Philanthropy

Contextualizing the Roundtable on Sustainable Palm Oil’s Evolving Relationship with Small Landowners in Indonesia

Robert Epstein

The role of nongovernment organizations in American hegemony has been the subject of scholarly debate. This essay will use lessons from the 1984 Ethiopian Famine and apply them to the transformation of the Roundtable on Sustainable Palm Oil (RSPO) to examine why an NGO would transition from engaging in pro-hegemony activity to counter hegemonic practices. RSPO is a public private partnership to certify palm oil as sustainable (Roundtable on Sustainable Palm Oil, 2019). Through certification they believed they could create market pressure and a market solution to global damage caused by palm oil. This certification played an important role in the sale of palm oil to the European Market. The certification process was not inclusive of small farmers particularly in Indonesia (Schouten and Glasbergen, 2011). Mostly large farms that participated in trade groups were able to obtain certifications. To include small farmers RSPO began offering grants, created weaker regulations for small farmers and helped small NGOs connect with farmers. This transition shifted RSPO away from making a more effective palm oil market to direct philanthropy. In order to meet the needs of small Indonesian farmers the RSPO transitioned from market oriented pro hegemony to less market-oriented counter hegemony. They made this transition in part to be more inclusive and respectful of minority rights, they were valuing liberal ideology over American economic hegemony.

American Hegemony

The Philanthropic efforts of NGOs are often described as a tool of American hegemony. Vogel (2006) describes the American hegemony as shaping the world’s geopolitics and economy through the use of economic, political and military power. Philanthropy compliments military and cultural power by reshaping social structures in other countries. In the name of global civil society, they educate people on how to create institutions which can be part of the dominant American global system. American philanthropy strengthens the American led global system by reshaping international institutions to better fit into the global order.

American Hegemony is also built on imposing the American conception of liberalism on the world. Liberal democracies are built on tolerance and autonomy (Kymlicka, 1995). They believe that individual freedom should be respected. Minority groups should be free to make their own choices even if larger society does not agree with those choices. Tolerance extends to fundamental questions about human life. In this ideology people should be free to live and express their beliefs through individual choices. The existence of liberal ideals within a hegemony that seeks to impose its own structures creates a fundamental tension within American style hegemony. Under what conditions are minority rights or American economic structures more important?

The Ethiopian Famine

The Ethiopian Famine seems to provide a framework for understanding when minority rights outweigh economic interest. Zunz (2011) uses the example of the Ethiopian famine to show large scale NGO counter hegemony activity. The Reagan administration did not want to provide direct aid or development assistance to Ethiopia during their 1984 famine, because they feared that aid would prop up a socialist government. Supporting a socialist government would mean helping a country that was not using the American economic model and did not share its economic values. Aid groups ignored this prohibition. The American public ignored this prohibition as well. Television footage of people starving was too horrific to consider the policy implications of providing food. When working towards hegemony violated the liberal principle of valuing human life, the public and NGOs sided with Ethiopia over their own government. They were willing to tolerate an economic model that that did not agree with if it meant supporting the wider principle of promoting the existence of human life. In response to public opinion the Reagan administration relented and agreed to provide funding to aid groups for direct assistance but not for development. Once again, the aid groups promoted the autonomy of the minority group (the Ethiopians) and supported their development. The American response supports the theory that NGOs value liberal ideals more than American economic power.

The Roundtable on Sustainable Palm Oil

Principles drawn from the Ethiopian famine can be used to understand the transition of the Roundtable on Sustainable Palm Oil (RSPO) from hegemonic to counter hegemonic activity. The Roundtable on Sustainable Palm Oil is an initiative of the World Wildlife Federation (WWF) to reduce the negative environmental impacts of palm oil (Roundtable on Sustainable Palm Oil, 2019).  The RSPO promotes sustainability by creating a set of standards required of producers who want a sustainability seal. Participating in these standards was voluntary but offered the producers access to larger markets.  The group was originally a partnership between the Malaysian Palm Oil Council, the World Wildlife Federation and Unilever. One of the earliest additional members where representatives of the Indonesian palm oil industry. Malaysia and Indonesia account for about 85% of the world’s palm oil production. Reduced sales of palm oil in Europe would hurt their economies (Koswanage, 2010).   At the time Unilever was buying 1.3 million barrels of palm oil a year. Palm oil was being blamed for contributing to global warming resulting in protests from groups like Greenpeace, EU regulations requiring only the use of sustainable palm oil and removal of palm oil from the EU’s list of sustainable fuels (Reuters, 2016). As European consumers called for more sustainable palm oil companies like Unilever wanted a way to reassure consumers their products where coming from a sustainable source. The World Wildlife Federation has a long history of working to protect rainforests and promoting sustainability. Leading the RSPO would allow the WWF to harness European concerns about sustainability to change production in Asia. The RSPO would not need to give a large number of grants or do development work instead they could use the wisdom of the markets to promote sustainability. The RSPO would be an American style market capitalism solution to the sustainability problem. Participation would be voluntary, but it would be economically supported.

Zunz (2011) argues that in the post war era American philanthropy has focused on expanding the market economy. The RSPO is a public private partnership that is part of this trend.  The effort is focused on development in palm oil producing countries. The group is promoting practices that it believes will help farmers produce better yields and are more sustainable. The reward they offer is access to the international market.  Part of the United States global hegemony has been the adaptation of U.S. economic practices and organization by other countries (Vogel, 2006). American agriculture is primarily large scale. The U.S. has many farm trade groups that participate in creating regulation, similarly large-scale Indonesian and Malaysia farm groups are participating in the RSPO. The groups English language meetings are highly technical making it unlikely that groups who are not organized in a similar way to the U.S. style groups would be unlikely to attend (Ruysschaert, D., & Salles, D. ,2016).  The RSPO provides access to the European market but only for farmers who can adapt to American economic organization. One of the ways RSPO has sought to remedy the advantage that large farming groups have in the Roundtable is to help small farming groups form their own trade organizations. Creating these local groups is an expansion of American style economic organization on a community level. The RSPO is expanding American economic hegemony by expanding and rewarding American Style Economic organization.

The RSPO had a history of leaving small producers out of its governance. Small producers often struggled to meet standards that they had minimal impact on developing. The prime ministers of Malaysia and Indonesia released a joint statement criticizing EU efforts to only use sustainable palm oil (Reuters, 2017). The joint statement claimed that any efforts to regulate palm oil risked deepening poverty for millions of small landowners. Small producers have historically not participated in developing standards. Small landowners were not as organized as large landowners. They often were not part of any trade group (Ruysschaert, D., & Salles, D. ,2016). RSPO communications tended to be in English creating additional barriers to communication. The small farmer’s organizational norms did that correspond to the norms of a multinational public private partnership.

Entry into the global economy may have replaced Indonesian community organization with American style community organization. In a focus group on palm oil production a farmer stated “Before [oil palm expansion], there were lots of emotional bonds, a sense of togetherness and everyone was family” (Kuntz et al. 2019). The farmer linked this to a social requirement for mutual cooperation. Before taking part in the global palm oil market people worked together to accomplish community tasks like improving infrastructure. As palm oil production increased neighbors became competitors with one another in the market and no longer participated in mutual aid activities. Local NGOs helped the communities no longer participating in mutual collaboration learn new skills needed to adhere to the new RSPO standards. Palm oil production has allowed local NGOs to help people but has also damaged traditional community organization.

In order to engage small farmers, the RSPO shifted their organizational strategy from large organizations to promoting small partnerships between individual NGOs and small stakeholder groups. RSPO has also began supplementing their style of philanthropy from market oriented public private partnership with direct philanthropy. In 2017, twelve years after founding the roundtable, in partnership with the United Nations they began providing Indonesian farmers direct grants to improve their farming practices (Roundtable on Sustainable Palm Oil, 2018). This partnership with the U.N is a form of adaptation for RSPO. In order to reach small farmers, they had to provide funds rather than encourage people through giving them access to markets.  The Small Stakeholder Initiative includes a surprising feature in its strategic plan. Funds from the program do not need to go towards certification. This changes the Roundtable’s relationship to small stakeholders (Roundtable on Sustainable Palm Oil, 2018b). They are providing assistance with connecting with NGOs and funds to improve farmer livelihoods even if it will not benefit them in the market. The strategic plan goes further and admits that for small farmers “The business case for smallholder integration into the RSPO system, and the sustainable palm oil market, has not yet been made” (Roundtable on Sustainable Palm Oil, 2018b p. 2). They are admitting that the wisdom market may not support their efforts. Engaging in direct philanthropy not aimed at the market and accepting that the market may not incentivize sustainability suggests a large shift in the governing philosophy of the RSPO. The RSPO is no longer trusting the wisdom of the market to promote positive behavior instead they more directly engaging with improvements in quality of life for farmers. The small stakeholders shifted the RSPO away from its market-oriented roots to a new perspective.

Synthesis of RSPO and Famine Insights

The RSPO’s new perspective shares common features with the perspectives of NGOs during the Ethiopian famine. When free market efforts to promote sustainability failed the RSPO decided to value the rights of minority groups over American hegemony. The RSPO’s market-oriented activities seem superficially in line with tolerance and free choice. No one forced to the Indonesian small farmers to adapt their culture to the global market, people who adapted were simply being awarded if they do adapt. The prime minster of Indonesia did not agree with this assessment. He argued that when the EU restricted the purchase of palm oil, they doomed farmers to poverty (Reuters, 2017). The prime minister wanted his countries small landowners to be able to access the market without adapting or changing behaviors. He is objected to one style of liberalism. The RSPO seems to agree with his objections. Both the new RSPO strategy and the prime minister of Indonesia endorse inclusion even if it means impinging on the rights of the majority to have a clean environment. They valued inclusion when inclusion meant a reduction in poverty. A reduction in poverty is less severe than ending a famine but does show that counter hegemony emerges when market-based solutions that do not impinge on the majority fail.

The Ethiopian famine and RSPO’s shift in NGO strategy show the dynamic relationship between local contexts, hegemony, and values. American hegemony imposes a specific economic model on the world. Often NGOs work to implement this approach to economics. They do so by imposing American style organizational and economic structures on other countries. An important exception to this rule emerges. When the result of American hegemonic policy fails to achieve results that agree with American values like the respect for life NGOs act in a counter hegemonic fashion. The RSPO provides a clear example of this transition, they began as market oriented public private partnership, but they were unable to bring small farmers into their organization structure. Small farmers were not economically served by the RSPO. To address this failure, they began providing direct grants which were no longer aimed at having small farmers join the sustainable global market. To respect this group’s rights, they altered their mission away from the aims of American economic policy.

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