Sustainability of the palm oil industry: The effectiveness of functional meta-partnership in driving system-wide change


The increasing global demands for palm oil is followed by the rising critique associated with sustainability issues towards the production practices as it is the main driver behind the massive agricultural expansion, causing large-scale deforestation and biodiversity loss in the tropics. The accumulated dissatisfaction of the way of producing palm oil in the producer countries have prompted the most affected actors like globally-oriented palm oil corporations and private governors to directly lay their hands on the supply chain by developing their own supplier upgrading projects through intervention is known as private governance. In order for the private governance model to work effectively in the global scope, the presence of big-brand companies at the downstream end of the value chain that has the incentives to act on sustainability and command the market power is required to put pressure on upstream producers to improve their practice. However, it is extremely difficult to convince domestic companies in the emerging countries to participate. While the producing countries are trying to comply with the Western market’s expectations of sustainable production practice, the rise of the emerging countries’ market share for palm oil may discourage the sustainability movement and initiatives by not participating. Today, the US and the European Union (EU) remains the world’s largest exporter and importer. However, their market share has been declining for years. As part of a larger transformation of the global economy, the center of gravity in the agrifood the system is shifting from the Global North to the emerging markets of the Global South. As the existing private governance arrangement struggle to penetrate and leverage the market power in the emerging countries, thus the question is how will the rise of emerging market’s share in the global agriculture economy influence the way of palm oil being traded? Emerging market value chains are not well integrated in existing certification programs. The effectiveness of this mechanism is increasingly undermined by the rise of South-South trade and the different structure and low institutional pressures for sustainability of emerging market value chains.

Another issue is that the individual partnership established as one form of private governance is not enough, problems including limitations in reaching out for more smallholders outside the existing individual partnership projects, limited or no access to credit to support investment into longer-term upgrading activities, the low and unpredictable sustained price premiums for certified palm oil relative to the high certification costs is still present to date. As a response, there is an attempt of doing brokerage activities to form functional meta-partnership aiming to find innovative solutions that can be extended industry-wide and sustained over time. In brokered meta-partnership, self-interested brokers like international organizations, NGOs, and corporations exploit their connections and resources to extend developmental and regulatory interventions within and across agricultural sectors through coordination of diverse and differently-resourced actors including private, public, and international bodies. Overdevest and Zeitlin (2014) describe a process of experimentalist governance, which emerges as a result of dynamic interactions between private-public and global-domestic governance. As suggested by Clara Brandi (2020), the experimentalist architecture or mechanisms of the existing governance approaches, such as benchmarking and the establishment of joint committees has fostered productive interactions across public and private schemes and initiatives which has helped to join up the separate components to become “joined-up transnational regime” within the “transnational regime complex” for palm oil governance.

My research questions cover:

  1.  To what extent the functional meta-partnerships succeeding in driving system-wide change?
  2. Can the formation of functional meta-partnerships resolve the problem of the integration of the private standards in emerging countries or is it only up to the scope of support and encouraging producers to be certified?

Josephine Rakun Lunardi

A Research Fellow in Value Chain Analysis