Value–Supply Chain Analysis (VSCA) of crude palm oil production in Brazil, focusing on economic, environmental and social sustainability

Abstract

This paper is an evidenced-based analysis of sustainability (based on carbon, energy, blue-water, labour and economic footprints) of crude palm oil (CPO) production in Pará, Brazil. It includes cradle to gate value/supply chain-based life cycle analysis (LCA), a socio-economic analysis of small holder farmers in Para; and a discussion on how operational and supply chain management (SCM) methods can assist practical application of LCA results. The LCA consists of 4 stages: nursery; plantation management; harvesting and transport of fresh fruits; and, extraction of CPO. The analysis was based on direct data obtained between November 2014 and August 2015. The total carbon footprint (CFP) was 1.5 kgCO2eq /L CPO and the total energy footprint (EFP) was 5.1 MJ/L CPO. The life cycle based cost is US$ 0.7/L of CPO and the largest cost comes from harvesting and transport (45%). The study uncovered many sustainability hotspots. The carbon hotspots were: methane emissions from waste water at the Oil Extraction stage, and fertilizer use from the Plantation Management stage. Fertilizer use is a key hotspot in all 3 areas: carbon, energy and economic cost. Given the plantation is only 5 years old, high consumption of fertilizer is expected. However, reducing N-fertilizers will help lower all three footprints. A sensitivity analysis shows that if the direct N2O emission factor was doubled, the CFP value at plantation stage could go as high as 49%, and the total CFP value could increase by 18%. If fertilizers were produced using modern technology, the total CFP value could go down by 13%, while the value at the plantation would go down by 29%. For methane emissions, the use of modern technologies to capture biogas from waste water has potential to reduce emissions significantly. Biofuel use at the Extraction stage is a win–win outcome with regard to carbon emissions, energy use and economic cost. However, biofuel use causes significant local environmental pollution and human health risks such as dark smoke and particulate matter. The blue-water footprint was 6.8 per L of CPO. Reduction of water consumption by increasing water efficiency at the extraction mills is important, because water extraction by mills is a serious threat to the local river basin. As a fraction of the total number of employees in the entire system, the highest labour use (68%) is at the Plantation Management stage. The analysis of smallholder farmers raises questions about the popular justification of palm oil plantations as a provider of rural employer and argues that indicators like community welfare and income inequality must be evaluated, because the extent to which the industry will enhance sustainable development depend on the way they combine with local communities, directly and indirectly.