Casey Maue, a PhD student in the Emmett Interdisciplinary Program in Environment and Resources alogn with Woods Institute Senior Fellow, Erica Plambeck, spent time this spring examining the oil palm supply chain in Ghana. Casey is a 3rd year PhD student and is advised by FSE Director Roz Naylor and FSE Senior Fellow Marshall Burke. Casey's research focuses on the economic dimensions of agricultural development in Sub-Saharan Africa, and the economic impacts of climate change on the agricultural sector. In his dissertation chapter focused on development in the oil palm industry in Ghana, Casey is examining how the provision of informal financial services (such as access to trade credit or informal savings) by different buyers (processors) in the oil palm supply chain determines farmers' output-market decisions, and how relational contracts between farmers and processors that provide access to these informal services can be leveraged to increase supply chain productivity, and the welfare of smallholder oil palm farmers.

Casey and Erica traveled to the municipality of Juaben, located in the Ashanti region of central Ghana, and conducted focus group discussions and in-person interviews with numerous stakeholders working in oil palm. They visited with oil palm farmers and buyers of their fruit – palm oil processors. There are two kinds of palm oil processors in the Ghanaian supply chain, small-scale artisanal mills and larger industrial mills, which compete with each other for the fruit produced by smallholder oil palm farmers. Through this research, Casey and Erica sought to better understand the economic forces that affect a farmer’s decision to sell their fruit to an industrial versus an artisanal mill. Doing so will provide insights that processors can use to design more effective incentives for their suppliers that will increase the quantity and reliability of fruit delivered to them. Fostering more consistent, and trusting relationships between farmers and processors is key to increasing the productivity and profitability of enterprises all along the supply chain, to increasing food security for poor oil palm farmers, and to promoting effective private governance of oil palm’s environmental impacts. 

Since the 1960s, India’s groundwater irrigation has increased dramatically, playing an important role in its economy and people’s lives — supporting livelihoods of over 26 crore farmers and agricultural labourers who grow over a third of India’s foodgrains. These benefits, however, have come at the cost of increased pressure on groundwater reserves. 

India is the world’s largest user of groundwater and, since the 1980s, its groundwater levels have been dropping. The severity of the problem is particularly acute in the northwest, where levels have plunged from 8m below ground to 16m, so that water needs to be pumped from even greater depths. Worse yet, much of this is non-renewable since recharge rates are less than extraction rates and replenishing this resource can take thousands of years. 

This won’t last 

Using up such “fossil” groundwater is unsustainable. Moreover, the future of monsoon rainfall remains uncertain; while some climate models predict an increase, others forecast a weakening monsoon, although changes in monsoon variability are already underway and will continue into the future. Historical records show the number of dry spells and the intensity of wet spells have risen over the past 50 years. As climate change alters the monsoon, the large stresses on India’s groundwater resources may increase.

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An interview with authors of the “The Tropical Oil Crop Revolution” predicts the future of soy and palm oil booms by examining the past and present.

Used in everything from food to fuel, soybean and palm oil have seen production rates skyrocket in the past 20 years. Controversy surrounds the planting of oil crops – cultivated primarily in Southeast Asia and South America – as they are often grown on deforested lands and rely on large farmers and agribusiness rather than smallholders. “The Tropical Oil Crop Revolution: Food, Feed, Fuel, and Forests,” a new book co-authored by Stanford University researchers, examines the economic, social and environmental impacts of the oil crop revolution, and explores how to develop a more sustainable future.

Derek Byerlee, visiting fellow at Stanford’s Center on Food Security and the Environment (FSE), FSE Fellow Walter P. Falcon, and FSE Director Rosamond L. Naylor recently discussed some of their book’s key ideas.

Q: What are the key similarities and differences between the rise of oil crops and the 1965-85 green revolution?

A: From 1990 to 2010, world production of soybean grew by 220 percent and production of palm oil by 300 percent. Like the green revolution for cereal crops, this recent revolution involves two crops – oil palm and soybeans – that dramatically expanded shares in their respective crop subsector – oil crops.

The oil crop revolution differs from its predecessor, the green revolution of rice and wheat, in its mode of expansion. The green revolution embraced tens of millions of producers across many countries, especially where irrigation was available. The oil crop revolution was highly concentrated in a few countries and almost entirely in rainfed areas. Unlike the green revolution, which was spurred on by rapid yield gains, the force behind the oil crop revolution was expansion of crop area. 

Q: What are some ways to improve oil palm sustainability?

A: A lot of faith has been put on certification and private standards and commitments. However, without effective land and forest governance, it will be very difficult for the private sector to operate. The state at both national and local levels will need greatly improved and more transparent systems starting from land and forest tenure laws, information systems, civil service capacity and judicial and redress systems. 

Q: How will the future of oil crops differ from the past?

A: By 2050, we predict demand for oil crops to drop by as much as two-thirds. Demand for biofuel feedstocks cannot maintain the rapid pace of the past decade. Vegetable oils used for food will also grow more slowly. In Asia, population growth will slow and the effects of rising incomes will diminish as consumers in middle-income countries reach high levels of vegetable oil consumption.

The biggest wild card in terms of supply is land availability. Africa has the most land available, however access to clear property rights are often difficult due to “customary rights” to the land. Soybean, a new crop in much of Africa, will increase along with oil palm. We believe the area covered by oil crops does not have to expand greatly; rather, intensification of existing crop land and a modest expansion in area can meet demand. Steady progress is possible through genetic gains in yield. Sufficient degraded land is available for area expansion, provided land governance and incentive systems are developed to steer the expansion onto degraded lands.

Q: How has development of the biodiesel industry affected tropical vegetable oils in the past 25 years, and how will it shape the sector going forward?

A: Before the turn of the 21^st century, few analysts predicted that biodiesel would play a major role in boosting global vegetable oil demand and prices. As it turns out, the expansion of biodiesel markets has been responsible for roughly half of the increase in vegetable oil consumption since 2013. Global biodiesel production more than doubled between 2007 and 2013. By some estimates, it could grow another 50 percent by 2025.

National energy policies continue to play a dominant role in the profitability of the biodiesel industry. The growing response of biofuel policies to low agricultural commodity prices is an important factor that is bound to keep biodiesel in the transportation fuel mix. This is true at least in countries that have strong interests oil crops, such as Indonesia, Malaysia, and Colombia in the case of oil palm, and the U.S., Brazil, and Argentina in the case of soybeans. Without policies mandating the use of biodiesel in fuel mixes, or incentivizing its use, the industry might fade away.

Q: What do you believe is the biggest takeaway from your research?

A: We are cautiously optimistic that the future expansion of the oil crop sector can be managed more sustainably. The predicted slowing of demand and land requirements will reduce pressure on native ecosystems. Several signs point to convergence among global consumers, private business, civil society, and local governments in finding ways to minimize the trade-offs between economic benefits and social and environmental costs.

Derek Byerlee, is an Adjunct Professor in the Global Human Development Program at Georgetown University and Editor-in-Chief of the Global Food Security journal. Walter P. Falcon is the Farnsworth Professor of International Agricultural Policy (Emeritus) at Stanford, senior fellow with the Freeman Spogli Institute for International Studies and the Stanford Woods Institute for the Environment. Rosamond L. Naylor is the William Wrigley Professor in Earth Science and Professor of Economics (by courtesy) and Gloria and Richard Kushel Director, at the Center on Food Security and the Environment Stanford.