- There’s a degree of risk that Southeast Asia may see the return of transboundary haze this year from forest fires in Indonesia, according to a new report by a Singaporean think tank.
- The key driver of that risk is the currently high price of palm oil on the world market, which could pose an incentive for farmers in Indonesia, the world’s top producer of palm oil, to expand their plantations, including by clearing land with fire.
- In anticipation of the dry season, which starts in July, some local governments in Indonesia are putting in place policies to prevent fires, including sanctions for companies using fire to clear their concessions.
JAKARTA — A new analysis warns of the potential for forest fires in Indonesia that could spread smoke to neighboring countries as this year’s dry season sets in, following two years of haze-free skies across this part of Southeast Asia.
In their “Haze Outlook 2022” report, researchers at the Singapore Institute of International Affairs (SIIA) said there’s a higher risk this year than last of the region experiencing some fires and transboundary haze. They looked at three factors — weather, policies and people — to determine that the risk comes primarily from the prospect of forest fires being set to clear land for plantations. Current record-high prices for palm oil and other forest commodities pose an incentivize for small farmers and big companies alike to expand their operations.
In their report, the researchers cited an NGO warning of the potential for degraded peatlands in several provinces on the islands of Sumatra and Borneo being burned.
“Fires in Riau, Jambi, and South Sumatra might reach Singapore and Peninsula Malaysia, while fires in West Kalimantan might affect air quality in East Malaysia,” the report said. “However, the NGO noted that this haze would be ‘short and limited’ compared to previous haze years.”
This region of Southeast Asia has experienced several episodes of severe transboundary haze in the past, particularly in 1997/1998, 2015 and 2019, when smokes from fires in Sumatra blew across the Malacca Strait to Singapore and Malaysia, even going as far as southern Thailand, a distance of more than 600 kilometers (370 miles).
Milder dry seasons in 2020 and 2021 saw no severe transboundary haze in the region.
In Indonesia, local governments are bracing for the onset of the dry season with policies to prevent fires. In West Kalimantan on the island of Borneo, authorities are prioritizing a law enforcement approach to deter companies from using fires to clear land.
Adi Yani, the head of West Kalimantan’s environmental agency, said the provincial government is drafting a regulation that would ban companies from any activity on their concessions for five years if they’re found to be deliberately setting fires.
“If there’s an indication that [the fires] are deliberate, the burned areas will be sealed with police line for five years,” he said during a recent online discussion. “No activities are allowed and [the concessions] have to be maintained. If they’re peatlands, they have to be restored to their original function.”
Companies will also have to pay all the costs of extinguishing any fires on their concessions, Adi said.
The provincial government has also sent letters to mayors and district heads across the province to remain vigilant ahead of the dry season, which is predicted to start in July in West Kalimantan, he added.
Governments in three districts that have vast areas of peatlands that are frequently burned — Pulang Pisau in Central Kalimantan, Ogan Komering Ilir in South Sumatra, and Pelalawan in Riau — have also put in place a number of fire policies.
All three governments are focusing on engaging all stakeholders in their jurisdictions, including local communities and companies, to press home the message about not starting fires.
Tony Harisinta, secretary of the Pulang Pisau district government, said the administration had issued a plan to manage land and forest fires in 2022, the first of its kind in the province. The plan emphasizes fire prevention over mitigation, he said.
Ogan Komering Ilir district secretary Husin said the district head there had formed a committee to prevent and mitigate fires, which will work from 2022 to 2026. Seventeen companies operating in the district have joined the committee and are obligated to help villages inside and in the vicinity of their concessions in preventing and mitigating fires.
In South Kalimantan, the governor there has declared an alert status for haze, which is in effect from June 15 until Nov. 15. Governor Sahbirin Noor has also ordered district heads and mayors in the province to anticipate the dry season, predicted to hit the region in July and peak in August.
Outlook
The SIIA researchers said this year’s dry season looks to be not much drier than last year, with wetter-than-average conditions expected from June to September.
This is due to neutral or La Niña weather phenomenon that increased rainfall in the latter half of 2022. Furthermore, the Indian Ocean Dipole (IOD), the other major meteorological phenomenon that can affect rainfall, is also expected to be muted.
“The current forecast as of June is normal and above normal rainfall,” Khor Yu Leng, a senior sustainability research fellow at the SIIA who co-authored the outlook report, said at a press briefing.
Based on weather factors alone, therefore, there’s no elevated risk of haze.
On the policy front, the SIIA researchers highlighted the positive steps being maintained by the Indonesian government at national and subnational levels to mitigate fires, such as a permanent moratorium on the granting of new concession permits in primary forests and peatlands.
There’s also a new policy in place that could further strengthen forest protection, which is a ministerial decree signed in February 2022 which commits Indonesia to turn its forests into a carbon sink by 2030, the researchers noted.
“Over the past three years, fire prevention and suppression efforts have also been strengthened at both the central government and provincial levels,” the researchers said in the outlook.
As such, judging by weather and policies alone, things look favorable for preventing transboundary haze this year.
However, other factors point to an increased risk of haze, including the return of business activity to pre-pandemic normal as Indonesia eases its COVID-19-related restrictions. Agricultural commodity prices, particularly palm oil, the world’s most widely consumed vegetable oil, are soaring due to poor harvests of other vegetable oils like soy and corn from South America.
The supply crunch has been compounded by the war between Russia and Ukraine, both of which are major producers of sunflower oil as well as the fertilizers used in industrial-scale agriculture.
This has driven palm oil prices further up, to a record $1,942 per metric ton at the start of March. The price has since stabilized at around $1,100, but this is still more than double the average palm oil price before the pandemic, which stood at $475 per metric ton between June 2018 and September 2019.
And prices will likely remain high amid concerns that flare-ups of COVID-19 outbreaks will disrupt vegetable oil supplies globally, according to SIIA senior assistant director Aaron Choo.
“We [also] don’t see the Russia-Ukraine war ending soon,” he said at the press briefing. “And even if it does, Russian farmers are missing an entire planting season.”
With Indonesia being the world’s top producer of palm oil, there are concerns that this high price will incentivize growers to expand their plantation areas, including clearing land by burning.
This, the SIIA’s Leng said, is the chief concern over the prospect of haze this year.
Market drivers
Historically, peaks in agricultural commodity prices have frequently been followed by a spike in deforestation due to the expansion of plantations in the following years, resulting in haze incidents when this agricultural activity coincides with severe drought seasons.
Research led by technology company TheTreeMap found that a price increase of 1% was associated with a 1.08% increase in new industrial oil palm plantations and a 0.68% increase in forest loss.
But there’s been recent evidence that Indonesia’s commodities sector has been able to break this link to some extent, given that tree cover and primary forest loss has declined amid the surge in commodity prices.
New research shows that deforestation in Indonesia linked to palm oil is at a 20-year low, despite the recent increase in palm oil prices. As prices exceeded $1,000 per metric ton in 2021, companies cleared just 15,540 hectares (38,400 acres) of primary forest for oil palms, according to the research.
This indicates the link between high palm oil prices and high deforestation may have been broken, some have argued.
The SIIA researchers, however, said the incentive for growers to expand given the recent spike in palm oil prices might be too strong.
They noted that even ordinary farmers are highly responsive to changes in commodity prices, with smallholders seeing the buying prices for their harvests jumping by two or three times in the first quarter of this year.
And this year, Leng said, there have already been signs that palm oil growers are gearing up to increase their planting activity, including a rise in sales of oil palm seeds.
Data from LMC International, a major agribusiness economic consultancy, shows a doubling of seed sales to more than 100 million in 2021, up from around 60 million in 2018 when palm oil prices were at a historic low.
Related audio from Mongabay’s podcast: How restoring peatlands cuts down on fires and haze, listen here:
This suggests that new planting of oil palm is occurring in response to price increases. It’s thought that one-third of seed purchases are for replanting existing plantations, while two-thirds are for planting on new land.
Still, seed sales are not as high as during the peak of planting between 2004 and 2013. This suggests the largest plantation companies aren’t expanding, the SIIA researchers said. Instead, most of the planting is being done by smaller, less visible, companies as well as smallholder farmers, the researchers said.
Another indication that large plantation groups aren’t responding to the palm oil price increase by expanding is the lack of increase in investment flowing into big companies, according to several industry representatives consulted for the outlook.
Large companies are likely refraining from expansion due to the moratorium on opening up primary forests and peatlands for plantations; continued labor shortages in Malaysia, the number two palm oil producer; and negative international perception of palm oil as a commodity, the SIIA researchers said.
“The market interest is strong but muted compared to the past,” Leng said.
SIIA chairman Simon Tay said big companies might also not want to risk their reputation by clearing and burning forests to expand their plantations, given that the sector is now in the spotlight following decades of environmental destruction wrought by plantation companies.
“Given their lessons and record so far, the big companies know that they are under scrutiny, so they won’t risk it by clearing lands using fires,” Tay said at the press briefing.
However, there remains potential for abuse from smallholder and community farms, which manage around 40% of oil palm plantations in Indonesia, as well as from medium-sized or “national-level” companies that operate without as much visibility. These growers typically face less scrutiny of their operations as well as fewer restrictions on plantation expansion. They also often don’t have the same sustainability commitments that their bigger, multinational counterparts have.
The SIIA researchers said NGO reports suggested that provincial and district politicians in Indonesia might even encourage farmers to expand during this election year, as a way of gaining favor and votes.
Nevertheless, the SIIA researchers projected the scale of land clearing this year to be not as extreme as in previous years when palm oil prices were high.
“We do think that current price surges could be followed by some tree cover loss, but this is likely to be a smaller amount than the degree seen in the early 2010s,” Choo said. “If commodity price increases are no longer being followed by surges in agricultural activity and deforestation, or are followed by smaller surges, it could mean that sustainability policies and practices are having a positive effect in Indonesia.”
But it’s still important to boost forest monitoring and enforcement against the illegal use of fire by those seeking to maximize profit, the SIIA researchers said, if severe transboundary haze is to be prevented this year.
Another thing that could increase forest protection in the future is the generation and sale of carbon credits from nature-based solutions (NBS), the SIIA outlook noted.
“Carbon-trading mechanisms will encourage the development of nature-based projects, providing economic incentives to conserve and restore ecosystems,” Tay said. “As these develop, they will provide incentives and more opportunities to link growth to conservation and fire-prevention efforts.”
Banner image: Haze rises from a forest fire in Riau, Indonesia. Image by Rhett A. Butler/Mongabay.
Related reading: Indonesia’s land and forest fires burned a greater area in 2021 than in 2020, with most of the fires occurring in West Nusa Tenggara and East Nusa Tenggara, two provinces that were until recently not major sites of burning:
Indonesia’s new epicenter of forest fires shifts away from Sumatra and Borneo
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