0.8mn tonnes and
a CSPK production of 0.2m tonnes. RSPO recognises four supply chain certificates:
- 'Identity Preserved': the product contains x % palm oil that can be traced back to a specific
RSPO certified grower (mill and plantation);
- 'Segregated': the product contains x % palm oil that can be traced back to a shipment that
originates from different RSPO certified growers;
- 'Mass Balance': the product contains palm oil, that according to the transporter or processor contains x% palm oil from RSPO certified growers;
- 'Book and Claim': the product contains palm oil, that according to the attached documents
or certificates contains x% palm oil from RSPO certified growers;
To date, 44 companies have a RSPO supply chain certificate. All major global traders and
processors are in the process of approval for a supply chain certification, almost all opting
for both Segregated and Mass Balance certification. This is also the case for the traders
and refineries in the Netherland. Only one company in the UK submitted an application for an
Identity Preserved Certificate.
The first consignment of certified sustainable palm oil came on the market in November
2008. As by September 2010, 1.7m tonnes of RSPO certified palm oil was available on the
market, of which around 60% was purchased (RSPO website: www.rspo.eu/market/index.
html 9/9/2010). The higher price for certified palm oil compared with not-certified palm oil is
impeding the purchases.
Source: RSPO website: http://www.rspo.eu

53

3.2

Total oil palm area and palm oil production

Oil palm is currently the most rapidly expanding crop in Southeast Asia. Globally
it covers over 14.7m ha and is one the world's major sources of edible oils,
about the same amount as soya oil. Palm oil production increased from around
2m metric tonnes in 1970 to an estimated 47m tonnes in 2009 (FAO, 2010a).
Indonesia and Malaysia account for about 85% of the global palm oil production,
with each about the same share.
Figure 3.2

Development of the production of palm oil (inclusive palm
kernel oil) in Indonesia, Malaysia and the World (1970-2009)

50
45
Million tonnes

40

35
30
25
20
15

10
5
1970

1975

1980

1985

World

1990

Indonesia

1995

2000

2005

2010

Malaysia

Source: FAO (2010a).

With respect to the total area of oil palm plantations, there is a large discrepancy between FAO figures (FAO 2010a) and figures published by the palm
oil industry, possibly due to the exclusion of recently planted areas that are not
yet producing (less than 3 years).
3.2.1 Indonesia

54

The development of oil palm plantations in Indonesia shows a steep growth from
the mid-nineties of the last century onwards (see Figure 3.2), from less than 1m
ha around 1990 towards more than 7m ha in recent years. According to Shean
(2009) the total area in 2009 was 7.3m ha, of which 5.06m ha is mature and
producing. The total area is expected to grow to 8.9m ha in 2012 (Santosa,
2008).

Figure 3.3

Oil palm area harvested and production volume of fresh
fruit bunches in Indonesia in the period (1970-2009)

6.0

100
90

80
70

4.0

60
3.0

50
40

2.0

Million tonnes

Million hectares

5.0

30
20

1.0

10
-

1970

1975

1980

1985

Indonesia: harvested hectares

1990

1995

2000

2005

2010

Indonesia: production palm fruit bunches

Source: FAO (2010a).

According to FAPRI (2009) projections, Indonesia will maintain its leading
position in world palm oil production, increasing its output from around 20m
tonnes in 2008/09 to 28m tonnes in 2018/2019. The strong increase in palm
oil production in Indonesia is driven by the large global demand for crude palm
oil and is facilitated by different levels of the Indonesian Government. An important role in this respect plays the decentralisation of power caused by the fall
of Suharto, which has given the lower local level authorities (district) the right to
decide on the use of state land. Local government authorities are leasing land
to private companies that start large-scale oil palm plantations. In 2007 the total
planted area accounted 6.8m ha of which 3.3m ha was controlled by private
companies, 2.8m ha by small holders and 0.7m ha by public companies. Smallholders accounted for 35% of the total crude palm oil produced and 41% of the
productive area (Sheil et al., 2009; Vermeulen and Goad, 2006). Because of the
required machinery and palm oil mill, most small holder plantations occur as nucleus estates in cooperation with larger, company owned plantations
(Sheil et al., 2009). These so-called 'supported small-holders' cultivate some
25,000 ha of land in Indonesia, while the so-called 'independent small holders',
who do not have outside assistance, cultivate some 650,000 ha of land
(Vermeulen and Goad, 2006).

55

The major part of the Indonesian oil palm plantations is located in lowlands
that are relatively easy to access; more than 95 % in Sumatra and Kalimantan,
but the palm oil sector is also expanding into other parts of Indonesia such as
Papua and Sulawesi (see Table 3.1 and Figure 3.4).
Table 3.1

Local production areas of palm oil in Indonesia (2005)

Province

Area (million ha)

%

Nangroe Aceh Darusalam

0.22

4.27

North Sumatra

0.68

13.20

West Sumatra

0.2

3.88

Riau

1.4

27.18

The Rest of Sumatra

1.25

24.27

Total Sumatra

3.75

72.80

Java

0.02

0.39

West Kalimantan

0.46

8.93

Central Kalimantan

0.34

6.60

South Kalimantan

0.2

3.88

East Kalimantan

0.2

3.88

Total Kalimantan

1.2

23.29

Sulawesi

0.12

2.33

Irian Jaya (Papua)

0.06

1.17

Total Indonesia

5.15

100

Source: GAPKI and Directorate General of Estate Crops (Bangun (2006), www.gapki.or.id/).

Forest clearings for plantation development increasingly occur in the hilly inlands of Central Kalimantan, although a recent report by ISRIC concludes that
these lands are highly unsuitable for oil palm (Mantel, 2007). Plans to establish
1.8m ha of oil palm plantations along the Sarawak-Kalimantan border, through
the heart of Borneo (The Kalimantan Border Oil Palm Mega Project) have failed
so far. Based on the proposed extensions for oil palm plantations, West Kalimantan, Riau and Papua will become the largest palm oil producing states by
2020. Currently Papua is still a minor producer.

56

Figure 3.4

Oil palm concession areas and their proposed extensions
by 2020 for Indonesia

Source: Santosa (2008).

The Indonesian Ministry of Forestry statistics indicates that 70% of the current oil palm estates in Indonesia are located in areas formally belonging to the
Indonesia's forest estate between 1982 and 1999 (Sheil et al., 2009). Many of
them have been established in forested areas because the timber yields can
offset the costs of plantation establishment. Many plantation companies are associated with logging companies to make this possible (see Casson, 2000;
Casson, 2007). According to international non-governmental organisations a
large part of the approved oil palm concessions in Indonesia has never been
planted with oil palms but was merely used for timber extraction. To illustrate
this, Casson (2007) described that within the province of West-Kalimantan some
5.3m ha of location permits for oil palm plantations were approved, whereas only 1m ha of land have actually been planted with oil palm. In addition, Riau province (Sumatra) lost 4m ha (64%) of its forests between 1982 and 2007; 29% of
this was cleared for industrial oil palm plantations, 24% for industrial pulpwood
plantations and 17% was not replaced by any crop cover (Uryu et al., 2008).
This process is expected to continue also elsewhere in Indonesia because part
of the oil palm concessions to be developed are planned in forest areas (Venter

57

et al., 2009), as it is shown in Figure 3.5, which is an overlay of the planned oil
palm plantations in Kalimantan and a 300 meter resolution forest cover map
(ESA, 2008).
In conclusion, a large part of the deforestation in Southeast Asia is indirectly
related to oil palm development. This indirect land use change is not accounted
for in the estimates of impacts of Dutch palm oil import on biodiversity presented in this report.
Figure 3.5

Location of planned oil palm concessions in forest and
deforested areas Kalimantan
oil palm planned in forest
oil palm planned in non-forest
remaining forest

Source: Venter et al. (2009).

The authority for approval of development plans for oil palm plantations over
1,000 ha lies still with the central government (Colchester et al., 2006). According to the Indonesian government, there is still an area of 27m ha of unproductive forest land available for palm oil production (Colchester et al., 2006). It is
unclear to what extent this estimate takes into account the large number of
people in Indonesia who are depending upon state forest areas for their livelihoods. It is estimated that 60-90m of the in total 220m people in Indonesia are
depending on forest resources, hence, the transformation from state owned
58

forest land to oil palm plantations will heavily affect Indonesia's rural communities (see section 2.7).
3.2.2 Malaysia
In Malaysia, the palm oil production started to grow much earlier than in
Indonesia. The area of oil palm shows a steady grow from less than 0.5m ha
in 1975 towards more than 3.5m ha in 2007 (Figure 3.6).
Figure 3.6

Oil palm area harvested and production volume of fresh fruit
bunches in Malaysia (1970-2009)

6.0

100
90
80
70

4.0

60
3.0

50

40
2.0

Million tonnes

Million hectares

5.0

30
20

1.0

10
-

1970

1975

1980

1985

Malaysia: harvested hectares

1990

1995

2000

2005

2010

Malaysia: production palm fruit bunches

Source: FAO (2010a).

Large-scale production of palm oil in Malaysia started in Peninsular Malaysia,
where its plantations covered over 2,36m ha in 2007 (Table 3.2). The area of
oil palm plantations is fast growing in the states of Sabah and Sarawak as well.
According the MPOB statistics, Sabah had planted about 1.28m ha of oil palm
plantations in 2007 and Sarawak 0.66m ha. Recent sources indicate, however,
that the total area of oil palm plantations in Sarawak was some 1.39m ha in
2007 (Forest Department Sarawak, pers. comm.), which is surprisingly more
than twice the figure shown by the official MPOB statistics. Most of the oil palm
plantations are located in the coastal lowlands, but oil palm is also being planted
in the hilly inlands of Sarawak, close to the Kalimantan border and close to the
heart of Borneo Area.
59

Table 3.2

Distribution of oil palm planted areas by estates in Malaysia
(2007, ha)

State

Small

Felda

Felcra

Risda

State

holders
Johor

151,025

Kedah
Kelantan

Private

Total

agencies estates
119,740

22,070

5,134

43,921

328,751

670,641

15,484

510

1,124

1,252

1,916

54,810

75,096

1,873

38,230

5,314

767

8,878

44,701

99,763

Melaka

6,419

2,848

2,411

1,966

-

35,469

49,113

N. Sembilan

15,229

46,125

7,644

10,523

3,003

88,319

170,843

Pahang

29,213

284,228

31,283

22,112

55,956

218,660

641,452

P. Pinang

7,054

-

511

56

-

5,683

13,304

Perak

72,292

20,252

31,548

19,779

13,717

193,395

350,983

Perlis

61

-

199

-

-

-

260

Selangor

30,685

4,989

4,297

342

1,126

87,876

129,315

Terengganu

5,435

38,500

19,962

19,555

12,732

65,103

161,287

Peninsular

334,770 555,422 126,363 81,486

141,249 1,122,767 2,362,057

Malaysia
Sabah
Sarawak
Sabah and

106,186

113,874

29,199

14,690

-

7,681

22,838

-

135,385 121,555

37,528

-

470,155

163,891

81,486

94,087

949,407

1,278,244

78,209

526,685

664,612

172,296 1,476,092 1,942,856

Sarawak
Malaysia

676,977

313,545

2,598,859

4,304,913

Source: www.econ.mpob.gov.my/economy/annual/stat2007

Large-scale production of palm oil in Malaysia started in Peninsular Malaysia,
where its plantations covered over 2,36m ha in 2007 (Table 3.2). The area of
oil palm plantations is fast growing in the states of Sabah and Sarawak as well.
According the MPOB statistics, Sabah had planted about 1.28m ha of oil palm
plantations in 2007 and Sarawak 0.66m ha. Recent sources indicate, however,
that the total area of oil palm plantations in Sarawak was some 1.39m ha in
2007 (Forest Department Sarawak, pers. comm.), which is surprisingly more
than twice the figure shown by the official MPOB statistics. Most of the oil palm
plantations are located in the coastal lowlands but oil palm is also being planted
in the hilly inlands of Sarawak, close to the Kalimantan border and close to the
heart of Borneo Area.

60

3.3

Global trade flows and the Dutch trade position

Being the two largest producers of palm oil products of the world, Indonesia
and Malaysia also dominate international trade; they are the largest exporters of
palm oil and oil cake (see Table 3.3). In 2009, Indonesia was the world's largest
exporter of crude palm oil, while Malaysia was the major exporter of processed
palm oil. The countries' exports of oil cake are quite balanced. Together they
account for 80-90% of the world's exports in these palm oil products.
The Netherlands and India are the two most important importers of crude oil,
while China is a key importer of processed or refined palm oil. The Netherlands
is also a major importer of oil cake.
Table 3.3

Major exporters of palm oil and their markets, 2009
(in million tonnes)

Exporting Palm oil, crude

Palm oil,

country

other than crude
world

major

world major

destination
Indonesia

9.6 India:

Oil cake
world

destination

major
destination

4.4

7.3 China:

2.3

2.6 Netherlands: 1.1

Netherlands: 1.1

India:

1.1

New Zealand: 0.5

Malaysia:

1.1

Ban-

Italy:

0.6

gladesh:

0.7

Republic

Singapore:

0.6

Egypt:

0.4

of Korea:

China:

0.3
0.3

Netherlands: 0.3
Malaysia

Other

2.6 Netherlands: 1.0

11.3 China:

3.2

2.2 Netherlands: 1.0

India:

0.6

Pakistan: 1.5

Republic

Pakistan:

0.4

USA:

0.6

of Korea:

China:

0.2

India:

0.5

New Zealand: 0.3

Finland:

0.2

Japan:

0.5

0.9

2.2

0.6

13.1

20.8

5.4

0.4

countries
Total

Source: UN Comtrade, LEI.

Table 3.3 is based on UN Comtrade statistics. It need to be noted that there
is a mismatch between the Indonesian and Malaysian export figures and
the Netherlands' import figures, e.g. Indonesia and Malaysia report an export
61

of 2.0m tonnes crude palm oil to the Netherlands, while the Dutch import data
show only 1.6m tonnes of imports from these countries. For oil cake these figures are 2.0 respectively 0.7m tonnes. On the other hand, the import data of
some European countries are much higher than the reported export data of the
two exporting countries. There is no clear explanation for these disparities in
trade data, as has been discussed section 1.4.
In the following sections about the trade of the Netherlands, the Dutch reported figures are taken as starting point for further analysis. Trends in the
Dutch imports of palm oil products are presented in Figure 3.7. The total import
value significantly increased since 2000 and adds up to almost USD2.1b in
2008, and a sharp decline in the following year, caused by an increased competition in the global food market since 2007. In the period 2007-2009, the annual Dutch import value was about USD1.6b and accounted for 7% of the total
global trade in palm oil products. For crude palm oil the share of the Netherlands was 15% and for palm oil cake even 23%.
Figure 3.7

Value (million USD) of Dutch import of palm oil products
(1995-2009)

2,500

Million USD

2,000
1,500
1,000
500
0
1995

Source: UN Comtrade, LEI.

62

1997

1999

2001

2003

2005

Palm oil total

Palm oil crude

Palm oil other

Palm oil cake

2007

2009

The commercial links of the Dutch palm oil traders and processors are more
intensive with Malaysia than with Indonesia, as is shown in Table 3.4: the import
volume of crude palm oil and palm oil cake from Malaysia is about twice as
much as from Indonesia.
Table 3.4

Major exporting countries for palm oil products to
the Netherlands (average 2007-2009)

Commodity

Import value

Import volume

million USD

1,000 tonnes

1,226

1,669

Malaysia

666

1,020

Indonesia

427

521

Papua New Guinea

39

44

Palm oil, other than crude

256

290

Malaysia

102

128

Indonesia

123

136

Oil-cake

158

853

Malaysia

95

521

Indonesia

48

256

Germany

15

74

Palm oil, crude a)

a) Import volume of crude palm oil is average of 2007/2008, 2009 figures not available.
Source: UN Comtrade, LEI.

The Netherlands is not only a significant importer of palm oil products, in
particular crude oil, but also a major exporter, especially of processed palm oil
and oil cake (see Table 3.5). The most important export destinations are the
neighbouring countries Germany and Belgium.

63

Table 3.5

Major importing countries for palm oil products from
the Netherlands (average 2007-2009)

Commodity

Export value

Export volume

million USD

1,000 tonnes

Palm oil, crude

123

151

Finland

43

67

Germany

38

38

1,158

1,090

Germany

342

351

Belgium

307

283

France

134

121

Oil-cake a)

65

372

Germany

35

210

Belgium

16

89

Palm oil, other than crude

a) Export volume of oil cake is average of 2007/2008, 2009 figures not available.
Source: UN Com trade, LEI.

Table 3.6 shows the importance of palm oil processing for the Netherlands:
the import value of crude palm oil is about the same as the export value of processed palm oil. The total balance shows a deficit for the Netherlands.
Table 3.6

Trade balance of the Netherlands in palm oil products

Commodity

Value in million USD

Volume in 1,000 tonnes

(average 2007/09)
import
Palm oil, crude

(average 2007/08) a)

export

balance

import

export balance

1,226

123

-1,103

1,669

174

-1,495

Palm oil, other than crude

256

1,158

+902

351

1,231

+880

Oil-cake

158

65

-93

1,044

372

-672

a) Volumes are averages of 2007/2008, because 2009 figures on volumes were not available for all
commodities.
Source: UN Comtrade, LEI.

Import tariffs
In most cases there are no import tariff charges on palm oil and cake when entering the EU. However, imports from Malaysia and Indonesia are subject to
a tariff on palm oil, with less than 2% on crude palm oil imports whereas the
EU charges a significant 9.5% import tariff on processed palm oil
64

Table 3.7

Import tariff structure of palm oil commodities

Commodity

Tariff Countries

Palm nuts and kernels

0% For all countries

Palm oil, crude

0% For all countries except:
1.9% Indonesia, Malaysia, Norway, Philippines, Singapore, USA

Palm oil, other

0% For all countries except:

than crude
3.2% Argentine, Brazil, China, Morocco, Russian Federation,
Saudi Arabia, Thailand, UAE, Ukraine
8.93% Sri Lanka
9.45% Indonesia, Republic of Korea, Malaysia, Norway, Philippines,
Singapore, Switzerland, USA
Oil-cake and other

0% For all countries

solid residues
Source: MacMAP tariff data.

3.4

Future trade developments

3.4.1 Drivers of supply and demand
This section presents an analysis of the main drivers of the supply and demand
developments on the international agricultural market in general and for palm oil
and soya bean products in particular. Furthermore, expectations in production
and trade for the next 10 to 15 are depicted, based on estimated international
supply and demand developments. The projections show where (in which countries) and to what extent palm oil production most probably will expand.

Drivers of demand
Population growth and rising incomes are, together with migration from rural to
urban areas and changing consumption habits the most important drivers of
developments in the demand of agricultural products. All four factors interact
with each other and cannot be regarded separately. For the coming ten years
the worldwide population growth is estimated to be no more than 1% annually,
although population growth will be much higher in the lower (Africa) and middle
income (Latin America, Asia) countries than this average figure (OECD/FAO,
2009). Moreover, more and more people in developing countries are migrating
65

from the poorer rural areas to the growing and richer urban centres, in the
prospect of finding better paid work in the cities. As a result of this migration
an increasing part of population will not be able to get sufficient food based on
subsistence farming and hence more and more people have to earn money to
purchase food. Despite the world wide slow-down of economic growth in the
most recent years due to the financial and economic crisis of 2008/2009
projections for 2011-2018 indicate a substantial economic growth for all regions in the world, although the expected growth figures are significantly higher
in the emerging economies like China, India and Russia and (other) developing
countries compared to those for the EU-15, the USA and Japan.
Income growth per capita leads generally to more consumption of 'luxury'
goods. This implies a shift in food consumption patterns towards more convenience and processed products, while consumers show greater attention to food
safety, environmental and health issues. In volume terms it may not be expected
that food consumption will increase much in high-income countries, yet increasing income in developing countries will result into more demand and a shift to
products with higher added value. An important implication is the shift in the
consumption pattern from cereals to meat products and that implies an increasing demand of coarse grains and protein rich products such as soya beans for
animal feed.
In addition to these four 'traditional' drivers a new source of demand for agricultural commodities has emerged, viz. biofuels (primarily of bio-ethanol from
maize and sugar cane and biodiesel from rapeseed and lately palm oil). The recently growing demand and production of biofuels has been the result of increasing prices of fossil fuel and the policies in the USA and EU to direct the
share of renewable energy in total energy consumption as part of their strategic
energy and climate policy. Also other countries (e.g. Argentina and Brazil) promote ethanol and biodiesel production. Although the usage of grain for the production of biofuels is still only a small share of well below 5%, the production of
ethanol from grain is mainly promoted or planned to be promoted in the grain
exporting countries. This leads to a decrease in the availability of agricultural
raw materials for exports and thus on the world market with possible consequences for international prices if production falls short of demand growth.

66

EU's goals set in its biofuel policy will not be met without a significant increase of imports of oilseeds and vegetable oils (Banse et al., 2008).1. As a
consequence of biofuels policies and their impact on demand for agricultural
commodities, the price structure, i.e. the relation between the prices of individual commodities, will change, which effect supply responses.

Supply and demand projections
According to projections in OECD/FAO (2009) supply response to these demand developments will largely be the results of productivity increases (at least
in the most productive areas) while expansion of areas and/or livestock numbers will only contribute little. The outcome of the dynamics in supply and
demand is that in the 10 years to come the (real) prices of agricultural commodities will be on average on a significant higher level than they were in the decade
prior to the 2007-2008 peaks (and despite the significant price decrease in
2008/09 against 2007/08). The situation varies by commodity with average
crop prices being projected to be 10-20% higher, while vegetable oils real
prices are expected to be more than 30% higher relative to 1997-2006.
3.4.2 Projections of palm oil exports and imports
According to FAPRI projections, Indonesia and Malaysia will continue to dominate world exports of both palm oil and meal (Table 3.8). The largest importers
are China, India and the EU. Population and income growth cause palm oil consumption to expand in China and India, as industrial use for palm oil rises rapidly
with the demand for processed food. The EU depends on imports to maintain
its palm oil consumption which is expected to increase about 20% over the projected period. Because rapeseed oil, the major vegetable oil in the EU, is primarily used for biodiesel production, the low cost palm oil becomes a preferred
substitute for other industrial uses.

1

EU's biofuel policy is much under debate. Goals set to reach a biofuel target of 10% blending by
2020 are not considered sustainable in terms of industry development as well as in terms of land-use
in and outside the EU (see Renewable Fuel Agency, The Gallagher Review of the indirect effects of
biofuels production, July 2008). For latest updates of the policy and the specifications of EU's Biofuel
Directive, see www.ec.europa.eu/agriculture.

67

Table 3.8

Projections of palm oil exports and imports (million ton)
Palm oil

Palm kernel meal

Palm kernel oil

2008/09

2018/19

2008/09

2018/19

2008/09

2018/19

Malaysia

13.9

18.2

2.1

2.6

0.5

0.5

Indonesia

14.6

22.3

2.2

3.2

1.5

2.4

China

5.7

9.1

0.4

0.7

EU

3.8

4.5

2.4

2.8

0.6

0.7

Net-exporters

Net-importers

India

4.9

6.7

Rest of world

14.0

21.2

2.0

3.0

1.1

1.4

Total trade a)

28.4

40.5

4.4

5.8

2.1

2.8

a) Excluding intraregional trade.
Source: FAPRI(2009) World Agricultural Outlook (2009: p. 264).

3.5

Land area used for Dutch import of palm oil

In this section an estimate is made of the land area that is needed for the Dutch
import of palm oil and palm oil products from Malaysia and Indonesia. Starting
point for the calculations are the Dutch import figures combined with estimates
of yields per hectare for different type of producers in Malaysia and Indonesia.
3.5.1 Production methods and yields
The productivity of oil palm plantations, i.e. both the yield of fresh fruit bunches
(FFB) per hectare and the FFB quality, depends on various factors such as the
site conditions, the management of the plantation, the age of the oil palms
(mature palms produce more fruits than young ones) and the variety used. The
palms start producing at the age of three and they reach their highest average
production at 8-10 years old, after which the yields decline gradually until the
end of the rotation, normally about 25 years. In 2007 only 12.6% of the
Malaysian plantations had immature palms and consequently a lower production.
This explains why in Malaysia the productivity increases relatively faster than the
area used for production (Figure 2.6). The age distribution of plantations differs
between states, with especially younger palms in the more recently established
plantations in Sarawak. Partly because of this age effect the yields in Sarawak
are lower compared to other Malaysian states.
68

The most important measures to increase the plantations yield are soil
preparation, application of fertiliser and pest control, either chemically or biologically. The maximum yields reported for oil palm are 48.3 tonnes FFB per hectare per year (Harun 2005). Without soil preparation oil palm yields on peat are
generally lower, but proper soil and water management of oil palms on deep
peat can result in FFB yields closely mirroring those on good mineral soils
(Harun, 2005). Soil compaction reduces soil water evaporation and increases
root branching and phosphorus uptake. It also prevents three toppling and
slows down the soil subsidence. However, soil compaction is not practiced in
all plantations on peat.
Each tonne of fresh fruit bunches yields about 180-200 kg of crude palm oil
(CPO), depending on the oil content of the fruit, which depends on a number of
factors such as climate, soil type, and water- and nutrient availability.
There is a large difference between the FFB yields from private and government plantations and yields small holders attain. The FFB yields are generally
highest in the large scale private and government estates and much lower in
small holder production systems. In both Indonesia and Malaysia small holders
can be divided in supported small holders and independent small holders
(Vermeulen and Goad, 2006). Supported small holders receive technical assistance and high quality seed stock, fertilisers and pesticides from government
institutions or the private sector, while independent small holders lack this type
of support. Although there are high yielding independent growers, the average
yields of independent small holders are much lower compared to supported
small holder growers (ibid).
3.5.2 Estimated land area needed for Dutch palm oil imports from Indonesia
and Malaysia
This section provides an estimate of the land area needed for the import of
palm oil products from Indonesia and Malaysia to the Netherlands. These calculations are based on the import of Crude Palm Oil (CPO). It is assumed that no
additional area is needed to produce Palm Kernel Oil (PKO) and oil cake for the
Dutch market because PKO and oil cake form only a limited part of the total
Dutch palm oil import. In the calculations the differences in CPO yield per ha for
private and government estates and small holder production is taken into account (Tables 2.9 and 2.10). The total area used for Dutch CPO import from
these countries is assumed equal to the sum of the production areas of these
69

three producer's categories and that the share of each category is the same as
their shares in the total national production of Indonesia or Malaysia.
It needs to be noted here that these calculations are based on the total imports of palm oil products by the Netherlands, not taking into account that a
large part of it is re-exported, mostly after processing, to other countries, mainly Germany and Belgium.

Indonesia
The yields attained by the private and state-owned oil palm estates in Indonesia
are about 21 tonnes FFB and 4.2 tonnes CPO per ha. Despite the differences
are becoming smaller, the overall small holders' production is lower. The yields
of supported small holders, usually around 19 tonnes FFB and 3.8 tonnes CPO
per hectare, are close to those of the large estates. However, within the group
of independent small holders, there is a large variation in productivity, mainly
depending on the size of the holding. High yielding small holders usually have
more than 10 ha oil palm and produce 17 tonnes of FFB and around 3.4 tonnes
CPO per ha, while smaller independent producers have on average around 2 ha
and produce only 10 tonnes FFB and approximately 2 tonnes CPO per ha
(Vermeulen and Goad, 2006), which is about half the yield of the large estates
and the supported small holders. The share in the total small holders' oil palm
area is about 50% for the supported small holders, 36% for the low yielding independent producers and 14% of the high yielding independent producers
(Vermeulen and Goad, 2006). Weighing for these area shares, the average
small holder yield in Indonesia is approximately 3.1 tonnes CPO per hectare,
which is about a quarter lower than that of the large estates.
In 2007 some 2.81m ha of oil palm plantations in Indonesia were owned
by small holders, 3.26m ha by private estates and 0.71m ha by the government. Following the above described method, the Indonesian area needed for
the Dutch import of CPO in the period 2007-2009 was on average about
140,000 ha per year (see Table 3.9) which is equivalent to 7% of the total
Dutch agricultural land area.

70

Table 3.9

Estimated area needed for the Dutch imports of crude palm
oil (CPO) from Indonesia during 2007-2009 a)
Small

Government

holders estates
Area (million ha)

2.81

Private

Total

estates
0.71

3.26

6.78

CPO yield per ha (tonnes)

3.1

4.2

4.1

3.7

Total CPO production (million tonnes)

8.71

2.98

13.37

25.06

Average Dutch import CPO (million tonnes)

0.18

0.06

0.28

0.52

Area needed for Dutch CPO import (1,000 ha)

58.3

14.7

67.7

140.7

a) CPO yield data are for 2007; Dutch import data refer to the average annual Dutch imports during 2007-2009.

Malaysia
The Malaysian annual production of independent small holders was reported to
be between 16 and 17 tonnes FFB per ha (Ismail et al., 2003; Vermeulen and
Goad 2006), which gives 3.3 tonnes CPO per ha per year and thus equals that
of the Indonesian high yielding independent small holders. The productivity of
supported small holders was with 19 tonnes FFB and 3.8 tonnes CPO per hectare also similar to that of the supported small holders in Indonesia (Vermeulen
and Goad 2006). The supported small holders have a share of 76% in the total
small holders oil palm area and the independent small holders about 24%. Taking into account these shares, the weighted average CPO production for small
holders in Malaysia is about 3.7 tonnes CPO per hectare. There are no data
available on production differences between government and private companies, so that it is assumed that the yields obtained in these plantations are the
same, 4.2 CPO per ha (Shean, 2009; Vermeulen and Goad, 2006). Based on
these figures the total area in Malaysia needed for the Dutch annual import of
CPO during 2007-2009 is approximately 246,000 ha (Table 3.10), which is
roughly equivalent to 13 % of the total Dutch agricultural land area.

71

Table 3.10

Estimated area needed for the Dutch imports of crude
palm oil (CPO) from Malaysia during 2007-2009 a)

Area (million ha)

Small

Government Private

holders

estates

0.47

Total

estates
1.24

2.60

4.30

Production per ha (tonnes)

3.7

4.2

4.2

4.1

Total CPO production (million tonnes)

1.74

5.21

10.92

17.87

Annual Dutch import CPO (million tonnes)

0.10

0.30

0.62

1.02

Area needed for Dutch CPO import (1,000 ha)

26.8

70.8

148.4

246.0

a) CPO yield data are for 2007; Dutch import data refer to the average annual Dutch imports during 2007-2009.

3.6

Biodiversity impacts

3.6.1 Introduction
Land clearing for agriculture is the greatest single cause of deforestation in the
world and it is proceeding most rapidly in countries with the highest biodiversity
(Balmford and Long, 1994). In Southeast Asia, the majority of the remaining
forest area consists of secondary, logged-over forests, and it is especially these
forests that are being converted into oil palm plantations (Bhagwat and Willis,
2008). To assess the impact of oil palm plantations on biodiversity, results from
field studies across South-East Asia were used. The collected data were inserted into a database and for all these studies the relative species richness (RSR,
see section 1.4) was derived. Where possible, data were further subdivided into
species that occurred in both the studied ecosystem as well as in the reference
ecosystem, and species that occurred in only one of the two ecosystems. Unfortunately, these details lacked for most of the species groups in our review.
The data are used here to portray differences in species richness in oil palm
plantations relative to primary forest and relative to logged-over forest.
There is an ongoing scientific debate on the effects of small holder versus
large-scale palm oil plantations on biodiversity. It is generally expected that
small holder production in more extensively managed mosaic landscapes is
more beneficial to wildlife and maintenance of local biodiversity than in intensively managed large scale plantations. There are, however, limited data to support
this. On the other hand, many small holder plantations have low crop yields,
which mean that they need more land to produce a given amount of palm oil
72

compared to intensive plantations. In the following paragraphs the biodiversity
impacts of oil palm plantations is described in general terms without differentiating between small-scale and large-scale palm oil plantations. The term 'direct effects' will be used to indicate the effects of land use change, in this case the
conversion of forest into oil palm plantations. These effects are described in
paragraph 3.6.2. The term 'indirect effects' on biodiversity indicates the effects
of plantation establishment and management on biodiversity in indirect ways,
such as changed hydrology or water pollution. These effects, which are hard to
identify and to measure, are briefly described in paragraph 3.6.3.
3.6.2 Direct effects on biodiversity
A rapidly increasing number of scientific publications indicates that tropical biodiversity is critically affected by the conversion of forest into oil palm plantations
(e.g. Danielsen et al., 2009; Fitzherbert et al., 2008; Koh, 2008c). Losses of
tropical forest, and in particular lowland forests, represent one of the greatest
threats to bird diversity globally (Aratrakorn et al., 2006; Aratrakorn et al.,
2006). It is also iconic mammal species such as the Orang-utan that are suffering dramatic declines because of the ongoing expansion of oil palm plantations
(Robertson and Van Schaik, 2001).
The deforestation rate in Southeast Asia is among the highest in the world,
averaging 1.5% per year. Deforestation occurs throughout the region but is
most rapid in the lowlands, in particular in peat areas (Figure 3.8). Development
of peat areas, mainly for oil palm plantations is the major driver of the ongoing
peat swamp forest conversion in Indonesia and Malaysia (Bhagwat and Willis
2008). In the state of Sarawak alone, more than 0.5m ha of peat land have
been planted with oil palm, equalling 38.3% of Sarawak's total peat area (Forest
Department Sarawak, pers. comm.). In 1996, about 1m ha of peat swamp forest in Central Kalimantan were cleared and drained in the Mega Rice Project
(MRP). Due to such large-scale developments peat swamp forests are one of the
most rapidly disappearing ecosystems in the world. Although the peat forest
vegetation harbours fewer species compared to some other tropical forest
types, such as mixed Dipterocarp forest, there are several endemic animals and
plants that fully depend on the peat swamp forest ecosystem.

73

Figure 3.8

Loss of forest and peat swamp forest in Insular Southeast
Asia (2000-2005)

100
99

Forest loss (%)

98

annual loss 0.8%

97
96
95

annual loss 1.5%

94
93
92
91
90
2000

2001

Total forest

2002

2003

2004

2005

Peat swamp forest

Source: Hooijer (2006).

Where future expansion of oil palm concessions is planned in forest areas,
the impact on biodiversity will be especially high (Venter, in press.). Nevertheless, most of the current forest conversion in Malaysia and Indonesia takes
place in lowland tropical forests that have been logged over in the past decades. Logging operations have declined the species diversity of these ecosystems, but a number of studies indicate that logged-over forest patches may still
harbour the majority of the originally occurring forest species (Koh, 2008a,b;
Peh et al., 2006; Struebig et al., 2008; Turner, 1996) (see also section 4.5.1).
The results of local field studies in oil palm plantations should be considered
within the background of their species richness being the result of four main
characteristics:
a. The diversity of vegetation within and around the plantation
Most field studies indicate that oil palm plantations have simple communities
of non-forest species of low conservation concern (Danielsen et al., 2009;
Turner and Foster, 2009).The observed low species richness in oil palm
plantations relative to forest is for a large part related to the homogeneity
in vegetation structure, which provides less potential habitat space and food
sources. The loss in abundance and biomass of arthropods for example
was related to three different structural elements: ferns, canopy and litter.
74

In general their abundance and biomass declined during conversion to oil
palm, but the abundance of ants in the canopy seemed to increase in oil
palms, although their biomass declined. It indicates a tendency that bigger
species survived. These effects illustrate the complexity species shifts
caused by habitat conversion.
b. The permanence of the various crops within the plantation
In oil palm plantations the main crop has a rotation cycle of 25 years. This
allows long-lived species to grow and reproduce within the plantation. Therefore oil palms and other tree crop plantation such as rubber, harbour many
more species than short rotation crops like soya or maize. In addition, the
larger physical structure of an oil palm offers more ecological niches compared to smaller crops. In many oil palm plantations cover crops are used
for various reasons. These cover crops may be replaced several times within the 25-year oil palm cycle.
c. Plantation management
Species richness in oil palm plantations is strongly influenced by plantation
management as well. For example, the use of herbicides and slashing of undergrowth or removing epiphytes from the oil palm stem will decrease the
plant species richness (Abdullah, 1995; Bucas and Saliot, 2002). Intensive
use of fertilisers and agro chemicals for pest control will have negative effects on the environment, for example due to leaching of chemicals to the
water system (see paragraph 2.6.3). However, plantations can also be managed to increase biodiversity without decreasing yields, for example by introducing biological pest control such as barn owls.
d. The extent of the isolation of the plantation from natural vegetation
Surrounding forests have significant effects on biodiversity within the oil
palm plantation borders because they offer necessary refugee area. They
contain many species themselves so the incidence of species visiting the
plantation is higher compared to plantations that are not surrounded by forest. Indeed, the percentage cover of old-growth forests surrounding an oil
palm estate has been found to significantly increase the number of butterfly
species observed within the plantation. Similarly, the percentage of cover of
young secondary forests surrounding an estate was found to increase the
number of bird species encountered within the plantation (Koh 2008b).
The reviewed scientific literature shows that oil palm plantations are relatively species poor (33% of the number of species found in primary forest) and
that the majority of species found in forests (either primary or logged-over) was

75

not present in plantations (Figure 3.9). For example, Chung et al. (2000) found
that plant species richness in oil palm plantations was 77.3% lower compared
to primary forest and none of these species or families were shared with forest.
Although dung beetles were relatively well represented in oil palm plantations,
more than half of the species found in oil palm did not occur in forests (Davis
and Philips, 2005), which indicates a large shift in dung beetle communities
during forest conversion to oil palm. Similarly, for bees it was observed that
most species within the family Apidae, which are important forest pollinators,
lacked in oil palm plantations (Liow et al., 2001). For birds it seems that no
unique species were associated with oil palm plantations. The plantations had
about one third of the number of bird species of logged-over forests. All
except one bird species in oil palm plantations were also found in logged-over
forest. In contrast, lizards seem relatively well represented in oil palm plantations (RSR=83%), sharing 50% of the species with logged-over forest (Glor
et al., 2001).
Generally it was found that oil palm plantations are often dominated by a few
abundant generalists, non-forest species (including invasive alien species) and
pests (Aratrakorn et al., 2006; Danielsen and Heegaard, 1995; Hassall et al.,
2006). In Sabah for example, ant fauna in oil palm plantations was dominated by
the crazy ant, Anoplolepsis gracilipes (Brühl and Eltz, 2009). Beetle communities shifted from predator-dominated in forests to communities with a higher
proportion of fungivores and sporophages in oil palm plantations (Chung et al.,
2000) and the scarab beetle community in oil palms in Ghana was dominated by
invasive savannah species (Davis and Philips, 2005).

76

Figure 3.9

Species richness of plants and animals in oil palm plantations
relative to primary forests (A) and logged-over forests (B) a)

RSR (%)

A. Oil palm vs. primary forest (avg RSR = 33%)
100
9

0

19

23

36

33

4
17

36
22

52

20

16

13

13

17

20

28

32

RSR (%)

B. Oil palm vs. logged forest (avg RSR = 37%)
100
33
1

0

29

31

50

52
18
18

unknown portion of shared species

9
18

N/A

species not shared

28

N/A

species shared

a) RSR=relative species richness; N/A: no information available.

3.6.3 Indirect effects on biodiversity
Most of the studies on biodiversity effects of oil palm plantations are conducted
within the plantation area. Therefore, off-site biodiversity effects of large-scale
oil palm plantations, such as the influence of drainage and fertiliser and pesticide run-off are as yet poorly understood. These off-site impacts may be particularly high in peat areas that are drained for oil palm. In Central Kalimantan, peat
drainage has led to the large-scale drying of peat, in areas far beyond the
indicated plantation concessions (Werf et al., 2008; Rieley, 2005). Those areas
suffered massive forest loss through drought and subsequent fires. Considering
the large-scale conversion of tropical peat lands to oil palm plantations in
Malaysia and Indonesia, these effects may seriously threaten the species diversity in remaining forest remnants that form part of the same peat dome. Extensive forest and peat fires ignite every year in Sumatra and Kalimantan, burning
down remaining patches of forest and releasing vast amounts of CO 2 into the
atmosphere (Hooijer et al., 2006; Page et al., 2002).
Species losses may also occur as a consequence of cascading effects within a food-web. For example the loss of ground beetles may affect insectivorous
birds that feed on them, which again may result in lower the abundances of
77

predators of these birds (Chung et al., 2000) (Figure 3.10). This example shows
that local changes in species richness at the bottom of the food-web may trigger accumulating losses of species at higher levels within the food-web. In the
context of large-scale oil palm development, these accumulating effects may
become an important threat to biodiversity conservation in still relatively species
rich forest remnants. Such biological impacts may not be easy to assess but it
is important to acknowledge that species losses measured on the site may lead
to species losses in a wider range around the particular site.
Figure 3.10

Illustration of indirect effects on biodiversity through trophic
interactions

See text for further explanation.

3.7

78

Socio-economic impacts of palm oil production in Indonesia

In this section the impact of the development of palm oil production in Indonesia
on rural communities is discussed in terms of: (a) employment, (b) income,
(c) access to land and (d) health. Where relevant, a differentiation will be made
in the type of production region (viz. established, expansion and frontier

regions1), the social groups involved (original inhabitants and immigrants) and
the type of oil palm plantation (small holder production and large-scale private
or government estates).

Employment
Oil palm plantations nationwide employ around 2.0m people in Indonesia. Including related industries, around 6m people benefit from the oil palm plantations in Indonesia (Wakker, 2004; Zen et al., 2005). The Indonesian government
plans to double the annual production of palm oil over the next ten years, creating new jobs for an estimated 1.3m households and reducing poverty for
around 5m people (Bahroeny, 2009). Whether oil palm provide a pathway out of
poverty very much depends upon the terms under which small holders engage
with oil palm and the dynamics that shape that engagement (McCarthy, 2010).
Oil palm plantations are labour intensive and have, therefore, a potential for creating employment for local communities (Bertule and Twiggs, 2009). However,
the employment potential is not always realised. Many local communities in the
frontier and expansion regions depend for their livelihoods upon shifting agriculture. Companies prefer labourers with experience in sedentary agriculture
(WorldBank, 2010). Labour for the oil palm plantations is therefore often 'imported' from Java, where landlessness and poverty drive farmers with experience in the monoculture of rice towards migration to the oil palm regions
(McCarthy and Cramb, 2009).
The arrival of plantation workers leads to the development of secondary activities. The construction of infrastructure, houses and health and education services are often initiated in tandem with the establishment of large-scale oil palm
plantations (Bertule and Twiggs, 2009). As a result, rural communities have easier access to local markets. However, the large influx of migrants for employment in the oil palm plantations can also cause cultural disruptions that lead to
conflicts with and within traditional communities (Sheil et al., 2009; Wakker,
2004; Schrevel, 2008). It has been noted that with the increase of immigrants
the culture of community sharing and traditional law systems are getting lost
(Colchester et al., 2006).

1

Following Kessler et al. 2007 Kessler et al. 2007 Kessler et al. (2007) three types of production
regions are distinguished: (1) the 'established regions' where palm oil has been produced over a
longer period of time and little expansion has taken place, (2) the 'expansion regions' that are characterised by strong expansion of palm oil production and (3) the 'frontier regions' that are characterised
by a fast transformation of forests into oil palm plantations.

79

The labour conditions at the plantations are often described as poor, including payment under minimum wages, poor responses to union requests, unsafe
working conditions and forced evictions (Colchester et al., 2006). About half of
the plantation workers are day labourers and this percentage has been increasing over the past years. Production targets are high and it is, therefore, not unusual that employees work together with their wife and children to meet these
targets. In many cases, workers are not aware of their rights and safety precautions for harvesting and dealing with pesticides are not implemented (Colchester
et al., 2006; Sheil et al., 2009).
New employment is not only created by large-scale plantations but also by
small holders. The Indonesian government is supporting small holders' palm oil
production through various small holder schemes (Vermeulen and Goad, 2006).
In Plasma-Nucleus Estate Programmes, small holders transfer part of their land
to a company, which transforms the land into a palm plantation. The small holder keeps and manages a part of it. Deals between companies and small holders
may differ greatly, but in general a small holder sells ten hectare to a company
in turn for 2 ha of palm plantation (Rist et al., 2010). The development of nucleus oil palm plantations supported by individual small holders has been initiated
by the Indonesian Government aiming at improving the rural socio-economic situation in the regions concerned (Zen et al., 2005). It is estimated that in 2009
small holders accounted for about 40 per cent of the total national oil palm area
(Teoh, 2010).

Income

80

A study of Kessler et al. (2007) shows that at the regional level there is a rise in
GDP in both the expansion and established regions. This study notes, however,
an increase of poverty in the frontier regions. Schrevel (2008) observed an increase in poverty for rural communities in the long term. At the farm level, the
government's nucleus estates and support to individual small holdings has resulted in a raise in income of more than half a million farmers (Zen et al.). Susila
(2004) found that in these estates palm oil production generates over 63% of
the farmers' income. The average income for these small holders is seven times
higher than the average income of a subsistence farmer (Sheil et al., 2009).
Susila (2004) concluded that there is a positive effect on farmers' income
generated by palm oil production which reduces inequality and poverty in the
palm oil communities. This conclusion is supported by a recent study of Rist
et al. (2010) that documented a strong interest of communities for palm oil
plantation as a way to enhance income. However, individual farmer incomes de-

pend upon the amount of debt that a farmer has to pay for the development of
the palms on his land, interest rates, time period for repayment of loan, costs
for inputs and prices paid for palm fresh fruit bunches. Small holders in nucleus
estates often share risks with the company with regard to crop failure (Sheil
et al., 2009). They can also be restricted in the choice on how to use the land,
for example to apply multi-cropping. Generally, small holders are unaware of the
agreements made with the company as they often consent without reading the
contract (Rist et al., 2010). The dependence on the company makes small holders economically vulnerable (Bertule and Twiggs, 2009).

Access to land
The development of oil palm plantations requires changes in land use and land
use rights, both having direct implications for local communities. Landownership
of local communities in Indonesia is generally based on custom and tradition
rather than on formal law or contract. Customary landownership is legally recognised, although the procedures to attain an official land title are ambiguous,
absent, defective and rarely applied (Sheil et al., 2009). The government frequently allows oil palm plantations on land that is in use of local communities
(Colchester et al., 2006; Schrevel, 2008; Wakker, 2004; McCarthy and Cramb,
2009). Competing land claims together with weakly identified and recognised
customary land rights held by rural communities have caused severe conflicts
and illegal activities. Conflicts arise from unmet promises for development of
infrastructure and social facilities by companies, changing land values and
unclear tenure rights (Rist et al., 2010). Occasionally companies are blamed for
unrightfully occupying land, while the land has been legally sold by community
members. This happens without consent or awareness of the entire community.
Illegal activities include the falsification of land permits, occupation of land
without permit, no prior consent with communities, compensation not paid or
only partly, no recognition of customary laws, use of violence for stopping
community resistance, and manipulation of community leaders to sell land
(Colchester et al., 2006). All these actions can lead to violent conflicts in which
more serious violations of human laws occur. According to the consortium for
agrarian reform (KPA) one third of the land conflicts in Indonesia are related to
oil palm plantations, in half of which the military was involved. They also noted
that between 1998 and 2003 479 people were tortured in 41 conflicts,
12 were killed, 134 shot, 25 abducted and 936 arrested (data by KPA as
presented in Colchester et al., 2006).
81

Human health
Generally, rural communities in Indonesia rely on a diversity of livelihood activities, such as agricultural production of rice, rattan, rubber, tea, cacao and coffee (Wakker, 2004) combined with the gathering of products such as timber,
game, medicines, fruits and fish from forests and rivers. The transfer of forests
into oil palm plantations indicates a reduction of related environmental goods
and services (Rist et al., 2010) and hence a decrease of local food security.
Many peat areas in Indonesia are converted into palm oil plantations (see
sub-section 2.6.2). Fires to clear land quickly and to reduce the acidity of peat
soils is a common, but an illegal practice among oil palm developers. The
smoky haze of these fires causes recurrently respiratory problems and affects
the health of people months after the occurrence of the haze (Frankenberg
et al., 2005). In 1997 over 20m Indonesians suffered from respiratory problems (WHO, 1998), whilst the costs of health treatments for Indonesians and
loss of income from tourism was estimated at USD1.4b (Tacconi, 2003).
Furthermore, the use of mostly very toxic agro-chemicals on plantations
combined with low safety precautions form a direct threat to plantation workers'
health (Wakker, 2004). The use of agro-chemicals also endangers the quality of
the drinking water sources and fish populations on which the communities rely
for their livelihood.

3.8

82

Options for mitigating biodiversity and socio-economic impacts

The global demand for palm oil for food, feed and fuel is expected to increase
further as a result of a growing world population, increasing incomes, changing
consumption habits and a growing demand for biofuels. This will lead to further
expansion of the oil palm plantations and related loss of biodiversity. Recently,
Fitzherbert et al. (2008) stated that substantial biodiversity losses will only be
averted if future oil palm expansion is managed in such a way that further deforestation is avoided.
A major decision with potential significant effects on biodiversity is the spatial planning of new oil palm plantations. There is general consensus about the
potential to focus future area expansion on so-called degraded land, carrying
small carbon stocks and low species diversity (Gallagher, 2008; Rötheli, 2008).
For example in Indonesia, extensive areas of land have been deforested without
further agricultural development. Already in 2003, it was estimated that 12.5m
ha of heavily degraded land was available for agricultural development (Casson,

2003). As suggested by several international NGOs and research institutes, the
utilisation of these areas for agricultural expansion would minimise the pressure
to clear new land (e.g. Sheil et al., 2009; Casson, 2000; Casson, 2007). A field
study in Indonesia revealed that grasslands dominated by alang alang (Imperata
cylindrica) offered the best opportunities for agricultural expansion without significant further losses of biodiversity (Fairhurst and McLaughlin, 2009). Several
Indonesian oil palm companies have already experience with alang alang control
in new plantations and some field examples show that these idle lands can be
made productive with the right measures. However, experience in Indonesia has
also shown that many grassland areas are claimed by local people, and the
costs of negotiating over land rights may be a significant factor in preventing
the use of degraded lands for oil palm plantations (WorldBank, 2010). In addition to that, conversion of forest areas provides initial income from wood production, which is often used to finance plantation establishment, which is not
possible in degraded areas.
Remnant forest patches that are still crucial for biodiversity conservation
may be identified using integrated land use planning approaches. Several publications have emphasised that remnant forest patches support a great portion of
local species richness (Koh, 2008a, b; Peh et al., 2006; Struebig et al., 2008;
Turner, 1996). A case study in Sumatra showed that there is considerable potential for enhancing biodiversity, including some Red List species, through the
adoption of conservation set-aside policies in palm oil plantations and that there
are administrative mechanisms to implement such policies (Bateman, 2009).
The involvement of local communities and indigenous peoples in the planning
and management of protected areas is an effective way to link conservation and
development aims, and is supported by the Convention of Biological Diversity's
programme of work on protected areas. Key to the success of this approach is
an enabling institutional and legal environment that promotes equitable distribution of costs and benefits and ensures genuine participation of local communities in planning and management.
Oil palm companies could contribute to the conservation of species diversity
by preserving large forest fragments in their concession area and connect them
with important ecological corridors, such as natural streams within in the plantation and adjacent natural areas outside the plantation. The introduction of integral spatial planning will be instrumental for that purpose.
The introduction of integrated land use planning will be instrumental for that
purpose. The RSPO has recently adopted the protection of HVCAs within certified oil palm concessions (see Text box 3.2). For this policy to be effective the-

83

se areas need to be identified in advance within all areas subject to oil palm expansion, and in due consideration of the needs of local communities, at least
when the owners would like to have their produce RSPO certified. Moreover,
the establishment of small isolated reserves of HVCAs needs to be prevented.
Examples from temperate natural areas have shown that the establishment and
protection of ecological corridors may be very successful to facilitate species
migration. Corridors can help to mitigate habitat loss by increasing the connectivity between forest fragments and thus increasing the area available to the
species. Although there is as yet no evidence that such corridors are successful
to protect species in the tropics, the limited available field studies suggest that
species richness is significantly higher in areas with close connectivity to natural
areas (Bateman, 2009).
Text box 3.2

High Value Conservation Areas (HCVA)

The Roundtable on Sustainable Palm Oil proposed to use the concept of High Conservation
Value Forests (HCVF) as a tool for optimising land use planning and conservation of biodiversity. The HCVF status can help prioritise different land uses and protect forests that are
of high conservation concern for example because they contain high biodiversity values or
threatened ecosystems such as a rare class of peat swamp forest. The concept was originally introduced by Forest Stewardship Council (www.fsc-uk.org) for its timber certification
scheme but it is now being used for timber purchasing policies, investment safeguard
policies and government land use planning processes. A number of HCVF areas in Indonesia
and Malaysia have been identified, some of which turned out to be effective and some of
which have failed (Ardiansyah, 2006). Both countries developed their own HCVF toolkit, a
document in which the criteria and indicators for high conservation value are outlined.

Another way to reduce the pressure to clear new land is to increase the
palm oil yield per hectare. Such enhanced production efficiency may offer a
promising way to conserve remaining forests and their biodiversity (Aratrakorn
et al., 2006). The scale of the plantation and its management may have a huge
influence on how it affects biodiversity. For example, small plantations (less than
10 ha) that form part of a small scale mosaic landscape generally harbour more
species compared to larger oil palm estates (larger than 10 ha), especially because they are surrounded by other land uses that offer additional niches.
Shean (2009) estimated that the current average yields of CPO per ha in
Indonesia are well below their potential, both for small holders and large scale
plantations. It should be possible for small holders to increase the average CPO
84

production from 3.4 towards 5.0 tonnes per ha and for state and private companies from around 4 to 7 tonnes. Such yield increases would further increase
total production by over 40% or reduce the area needed by 40%. Given the
large share of small holders in the total palm oil production and the large yield
differences between independent small holders, supported small holders and
large scale estates, improving productivity of independent users could increase
the total production in Indonesia by 2m tonnes of CPO per year or reduce the
total needed oil palm area by 500,000 ha. This is four times the Dutch gross
imports of palm oil from Indonesia.
Key technical measures to improve the productivity in small holder plantation
are the use of new high yielding crop varieties and the application of fertiliser.
Currently, many of the independent small holders hardly use any fertiliser on
their land and the genetic stock growing on their properties is generally inferior
to that propagated by private and government estates. According to the USDA
(2009), small holder production could increase to at least 5 tonnes CPO per
hectare if they would plant high-yielding crop varieties a potential increase of
47% over current levels. To achieve higher yields, these small holders should be
supported in making a transition towards higher yielding hybrid varieties, applying fertilisers and overcoming the time lag between planting and the new palms
becoming productive.
In Malaysia the total area of small holders in palm oil production is smaller
than in Indonesia and also the yield difference between small holders and estates is relatively small. Therefore, the gain from improving small holders'
productivity will be smaller in Malaysia. The relative future effect will largely depend on developments in plantation development. If total palm oil production in
Indonesia mainly expands based on large scale estates the relative effect of improving small holders productivity will become smaller.
The small holders in palm oil production face many constraints in maximising
their potential, which include: (a) uncertainty over land tenure, (b) poor access
to loans and credits, (c) lack of technical, policy and market information and
(d) high vulnerability to price fluctuations (Vermeulen and Goad, 2006). The Task
Force on small holders of the RSPO recognizes the many challenges to ensure
that small holders manage and produce crude palm oil in line with the RSPO
Principles and Criteria. The theme of the 8th roundtable meeting held in November 2010 in Indonesia was 'RSPO is also for small holders'. Participants raised
that certification for small holders goes beyond price premiums and additional
support is needed.
85

In addition to avoided deforestation, also plantation management can significantly affect the suitability of oil palm plantations for certain plant and animal
species. Aratrakorn et al. (2006) found that bird species richness in plantations
was significantly greater where undergrowth was allowed to regenerate beneath
the crop trees, which is largely due to the increased number of insects (Koh,
2008b). Similarly, in a Malaysian oil palm plantation in East Sabah the percentage ground cover of weeds enhanced the species richness of butterflies, and
epiphyte prevalence and the presence of leguminous crops enhanced bird species richness.
Specific management efforts to increase biodiversity within oil palm plantations are the application of biological pest controls such as the use of Barn owls
to reduce rat abundance, the removal of dead palm stems to avoid the spread
of stem rot, the intercropping of cover-crops to increase soil moisture and soil
fertility, improved water management and soil preparation, zero-burning and the
use of grazing animals such as ruminants to control weeds.

3.9

Synthesis

Oil palm is currently the most rapidly expanding crop in Southeast Asia. Globally
it covers over 14.7m ha and is the world's largest source of edible oils together
with soya bean (FAO 2010a). The most rapid oil palm expansion has been in
Malaysia, Indonesia and Thailand. Indonesia and Malaysia account for 85% of
the global palm oil production. It is expected that the palm oil production in
both countries will further increase, driven by the large global demand for crude
palm oil.
The Netherlands is one of the most important importers of palm oil products. In the period 2007-2009, the Dutch import accounted, on average, for
7% of the total world trade value in palm oil products. For crude palm oil the
share of the Netherlands was 15% and for palm oil cake even 23% of the world
trade value.

Biodiversity impacts

86

The production of palm oil has led to a massive clearing of tropical forests and
subsequent loss of biodiversity. Due to these large-scale developments, peat
swamp forests are one of the most rapidly disappearing ecosystems in the
world and with that the habitat for many endangered species, including several

IUCN Red List species. Besides these direct losses, there are also indirect effects of palm oil production on biodiversity, caused by the drainage of peat
swamps, peat fires and the use of agro-chemicals. These activities have an impact far outside the oil palm concessions, threatening biodiversity in forest
remnants. Although a larger part of the oil palm plantations have been established in lowland tropical forests that have been logged over in the past decades, the impact is yet tremendous. Studies show that most of the species
found in oil palm plantations are not found in forests, either primary or loggedover. Plantations are often dominated by a few common species and forest endemics are lost. It is obvious that in case primary tropical forests have been
transformed into plantations, the impact on biodiversity is much higher. Many of
the species occurring in tropical rainforests have never been described even,
and it is likely that most of these will be lost without knowing them.

Socio-economic impacts
Around 6m people in Indonesia benefit from palm oil production, of which
around 2m in oil palm plantations. Palm oil production has a positive effect on
farmers' income and reduces inequality and poverty, hence leading to a strong
interest of communities for palm oil plantation as a way to enhance income.
The socio-economic impacts of oil palm plantations, however, differ between the
regions and type of plantation. In the so-called nucleus oil palm plantations, for
instance, the dependence on the core company makes small holders economically vulnerable. There are also regional differences, depending on the pace of
the expansion of oil palm production and the extent to which forests are transformed into oil palm plantations in a specific region. Palm oil production can
provide employment opportunities for existing rural communities, but in areas
where shifting cultivation agriculture is dominant, labour is often 'imported' from
other regions, such as Java and Papua. In that situation, the income of the immigrants rises in contrast to that of the original inhabitants.
Palm oil production provides an attractive income opportunity for small holders, but their position is often weak due to not well identified or recognised customary land rights, the dependence on the nucleus companies and the often
limited knowledge of the signed nucleus estate contracts.
The Indonesian government plans to double the annual production of palm oil
over the next ten years, creating employment and reducing poverty for around
5m people. However, the trade-off between oil palm expansion and the environment largely depends on where the oil palm is planted. A key challenge for In-

87

donesia is guiding the development of new palm oil plantations into areas where
the environmental impact is minimised and where there are either no land claims
by local people or where local people have an interest in developing oil palm
plantations.

Estimate of the land area used for Dutch import of palm oil from Indonesia
and Malaysia
Although there are many studies describing the impact of deforestation on biodiversity, it is difficult to quantify the impact and to link it to the area of plantations needed for the Dutch import of oil palm products. The total production of
crude palm oil in Indonesia is estimated on roughly 26.5m tonnes per annum
in the period 2007 -2009, of which only 0.5m (2.0 %) destined for the Netherlands. The CPO production of Malaysia is estimated on 17.4m tonnes, of which
1.0m for export to the Netherlands, which is 5.8%. The percentages above
can be considered as proxies for the share of the Netherlands in the loss of
biodiversity in Indonesia and Malaysia. For a small country as the Netherlands is,
these figures are considerable, as it can be illustrated by the fact that the import of palm oil products from these two countries is equivalent to an estimated
area of 387,000 ha, which is 20% of the total Dutch agricultural area. It should,
however, be noted that a large part of the imported palm oil products is reexported, after processing, so the net impact of the Netherlands is much
smaller.

Options for mitigating biodiversity and socio-economic impacts

88

The global demand for palm oil for food, feed and fuel is expected to increase
further as a result of a growing world population, increasing incomes and changing diets and a growing demand for bio-energy as well. It is, however, not necessary to clear tropical forests in the same pace. Millions of hectares of forest
in Indonesia have been transformed into oil palm plantations, but there are also
millions of hectares cleared without realising the planned oil palm plantations.
These left-over so-called 'degraded forest' areas offer good opportunities for oil
palm expansion without significant further loss of biodiversity. Plantations will
likely have positive impacts on biodiversity in these areas.
Oil palm companies could contribute to the conservation of species diversity
by preserving large forest fragments in their concession area and connect them
with important ecological corridors such as natural streams within in the plan-

tation and adjacent natural areas outside the plantation. The RSPO has recently
adopted the protection of High Value Conservation Areas (HVCA) within certified
oil palm concessions. The introduction of integrated land-use planning could be
instrumental for that purpose. The involvement of local communities and indigenous peoples in the planning and management of protected areas is an effective
way to link conservation and development goals.
Increasing the palm oil yield per hectare is another option to reduce the
pressure to clear new forest land and, hence, offer a promising way to conserve
remaining forests and their biodiversity. Given the large share of small holders
in palm oil production in Indonesia and the large yield differences between independent small holders, supported small holders and large scale estates, improving productivity of independent producers could increase the total palm oil
production by 2m tonnes of CPO per year, hence, reducing the needed area of
oil palm in Indonesia by an estimated half a million hectares.
Other, management related measures can also lead to decreasing the environmental impact of the plantations, such as zero-burning policy, biological pest
control, improved water management and soil preparation.

89

4

Tropical timber
4.1

Introduction

The increasing world population in combination with an increasing income, will
lead to increasing worldwide demand for wood. About 30% of the world's forests are designated for production of wood and non-wood forest products, while
an additional 24% is designated for multiple uses including wood production
(FAO, 2010b). Brazil, Malaysia and Indonesia are the major exporters of tropical
timber and wood products, while China and the European Union are key importers. Future export of wood from Malaysia and Indonesia to the EU is expected
to become affected by a number of key factors, which include amongst others:
(a) the declining natural resources in these countries and the implementation of
associated Sustainable Forest Management (SFM) policies, limiting the amount
that can be produced in these countries, (b) the increasing demand for wood
products from China, (c) the increasing log export duties in Russia, further increasing Chinese demand for wood from other regions, in particular South-East
Asia, and (d) the stricter timber procurement and certification policies of importing countries in the EU, which may constrain the demand for wood and wood
products from Indonesia and Malaysia if the criteria for certification cannot be
met (CIFOR, 2008). Another important factor may be the implementation of the
Reducing Emissions from Deforestation and Forest Degradation (REDD) mechanism under the Kyoto Protocol.
With the aim of promoting sustainability of wood from tropical regions, the
EU launched an action plan to restrict the amount of illegal timber entering the
EU through Voluntary Partnership Agreement (VPA) with the exporting countries
(see Text box 4.1 about FLEGT). In November 2010 the EU published its new
Regulation on Timber which prohibits placing of illegally harvested timber on the
market.1

1

90

European Commission, REGULATION (EU) No 995/2010 of the European Parliament and of the
council, Official Journal of the European Union, 12/11/2010 of 20 October 2010, laying down
the obligations of operators who place timber and timber products on the market (www.eur-lex.
europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:295:0023:01:EN:HTML).

Text box 4.1

EU Forest Law Enforcement, Governance and Trade (FLEGT)

In response to concerns about the negative social and environmental impacts of large scale
illegal logging in tropical countries, in 2003 the European Commission (EC) adopted an action
plan for Forest Law Enforcement, Governance and Trade (FLEGT). This EU FLEGT initiative
(2003) intends to halt the trade in illegal timber, to support sustainable forest management
and to implement a transparent and accountable tracking and licensing system. Under the
2005 EU regulation for a FLEGT licensing scheme, timber exporting countries, among which
Indonesia and Malaysia, negotiate with the European Union a Voluntary Partnership Agreement (VPA) for imports of timber into the European Community. A key element of the FLEGT
regulation is that each shipment of timber must be covered by a license issued by an authority in the country of origin before being released into free circulation in the EU.
The FLEGT action plan further provides for governance reforms and capacity building in
the VPA countries. The EU has been negotiating VPA's with Cameroon, Ghana, Congo, Indonesia, Malaysia and Viet Nam, while other countries like Bolivia, Liberia, and Gabon have expressed interest in developing voluntary agreements. The first agreements have been signed
with Ghana, Congo and Cameroon.

A number of EU member states are putting into effect stricter timber procurement policies focusing on certification. The governments of these countries
have developed sets of criteria for legality and sustainability (e.g. CPET, 2010;
TPAC, 2008) against which forest certification schemes are assessed by independent committees, such as the Central Point of Expertise on Timber Procurement (CPET) in the UK, and the Timber Procurement Assessment Committee
(TPAC) in the Netherlands. In the Netherlands, from 2010 onwards, all wood and
wood based products procured by the national government need to meet these
sustainability criteria. In practice, certification of wood products is one of the
most important instruments to achieve a sustainable wood chain. Many different
certification schemes are currently in use. Besides many different national
certification schemes, there are two key global schemes that include national
certification standards, viz. the Forest Stewardship Council (FSC) and the
Programme for the Endorsement of Forest Certification (PEFC) schemes.
The following sections start with a description of the developments in the
global trade in wood and wood products and the Dutch trade position. The paper chain as depicted in Figure 3.1 was not included in the analysis. The major
part of this chapter is focussed on the trade relations between the Netherlands
and Indonesia with respect to tropical timber and the related impact on biodi91

versity and the social economic situation in the production areas in Indonesia.
This chapter will end with a synthesis of major findings.
Figure 4.1
Wood
industry

Sawn wood

Saw mills

Schematic outline of the wood supply chain
Packaging
Industry

Veneer

Veneer plants

Logs

Landowners/foresters

4.2

Furniture
Industry

Joinery
works

Plywood

Construction
Industry

Paper
Industry

Reconstituted
panel products

Paper products

Manufacturers

Paper mills

Wood
residuals

Pulp mills

Plywood mills

Logging companies

Forests/Trees

Pulp wood

Landowners/foresters

Global trade in wood and the Dutch trade position

4.2.1 Development of global trade in wood and wood products
In the period 2001 to 2007, the total world trade in wood and wood products
grew very fast, almost doubling from USD63b towards USD120b. However, after that, the total trade decreased to the level of 2004, because of a sharp drop
in demand in Europe and North America caused by the economic crisis 1 (see
Figure 4.2).

1

92

The trade figures of UN Comtrade used in this chapter refer to HS code 44 - Wood and articles of
wood; wood charcoal; paper and paper products are not included in these figures.

Figure 4.2

World trade in wood and wood products 1995-2009

200

180
160

Billion USD

140
120
100
80
60
40

20
0

Imports by
Europe

North America

Asia

Other countries

Source: Based on import data in UN Comtrade, LEI.

The three most important exporting countries of wood and wood products
are Germany, Canada and China, with respectively 8.9%, 8.9% and 8.3% of the
total world trade (See Figure 4.3 and Table 4.1).
Thereinafter follow the Russian Federation and the US, with an export value
of 6.9% respectively 5.9% of the total world trade. Malaysia, Indonesia and Brazil are in a group of countries with a world trade share of 2% to 5%. The total
export value of a country does also include wood and wood products that have
been imported and then processed and re-exported. Figure 4.3 shows the role
of China and Germany as the most important import based 'furniture factories'
in the world. Russia and Canada are the world most important wood exporting
countries, with a net export value of about USD6.5b. Malaysia, Indonesia and
Brazil are the most important exporters of tropical wood and wood products
with a net export value of USD3.9b, USD2.5b and USD2.5b.

93

Figure 4.3

The most important export countries of wood and wood
products (average 2007-2009)

Czech Rep.
China
Latvia
New Zealand

Finland
Chile

Poland
Brazil
Indonesia

Germany
Austria

Sweden
Malaysia
Canada
Russia

Billion USD

-10

-8

-6

-4

-2

net export value

0

2

import value

4

6

8

10

export value

Source: UN Comtrade, LEI.

The European Union is a large player in the world wood trade: the share of
the EU-27 in the world import value of wood and wood products is 45.6% (see
Table 4.1). The importance of the EU for the top 15 wood exporting countries
varies significantly. Most EU-countries, mentioned in table 4.1, export around
two thirds to other EU countries, but the EU imports take only 6% of the total
export of Canada, being the second largest wood exporter of the world, and
one third of the total exports of the Russian Federation and China, the other
two top exporters. The EU accounts for 46% of the total wood export of Brazil,
28% of Indonesia and 16% of Malaysia.

94

Table 4.1

Share of the EU-27 and the Netherlands in the total export of
wood and wood products of the top 15 exporting countries
(average 2007-2009)
Total

Share

Share in total

export

in total

export by country

value

export

EU-27 Netherlands

billion USD

%

%

%

World

107.3

100.0

45.6

3.1

Germany

9.5

8.9

70.0

6.1

Canada

9.5

8.9

6.0

1.1

China

8.9

8.3

32.7

2.5

Russian Federation

7.4

6.9

34.7

1.3

USA

6.4

5.9

18.0

0.7

Austria

5.3

4.9

67.6

1.3

Sweden

4.8

4.5

57.7

4.8

Malaysia

4.4

4.1

16.4

4.9

Poland

3.6

3.4

66.3

1.6

Belgium/Luxembourg

3.3

3.1

68.2

14.6

France

3.2

3.0

63.4

5.1

Finland

3.2

3.0

66.1

5.4

Indonesia

2.8

2.6

28.4

6.0

Brazil

2.6

2.4

46.2

4.1

Italy

2.1

1.9

52.3

1.0

Sum of 15 largest exporting countries

77.0

71.8

42.6

3.6

Other countries

30.3

28.2

53.3

2.0

Source: UN Comtrade, LEI.

4.2.2 The Dutch position in the global wood trade
The import of wood and wood products by the Netherlands follows largely the
developments in global trade. However, a comparison of Figure 4.2 and Figure 4.4 show that in the period before 2007 the Dutch imports grew faster than
global trade. The Netherlands accounted for 3.1% of the average annual world
trade in the period 2007-2009 (Table 4.1).

95

Figure 4.4

Development of the Dutch import and export of wood and
wood products

4.0
3.5

Billion USD

3.0
2.5
2.0
1.5
1.0
0.5
1995

1997

1999

2001

Import

2003

2005

2007

2009

Export

Source: UN Comtrade, LEI.

The major part of the imported wood and wood products of the Netherlands
is from the European Union, in particular from the neighbouring countries
Germany and Belgium, in total 63% of the average annual import value in the
years 2007-2009. Of the remaining 37%, one third is tropical timber imported
from Malaysia, Indonesia and Brazil. The rest is mainly imported from China,
Russia and Canada (See Figure 4.5).

Dutch import of tropical timber
From 2000 onwards the total import of tropical timber by the Netherlands was
around 1.3m m3 RWE (Round Wood Equivalents), but due to the economic crisis
the imports decreased with 40% to 0.8m in 2009 (Figure 4.6). The average import volume over the years 2007-2009 was about RWE1.1m with a value of
USD0.7b.

96

Figure 4.5

The most important countries of origin of Dutch imports of
wood and wood products (average 2007-2009)

700
600

Million USD

500
400
300
200
100
-

Source: UN-Comtrade, LEI.

Figure 4.6

Dutch import of tropical timber by type

1.8
1.6

Million m3 RWE

1.4
1.2
1
0.8
0.6
0.4
0.2

0
1990

1995

2000

plywood/veneer

2005

2006

sawn wood

2007

2008

2009

round wood

Source: PROBOS (2010).

97

The major part of the tropical timber is imported from Malaysia, Indonesia
and Brazil. The Netherlands is an important entry point for tropical timber to
the European Union. Based on the average annual export value over the period
2007-2009, 30% of the total wood export of Malaysia entered the EU via
the Netherlands. The second importing EU country is the UK with 28% (see Figure 4.7). For Indonesia, Germany and the Netherlands are the major destinations in the EU, with a share of 22% respectively 21%. For Brazil, the
Netherlands is less important (9%). France, the UK and Belgium account for almost half of the Brazilian wood export to the EU.
Figure 4.7

Export of wood and wood products from Malaysia, Indonesia
and Brazil to the EU-27 in million USD (average 2007-2009)

Denmark
3%

Rest EU-27
7%

Spain
3%

France
5%

Netherlands
30%

Italy
6%

Rest EU-27
8%
Germany
22%

Poland
4%
Italy
7%
France
9%

Belgium/Luxem
10%

Netherlands
21%

Belgium/Luxb
12%
Germany
11%

United
Kingdom
14%

United Kingdom
28%

Malaysia

Portugal
5%

Indonesia

Rest EU-27
8%
France
20%

Italy
8%

Spain
10%

United Kingdom
14%

Germany
10%
Netherlands
11%

Brazil

Belgium/Luxb
14%

Source: UN-Comtrade-LEI.

98

The Dutch imports tropical timber from Indonesia and Malaysia show a
steady grow since the year 2000 (Figure 4.8). After a growth from USD150m
in 2005 towards USD200m in 2006, the imports from Indonesia started to decline to about USD134m in 2009. The Dutch imports from Malaysia surged

from USD158m in 2005 towards 256m USD in 2008, but dropped with around
USD100m in the following year. The last year decrease is caused by the global
economic crisis, which also severely affected the wood imports from Brazil. The
import value from Brazil fell back from almost USD146m in 2007 towards 58m
in 2009.
Figure 4.8

The import of the Netherlands of wood and wood products
from Malaysia and Indonesia (1995-2009, in million USD)

300
250

Million USD

200
150
100
50
0

Malaysia

Indonesia

Brazil

Source: UN-Comtrade, LEI.

4.3

Future trade developments

As shown above, the market of wood and wood products is severely affected
by the financial and economic crisis that started in 2008 with the crash in the
housing market in the USA. The residential housing starts in the USA fell from
over 2.2m units in 2006 till about 0.5m in 2009. The UNECE timber committee
expects in its statement on forest products markets 2010, that the bottom of
the downward trend has been reached. The demand for wood products is growing again but a full recovery is not expected before the housing markets starts
to recover.
99

The market for tropical timber was less influenced by the crisis, partly because the major part of the tropical timber is traded within the timber producing
regions of Asia and South America and these regions are less affected by the
economic crisis than Europe and the USA. For example, 60% of the global trade
in tropical sawn wood is within the Asian region. However, the declining demand
in the USA, Japan and Europe did have a severe impact on the Chinese wood
processing industry, which was strongly affected by the contracting consumption in the USA, Europe and Japan. China succeeded in limiting the impact of the
financial crisis on its economy by huge financial interventions and, hence, supported its timber and furniture industry, but that did not prevent a downturn in
the import of tropical timber. On longer term, however, a recovery of the global
economy is expected leading to a growing demand for tropical timber.
Besides the financial and economic developments, the market of wood and
wood products will be influenced by the climate change policies and the policies
to reduce illegal logging. The policies to decrease the greenhouse gas emissions and to use renewable energy sources will have a positive impact on the
demand for forestry products.
The policies to combat illegal logging by the major importing countries,
in particular the EU (FLEGT initiative) and the USA (Lacey Act Amendment) are
expected to have increasing implications for producers and traders of wood
and wood products. The certified forest area is increasing, but it concentrates
on Europe and North-America, representing more than 90% of the global certified round wood supply. One of the major challenges for the future is to extend
the legal timber certification schemes to the major tropical timber producing
countries.

4.4
nesia

100

Land area used for Dutch import of tropical timber from Indo-

In this section an estimate is made of the land area that is needed for the Dutch
import of wood and wood products from Indonesia. Starting point for the calculations are the above import figures combined with estimates of yields per hectare for different production regions and logging systems. For most tropical
countries no extensive forest and logging data are available or easy accessible.
For that reason the projections in this report are based on data on management
types, harvested areas, timber yields, losses, damage and growing stock in
separate scientific publications, which generally relate to smaller area or re-

gions within a country. The relative figures in these studies are used for upscaling to larger areas and to the country level.
4.4.1 Introduction to wood production methods
Forest management and logging systems have a considerable influence on the
net wood production per hectare and, hence, on the forest area needed for
Dutch timber import. To take into consideration different intensities of wood
production, four different management types in industrial round wood production are distinguished: (a) clear felling, (b) conventional selective logging (CL),
(c) selective logging with application of reduced impact logging techniques
(RIL) and (d) wood production in wood plantations.
In many tropical countries timber is extracted from the forest through selective logging, i.e. in a given forest area only a small number of trees of commercial value is harvested. Under selective logging usually the number of harvested
trees is rather low, but the damage to the remaining forest stand may be considerable. Under the name Reduced Impact Logging (RIL), during the last decades a number of (combinations) of measures have been developed with the
purpose to minimise the damage to the residual forest, in particular to trees
suitable for harvesting in the future. During CL those precautionary measures
are not taken. Although RIL is an emerging harvesting
system that receives a lot of attention by forest researchers, its implementation
beyond pilot and research-scale experiments is modest. Hence, in contrast to
CL, data on RIL are mostly based on experimental harvesting under controlled
conditions.
Although the difference in harvested volumes per area is generally not large
between CL and RIL, the difference in damage to the forest may be considerable (e.g. Sist and Nguyen-The, 2002; Sist et al., 1998). In this study it is assumed that the produced volumes are similar for CL and RIL. Yet, because, in
general, the harvesting losses and damage to the residual forest for RIL is half
those for CL, the total volume felled under RIL is considerably lower than the total volume felled or damaged under CL. Therefore, higher yields can be sustained by using RIL techniques compared to CL.
In general, Indonesian forests support a relatively high abundance of commercial timber species compared to other tropical forests, like for example in
the Amazon. As a consequence, a considerable part of the total timber volume
produced in Indonesia comes from clear-felling. However, with decreasing avail101

ability of accessible, mature natural forests, commercial tree plantations are
becoming ever more important for timber production in Indonesia.
4.4.2 Major timber production areas and methods in Indonesia
Illegal logging is a vast problem in Indonesia and may account for a two to four
times bigger volume of timber produced than reported in the official country
statistics (Brown, 2002, Contreras-Hermosilla, 2005). Production statistics
for Indonesia are usually not incorporating the total domestic production. For
example the total timber volume produced in 2001 reported by the Indonesian
Department of Forestry was based on the projected log consumption of reporting large sawmills only (Brown, 2002). The definition of a large mill is one with
a licensed production capacity of over 6,000 cubic meters per year. There are
thought to be about 425 such mills in the country, of which only 217 did report
to the Department's Directorate of Timber Processing and Marketing (Brown,
2002). Production statistics therefore vary from 25m m3 round wood equivalents (RWE) (IDF) to 74m m3 RWE (Brown, 2002).
More than half of the total timber volume legally produced in Indonesia in
2006 originated from timber plantations and about 46% from natural forest
(APHI, 2009). Most of this wood came from Sumatra, where 12.7m m3 of timber was produced in 2006 (Table 4.2). Riau Province, of which 7.6m m3 in the
major part of the production coming from plantations with fast growing timber
species such as Acacia mangium. Kalimantan was the second largest production region with a volume of 5.8m m3 in 2006. Here, most of the wood comes
from selective logging and clear felling of native forests. The number of timber
plantations in Kalimantan, however, is rising and the role of plantations is likely
to increase as natural forest cover is diminishing. On Java, the timber produced
is from private native forests and state-owned teak (Tectona grandis) plantations. West Papua is also an important producer (1.2m m3 in 2006), mainly by
selective logging and clear-felling but increasingly from commercial timber plantations, which are being established to meet future demand for timber. The
Moluku Islands produced some 0.6m m3 of timber in 2006, mainly from selective logging.

102

Log production (1,000 m3 RWE) in Indonesia in 2006, by

Table 4.2

region and source of production
Province

Natural Forest
selective

clear

logging

felling native

Forest Plantations

private total
natural

plan-

forests forests
Sumatra
Java
Nusa Tenggara

Total

teak private total
tation

205

1,703

14

1,922

0

0

0

968

968

338

10,771 10,771
0

338

12,693
1,306

0

25

0

25

0

0

0

25

Kalimantan

3,549

1,584

0

5,133

0

664

664

5,796

Sulawesi

122

0

0

122

0

0

0

122

Moluku Islands

522

51

0

573

0

16

16

589

Papua

1,189

71

0

1,261

0

0

0

1,261

Total

5,587

3,434

982

10,003

338

11,451 11,789

21,792

Source: APHI (2009).

The figures reported by the Association of Indonesian Forest Concession
Holders (APHI 2009) were used to assess the shares of different forest management types in the production for export to the Netherlands. It was assumed
that these shares are proportionate to the production methods in the total Indonesian log production, except for the production from private native forests,
which is assumed to be largely used for local consumption. The remaining timber is harvested from timber plantations (56.7%) and natural forests, through
selective logging (26.8%) or clear felling (16.5%) (see Table 4.2 and Table 4.4).
4.4.3 Average yields by forest management type

Estimates for timber plantations
In 2005, the most important timber species used in Indonesian forest plantations were teak (Tectona grandis, 37%), Acacia mangium (26%), Pinus merkusii
(20%), Acacia ssp. (3%), Agathis ssp. (3%), and mahogany (Swietenia macrophylla, 3%) (see Table 4.3). Teak plantations form the oldest commercial timber
plantings in Indonesia, with some of them over 100 years old. Most of these
plantations are state-owned. Teak has a long rotation length (at least 40 years)
compared to fast growing timber species such as Acacia ssp. and Pinus
merkusii. In 2006 however, only 9% of the teak plantations was mature
(FAO, 2006), resulting in a relatively low contribution to total plantation output.
103

High yielding timber species are those with indicated short minimum rotation
cycles in Table 4.3. Their mean annual increment may reach up to 24 m3 per ha
per year (Acacia mangium) or even 53 m3 per ha per year (Paraserianthes falcataria). Combining the information for fast and slow growing deciduous and fast
growing coniferous plantation species, the average yield per ha of plantation
was estimated to be 182m3 per ha out of 222 m3 felled volume in 2005. The
highest maximum yields have been reported for Agathis ssp (250 m3 per ha)
and Pinus merkusii (197m3 per ha), both species with a low wood density.
The predominant purpose of the industrial timber plantations is the production
of sawlogs (43%) and pulp/fibre (35%) (FAO, 2006).
Like oil palm estates, many of the large-scale timber plantations are being
established in areas with lowland rainforest vegetation, and some of them in
peat swamps that need to be drained to grow harvestable timber. Some plantations in Riau Province have experienced an excessive soil subsidence of more
than 10 cm per year (Wösten, pers. com.). It shows that timber plantations on
peat may be a risky investment, especially for species with a long rotation because some areas may subside below sea level on relatively short term (3050 years).
Table 4.3

Timber species most frequently used in commercial timber
plantations in Indonesia by 2005

Species planted

Mean annual increment

Rotation

(m3 per ha per year)

(years)

%

minimum

Tectona grandis

37

12

Acacia mangium

26

19

24

Pinus merkusii

20

2

14

Acacia spp.

7

6

8

Agathis spp.

3

20

25

35

Swietenia macrophylla

3

15

40

50

Paraserianthes falcataria

1

19

53

6

10

Albizia sp.

1

19

6

8

Eucalyptus sp.

1

19

6

8

Other

1

19

6

8

Source: FAO (2006).

104

Share in
plantations

maximum minimum

maximum

40

80

6

10

10

50

19

The data from the FAO Forest Resources Assessment 2005 (FAO, 2006)
and the country report for Indonesia (FAO, 2005) have been used for estimating
the total round wood production and the corresponding area natural and planted
forests. The low values for production in 2005 in the FRA2005 data are probably an underestimation as a result of deficient reporting since the decentralisation of the forestry system in Indonesia in 1999 (see Brown, 2002). Therefore,
the data from FRA2005 have been adjusted based on the relative difference between the 2000 and 2005 production data in FAOstat (FAO, 2008), showing
that the production of industrial round wood in 2005 was 97% of that in 2000.
In general the production statistics as reported by Indonesia appear to be rather
unreliable; illegally harvested volumes appear to be more than double the official
statistics (Brown, 2002; Freezailah et al., 2002).

Estimates for selective logging
The estimates of felled volumes per hectare for the different production methods are based on values in scientific literature. However, the values reported in
different studies in the same regions often show large variations. These variations are due to combinations of differences in methods of experimental harvesting, variation in harvesting practices by different logging companies and by
variations in available figures about commercial volumes of wood in forests. The
harvested volumes presented in different studies on selective logging (both RIL
and CL, see FAO, 2004) widely vary, from 30 to 250 m3 per ha. Most reported
average harvests are, however, around 40-80 m3 per ha. Therefore, 60m3 per
ha is used to estimate the area that is selectively harvested for wood production
for the Dutch market we therefore used 60 m 3 per ha. The differences in harvested volumes between CL and RIL are usually small, but in forests harvested
according conventional practices (CL), losses amount to about 55% of the harvest while these losses are halved using RIL techniques (FAO 2004). Taking into
account the harvest losses as indicated in FAO (2004), the estimated volume
felled per hectare is 93 m3 over bark (o.b.) per ha for CL and 76 m3 o.b. per ha
for RIL.

Estimates for clear-felling
According to FAO statistics (FAO, 2004), the total volume of commercial trees
per hectare varied between 83 and 125 m3 under bark (u.b.) per ha. Therefore,
in the calculations for this report, the midpoint between these two values,
104 m3 per ha, has been used as the produced volume per hectare for clearfelling.

105

4.4.4 Estimated area used for Dutch timber imports from Indonesia

106

The Netherlands imported in the period 2007-2009 on average around
200,000 m3 RWE per year from Indonesia, mostly as plywood, sawn wood and
pulp. It is assumed that the Dutch import originated from different sources and
that the share of the different management and logging systems in the imports
are equal to the share of each system in the total timber production of Indonesia as depicted above. For example, 24.6% of the total wood production in Indonesia is estimated to be harvested under CL, so the same percentage of the
Dutch import from Indonesia is assumed to originate from CL. The figures used
for these calculations are based on the situation in 2006 (see Table 4.2).
According to ITTO (2006), 6% of the natural forest area is under sustainable
forest management, presumably at least following basic principles of RIL (see
4.4.2). Because the differences in yield per ha, 60 and 104 m 2 for RIL respectively clear felling, the share of RIL in the total wood production is 2.2%. Therefore RIL was assumed to be practiced for 2.2 % of the wood exported to
the Netherlands.
Based on these assumptions, the area of natural forest needed to produce
the annual Dutch import in the period 2007-2009 was 1.833ha, of which the
majority was produced with CLT (820 ha) and a small amount following RIL
standards (73 ha). Some 317 ha of forest were clear-felled and the remaining
623 ha were timber plantations (Table 4.4).
In contrast to the other two commodities, soya and palm oil, wood is not an
annual crop that can produce similar yields on the same hectare year after year.
To give the forest the possibility to replenish the timber stock, long periods of
time are needed between two harvests. Ideally, the time in between two harvests (felling cycle) is sufficiently long for the forest to recover and sustain similar yields over long time periods. The (sustainable) felling cycle depends on tree
species, local growing conditions, and logging method. To compare the areas
needed for wood imported by the Netherlands with the other commodities,
the areas need to be multiplied by the length of a (sustainable) felling cycle to
give the area claimed for (sustained) Dutch wood production over longer time
periods. To calculate this area needed for sustained yields the following felling
cycles were assumed: CL 60 years, RIL 40 years (based on Sist et al., 2003a;
Van Gardingen et al., 2003) and clear felling 100 years, which is a rough estimate and not likely to result in completely sustained yields. For plantations, the
rotation cycle was estimated at 33 years, based on the average rotation for the

various species and the share of the different plantation species (Table 4.3).
On this basis, the annual forest area of 1,833 ha needed in Indonesia for wood
exports to the Netherlands, leads to a claim on 104,426 ha of forest for a sustained future production.
It need to be noted that these estimates include only timber that was directly
imported (and registered) from Indonesia to the Netherlands. Timber that has
been imported to the Netherlands through other countries, such as Belgium,
Singapore, China and Malaysia is not included. Some sources indicate, however,
that this may involve considerable volumes (AidEnvironment, 2009).
Table 4.4

Share of management type in total production, Dutch import
volumes (m3) and corresponding area (ha) needed to produce
these volumes of timber from Indonesia (2007-2009)
CL

RIL

24.6

2.2

16.5

56.7

60

60

104

182

49,200

4,400

33,000

113,400

200,000

Corresponding forest area (ha)

820

73

317

623

1,833

Forest felling cycle (years)

60

40

100

33

49,200

2,933

31,731

20,562

Share in wood production

Clear felling Plantation

Total
100

in Indonesia (%)
Average yield per hectare
(m3 per ha)
Annual Dutch import in
2007/2009 m3 RWE)

Forest area claim for sustained

104,426

yields (ha)
CL = Conventional Selective Logging; RIL = Reduced Impact Logging.

4.5

Biodiversity impacts

4.5.1 Direct effects on biodiversity
The impact of timber production on biodiversity depends mainly on differences
in production methods. As presented above, 57% of the legal timber production
in Indonesia comes from plantations, 27% results from selective logging, either
CL or RIL and 17% from clear-felling. Several publications have shown that the
diversity of species is clearly diminishing along a gradient from near primary
forest via logged forest to agro-forestry and annual crop systems (Schulze
107

et al., 2004). Logged forests also support fewer species than primary forests,
but their species richness is still far above the values reported for tree or agricultural crop plantations. Species respond differently to selective logging as it
may leave behind a highly heterogeneous environment in which some species
will thrive and others will decline. Environmental changes following logging in
Central Kalimantan for example induced a shift in feeding guilds of bird species;
canopy gleaning species and terrestrial insectivores were negatively affected
whereas understory birds increased in abundance (Cleary et al., 2007).
Primary and near-primary forests contain the highest biodiversity for most
species groups (e.g. Dennis et al., 2008; Fredericksen and Putz, 2003). Nevertheless, secondary forests supported high numbers of understory plants, birds,
and butterflies and agro-forestry systems did support relatively high numbers of
butterfly species (Schulze et al., 2004). Some studies showed that bees and arthropods were observed more frequently in logged forest compared to primary
forest (Figure 4.5). This might be explained by the change in micro-climate that
stimulates growth of flowering plants in the forest understory and the increase
in course woody debris following logging (Liow et al., 2001; Turner and Foster,
2009).
Additionally, more primate species were found in logged-over and secondary
forests. This may suggest either that primates prefer (lightly) logged forest as a
habitat type or that primates are forced to extend their range as food sources
become scarce due to forest degradation and fragmentation. The higher primate richness observed could however also be the result of a sampling bias,
since monkeys are easier to spot in more open forests. Overall, species diversity in selectively logged forests is about 88% of the richness found in primary
forest1 (see Figure 4.5). The variation that was observed in logged forests was,
however, very high, probably as a result of high variation in the degree of disturbance, i.e. it includes both heavily and recently logged forest as well as forest that was logged longer ago and at lower intensities. Furthermore, the
monitored species groups and methods used were not precisely similar in the
studies that were used in this review.
The number of original species (i.e. primary forest species) is still considerably high in selectively logged forests, as opposed to timber plantations. Timber

1

108

It is important though to mention that the RSR does not incorporate the abundance of species.
When for example more primate species were found in secondary forest compared to primary forest,
their populations may have been much smaller. Unfortunately, abundance of species is often not
known, although it is an important component of biodiversity.

plantations are dominated by a few common species of low conservation concern, comparable with oil palm plantations. Based on five species groups, the
average relative species richness is 51% in rubber plantations versus primary
forest. The number of shared species in both systems is still undocumented.
So far, only few studies have examined the effects of RIL on biodiversity. It
has been shown that RIL significantly reduced skidding damage compared to
conventional logging, but as felling intensity increases the positive effects of
RIL become negligible and additional silvicultural rules are needed (Sist et al.,
2003b). It is likely that the damage induced by logging operations brings about
a shift in species composition, but it is not yet determined whether the overall
biodiversity would increase by RIL compared to CL. Species compositions have
indeed changed in RIL concessions compared to CL concessions and positive
effects were seen for bats (Castro-Arellano et al., 2007), dung beetles (Davis,
2000), mammals, soil macro-fauna, flying insects and trees (Mannan, 2008).
These studies suggest that RIL better preserves the primary forest assemblage
than CL. Some species groups such as primates, birds, arachnids and ants
were even observed more often in RIL forest compared to primary forests.
Figure 4.9

Species richness of plants and animals in logged forest
relative to primary forest (A) and rubber plantation relative
to primary forest (B) a)

RSR (%)

A. Logged forest vs. primary forest (avg RSR = 88%)
100

2
82

73

0

9
45

50

16

160

42
81

93
N/A

63

84

25

N/A

79

RSR (%)

B. Rubber plantation vs. primary forest (avg RSR = 51%)
100
98

0

38

N/A

N/A

N/A

40

N/A

unknown portion of shared species

N/A

species not shared

56

species shared

a) RSR=relative species richness; N/A: no information available.

Clear-felling systems are often used to replace a forested area for agriculture (i.e. oil palm) or timber plantations. In Indonesia clear-felling is often fol109

lowed by land preparation in the form of open burning of residual biomass. During clear-felling and burning most species are lost from the site. Depending on
the fire intensity some soil biota may survive. Although after burning the site
may rapidly be re-colonised, the replacing pioneer communities are generally
species poor and natural succession is limited as the land use shifts to agriculture or timber plantation.
4.5.2 Indirect effects on biodiversity
As the direct biodiversity effects of timber production, so the indirect effects of
timber production relate to the type of production. Particularly intensive timber
plantations are prone to indirect losses of biodiversity, for example through environmental disturbance. For instance, large-scale Acacia mangium plantations
on peat require sufficient drainage of the peat soil, which leads to the drying out
of peat, also in areas surrounding the plantation. Additionally, the use of pesticides is common in commercial timber plantations, potentially leading to pollution with possible hazardous effects when taken up by plants or animals.
Indirect effects of selective logging in natural forests may be less pronounced,
but have not been assessed in the field. They could relate, for example, to accumulating species loss through substantial logging damage. Clearly, the development of infrastructure for the extraction of timber from forests might affect
biodiversity by fragmentation of forests.

4.6

Socio-economic impacts of the timber industry in Indonesia

The development and impacts of the tropical timber industry in Indonesia is intertwined with the development of oil palm plantations. Concessions on land for
both products have been decentralised and are granted by the local departments of the Government of Indonesia as described in section 2.1.1 (Engel and
Palmer, 2006). Both production systems are driven by a large-scale global demand, translated into big commercial companies that acquire land for wood and
palm oil production (Kartodihardjo and Supriono, 2000). For that reason the social and economic impacts of timber production and oil palm development have
a lot in common. This section is focussing on timber plantations and their impact on employment, income, access to land and health.
110

Employment and income
The timber industry is an important economic sector in Indonesia. It contributes
around 10% to the national income and provides employment and income to
millions of people. Between 2002 and 2006, however, the number of people
employed in the Indonesian forestry sector decreased with around 800,000 of
the estimated total of 3m, due to a decline in timber production and export
(Obidzinski and Chaudhury, 2009). In response to the economic decline of the
timber industry and under pressure of global community about the destruction
of Indonesia's forest resources, the Indonesian Government initiated a new
timber plantation policy, which is aimed at reviving the timber industry by the
development of 9m ha of industrial timber plantations by 2016 (Obidzinski and
Chaudhury, 2009). Industrial timber plantations, however, offer on average only
1 to 3 jobs per 100 ha of plantation (Charnley, 2006). Wages offered are
generally low and working conditions are poor and dangerous (van Bodegom
et al., 2008). Loggers and sawmill workers often operate dangerous machinery
with no health or safety safeguards (Scotman, 2000). Although industrial timber
plantations generate employment, jobs are often taken by (educated) immigrants. Local people are most likely to benefit if the establishment of a plantation is combined with the development of wood processing and manufacturing
facilities (Charnley, 2006).
The government promotes the participation of rural people in timber plantation programmes (Rohadi et al., 2010). Small holder timber plantations represents a potential contribution to rural households employment and income. The
development, however, remain behind the official targets. In 2004, 1.5m ha of
small holders plantations were realised in contrast to the 41.5m ha that are
available for that purpose (Rohadi et al., 2010). One of the reasons is the dependence of small holders on large companies for timber transport and market
access and hence for their income. Timber plantations contribute only a small
part to the household income of small holders. A survey on teak plantations
showed that teak contributed up to 12% to the households income; food crops
and animal husbandry together contributed 25%, while other off-farm activities
such as paid labour, trade and the provision of services provided the remaining
part. Farmers grow timber mainly as a safety net and harvest it when cash is
urgently needed. Economically, timber plantations are far less profitable for
small holders than rubber or oil palm plantations (Rohadi et al., 2010).

111

Access to land
Forests play a crucial role in local economies. In Indonesia 30m people are estimated to depend on the forest for their livelihoods and for environmental services such as water filtration and flood protection (FWI/GFW, 2002). In general
rural people in Indonesia depend for their livelihoods on rice cultivation, vegetable growing, fisheries and harvesting timber and non-timber forest products
(NTFPs) such as rattan, honey. The establishment of industrial timber plantations
may lead to displacement of local communities and causing conflicts similar to
those associated with the establishment of oil palm plantations. It has been reported that people lost their (rice) fields, cemeteries and holy land and species
(Noor and Syumanda, 2006).
The loss of agricultural and forested land due to industrial timber plantations
potentially decreases the food security in rural communities. Small holder timber plantations, however, are often planted in agro-forestry systems. Usually a
farmer will only use around 10% of his land for the production of timber, hence,
these plantations will not have a significant impact on local food security (Rohadi
et al., 2010).
Noor and Syumanda (2006) conclude that the diverse products provided by
natural forests and shifting agriculture provide rural communities with better opportunities to deal with changes in markets and climate than timber plantations.

Health
Industrial timber plantations often use irrigation for their water supply, thereby
affecting the water table in the catchment area. Dropping water tables may lead
to water shortage in agricultural fields adjacent to timber plantations and ultimately result in yield reductions. Another potential negative effect is water pollution caused by pesticide use, leading to decreasing fish stocks and, hence,
decreasing income from fisheries. Loss of biodiversity can also affect local livelihoods in several ways, for example by the loss of species that form part of
the diet of local people, or by the increase of pests and diseases (Noor and
Syumanda, 2006).

4.7

112

Options for mitigating biodiversity and socio-economic impacts

In contrast to soya (see section 2.7) and palm oil (see section 3.8), intensification of wood production from selectively logged tropical forests is not recommendable. Modelling studies (e.g. Arets, 2005; Sist et al., 2003a;

Van Gardingen et al., 2003) show that only moderate harvest intensities and sufficiently long felling cycles, i.e. the time in between two harvests, will result in
long term sustained yields. Higher harvest intensities will result in forest degradation and lower (quality) yields at the following harvests. Ten Brink et al. (2010)
explored the possibility to intensify wood production by establishing more forest
plantations. The results indicate that this may reduce the pressure on natural
forests in the long term, but will lead to higher levels of biodiversity in the short
term. As part of an integrated land-use planning at a landscape scale, forest
plantations could be planned strategically, especially on degraded land. As
such, forest plantations may well be part of a strategy to alleviate the pressure
on natural forests, but they are only one element in a whole package of
measures to reduce the deforestation of natural forests and to promote their
sustainable use and management (van Bodegom et al., 2008).
The most promising policies with respect to mitigating thebiodiversity impact of wood production are forestry certification schemes, such as the international certificates, PEFC and FSC, and national certificates as MTCS (Malaysian
Timber Certification Scheme), CSA (Canadian Standards Association) and SFI
(Sustainable Forestry Initiative, USA). Forest certification systems include a variety of 'good management practices' such as Reduced Impact Logging, retention
of seed trees, establishment of riparian buffer zones and non-riparian corridors
and the identification of High Conservation Value Forests (HCVF). A HCVF refers
to a rare forest type or a forest with an exceptionally high number of rare species. Protection of such ecologically important areas within forest management
units may be among the best instruments for biodiversity conservation. However, the effectiveness of HCVF in tropical countries has yet to be proven. Biodiversity rich areas do not automatically receive a HCVF status, for instance,
because they are not easy to access or because they are being logged before
any proper inventory has taken place. In addition, HCVF status does not guarantee protection of the area, especially not in countries with a high rate of illegal
logging (Ardiansyah, 2006).
A crucial role in biodiversity conservation might be played by ecological corridors. In temperate zones, ecological corridors have been proven to have positive effects on biodiversity (Haddad et al., 2003). They may initiate important
ecological processes such as migration, seed dispersal and pollination by offering suitable habitat for the species underlying these processes. Mammals and
birds for example have been observed to migrate through corridors (Pereboom
et al., 2008; Tewksbury et al., 2002). A study to howler monkeys in Mexico
showed that their abundance increased with the degree of connectivity with

113

other forest fragments (Anzures-Dadda and Manson, 2007). Nasi et al. (2008)
suggested that forest fragments may be used to mitigate the negative impact
of plantations on biodiversity, especially when connected to remaining natural
forest patches (Nasi et al., 2008). Riparian buffer zones are also promising in
biodiversity conservation. High insect abundance near streams makes them
a crucial feeding habitat for several important species groups such as forest
birds (Chan et al., 2008). A successful example of connecting remaining natural
forest patches, comes from the Tesso Nilo conservation area on Sumatra.
However, such examples are as yet very rare in tropical Southeast Asia.
Within timber plantations, the plantation management could significantly influence their suitability for species conservation. For example, low-input rubber
(Hevea brasiliensis) agroforests support relatively high species richness compared to rubber plantations. They play an important role in the conservation of
forest species in an impoverished landscape that is increasingly dominated by
monoculture plantations (Beukema et al., 2007). On the other hand, management of agro-forestry systems that includes the thinning of tree stands can facilitate invasive species such as the Yellow Crazy Ant, Anoplolepis gracilipes (Bos
et al., 2007). Dominance of pest forming species like those observed in oil palm
plantations do also occur in timber plantations. Plantation management and tree
selection andmodification is forced to act accordingly.
To ensure that the basic needs of local communities are met in forestry
planning, local communities and indigenous peoples should be involved in the
identification and management of areas that they require for the provision of
ecosystem services and areas critical to their traditional cultural identity. These
areas should be included in HCVFs. Timber plantations may also have a positive
impact on the livelihoods of local people, because they provide employment and
income opportunities, but there is risk of an unfair distribution of plantation
costs and benefits (see section 4.6). An option is to establish mixed species
and agroforestry plantations with well-defined rights of access and use for the
local population. Integrated land-use planning involving all relevant stakeholders
is a promising option to find a solution that fits best to them all.

4.8

114

Synthesis

The by far most important wood producing countries in the world are Canada
and the Russian Federation. Malaysia, Indonesia and Brazil are the most important producers of tropical wood and wood products. The European Union is

one of the largest importers of wood and wood products, next to China. The
import by EU-27 countries counts for 46% of the total world trade. A larger part
of the import of EU member states origins from other member states. The
share of EU countries in the total trade of wood exporting EU countries is about
two thirds. The EU accounts for about one third of the total wood export of
China and the Russian Federation, almost half of the export of Brazil, 28% of
that of Indonesia and 16% of the wood export of Malaysia. The Netherlands is
an important entry point for tropical timber to the European Union. Around 30%
of the total timber export of Malaysia entered the EU via the Netherlands. For
Indonesia is was 21% and Brazil 9%.
The market of wood and wood products is severely affected by the financial
and economic crisis that started in 2008 with the crash in the housing market
in the USA. As a result the consumption of wood and wood products started
to decline in that year after a long period of growing demand. It looks that the
bottom of the downward trend has been reached, but a full recovery is not expected before the housing markets starts to recover. The market for tropical
timber was less influenced by the crisis, partly because the major part of the
tropical timber is traded within the timber producing regions of Asia and South
America and these regions are less affected by the economic crisis than Europe
and the USA.

Biodiversity impacts
The impact of wood production on biodiversity is largely dependent on forest
management and logging systems. Four different management types can be
distinguished: (a) clear-felling, (b) conventional selective logging (CL), (c) selective logging with application of reduced impact logging techniques (RIL) and
(d) wood production from wood plantations. It is obvious that the impact on
biodiversity is largest when the whole forest area is harvested. Because of the
high density of good quality trees, a considerable part of the total timber production in Indonesia comes from clear felled forests. However, in many tropical
countries timber is extracted from the forests through selective logging, i.e.
in a given forest area only a small number of trees of commercial value is harvested. The number of harvested trees is rather low, but the damage to the
remaining forest stand may be considerable. In a RIL system a number of precautionary measures are taken to minimise the damage to the residual forest,
and in particular to trees suitable for harvesting in the future. Although on average the difference in harvested volumes between CL and RIL is not large, the
harvesting losses and damage to the residual forest for CL is considerable, so

115

that, eventually, more forest need to be felled for the same amount of wood as
under RIL.
There is not much information available about the impact of both logging
systems, but the available studies suggest that reduced-impact logging better
preserves the primary forest assemblage than conventional logging techniques
do. In general, the damage to biodiversity in selectively logged forests is limited; studies found an overall species diversity in these forests of about 84% of
the richness found in primary forest. The situation changes dramatically, when
these forests are converted into timber plantations. In general the biodiversity in
timber plantations is comparable to that in oil palm plantations and is dominated
by a few common species of low conservation concern. Nevertheless, the management of timber plantations (especially long-rotation trees) is more extensive
compared to oil palm plantations, which may eliminate some of the negative biodiversity impacts.
Management of tree plantations could significantly influence its suitability for
species conservation. Important aspects are tree density, the undergrowth and
the use of agro-chemicals. Forest plantations generally consist of mono-specific
blocks interspersed with natural forest remnants, which can provide an important way to mitigate the negative impact of plantations on biodiversity, provided
that they are appropriately interconnected and managed. Protecting ecologically
important areas and corridors within forest management units and conservation
of High Conservation Value Forests may, therefore, be among the best instruments for species conservation.
Well managed forest plantations, however, also can reduce pressure on remaining forest areas for wood production. Global scenarios in which the share
of wood produced from plantations is increased show a reduction in impact of
forestry on biodiversity (ten Brink et al., 2010). This is because on the long term
less primary forest area is needed to meet global wood demand. As a trade-off,
however, initial plantation establishment will on the short term, result in additional loss of natural areas and biodiversity.

Socio-economic impacts

116

The timber industry is an important economic sector in Indonesia. It contributes
around 10% to the national income and provides employment and income to
millions of people. Since a number of years, however, the industry is in decline.
In response to that and under pressure of global community about the destruction of Indonesia's forest resources, the Indonesian Government started a new
timber plantation policy, which is aimed at reviving the timber industry by the

development of 9m ha of industrial timber plantations by 2016. Industrial timber
plantations, however, offer a few jobs per 100 ha of plantation, the wages are
generally low and working conditions are poor. New positions on industrial plantations are often filled in by immigrants. Local people are most likely to benefit
from plantations if they are combined with wood processing and manufacturing
facilities. The Indonesian government is also promoting small holders' plantations, but the development remain behind the official targets, probably because
timber plantations are not very profitable. Farmers grow timber mainly as a
safety net and harvest it when cash is urgently needed.
The establishment of industrial timber plantations generally leads to the deprival of land and forest resources for rural communities and involves risks of
social unrest and conflicts, impoverishment and food insecurity, in particular for
indigenous people. Other negative impacts often associated with industrial timber plantations are decreasing water availability for agricultural and domestic
uses, water pollution and non-voluntary resettlements.

An estimate of the forest area used for the Dutch import of wood products
from Indonesia
To estimate the impact of Dutch import of wood and wood products from Indonesia, figures of Dutch import are combined with estimates of yields losses,
damage and growing stock per hectare for different logging systems and production regions in Indonesia. In the period 2007-2009 the Netherlands imported
annually about 200,000 m3 RWE from Indonesia. It is assumed that the Dutch
wood import comes from different sources and that the share of the different
management and logging systems in the imports are equal to the share of each
system in the total timber production of Indonesia. Based on these assumptions, the area of natural forest needed to produce the Dutch import volume
was about 1,800 ha, of which 49% was produced by selective logging, 17% by
clear felling and 34% on timber plantations.
Wood, however, is not an annual crop that can produce similar yields on the
same hectare year after year. Long periods of time are needed between two
harvests to replenish the timber stock. The (sustainable) felling cycle depends
on tree species, local growing conditions, and logging method. For conventional
selective logging the felling cycle is about 60 years, for reduced impact logging
40 years, for clear felling 100 years and for plantations 33 years. On this basis,
the annual forest area of 1,800 ha needed in Indonesia for wood exports to the
Netherlands, leads to a claim on about 104,400 ha of forests and plantations
for a sustained future production.

117

This estimate includes only timber that was directly imported (and registered)
from Indonesia to the Netherlands. Some sources indicate, however, that
considerable volumes are imported to the Netherlands through other countries,
such as Belgium, Singapore, China and Malaysia.

Options for mitigating biodiversity and socio-economic impacts
The most promising policies with respect to mitigating the impact of wood production on biodiversity are the various forestry certification schemes, such as
the international certificates, PEFC and FSC.
Forest certification systems include a variety of 'good management practices' such as Reduced Impact Logging, retention of seed trees, establishment
of riparian buffer zones and non-riparian corridors and the identification of High
Conservation Value Forests (HCVF). In particular protecting ecologically important areas and corridors within forest management units and conservation of
HCVF may be among the best instruments for species conservation. However,
the effectiveness of HCVF in tropical countries has yet to be proven. Biodiversity
rich areas do not automatically receive a HCVF status and a HCVF status does
not guarantee protection of the area, especially not in countries with a high rate
of illegal logging.
To ensure that local communities and indigenous people will equally share
in benefits (and costs) of the HCVFs and that their needs and concerns will be
heard, they should be involved in the planning and management of HCVFs. Integrated land use planning may be one of the options to achieve biodiversity and
socio-economic goals in a sustainable way.

118

5

Key findings and options for sustainable
use of biodiversity
5.1

Introduction

In the last decades, the world has witnessed tremendous changes in land use,
caused by a rapid growing demand for food, feed and fuel for the increasing
world population, together with rising incomes and changing food consumption
patterns from cereals to meat products. The growing demand and production
of biofuels is a new driver behind land use changes and challenges producing
countries to secure people's food security and achieving environmental priorities such as sustainable use of biodiversity. The Dutch government through its
Biodiversity Policy Programme (2008-2011) aims at making the Dutch international trade 'sustainable inclusive', a term that refers to public and private policy
making that equally takes into account the social, economic and ecological interests associated with international trade. The international trade in products
and commodities that require large areas of land and consequently put a high
pressure on biodiversity, such as tropical timber, palm oil, soya, coffee, cacao
and fish products have the particular interest of the Dutch government.
This study focuses on soya, palm oil and tropical timber. This chapter provides the key findings of this study with respect to the global trade in these
commodities and the Dutch trade position (section 5.2), the expected future
trade developments (section 5.3), the impact on biodiversity (section 5.4), and
the impact on rural communities (section 5.5). In the concluding section (section
5.6) three options for mitigating the biodiversity and socio-economic impacts
are presented: (a) sustainable intensification, (b) expansion of production in degraded areas and (c) integrated land use planning.

5.2
-

Global trade flows and the Dutch trade position

The world soya bean area rose from about 25m ha fifty years ago to around
100m ha in 2009. South America has about 43% of the total world area under soya beans, the USA 32% and China and India each about 10%. The USA
account for 41% of the global soya bean production of over 220m tonnes in
119

-

-

120

2009, followed by Brazil (26%) and Argentina (14%). In the period 20072009, the total Dutch import value of soya bean products was around
USD3b per year. Since the year 2000, the Dutch soya import significantly
increased and added up to more than USD4b in 2008, with a sharp decline
in the following year, caused by an increased competition in the global food
market since 2007. The Dutch import of soya beans is mainly from Brazil
(67%) and the USA (25%), while soya oil cake is almost totally imported from
Argentina and Brazil, each almost 50%. About one third of the total soya import of the Netherlands is exported to its neighbouring countries, in particular Germany and Belgium. The remaining part of the soya bean import is
crushed in the Netherlands to extract soya bean oil, which is exported partly
to other EU countries. The majority of the processed products (soya bean
meal and oil cake) are used as feed in the livestock industry in the Netherlands and other EU countries (see section 2.2).
The world oil palm area grew from 3m in the sixties of last century to 14m
ha in 2009, of which more than 10m ha in Indonesia and Malaysia. These
two countries account for 85% of the global palm oil production of 47m
tonnes in 2009, each producing around 22m tonnes. The Netherlands is the
second largest importer of crude palm oil after India. In the period 20072009, the Netherlands imported annually about 1.0m tonnes of crude palm
oil from Malaysia and some 0.5m tonnes from Indonesia. The total global
Dutch import value significantly increased since 2000 and added up to almost USD2.1b in 2008, with a sharp decline in the following year, caused by
an increased competition in the global food market since 2007. In the period
2007-2009, the Dutch import value was USD1.6b per year and accounted
for 7% of the total global trade in palm oil products. For crude palm oil the
share of the Netherlands was 15% and for palm oil cake even 23%. A significant part of the imported crude palm oil is - after processing into palm oil
and oil cake - exported to neighbouring countries, in particular Germany and
Belgium. The value of the exported palm oil products is nearly equal to the
value of total crude palm oil import (see section 3.2 and 3.3).
In the period 2001 to 2007, the global trade in wood and wood products
almost doubled from USD63b to USD120b. Malaysia, Indonesia and Brazil
are the world's major exporters of tropical timber. The production of tropical
wood is partly intertwined with the development of soya and oil palm production. A majority of the large oil palm estates in Malaysia and Indonesia is located in former forest areas because timber yields can offset the costs of
plantation establishment. Many oil palm companies are, therefore, associat-

-

ed with logging companies. The expansion of soya production in South
America occurs mainly in former forest areas that have been logged in the
last decades and then used for extensive cattle farming. The EU is one of
the largest importers of wood in the world, with 46% of the total world trade
in 2007-2009. The EU accounts for almost half of the wood export of Brazil,
28% of that of Indonesia and 16% of Malaysia. Of the total EU import from
Malaysia 30% enters the EU via the Netherlands, for Indonesia it is about
21% and for Brazil 9%. The share of the Netherlands in the global wood
trade is about 3.1%. In the period 2007-2009; 63% of the total Dutch import
originated from neighbouring EU countries and of the remaining 37%, one
third is tropical timber, imported from Malaysia, Indonesia and Brazil. The total import value of tropical timber was about USD0.7b per year (see section
4.2).
The impact of Dutch imports of palm oil, soya bean and timber products on
biodiversity in the production regions can be illustrated by the total area of
land needed for the production of these products in the respective countries
(Brazil, Malaysia and Indonesia). It is not possible to trace back the Dutch
imports to the specific production areas, so only a rough estimate can be
made of the land area that is needed for the Dutch imports. This estimate is
based on the assumption that the imports of the Netherlands are produced
proportionally to the distribution of the total production over the different
production regions and production methods in the exporting countries. For
the annual Dutch soya imports from Brazil in the period 2007-2009 an estimated production area of about 1.5m ha is needed (see section 2.4). For
the annual Dutch palm oil imports from Indonesia and Malaysia this area
equals to almost 0.4m ha (see section 3.5). These gross imports require
roughly the same area as the total agricultural land area of the Netherlands.
It should be noted that a significant part of the Dutch soya and palm oil imports is re-exported to neighbouring countries, mostly after processing. For
a sustainable import of timber products from Indonesia a forest and plantation area of about 100,000 ha is required (see section 4.4).

5.3
-

Future trade developments

The demand for soya in the feed and energy sector is expected to increase
over the coming years, especially in China, due to a continuing economic
growth resulting in higher food consumption levels and changing food con-

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-

-

sumption patterns from cereals to meat products. The EU imports of soya
beans are not expected to increase and imports of soya oil and soya bean
meal will slightly increase. Soya bean production areas in Latin America are
expected to expand by 10m ha, of which 5m ha in Brazil (see section 2.3).
Indonesia and Malaysia will continue to dominate the world exports of palm
oil products. The export of both countries is expected to increase to 50m
tonnes in 2018/19. A major growth of palm oil consumption is expected
in China and India, as the industrial use for palm oil will continue to rise due
to the growing demand for processed food products. The EU import is expected to increase about 20% over the period 2008-2018 (see section 3.4).
The market for wood and wood products was severely affected by the recent financial and economic crisis, but the expected global economic recovery will lead to a growing demand for tropical wood products. Policies to
combat illegal logging by the major importing countries, in particular the EU
(FLEGT initiative) and the USA (Lacey Act Amendment) are expected to have
important implications for producers and traders of tropical wood products.
The certified forest area is increasing, but concentrates in Europe and NorthAmerica, representing 97% of the global certified round wood supply (see
section 4.3).

5.4
-

-

122

Impacts on biodiversity

The growth of soya bean production in Latin America has mainly been realised at the cost of until then undisturbed ecosystems in Brazil and Argentina.
The expansion of soya bean cultivation promotes sometimes large-scale forest conversion directly, but more often it is part of a whole chain of land use
dynamics, in which it indirectly drives deforestation. Deforestation leads to
direct losses of biodiversity at the site and it contributes to fragmentation
of the forest and Cerrado landscapes. Exact species losses due to soya
bean cultivation have not yet been quantified, although it is likely that the
loss of rare ecosystems with high levels of endemism such as the Atlantic
forest and Cerrado would result in significant reductions of biodiversity
(see section 2.5).
Tropical biodiversity is critically affected by the fast conversion of forest into
oil palm plantations, which mainly takes place in the lowlands of Indonesia
and Malaysia. Biodiversity impacts are greatest when oil palm expansion is
planned in forest areas, but also conversion of secondary forests that have

-

been harvested for wood will lead to a relatively strong reduction in richness
of original species, i.e. the species that would be present in primary forest.
There is an ongoing scientific debate on the effects of small holder versus
large-scale palm oil plantations on biodiversity. It is generally expected that
small holder production in more extensively managed mosaic landscapes is
more beneficial to wildlife and maintenance of local biodiversity than intensively managed large scale plantations. However, there are limited data
available to support this claim. On the other hand, many of the small-holder
plantations have low crop yields, which means that they need more land to
produce a given amount of palm oil compared to intensive large-scale plantations. Most of the current forest conversion in Malaysia and Indonesia for
large scale palm oil development takes place in lowland tropical forests
that have been logged over in the past decades. These logged-over forest
patches, however, may still harbour a substantial part of the originally occurring forest species. In contrast, oil palm plantations are relatively species
poor. The number of species in these plantations is only 37% of the number
of species found in logged-over forest. The majority of species found in forests, either primary or logged-over, is not present in plantations. The clearing of forests for oil palm plantations also entails several indirect effects
on biodiversity, for example caused by drainage and the use of agrochemicals. These effects may be potentially large but are hard to quantify (see
section 3.6).
The impact of wood production on biodiversity largely depends on forest
management and logging systems. Diversity of several species groups is
clearly diminishing along a gradient from near primary forest via logged
forest to agro-forestry and annual cropping systems. Selective logging, in
which only a selection of trees in a forest is harvested, is the main practice
in tropical forests. These selectively logged forests support fewer species
than primary forests, yet their species richness is still far above the values
reported for agricultural crop or tree plantations. Increasing amounts of
timber are being produced in plantation forests, relative to natural forests.
Timber plantations are comparable with oil palm plantations in that they are
dominated by a few common species of low conservation concern (see
section 4.5).

123

5.5

Impacts on rural communities

Kop4
-

-

-

124

Soya production is an important driver for economic and rural development
in Brazil. However, the total employment in the soya industry is estimated on
5-6m people. The employment in soya producing regions is decreasing due
to the introduction and expansion of large scale highly mechanised soya
farms, which employ only a few workers per 100 ha. This drives farmers to
migrate to urban areas and vice versa seasonal workers to migrate to plantation areas. It is expected that further development of large-scale soya
bean cultivation will lead to increasing poverty rates. The expansion of soya
production is also often associated with land conflicts (see section 2.6).
Oil palm industry is among the major economic activities in Indonesia and
Malaysia. An estimated 6m people in Indonesia benefit from the palm oil
production and related activities. The employment potential of large-scale
plantations is not always realised and the influx of large numbers of migrants
for employment in the oil palm plantations regularly lead to conflicts within
existing rural communities. The labour conditions at this type of plantations
are often described as poor. Moreover the establishment of large-scale plantations, either owned by private or public companies are often associated
with land conflicts, due to weakly identified and recognised customary land
rights. In 2007, small holder growers accounted for about 40% of the productive oil palm area and 35% of the crude palm oil production. For small
holders palm oil production provides an attractive income opportunity, but
their economic position is vulnerable due to uncertainty over land tenure and
lack of technical, policy and market information and, hence weak bargaining
power (see section 3.7).
The timber industry is an important economic sector in Indonesia. It contributes around 10% to the national income and provides employment and income to millions of people. Between 2002 and 2006, the number of people
employed in the Indonesian forestry sector decreased due to a decline in
timber production and export. In order to revive the timber industry the
Indonesian Government initiated a new timber plantation policy, which is
aimed at the development of millions of hectares of industrial timber plantations. Industrial timber plantations, however, offer on average only a few
jobs, the wages offered are generally low and working conditions are poor.
Local people are most likely to benefit if plantations are combined with
the development of wood processing and manufacturing facilities (see
section 4.6).

5.6

Options for mitigating biodiversity and socio-economic impacts

The growing global demand for palm oil, soya and wood products will certainly
lead to further large-scale conversion of natural habitats. The following three options are identified to mitigate the biodiversity and socio-economic impacts.

A. Sustainable intensification of production
The strongest drivers of biodiversity loss are associated with land-use changes
from natural ecosystems to agricultural production, infrastructure and urban areas (Alkemade et al., 2009; Pereira et al., 2010). A recent study on land-use
changes shows that between 1980 and 2000, 55% of agricultural expansion
was on previously intact forest areas, while another 28% was on already disturbed forest areas (Gibbs et al., 2010). In a scenario study, ten Brink et al.
(2010) indicated that the option of closing the yield gap, i.e. reducing the difference between the current and the potential yields, could reduce the loss of original biodiversity in 2050 with 20% compared to the baseline scenario. This was
mainly achieved by reducing agricultural expansion and even agricultural abandonment in some regions. On a global scale, this option would gain 2m km2 of
wilderness area compared to the baseline situation.
In general, more intensive management of agricultural areas, involving artificial fertilisers and pesticides will have a negative impact on biodiversity at the
local scale. Yet, because the largest biodiversity losses are associated with forest conversion, it is probably better to intensify production, rather than to further expand the total production area, as illustrated by the scenario study
mentioned above. Intensification of production, however, should be applied in
a sustainable way and preferably be part of a larger strategy of integrated landuse planning. In that way, areas could be identified where the production could
be intensified, of course within the ecological, social and economic context, and
areas where the intensification and expansion of production should be limited,
e.g. areas with high ecological values or with vulnerable local communities. In
these areas, agrochemicals and fertilisers should be used with care, and its application in terms of composition and concentration should be optimised to
make sure that degradation of soils and pollution of water is prevented. Imposing constraints on intensification, promoting biological pest control and the use
of organic fertilisers could lead to production systems with fewer negative impacts on biodiversity and human health.
125

126

The results of ten Brink et al. (2010) show that improved agricultural practices are especially effective for cereals and rice and in Sub-Sahara Africa, the
area with currently the widest yield gap. Yet, the trends in palm oil and soya
yields (as well as for their substitutes) show also room for improvement and are
key to answering the question how much more productive land is needed to
meet the fast growing global demand.
For palm oil, the average yields of independent small holders are much lower compared to private and government estates and supported small holder
growers. This affects not only the total area needed for oil palm, but also
farmer's income. Improving the yield of the low yielding independent growers,
who occupy some 650,000 ha of land in Indonesia, may be very effective to reduce the expansion rate of oil palm plantations on the short term. If independent
small holders would improve their yields to the level of supported small holders,
the total production of oil palm in Indonesia could increase by 2m tonnes of CPO
per yea,r or the total area of palm oil plantation be reduced by half a million hectares. Shean (2009) estimated that the average CPO production per ha could
even be increased from 3.4 to 5.0 tonnes for small holders and from around
4 to 7 tonnes for state and private companies. Such yield increases would further increase the total production of palm oil by over 40% or reduce the area
needed by 40%. Most small holders currently apply no or only little fertiliser,
while their genetic stock is inferior to that used on estates. These small holders
should be supported to make a transition to higher yielding hybrid varieties, to
apply fertilisers and to overcome the time lag until the new palms become productive. A reason that private and government estates are still well below their
potential yields appears to be a lack of motivation to manage plantations more
intensively. They already achieve large profits at current production levels, so
there is little incentive for higher investments in optimal fertiliser application
(Shean 2009).
Compared to palm oil, there is apparently less potential for yield increments
in soya production, although there are large differences in yields that seem to
depend on the level of technology adapted. For instance, some farmers succeed in harvesting twice a year from the same field. Despite the greatest part
of the total soya production originates from intensive large-scale plantations,
there are still small and medium sized producers. Large-scale farms strongly inhibit an effective establishment of nature reserves and High Value Conservation
Areas, because they easily become isolated in a landscape with large soya
fields. Small and medium sized farms in a mosaic landscape of agriculture and
natural areas can thus play an important role in the development towards

a more sustainable soya production. With adequate support small farmers
can also increase yields. However, to prevent degradation and further indirect
losses of biodiversity, attention needs to be paid to the ecological and socioeconomic boundary conditions.
The key elements of an enabling environment for intensification of small
holder palm oil and soya production include secure land tenure for individuals
and community groups, adequate supportive infrastructure, access to markets,
fair credit schemes, new technology and improved seeds.
In contrast to palm oil and soya, intensification of wood production from selectively logged tropical forests is not recommendable. Modelling studies (e.g.
Arets, 2005; Sist et al., 2003a; Van Gardingen et al., 2003) show that only at
moderate harvest intensities and sufficiently long felling cycles, i.e. the time in
between two harvests, will result in long term sustained yields. Higher harvest
intensities will result in forest degradation and lower yields at the following harvests. Ten Brink et al. (2010) explored the possibility to intensify wood production by establishing more forest plantations. The results indicate that this may
reduce the pressure on natural forests on the long term, but results in higher
levels of biodiversity loss on the short term. As part of an integrated land-use
planning at a landscape scale, forest plantations could be planned strategically,
especially in degraded areas. As such forest plantations may well be part of a
strategy to alleviate the pressure on natural forests, but they are only one element in a whole package of measures to reduce the deforestation of natural
forests and promote their sustainable use and management (Van Bodegom
et al., 2008).
Timber plantations do not automatically have a positive impact on the
livelihoods of local people. Plantations seem to favour the interests of a few
above the basic needs of the majority of the rural population. One promising
option is integrated land-use planning for plantation development involving all
relevant stakeholders. Another strategy focuses on mixed species and
agroforestry plantations with well-defined rights of access and use for the local
population. The most promising policies with respect to mitigating the impact of
wood production on biodiversity are forestry certification schemes, such as the
international certificates, PEFC and FSC and national certificates as MTCS
(Malaysian Timber Certification Scheme), CSA (Canadian Standards Association)
and SFI (Sustainable Forestry Initiative, USA).

127

B. Expansion of production in degraded areas
Yield improvement of palm oil and soya alone is not expected to match the
growing world demand over the next thirty years. Area expansion will almost
certainly be needed. There is general consensus about the potential to focus future area expansion on so-called degraded land, carrying small carbon stocks
and low species diversity (often Imperata grasslands or 'alang alang'). Several
Indonesian oil palm companies already have experience with alang alang control
in new plantations and some field examples show that these idle lands can be
made productive with the right measures. However, experience in Indonesia
has also shown that many grassland areas are claimed by local people, and the
costs of negotiating over land rights may be a significant factor in preventing
the use of degraded lands. In addition, palm oil is a labour intensive crop that
requires high investments to establish and manage, and there is a relatively long
time lag between establishment of a plantation and the first production, at least
three years. Therefore, conversion of forest areas often provides initial income
from wood production, which is used to finance plantation establishment. This
situation makes the establishment of oil palm plantations on degraded areas
less attractive.

C. Integrated land use planning

128

Integrated land use planning for the development of new agricultural areas and
plantation expansion is a key strategy to reduce negative biodiversity and socioeconomic impacts and to ensure preservation of regional biodiversity. Such an
integrated planning should involve ecological and economic zoning, including
protection zones, i.e. vulnerable areas rich in biodiversity and endemic species,
and intensification zones, i.e. areas where ecological and social boundary conditions further agricultural expansion and intensification permit. The involvement
of local communities and indigenous peoples in the planning and management
of protected areas is an effective way to link conservation and development
goals, and is supported by the Convention of Biological Diversity's programme
of work on protected areas. Key to the success of this approach is an enabling
institutional and legal environment that promotes equitable distribution of costs
and benefits and ensures genuine participation of local communities in planning
and management.
An example is the Ex Mega Rice Project area in Central Kalimantan,
Indonesia, where integrated land use planning was applied for a sustainable

development of the area. Biophysical and socio-economic baseline studies and
land suitability analyses have been used to identify areas for conservation and
rehabilitation of forests and peat lands, and areas for agricultural development.
In order to ensure that the planning reflects local realities and builds on the
knowledge of stakeholders in the area, a multi-stakeholders approach was
applied including workshops and consultations, as well as engagement and
cooperation with governmental institutions at all levels.
Integrated land use planning is also a promising approach for a successful
establishment of High Conservation Value Areas (HVCAs) interconnected with
corridors of other intact forest areas over different properties. HCVAs are included in the draft global standard for responsible soya production of the
Roundtable on Responsible Soy Association (RTRS). The concept is also included in the standard for sustainable palm oil of the Roundtable on Sustainable
Palm Oil (RSPO) and in the FSC timber certification scheme. Key to the establishment of HCVAs, in particular to ensure the equal distribution of costs and
benefits of these areas, is the involvement of local communities and indigenous
people in the planning and management of HCVAs to ensure their needs and
concerns will be heard.

129

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