Importing palm oil and tropical timber from Indonesia and Malaysia and soy from Brazil
Netherlands Centre for Indigenous Peoples (NCIV)
Economic activities and trade by The Netherlands are contributing to the increasing pressure on ecosystems worldwide. An area three times as large as The Netherlands is needed to supply for the total consumption in The Netherlands. To keep up with this demand, nature is converted into production areas. This has a negative impact on biodiversity and the functioning ecosystem services. Likewise, indigenous peoples, who depend on the natural environment for their survival, are experiencing the negative effects of increasing economic activities and the related increasing need for natural resources, such as forced evictions from their territories or degradation of their environment and violation of their human rights.
The Netherlands Committee of the World Conservation Union (NC-IUCN) did a survey showing that the Dutch economy has a significant impact on the world's ecology. Since indigenous peoples live in areas with a high biodiversity, it can be assumed that there is also a significant impact of the Dutch economy on indigenous peoples´ territories and well-being. However, until now no research had been done into the specific impact of the Dutch economy on indigenous peoples.
The Netherlands Centre for Indigenous Peoples (NCIV) took the initiative to identify and research the three most relevant sectors of the Dutch economy impacting on indigenous peoples. This progress report describes the results of the first phase of the research which focused on identifying the three most relevant sectors of the Dutch economy impacting on indigenous peoples (chapter 2) and includes an initial mapping of the impact these sectors have on indigenous peoples (chapter 3 to 5). The final chapter contains some preliminary conclusions and recommendations for phase two of the research.
2. Indigenous peoples and the Dutch economy
For a general understanding, indigenous peoples can be described as thedescendants of the earliest inhabitants of a territory, who are now subjected by another, dominant culture and are determined to preserve, develop and transmit their culture and territories to future generations.1
It is estimated by the United Nations Permanent Forum on Indigenous Issues that there are 370 million indigenous people, living in more than 70 different countries around the world, representing over 5,000 languages and cultures on every continent. This means that indigenous peoples represent 5 to 8 percent of the world’s population and between 70 to 80 percent of the world’s cultural diversity. Many indigenous peoples have preserved a unique way of life, closely connected to their natural environment, which is therefore essential for their survival and well-being. Their territories are estimated to cover between 18 and 24 percent of the earth surface and largely overlap with the world’s richest areas in terms of biological diversity. Indigenous peoples have played an important role in the preservation and development of the world´s biological diversity and ecosystems and hold a vast knowledge on their natural environments. Because of this, indigenous peoples are key allies in the protection of biological diversity and in climate change adaptation and mitigation strategies.
Recently, on 13 September 2007, the United Nations General Assembly adopted the Declaration on the Rights of Indigenous Peoples, which is a landmark in the struggle of indigenous peoples for justice, equal rights and development. However, despite of this, indigenous peoples remain among the most disadvantaged and vulnerable segments of society. It is widely reported by the United Nations system and through many other independent reports that all over the world the rights of indigenous peoples continue to be seriously violated and their natural habitats conversed, destroyed or polluted, resulting in increasing poverty and health problems.2 Upholding the rights of indigenous peoples therefore remains an important challenge for the international community.
The world economy and its impact on indigenous peoples
In recent decades, indigenous peoples have faced the increasing negative impacts of economic globalization on their natural environment and their well-being. The growing global economy has increased the demand for natural resources. Many governments rely upon massive extraction of natural resources for exports to generate foreign currency to pay for foreign debts. And in many of these and also other countries, indigenous peoples’ territories are the last frontiers where such resources are found, because indigenous peoples had so far been able to successfully defend their territories from being exploited.3 According to Ms. Tauli-Corpuz, Chairperson of the UN Permanent Forum on Indigenous Issues, the majority of the world’s remaining natural resources – minerals, freshwater, potential energy sources and more – are found within indigenous territories.4
The impact of economic activities on indigenous people is increasingly being monitored by non-governmental organizations. For instance, in 2003 the US-based organisation International Forum on Globalization (IFG) published a map showing approximately 300 reported cases of negative impact of various economic activities on indigenous peoples. The map was based on input of a large number of organisations from all parts of the world and therefore gives a good indication of economic sectors with a negative impact on indigenous peoples. The following table shows the most reported sectors, divided by continent.5
Oil- and gas
In 2007, the Ethical Investment Research Services and the Centre for Australian Ethical Research published a report in which they identified the risks and opportunities for companies to manage issues related to the rights of indigenous peoples.6 In this report they identified the following sectors with the highest risks:
Agriculture and cattle breeding – including plantations
Forestry – timber and paper companies with forestry operations
Mining – all types of mining
Oil and gas exploration and production
From these two studies it can be concluded that extraction of natural resources (oil and gas, forestry and mining) and agriculture are the sectors with the highest impact on indigenous peoples.
The Dutch economy in the world economy
The Netherlands is an important player in the world economy and has a long tradition as a trading nation, due to its geographical location and open economy. The country is in the top five of foreign world investors and ranking 15th in terms of GDP. The Netherlands is the 6th largest exporter of merchandising goods in the world and the 8th largest importer of merchandising goods. The country is an important hub in the European economy as it holds the largest port in Europe, Rotterdam, and the fourth largest airport in Europe, Schiphol. Re-exportation of goods represents 40 % of the total export value of The Netherlands. The value of imported goods in 2008 was 355 billion Euros.7 From total Dutch imports, 63% originates from outside the EU. The majority of these imports consist of commodities and semi-processed goods.8
In 2008, the Netherlands was ranking second in exporting agricultural products in the world, only after the USA and ahead of France and China. In 2008 the Netherlands exported approximately a value of 58.5 billion Euros worth of agricultural products, or 17 % of the total Dutch export value in that year.9 Today, the Dutch agri-cluster occupies a strong position on the international market and produces a wide range of high quality products. It covers all economic activities in production, processing and distribution of agricultural products of domestic and foreign origin. It represents a gross added value of approximately 10 percent of the GDP.10
The Netherlands is also an important importer of timber. Especially for the processing industry, timber from Asia, Africa and South–America is being imported both directly and indirectly via neighbouring countries like Belgium and Germany. Directly the Netherlands imported 13.2 % of all tropical timber production of Brazil in the period 2001-2005 and 2.5 % of the total annual production of both Malaysia and Indonesia in the same period. This is excluding the timber from these three countries imported to the Netherlands via neighbouring countries. In total the Netherlands imports approximately 10 million of timber annually, of which 0.7 million is tropical timber.11
Matching high impact on indigenous peoples with economic importance of relevant sectors of the Dutch economy From the studies of the International Forum on Globalization, The Ethical Investment Research Services and the Centre for Australian Ethical Research it can be concluded that extraction of natural resources (oil and gas, forestry and mining) and agriculture/agribusiness are the sectors with the highest impact on indigenous peoples.
The Dutch oil- and gas industry extracts its resources mostly from Europe, North America and the Middle East, areas which fall outside the scope of this research which is limited to developing countries. For this reason it was decided not to focus on this sector.
There are no Dutch multinationals directly involved in the mining industry. Although many minerals are imported and processed in the Netherlands, the traceability of these minerals back to the source is often very complicated. As a consequence the link to indigenous peoples is also very difficult to identify, which is the reason why mining is excluded from this study as well.
In conclusion, by matching the four identified sectors above with their relevance and traceability within the Dutch economy and their potential impact on indigenous peoples in the developing countries, it makes sense to focus on the sectors agriculture/agribusiness and tropical timber.
Selection of three most relevant commodities
From these sectors, in terms of volume, the most relevant commodities for this study are soy, palm oil and tropical timber.
Worldwide, The Netherlands is the largest importing country of soy. In 2008 the country imported approximately 10 million tonnes of soy, which is 7 % of the total world soy import consisting of 143 million tonnes a year.12
The Netherlands are the third largest palm oil importing nation worldwide, importing 750 million tonnes annually in the period 2006-2007, or 4.2 % of the total import of palm oil worldwide consisting of 17.8 billion tonnes a year.13
The Netherlands is also one of the world´s largest importers of tropical timber, importing 700,000 m3 annually in the period 2007-2008. Approximately 40 % of the Dutch tropical timber originates from Indonesia and Malaysia being 280,000 m3 annually. 20 % of the Dutch tropical timber originates from Brazil, amounting to 120,000 m3 in 2008. Per capita, The Netherlands is one of the largest tropical timber importing countries in the world.14 This includes significant amounts of illegal timber imported to the Netherlands.15 Interconnectedness of the three sectors and challenges of this interconnection There is an important link between forest degradation (timber logging) and forest conversion. It has been estimated for instance that between 1990 and 2002, 66 % of the palm oil plantations in Indonesia were developed at the expense of forests. This clearly shows the interconnectedness of logging and plantation concessions for palm oil. While logging concessions can only be used for selective logging, a plantation concession allows the entrepreneur to clear the forest completely. According to a report of Milieudefensie (Friends of the Earth Netherlands) from 2004, out of 10 million ha allocated palm oil concessions in Indonesia only 5,4 million ha were actually planted with palm oil.16 This is why it was decided to include both palm oil and timber in Malaysia and Indonesia in this study.
Rates on deforestation for soy production purposes are even more alarming in Brazil according to the same report. Soy production has expanded rapidly in the Cerrado region and has increasingly penetrated the Amazon region. Although exact figures are not available a significant share of the annual deforestation of 15.6 million ha over the period 2001-2006 could be traced back to the Cerrado region. 17 Selection of most relevant countries in relation to soy, palm oil and tropical timber
The table below shows imports by the Netherlands from the most important export countries in the South for the selected commodities18.
The Netherlands imports most of its soy from Brazil (5.5 million tonnes in 2008). A total of 2.6 million tonnes was imported from Argentina. Since only few indigenous people can be found in Argentina this country has not been dealt with in this study.
Approximately 80 % of total palm oil production originates from Malaysia and Indonesia. 6 % of the Indonesian production (571 million tons) is exported directly to the Netherlands and 11 % of the Malaysian palm oil (1125 million tons) in 2008.
The most imported tropical timber exporting countries for the Netherlands are Malaysia, Indonesia, Brazil and Cameroon. Approximately 40 % originates from Malaysia/Indonesia and 20 % from Brazil.
In conclusion, this study will focus on the import of soy from Brazil and the import of palm oil and tropical timber from Indonesia and Malaysia.
Matching the main production areas of soy, palm oil and timber in Brazil, Indonesia and Malaysia with the habitat of indigenous peoples in these countries
The soy production in Brazil is mainly taking place in the Cerrado region, as soils are flat and the climate is most suitable. Over the last decade soy production expanded to the more humid tropical zones into the direction of the Amazon region. Both areas are inhabited by indigenous peoples. The indigenous population in the Amazon region is estimated at 20 million people19 The indigenous population of the Cerrado consists of approximately 45 thousand people.20
In the case of palm oil, 60 % of the production in Malaysia is taking place in the districts of Sabah, Johor, Pahang and Sarawak.21 All these districts can be found on the island of Borneo. In Indonesia the main palm oil plantations can be found in central Sumatra and Central, North and West Kalimantan. Especially the increase of plantations in Kalimantan is significant. According to a World Bank report in 2006, Indonesia’s lowland tropical rainforest has already been cleared in Sulawesi and nearly cleared in Sumatra for logging and palm oil plantations purposes. With deforestation rates accelerating in Kalimantan, the frontier in the next decade is expected to move to central Kalimantan and West Papua (Irian Jaya). All these regions are inhabited by indigenous peoples. The indigenous population in Sarawak (Malaysia) is around 50% of a total population of 579,900 people.22 The indigenous population in Kalimantan consists of an estimated 3 million Dayak people.23 The indigenous population in West Papua is around 1.3 million people.24 Timber production in Malaysia and Indonesia is mainly taking place on the Island of Borneo/Kalimantan. This island is shared by both countries making it difficult to analyse whether timber originates from Indonesia or Malaysia since the transport in timber is strongly interconnected on this island. In Indonesia timber production moved from Sumatra to Kalimantan and increasingly to West Papua as well. Kalimantan is the most important island at the moment, with a focus on Central, West and North Kalimantan. The south of Kalimantan is already completely cleared.
In conclusion, this study will focus on soy and timber in the Cerrado and Amazon regions in Brazil, on palm oil and timber in Sabah, Johor, Pahang and Sarawak in Malaysia and in central Sumatra and Central, North and West Kalimantan, Sulawesi and West Papua in Indonesia.
3. Sector overview: Soy in Brazil The importance of soy for the Dutch economy Soy is an annual crop that produces an edible bean with a high protein and oil content. Due to its high protein content and favourable amino-acid composition, soy is an excellent source of protein for human consumption Soy is being cultivated in moderate, sub tropical and tropical climates. It is used for many different food products. Only six percent of the world production of soy beans is used for easily recognizable soy products such as soy milk, soy sauce (e.g. ketjap), tofu and other meat replacements. However, most soy beans are being crushed into soy meal and soy oil, which is processed in many different food products.25 Brazil is the biggest soy production country in the world. In 2008 a total of 143 million ton soy was imported worldwide of which more than 30 % originated from Brazil.26. Soy is an important export product for Brazil. Over the last decade the Dutch import of soy from Brazil has increased exponentially as can be seen in the table below. With the increasing demand in biofuels in the near future in line with the new European legislation on the usage of biofuels and renewable energy this increase is expected to continue.
Table 1: Annual soy export in million tons from Brazil to the Netherlands 2002-200827
It appears that the Netherlands is a significant import country for Brazilian soy. 11% of the annual soy production in Brazil was exported to the Netherlands and 54 % of the soy imported by the Netherlands originated from Brazil in the period 2006-2008. This was a strong increase compared with 2002-2005 when only 6 % of the Brazilian soy was exported annually to the Netherlands. As a result, The Netherlands is the largest importer of soy among EU member states and the second largest in the world.
The impact of soy production on indigenous people More than 75 % of the soy production in Brazil is taking place in the states of Mato Grosso (Mato Grosso Central and Mato Grosso do Sul), Parana and Rio Grande do Sul, which are all part of the Cerrado ecological zone. All these districts can be found in the south west corner of Brazil. In the state of Mato Grosso Central approximately 28,000 indigenous people can be found divided over 38 different groups. More southwards in the state of Mato Grosso do Sul the indigenous population consists of about 60,000 people. Given the fact that Brazil is home to about 300,000 indigenous people in total, roughly one third can be found in these two states where a large share of the soy production is taking place.
Map 1: Soy production areas: Mato Grosso Central, Mato Grosso do Sul, Parana and Rio Grande do Sul