What do palm oil, lemons, and the Ku Klux Klan have in common?
They all illustrate what economists term asymmetric information. Coined by the Noble Laureate George Akerlof (1970s), in his paper titled “The Market for Lemons”, he demonstrated how different information that sellers impose on buyers lead to decisions ending in undesirable market outcomes.
Inferior products are often sold for more than what they are worth; good ones are either not traded at all or marginalised. This primarily also refers to the ultimate power of swaying public opinion in one’s favour.
Nothing defines this more strongly than the Ku Klux Klan (KKK), in its heyday, which swayed public opinion and instilled fear, through an orchestrated public outreach campaign that was also highly secretive.
It took a very strong willed individual named Stetson Kennedy, opposed to the KKK ideology of discrimination and hate to break the cycle. Kennedy, gained insider information about the KKK, started calling out radio stations across the USA to make that information public and ultimately broke the power of the Klan.
So, what do these have to do with palm oil? Well, just like the KKK, European public opinions on palm oil are highly orchestrated to create a state of fear –fear of an unknown, even invisible commodity, produced in an unfamiliar corner of the world that many have never stepped upon. Regardless of whether that fear is justified or not – it comes from woefully inadequate or asymmetric information.
For example, while Europeans routinely fret over the environmental impact of palm oil, they roll over and plead ignorance to the environmental consequences of their own agricultural practices particularly their dairy, rapeseed, sunflower and horticulture industries.
They also do not question their consumption of produces from North and South America (particularly soy meal for animal husbandry) which leaves an environmental footprint far worse than oil palm.
For its part, the palm oil industry, struggling to fight these negative public images in the West, is asking the right questions: Cui bono?
However, it is finding the wrong answers. Palm oil-producing nations see sinister forces at work: EU governments that keep out palm oil imports to protect their domestic rapeseed farmers. Or food processors and supermarkets using cheap marketing gimmicks to increase their sales of products labelled as No Palm Oil.
So palm oil producers tell themselves: if only we educate the Europeans, if we bring out the truth and let them see our efforts to produce truly sustainable palm oil and that our product is in fact not unhealthy they will come around and make the rational pro-palm oil choice.
Sounds reasonable. Only it is not working well! The reason could be that the Europeans are in a constant state of denial. In psychology, denial is a primitive defence mechanism against a reality too harsh to accept.
The person in denial acts as if something painful did not exist. For Europeans, palm oil has been positioned as “painful” through these negative campaigns.
In election after election, European political parties portraying “green environmental manifestos” have systematically gained power, putting the protection of the natural environment and climate on top of their agendas.
In Western Europe, this has changed the political landscape. We are now witnessing more Greens in the makeup of the incoming EU parliament.
The tragedy is that the environmentally conscious European consumer is like a reincarnation of Jekyll and Hyde, a respected citizen during the day and a murderer at night.
The European consumer is torn between contradictions just as stark: while voting for the Greens, supporting the Fridays for Future movement, or avoiding buying products that contain palm oil they at the same time use more natural resources, burn more fossil fuels and emit more greenhouse gases than most people anywhere else on the planet.
The plastic crisis is but one example of when European rhetoric and actions do not match. In fact they happily ship their plastic waste to our parts of the world! The same is true for not meeting the CO2 reduction targets of the Paris Agreement, overconsumption of meat and growth in per capita air miles travelled.
Perhaps other societies should ask Europe: “Why should we let you get away with that? It is our world, too!”
Every Friday, thousands of mostly school-aged youngsters gather in cities around Europe to demonstrate for the environment and against climate change. What was started by 16-year-old Swede Greta Thunberg now has become a global movement known as Fridays for Future.
Many of the protesters hold up signs that read: “There is no Planet B!” What they mean is that we only have one planet, and if we ruin it, we as the human race are out of luck.
While that observation surely is accurate, it misses the finer point: There is also only one planet in the sense that environmental degradation and air pollution in one place affects the entire globe. Greenhouse gas emissions certainly do not stop at national borders.
What the European affluent societies are guilty of is that their citizens preach water and drink wine. They admire Greta Thunberg but are up in arms when lawmakers raise petrol prices to reduce emissions from their transport sector.
They paint horror scenarios of climate change and echo Greta’s battle cry: “I want you to panic!” But at the same time, they consume like there is no tomorrow.
It is more than ironic that Europe emits more C02 per head than most geographies on the planet while at the same time raging against palm oil for destroying the rainforest and the climate.
What Europeans do not realise is that if global warming is human-made, it is they who need to change more than almost anybody in the world. If Hans in Berlin, Pierre in Paris, and Pedro in Madrid want to do something about climate change, they better put on their seatbelts. It will be a bumpy ride.
If C02 is what will do humankind in, it will not be enough to stop producing palm oil. Instead, the wealthy citizens in Europe will have to change their living standards in ways they cannot even begin to fathom.
It would not be enough to buy an electric car. It would mean to stop driving. It would not be enough to lambast palm oil. It would mean stop eating meat. It would not be enough to give in to avoid flights and take a sailboat across the ocean. It would mean vacationing in your own backyard or your own balcony.
And this is where the psychological phenomenon of denial comes in. The realisation of what each and every European would have to do to lower greenhouse gas emissions in any significant way is just too horrific, too earth-shattering and simply way too hard to be acceptable.
So the delusional mechanism tells the individual to shift the blame somewhere else. It is much easier to believe that I am not the problem. After all, I separate my garbage, vote for the Green Party and even take my bicycle every once in a blue moon instead of my SUV to go grocery shopping.
I much prefer to believe that the problem originates in a faraway place like the island of Borneo. To do something about climate change there, does not imply any effort on my part.
But all the good intentions will add up to nothing if we let the European consumer off the hook. The European appetite for food, energy, and industrial outputs is what fuels the engine of crop production overseas. Does anyone believe that the streets of London, Rome, or Paris in the future will look like those of Beijing in the late 1970s with millions of bicycles, a few buses, and no cars?
In reality, there is hope through technological investments for new ways to capture and store carbon. Also, sustainable best practices: the Malaysian palm oil industry, for instance, has come a long way in adopting a sustainably run business. The biggest mistake now would be to drain the sector of profits it badly needs for its sustainability investments.
On both accounts, Europe is failing the world. Despite many top-notch universities and research institutions, Europe this far has not even managed to clean up its own act.
Moreover, recent legislation like the Renewable Energy Directive (RED II) and Delegated Act that phases out palm oil-based biofuels is throwing sand into the sustainability motor of Asian palm oil producers.
We are all sitting in the same boat. We should not row in different directions.
Dr Kalyana Sundram is chief executive officer of the Malaysian Palm Oil Council.
The views expressed are those of the author and do not necessarily reflect those of FMT.