"Greener" palm oil: pricey
and not green enough?
By Catherine Hornby
AMSTERDAM (Reuters) - A drive to
improve the green credentials of palm oil, used in foods and
cosmetics but tainted for some by links to deforestation, could
make it too expensive for shoppers and may anyway be of limited
environmental benefit.
Palm Oil Farm - Belem, Brazil
The first palm oil certified in the
new scheme Round Table for Sustainable Palm Oil (RSPO) unloaded in
Rotterdam in November, but some environmentalists said the system
was not doing enough to tackle issues such as deforestation and
peatlands clearance.
Industry players said this
sceptical response from green groups would leave companies with
little incentive to switch to the pricier oil as a way to improve
their ethical image.
"Palm oil doesn't have a good
image and it's not likely to be improved by this sustainability
push, it doesn't seem to make any difference," said Ernesto
Zamudio, a trading manager at oils and fats manufacturer
AarhusKarlshamn (AAK).
Certification can add a premium of
around $50 (34.38 pounds) a tonne to palm oil in the wholesale
market.
Palm oil is produced mostly in
Indonesia and Malaysia where it has led to the rapid clearing of
millions of hectares of rain forest. It is used as cooking oil, in
products such as margarine, biscuits, crisps, lipstick and soap,
and for biofuel.
Producers and buyers of the
tropical oil established the RSPO in 2004 to develop an ethical
certification system including commitments to preserve forests and
wildlife and to deal with local communities in a responsible
way.
About 1.5 million tonnes of palm
oil production capacity is now certified as sustainable and about
100,000 tonnes is available per month, said RSPO President Jan Kees
Vis.
But he estimated that less than
100,000 tonnes of certified palm oil had traded so far, while in
November some industry leaders had forecast that up to 750,000
tonnes could be sold by the end of 2008.
"Uptake is slow, which is related
to the economic crisis at the moment. Companies are not really
willing to pay the premium -- anything that increases cost is out
of the question," said Vis.
CONTENTIOUS
Overall, about 35 million tonnes
of palm oil are exported globally annually, German oilseeds
analysts Oil World estimate.
Demand for palm is also seen
holding up in the recession as it tends to be cheaper than other
oils. It trades at roughly $700 a tonne in Europe, compared with
more than $800 for soy oil.
"Due to the downturn, people are
becoming more reliant on palm oil as it trades at a relative
discount, so actually the recession is a good thing for palm," said
Ambrian analyst Dougie Youngson.
AAK's Zamudio said palm oil demand
was about 10 percent lower than expected in the first quarter of
2009, but had not fallen as much as demand for premium oils such as
olive oil.
But he said the firm had not been
able to sell on the majority of the 1,000 tonnes of certified
sustainable palm oil they had bought so far.
Vis, who is also sustainable
agriculture director for Unilever said the RSPO was
trying to stimulate trade by asking members to publicly state their
commitment to converting to sustainable palm oil, though he added
not many had done so.
Unilever has committed to
using only fully traceable palm oil by 2015, and firms including
British retailer J Sainsbury and Dutch supermarket group Ahold have
made similar pledges.
But many companies are shying away
from publicly discussing their palm oil use, as the issue remains
contentious and some conservation groups argue that the RSPO's
voluntary rules for the group's 266 members are ineffective at
protecting the environment.
Business goals to expand the
lucrative industry -- which can necessitate more forest clearances
-- are also incompatible with the position of vocal environmental
groups such as Greenpeace, who say the RSPO needs to toughen
up.
"If a company is RSPO certified at
one plantation, it does not stop them from continuing unacceptable
practices elsewhere," said Andy Tait, forest campaigner for
Greenpeace.
"Palm oil producers and firms that
buy palm oil need to ensure no further forest is cleared for palm
oil production -- that's the biggest sustainability issue connected
to the trade."
(Reporting by Catherine Hornby,
editing by William Hardy)