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Unilever: We know there’s frustration, but ‘breakthrough is near’ on sustainable palm oil

By Elaine Watson , 29-Nov-2011
Last updated on 09-Dec-2011 at 21:59 GMT2011-12-09T21:59:00Z

While the uptake of certified sustainable palm oil (CSPO) has not been as fast as many stakeholders had hoped, a “breakthrough is near” according to Unilever’s director of sustainable sourcing development Jan Kees Vis.

Speaking at the ninth annual meeting of the Roundtable on Sustainable Palm Oil (RSPO) in Borneo last week, Vis - who is also the president of the RSPO - said more than five million tons of production capacity had been RSPO certified since 2008, representing more than 10% of global production.

By contrast, demand has not yet matched supply, with uptake of CSPO just 46% in 2010 – an improvement on 25% in 2009 - but still lower than anticipated.

Growers have been frustrated by the apparent lack of take-up in the market

However, rapid progress has been made since then, with uptake in September 2011 topping 70%, compared with 48% in September 2010, he said. “The current number sparks hopes that a breakthrough is near.”

RSPO secretary general Darrel Webber added: “The uptake has been steadily increasing, but it continues to require accelerated commitment. The RSPO has the dynamics and system to make this work; it is only a matter of time.”

Belinda Howell of the Retailers Palm Oil Group acknowledged that “growers that have made significant investments to achieve RSPO certification have been frustrated by the apparent lack of take-up in the market”, but said retailers were committed to change.

While the US has lagged behind Europe in the sustainable palm stakes, recent commitments from Hershey, McDonald’s and Walmart have raised awareness, although many observers argue that the tipping point will only come when major buyers in China and India get on board.

2012 a pivotal year for the RSPO in the US?

Bob Norman, general manager of the book & claim/Greenpalm scheme, told FoodNavigator-USA: "At the moment I don’t think sustainable palm oil is high on the majority of consumers' lists. My view is that the consumer expects the retailer or brand to the right thing and provide them the products accordingly. The supply chain in this case absorbs the premium from the certified growers and the increased costs of segregation.

"There is a surplus of RSPO certified palm oil and as a consequence the premiums on the GreenPalm platform have reduced. However there are signs of this lower premium attracting more brands and retailers into the market as the message of availability spreads."

He added: "It is worth commenting that about 5% of the global production of palm oil will be purchased through an RSPO certified supply chain this year. This is quite an achievement in only 3 years of certified material being available to the market.

"In terms of the US market there is a bit of momentum forming. My feeling is that 2012 will be a pivotal year for the RSPO in the US. Watch this space."

Asked whether significant progress could be made on sustainable palm without more buy-in from China and India, Jan Kees Vis told FoodNavigator-USA: “Of course India and China are important consumer markets that have our full attention and are a focal point in our plans for 2012 in terms of outreach to governments, companies and other stakeholders.

"At the same time it is important to continue to make further progress in markets that are further developed in terms of sustainability like Europe and increasingly also the USA, and where we see more and more companies and countries committing to CSPO by a certain date, which is very hopeful.”

Could Africa become a major player in the palm oil industry?

According to the RSPO, 88% of palm oil is produced in Malaysia and Indonesia.

However, many African countries are well-placed to grow palm oil as well, according to a new report from World Growth, which points out that Africa accounts for 8% of global consumption of palm oil but only 3.9% of global output “despite the fact that the oil palm is a native of West Africa”.

In its report, ‘A Roadblock to Food Security. How Halting Land Conversion Threatens Food Security in Africa— A Palm Oil Case Study’, the group observes that if farmers want to attract funding for palm oil projects, they must comply with standards set by the RSPO, which bans the conversion of primary forests and high conservation value forests for new plantings.

Sustainable palm oil: The options

Food manufacturers have three choices on the sustainable palm front.

The first is to buy certified sustainable refined palm oil. This is made by plantations adhering to criteria laid down by the RSPO, segregated throughout the supply chain and fully traceable. AAK, Loders Croklaan and Cargill all now supply this.

For manufacturers using more complex palm oil fractions and derivatives/blends , the most affordable options are the book and claim/GreenPalm scheme or the ‘mass balance’ system.

Buyers of GreenPalm certificates can guarantee that a tonnage of oil or derivatives equivalent to the tonnage they use has been produced from sustainable sources.

The third option – mass balance - combines some segregated certified/traceable sustainable oil and some standard oil.

Campaigners have tried to block plantations ‘regardless of the net economic and social benefits’

And this was actively thwarting attempts by African nations to generate income and reduce their reliance on imports, argued former president of Ghana J. A. Kufuor, in a forward to the report.

World leaders discussing climate change in Durban this week should remember that palm oil “has the potential to provide significantly higher returns to smallholders than their current crops or become an inexpensive African-produced source of food, particularly when years of drought have left the continent reliant on vegetable oil imports”, he claimed.

“[However] for some time, environmental campaigners have been actively seeking to stop multilateral and private financial support to major palm oil developments in Africa, regardless of the net economic and social benefit that the local population can expect to receive from these developments."

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