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Why Does the European Commission Care About Palm Oil Yield Curves?

Last month, the European Commission together with Guidehouse Consultancy launched a call for data about palm oil yield curves as it is attempting to establish what it refers to as a ‘dynamic yield baseline’ for oil palm plantations.

The Indonesian Palm Oil Association (GAPKI) has presented a detailed submission to the EU, outlining the data on Indonesian palm oil yield curves. This can be read in full here.

The real question is: what is the Commission doing? Some of the best data in the world on agricultural commodities comes from the US Department of Agriculture (USDA): the organization tracks prices, yields, outputs, technical developments and much more. These data are organized and presented for the world to read and use – and are updated regularly. It is in many ways a perfect demonstration both of altruistic leadership, and the use of geopolitical soft power. The USDA data are invaluable tools for farmers, governments, traders, civil society and media around the world.

At first glance, it may appear that the EU Commission is attempting a similar exercise. A detailed analysis of palm oil yield curves could bring many benefits to farmers and institutions in the developing world. Unfortunately, that is not the goal of this project.

The European Commission needs this data for an upcoming study, as part of the implementation of the Renewable Energy Directive (REDII). The RED II is best-known for its discriminatory effort to ban palm oil biofuels from the EU by classifying palm oil as ‘high ILUC risk’.

This study is not an effort to discover new information: it is an effort to justify a pre-existing policy of discrimination and exclusion.

Ultimately, the RED II is one part of the EU’s ongoing efforts to protect its fading rapeseed and sunflower industries.

Detail of the Study

The European Commission’s stated approach is to establish what it refers to as a ‘dynamic yield baseline’ for oil palm plantations. Variability of yields is compounded by growing conditions, as well as differing production models, whether from smallholders, larger plantation firms or nucleus-plasma models.

Variability is not only in the magnitude of the yield curve, but also in the shape of the curve.   Consequently, the observed baseline in palm oil producing countries varies significantly and it is not particularly useful to generalise regarding yield curves.

Secondly, the variability of yields is compounded by the differing production models, whether from smallholders, larger plantation firms or nucleus-plasma models.

It may be possible to read into the data that small palm oil farmers are inefficient – because peak productivity is not achieved for independent smallholders until considerably later after planting, with the broader trend line peaking and flattening considerably later than for plantation-based models.

This is not an objective reading of the data. It is only so if the European Commission is more interested in the ‘shape’ of the yield curve rather than the magnitude of the yield curve. That may well be the case, because it bolsters Brussels’ efforts to compensate for (i.e. try to discount) the fact that palm oil is so much more productive and efficient than oil biofuels feedstocks.

As with most such fully-funded studies, the inputs will determine the outputs. ASEAN and producer countries should fully object to this research. European Commission and its consultants should accept the reality that a ‘one size fits all’ approach to perennial crops is not appropriate given both production systems as well as geographies.

Although data is limited with regards to observed actual yields, there is enough data to dispense with the fiction that a single curve – for any production system – is appropriate.

Improving yields for palm oil smallholders is a worthy goal – as it is for any crop across the developing world. The Commission has multiple options at its disposal for achieving such a noble aim, if it chose: funding through aid programmes, partnerships with EU research institutions, providing new technology and training … but this is not the case.

Instead, another EU regulation has been passed to restrict the sales of smallholder palm oil, and many more trees are being cut down to make paper on which an EU-funded study will justify the anti-palm oil regulation.

Read the full GAPKI submission on palm oil yield curves here.

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