Palm oil deforestation rates drop, and is a food supply crisis looming?

Some good news from Chain Reaction Research, which has found that 2021 deforestation in Indonesia, Malaysia and Papua New Guinea linked to the development of palm oil plantations has fallen to the lowest level since 2017. Around 19,000 hectares were cleared for palm oil plantation development in 2021, compared to 74,000 in 2018, 90,000 in 2019 and 38,000 in 2020. Chain Reaction Research has attributed the 2020 decline to economic contraction in Indonesia and pandemic-related restrictions. Indeed, deforestation had been expected to rebound in 2021 as palm oil prices rose. Indonesia’s economy grew in 2021 prompting some to speculate that the perceived link between economic growth and deforestation has been broken. 

The no deforestation, no peat, no exploitation policies that many international brands and buyers have committed to seem to be making a difference. The new research finds that none of the top ten palm oil linked deforestation culprits can be conclusively linked to supply chains covered by NDPE policies. In 2021 the top ten largest deforesters cleared 42% of the total deforestation. 

 Food and fertiliser crises 

The conflict in Ukraine is going to have significant impacts on the global supply and cost of food, because of questions over the availability of crops grown in Ukraine and Russia, and through disruption to supply of fertilisers reliant on Russian raw materials, according to the boss of Yara International talking to the BBC. Svein Tore Holsether, whose business is one of the world’s largest fertiliser companies, pointed out that moving into the northern hemisphere spring is a critical time for delivery of fertilisers. He predicts that crop yields may drop by up to 50% without fertilisers. It’s not a question of if there will be a global food crisis but how large it is going to be, he said. 

Nutrients such as potash and phosphate are essential ingredients in many fertilisers, much of which comes from Russia. As is ammonia, the manufacture of which is reliant on large quantities of natural gas. There’s a double problem of the market price of gas being highly volatile in addition to reliance on Russian exports. 

Global food and beverage brands have been scrambling to announce cessation of business in Russia since the hostilities started in Ukraine, following initial criticism of some for not acting fast enough. Fast food giant McDonald’s is to close all its 850 outlets in Russia – and will take a significant financial hit in the process with $2bn of revenues, 9% of the total, coming from Russian and Ukrainian operations. Starbucks, Pepsi and Coca-Cola are among the other high profile brands that have ceased Russian trading. The long term implications are unsurprisingly unclear. Many brands, McDonald’s being one, have pledged to continue supporting their Russian employees, while continuing to pay Ukrainian workers in full. 

UK thinktank the Energy Transitions Commission has found that direct carbon dioxide removal from the air is going to be essential to mitigate climate change. New research concludes that CO2 removal, alongside rapid and deep decarbonisation, can give the planet a 50% chance of limiting warming to 1.5C. The commission says that a combination of natural climate solutions, such as reforestation and better soil management, engineered solutions, such as direct air capture of CO2, and hybrid such as combing bioenergy and carbon capture and storage, are required. Launching the Mind the Gap report, Adair Turner, chair of the Energy Transitions Commission highlighted the role that carbon offsets and the carbon markets were going to have to play and the importance of well-functioning markets that ensure cash generated is directed towards projects that provide genuine reductions in greenhouse gas emissions. 

And demonstrating the scale of change required for the net zero transition, China has announced plans for 450 gigawatts of solar and wind power generation capacity at sites in the Gobi desert and other arid zones, as reported by Reuters and others. This will help in part meet the Chinese president Xi Jinping’s pledge to bring the national wind and solar capacity to 1,200 GW by 2030.