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Alleviating poverty in Africa and Indonesia through sustainable palm oil production

Helping guide transformation of the global palm oil sector by developing strategies to sustain industry growth.
Environment and Climate Change

Stanford earth system science professor Rosamond Naylor has always had a strong interest in addressing inequality and poverty.

Naylor, who directs Stanford’s Center on Food Security and the Environment and is a faculty affiliate at the Stanford Center on Global Poverty and Development, heads a research project studying how to create sustainable palm oil supply chains that promote economic growth and environmental sustainability in Indonesia, Ghana, and Cameroon.

Palm oil is a ubiquitous ingredient found in an estimated 50 percent of the packaged items we purchase at the grocery store. Most processing of the palm fruit is controlled by large multinational companies, but the rest — the majority in West Africa and about 40 percent in Indonesia — is managed by poor smallholder farmers. In an attempt to compete in the market and lift themselves out of poverty, these farmers cut and burn swaths of natural forest, destroying habitats and emitting damaging greenhouse gases and regional air pollutants into the environment.

“Many are women and men who have almost nothing, who are surviving day in and day out just by producing a few bunches of this fruit, and are very anxious to improve their livelihoods,” said Naylor, who is a Stanford Professor (by courtesy) in economics. “They really don’t have any notion of whether they’re destroying the environment or not; they’re just trying to feed their families.”

rosamond naylor
Rosamond Naylor

As large multinational companies increasingly turn their attention toward environmental strategies, including zero-deforestation measures, the ability to source from independent smallholders and remain green is significantly reduced. The challenge for Naylor’s team is formidable: finding a way for large multinational companies to halt deforestation and continue to be profitable, while allowing for the increased participation of independent farmers.

“How do we make palm oil production more green, but include smallholders and alleviate poverty at the same time?” Naylor said. “How can you lessen that trade-off, have smallholders involved, and not destroy the forest?”

Many multinational companies are working to be more environmentally responsible, but if they choose to eliminate small farmers from the mix, the result will be worsening regional poverty. Aiming to prevent that, Naylor leads a collaborative, academically diverse team composed of Stanford student and faculty researchers from the departments of earth system science and economics, as well as Stanford Graduate School of Business. Team members work on the ground with company leaders, farmers, policymakers, and nongovernmental organizations to evaluate opportunities for sustainable palm oil production, build corporate partnerships to improve smallholder incomes, and design policy interventions for sustainable oil palm production. Their goal is to transform the way that companies and governments operate in the massive palm oil space.

“The power of multidisciplinary work and engaging all parts of this university in this effort is absolutely essential,” Naylor said. “If it was the business school only, they might not know anything about land use change, or peat burning, or how that peat burning causes air pollution, or they might not have a poverty alleviation strategy; they’d just be working in a bubble. By engaging teams like we have, you can really get at the key trade-offs and key difficulties that policymakers and companies face day in and day out when they’re trying to deal with these issues.”

The wide-ranging data that Naylor and her team collect has the potential to enhance rural incomes, alleviate poverty, and reduce tropical deforestation. More broadly, lessons learned will be important for guiding strategic policy and resource decisions in other palm oil producing countries in Southeast Asia, Sub-Saharan Africa, and Latin America where palm oil is rapidly expanding into tropical rainforests.

The three-year project will not end when the research team leaves, Naylor said. Team members already are collaborating with groups such as Indonesia’s Poverty Reduction Task Force. Her team has raised funds to conduct a large experimental trial in Indonesia on specific oil palm interventions in the coming years. The government will use the results from this study to implement policies to improve farm practices and rural incomes over the long run.  

Naylor’s team has also hired research experts from the study countries, including Cameroon, to help establish a long-term program “We’re trying to build capacity,” Naylor said. “That means actually getting people in Indonesia, Cameroon, and Ghana to take on this project themselves and take it forward without any Stanford assistance overall.”

For now, however, the goal is to leverage the resources of the university to help transform the entire industry into one that allows both companies and small stakeholders to profit while creating an environmentally sustainable product.

“The goal is to actually make a difference in the real world, and in some ways, we have to change the whole sector,” Naylor said. “I feel that being here at Stanford, we can get visibility on this issue, so that we can then engage more companies and more researchers into a unified goal.”

Please note that prior to May 2019, the Stanford King Center on Global Development was known as the Stanford Center on Global Poverty and Development.