Beyond sustainability criteria and principles in palm oil production: addressing consumer concerns through insetting

Palm oil is one of the most controversial agricultural commodities of our time. To its supporters, it is the golden crop that catalyzes smallholders out of poverty and brings salvation to the global food and energy crisis. For its critics, it is the single biggest threat driving the wholesale destruction of peatlands and rainforests as well as adding to greenhouse gas emissions. Hailed as a turning point in 2004, the Roundtable on Sustainable Palm Oil (RSPO) has been widely criticized as being unable to change the industry fast enough. We argue that certification, although certainly important, will not be able to deliver expected environmental and social benefits because of (1) an uneven distribution of incentives along the value chain, (2) traceability issues, (3) difficulties associated with an expanding market, and (4) alternative low standard markets to the standard large Organisation for Economic Co-operation and Development (OECD) markets. We argue that the sustainability debate has actually failed to address the fact that oil palm landscape as a whole would be more sustainable if smallholders for whom palm oil is not an economic viable avenue would engage in other forms of land use. An important starting point for change is to move beyond narrow business interests of satisfying customers and shareholders interests only and tackle the implicit contract between palm oil marketers and importers and the smallholder agricultural communities in palm oil producing areas. We introduce the concept of livelihood “insetting” that goes beyond the pure sustainability aspect by also addressing the issue of mutuality along the global value chain.