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Palm Oil and International Standards



The idea that companies can’t control their supply chains is ridiculous. They don’t control the labor and environmental conditions in them because they don’t want to and because they don’t care. They may not in fact be able to immediately enter a factory and transform it, but that’s because they have set up a decentralized system that favors their interests by shielding them from legal responsibility for what happens there. But when international pressure develops, it turns out that the corporations have tons of control. That is what’s happening with Cargill and their palm oil sourcing. Palm oil is a tremendously destructive product because it has led to the deforestation of vast swaths of southeast Asia, especially in Malaysia and Indonesia. That has led to significant habitat reduction and ecological degradation without actually providing very many jobs for workers, with many of what jobs do exist being dedicated to child labor. Palm oil is however quite profitable for the elites who control this land. So it has continued without stop, turning huge areas of these nations into an endless monoculture.

In response to outrage from environmental organizations, western companies have agreed to palm oil supply standards. And with the Malaysian agricultural giant IOI ignoring them as they continue to deforest Indonesia, Cargill is now suspending new contracts with the company. Now, this is just Cargill protecting its own self-image and critics note that the company’s demands of IOI amount to almost nothing. Cargill certainly doesn’t care about the planet’s ecological health and it really doesn’t care about maintaining Indonesian rain forests. But the fact that Cargill felt compelled to do anything and that other companies have done more to cut their ties with IOI is an example of how outside pressure can make differences in supply chains and their labor and environmental impacts and an example of how one can pressure western corporations into taking some level of responsibility for what happens in sourcing their products.

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  • Dr. Ronnie James, DO

    One interesting wrinkle in this: Cargill, as big as it is, is privately held (IIRC they were the largest privately-held company in the US for a long time, and may still be). So the motive/ excuse of “oh, we’d love to be socially responsible but have to make our quarterly targets or wolves will eat us” doesn’t apply. This may give them more flexibility.

  • Bruce Vail

    This isn’t merely an example of how large multinational corporations operate in poor countries.

    Down in Louisiana some years ago, I heard complaints that companies like Exxon were always seeking to outsource all business risks to the contractors and sub-contractors, while hoarding the profit end for themselves. Exxon was trying to establish a system where contractors were completely reliant on Exxon, but that Exxon was always free to cut them loose at any time.

  • ExpatChad

    Y’all have no idea what it’s like to try to breathe here in Southern Leyte when the big corporations are instructing their peasant farmers to illegally burn peat forests in Indonesia to clear land for Palm plantations.

    It goes on for weeks and kills people.

  • los

    Fires in peat-heavy areas can smolder for months or even years before they die out. Degradation of forest and peaty areas accounts for over 60 percent of carbon emissions in Indonesia. The country is the world’s third-worst emitter of greenhouse gases behind the US and China.

    Fires in Indonesia produce some of the world’s worst pollution, sending suffocating smog to cities hundreds of miles away in Malaysia and Singapore.

    Natural-color image acquired the Aqua satellite on September 24, 2015



  • Miss_Led

    I’ve got a new play about the palm oil issue and corporate colonialism in general, premiering in Berkeley, CA this weekend. A gang team of land grabbers corporate negotiators seek to expand their palm oil plantation. It’s called “Hearts of Palm.”

    I recommend Erik’s book in the program note.

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