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Sourcing affordable segregated sustainable palm oil remains ‘extremely difficult’ in the US, says Cargill

By Elaine Watson , 25-Apr-2012

The US is starting to catch up with Europe in the sustainable palm oil stakes, but cost remains a major hurdle, says Cargill.

Mohit Gupta, product line manager, tropical oils, at Cargill, told FoodNavigator-USA that it could be some time before certified sustainable palm oil (CSPO) fractions – the form of palm oil used by most food manufacturers – are affordable in the US.

He said: “The US is catching up a bit. We’ve seen a number of customers who have taken education around the issue and are in the process of considering their options.”

Cargill: Cost remains the biggest inhibitor in the industry

But he added: “Cost still remains the biggest inhibitor in the industry… Sourcing segregated palm oil for the US is still extremely difficult due to economical shipping quantities and lack of customer commitment.

“It is still very hard to source fractions for the US market, which does not consume olein as much as stearin. However, RSPO has made an exception and one can buy segregated RBD (refined, bleached and deodorized) palm oil and sell mass balance stearin against it on a 1:1 ratio*.”

While all four of Cargill’s US palm oil refineries have been audited by the RSPO (Round Table for Sustainable Palm Oil), “demand is not yet enough for all refineries to start supplying in full scale”, said Gupta.

However, “there are indications that it may increase in future”.

Greenpalm: McDonald’s RSPO membership ‘a significant step’

While the US was not as advanced as some European markets on sustainable palm, notably the UK, where NGOs had pressured retailers and manufacturers into making firm commitments, there are some signs of real progress in the US, said Greenpalm general manager Bob Norman.

“McDonald’s becoming a member of the RSPO is very significant step. For such an iconic brand to be associated with sustainable palm should give the demand market, including the US, the confidence to support sustainable palm production.”

He added: “The involvement of McDonald’s also opens the door to a new demand market for the RSPO – the foodservice sector.  

“Allied to this Walmart’s commitment to sustainable palm oil procurement, and I see the US market’s interest in sustainable palm production really growing.”

RSPO: Market uptake of SCPO rising, but on a ‘slowing trend’

RSPO figures show production of certified sustainable palm oil is now in excess of 6m tons, with 11 new palm oil mills certified in the first quarter of 2012 alone,

However, market uptake has been slowing, said RSPO vice president and World Wildlife Fund senior policy officer, Adam Harrison.

“Whilst this is great news from the producer members showing their real and growing commitment to sustainability, what we must see now is matching action from palm oil users.”

Last month, the RSPO released a progress report , which noted that market uptake was “rising, but on a slowing trend”.

Sustainable palm oil options for food manufacturers

Food manufacturers have three choices when it comes to sustainable palm oil. The first is to buy straight certified sustainable oil, which is segregated throughout the supply chain and fully traceable.

A cheaper option, ‘book and claim’ - designed with palm fractions in mind – is to buy GreenPalm certificates guaranteeing that a tonnage of oil or derivatives equivalent to the tonnage you use has been produced from sustainable sources.

The third option – mass balance* – combines some segregated and some standard oil, and has been changed to allow companies to buy a certain volume of segregated oil and use it to match the sales of an equal volume of a palm fraction under a mass balance claim.

For example, a purchase of 20t of segregated palm olein can be used to match the sales of 20t of mass balance stearin.

Cargill’s commitments

Cargill has made a commitment that all palm oil products (excluding palm kernel oil products) it supplies to customers in Europe, the US, Canada, Australia and New Zealand will be RSPO certified and/or originated from smallholder growers by 2015.

This commitment will be extended to cover 100% of its palm oil products and customers worldwide by 2020, said Steven Fairbairn, head of external communications, EMEA.

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