ADM will produce sustainable palm oil in Brazil from 2016

By Jess Halliday

- Last updated on GMT

Archer Daniel Midland (ADM) has unveiled plans to invest in sustainable palm oil production, with an initiative that brings a new crop to its Brazilian supply chain.

ADM is a member of the Roundtable on Sustainable Palm Oil, a multi-stakeholder organization that has been working to transform the supply chain for palm oil since 2004. The oil is used widely in consumer food products, as well as in cosmetics and toiletries and as a feedstock for biofuel production. The desire to meet global demand has led to deforestation in some production areas; concerns have also been raised about labor practices in some plantations.

The Illinois agri-foods giant will invest in 12,000 hectares of palm production in the state of Pará and a palm processing site near São Domingos do Capim, about 100 miles east of Belem. It has not given an indication of how much it is investing in the project, but construction of the production site is expected to start in 2013. Operations are scheduled to begin in 2016.

Emphasizing ADM's strategy of bringing profitable growth by expanding the size and global reach of its origination and processing assets, chairman, CEO and president Patricia Woertz said: "This investment adds a new crop to our value chain in Brazil and diversifies our feedstock options for biodiesel production there, while at the same time supporting our commitment to sustainability in terms of both agricultural production and the livelihoods of farm families in Brazil."

The sustainable palm and biodiesel production will be part of the Brazilian government's Social Fuel Stamp program, under which ADM will contract 600 family farms for 6000 hectares of palm production. It will provide them with technical assistance on sustainable agriculture practices.

More than 3000 people will be touched by the benefits of higher farm incomes, the company has said.

Certified sustainable palm oil has started to become available in the past year. Several multinational food companies have pledged to switch to certified sustainable palm oil only within the coming years – as has the whole of the Dutch food industry. Keeping sustainable palm oil segregated throughout the supply chain is still a challenge, and while that is the ultimate goal there are two other schemes, known as 'book and claim' and 'mass balance' that allow palm oil users to pay a premium to support sustainable production of volumes equivalent to those they are using.

Brazilian presence

ADM is Brazil's largest domestic soybean meal producer, its second largest soybean crusher, and second largest bottled oil producer; it has four soybean processing facilities in the country - as well as 42 grain elevators, a biodiesel plant, a cocoa processing facility and three fertilizer blending plants in the country.

It has also been actively supporting sustainable soybean production with a partnership with advocate group Aliança Da Terra to encourage growers to adopt more sustainable practices. It has signed up to the Soy Moratorium, committing not to purchase soybeans grown in recently deforested areas of the Amazon Biome.

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