There's gold in green

Welcome to the world of sustainable palm oil practices.

CAREFULLY I entered the killing fields. Skulls and bones crunched underneath my feet.

“You’re walking on a graveyard,” Carl Bek-Nielsen, the CEO of United Plantations (UP), told me as I squinted against the noonday sun to get a glimpse of the mass murderers. But the barn owls were gone.

Welcome to the world of sustainable palm oil where nature, human ingenuity and technology are harnessed to fight pests, improve yield and transform effluent into energy. UP has been at the forefront of this monumental effort to balance environmental health with bottom line growth.

In August 2008, UP became the first company – leading the way for nearly one thousand companies so far – to be certified by the Roundtable on Sustainable Palm Oil (RSPO), the world’s flagship certification body for the industry. That has made UP a poster boy for sustainable oil palm practices in Malaysia, and in the world.

UP’s prominence has made the company a lightning rod for attacks from environmental organisations concerned by how oil palm plantations in South-East Asia have destroyed rainforests and wildlife.

A field worker pruning the palm trees. Pruning is said to increase the productivity of the trees.

The problem is real. The United Nations Environment Programme (UNEP) has said that the spread of oil palm plantations is one of the greatest threats to forests in Indonesia and Malaysia.

Bek-Nielsen doesn’t deny those facts. “The palm oil industry is not perfect. We have to accept there are things we can do better; it’s simply our obligation,” he said.

UP’s acceptance of culpability on behalf of the industry has led them to become superbly creative in going that extra mile to balance between people, profit and planet.

“We are self-sustaining,” said P. Rajasegaran, 50, a UP group engineer, as I visited one of the spotlessly clean palm oil mills that is connected to an integrated biomass, biogas and fertiliser plant – the first of its kind in the world. “We generate our own power and water,” Rajasegaran said with pride.

All the solid waste and pulp from crushed fruit bunches are burned in a biomass boiler that creates heat, which converts water into steam that runs turbines to generate electricity.

The semi-solid waste is converted into fertiliser. And the most brilliant touch of all: the methane gas from liquid waste and effluent is captured at a biogas plant and turned into steam and electricity.

“We supply power to the staff quarters and bungalows, while surplus electricity is sent to the refinery,” Rajasegaran said.

Thanks to the innovations in plantations such as UP, Pemandu, in its Economic Transformation Plan for Palm Oil, has been pushing for biogas facilities to be installed in all palm oil mills in Malaysia by 2020. So far, 57 biogas plants have been set up, with another 164 being built or planned for.

These strategies make sound sense. But it was not so obvious as recent as seven years ago. Back then, Bek-Nielsen was in Denmark when he was invited to see a farm where they converted pig and cow manure into biogas and energy.

On his flight back to Malaysia, his mind couldn’t stop racing. He knew that effluent generated from the mills – and dumped into manmade lagoons – generated methane that is damaging to the ozone. Furthermore it was a waste not to use all that methane.

“How do I get a biogas plant?” he asked himself.

Back on the Jendarata estate in central Perak, he spurred UP engineers to build a pilot-scale biogas plant at the cost of RM50,000. To his delight, it produced gas. Within six months, and with the help of a Malaysian scientist and a contractor who worked around the clock, they built the first biogas plant which produced 12,000 cubic metres of gas daily – the equivalent of 50 barrels of oil – which met 25% of the refinery’s energy demands. It took UP only seven years to recoup the cost of building the RM7mil plant.

“Thanks to the biogas plants, waste has been converted into something valuable, while minimising environmental footprint,” Bek-Nielsen said.

Not everything requires technology. Some of the best things to create a sustainable business involve harnessing mother nature.

The graveyard of bones I walked through was created by barn owls. Each owl eats 800 rats per year. UP has 2,000 pairs of owls living in owl boxes, one for every 20 hectares.

A 525km network of railway tracks brings harvested fruits to the mill. – United Plantations

The company reduces the use of pesticide by using buckets laced with pheromones that attract and trap a type of rhinoceros beetle that can kill oil palms. The 169,000 bushes of yellow flowers that line the estate roads produce nectar that attracts wasps that eat up harmful caterpillars.

“Compared to rapeseed farmers in Europe, we use five to eight times less pesticide per tonne of vegetable oil produced,” Bek-Nielsen said.

Twenty years ago, UP’s head of human resources introduced to Malaysia the Makuna plant, a fast-growing creeper native to India. Makuna serves three purposes at UP – the roots prevent erosion during the rainy season; the umbrella-like leaves prevent evaporation during the dry season; and the dried-up leaves turn into humus that nourishes the soil with organic carbon and nitrogen.

Despite my initial scepticism about palm oil practices, I came away convinced that the oil palm is an efficient crop. It takes up 1% of the world’s land used for agriculture, yet it produces 32% of the world’s fats and oils to feed 2.2 billion people. Any oil substitute would need more land. So, the key lies in following UP’s strategy – increase yield on existing land.

At the same time, because of palm oil’s connection to deforestation, governments should ban new concessions that clear forests.

“Nature’s first green is gold,” wrote poet Robert Frost. And so it turns out that UP’s green practices – which require significant investment upfront – can yield a golden harvest. Multinationals such as Cargill, Nestle and Johnson & Johnson buy RSPO-certified oil. And global investors have recommended UP stock for that reason.

“UP’s long history and continued focus on environmental issues mean that, in addition to lower production costs, it outperforms the competition in meeting global food companies’ increasing demands for documentation of origin and environmental impact,” wrote the Danish mutual fund, BLS Capital.

That’s high praise for a company that provides a safe haven for nocturnal killers.

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