Industry moves to sustainable palm oil

By Warren Beaumont

There is global concern over palm oil being sourced from Indonesia and South East Asia where tropical forests have been cleared to make way for plantations, which have threatened the orangutan. This has led to major food retailers and suppliers to introduce plans to source sustainable palm oil or to ban palm oil in food.

Nestle announced it had stopped sourcing palm oil from the Indonesian company Sinar Mas and was moving to meet high standards for sustainability. Unilever suspended purchases of palm oil from PT SMART, part of the Sinar Mas group. It followed allegations by Greenpeace that Sinar Mas, Indonesia’s biggest palm oil producer, had been responsible for widespread deforestation and peatland clearance.

French supermarket giant Casino has announced that it will no longer use palm oil in 200 of its private label products by the end of 2010 and will eventually remove palm oil from all its food products, citing concerns over palm oil’s environmental impact and high levels of saturated fat. Palm oil will be replaced by other oils such as rapeseed or sunflower. Non-food branded Casino products will still use palm oil, but it must be certified as sustainable.

Australia’s largest supermarket retailer Woolworths has also announced a plan to move to Roundtable on Sustainable Palm Oil (RSPO) certified sustainable palm oil by 2015 for all its private label products. It will apply to become the first Australian retail member of the RSPO, a global not for profit organization set up to advance the use of certified palm oil and to establish consistent standards.

Sustainability questions over supplier’s sourcing

Questions have been raised about Nestlé’s approach to true sustainability in palm oil sourcing after it announced its commitment to using only “Certified Sustainable Palm Oil” by 2015. The segregated supply chain - the ability to keep sustainable palm oil separate from non-sustainable from plantation through to finished products - is still relatively undeveloped. Unilever claims that its involvement in the RSPO-endorsed scheme helps the company move towards its target of buying all its palm oil from certified sources by 2015. This company revealed in April it had bought enough sustainable palm oil certificates under the GreenPalm scheme to cover the requirements of its European, Australian and New Zealand businesses.

Although the oil they receive is not necessarily sustainably certified, in buying certificates equivalent to a certain volume of palm oil a manufacturer is promoting the sustainable production of the crop. “Until sustainable segregated supply chains become available, GreenPalm certificates are the best option to encourage growers to comply with the requirements of the RSPO and certify their plantations as sustainable,” Unilever’s senior vice president of global communications and sustainability Gavin Neath said.

“For those companies who decided to ban palm oil instead of supporting the good suppliers, we would like to ask if they will also take the same action with all other agriculture products”, says Tulio Dias environmental and social responsibility manager for Agropalma, Latin America’s largest producer of palm oil. “As far as we know, every economical development will bring a certain kind of ecological impact. There is no product that is 100% sustainable.” Mr Dias points out that Casino is likely to sell hundreds of products containing wheat and rice, just to highlight two out of thousands of products. He says: “Wheat and rice together stand for more than 370 million hectares of plantation worldwide (palm oil plantations stand for less than 20 million hectares), can they assure that all of them are sustainable? What about beans, fruits, cereals and beverages? This kind of action only shows that some companies are not yet ready for compliance of their procurement with good and sustainable practices, assuring their products come from reliable suppliers”.

Agropalma is the first 100% certified oil palm plantation under ISO 9001, ISO 14,001, OHSAS 18.001 and ISO 22.000. It is also the first producer to be granted approval in 2009 to use the EcoSocial seal by the IBD Certifications for its organic line of palm oil.

“Certification systems are important because almost all buyers (final or middle consumers) don’t have opportunity to visit the producers and to get information on how they operate the business”, says Mr. Dias. “If a buyer trusts a seal, it means that he trusts the certification system used to provide that stamp for that product,” he says.

Regarding issues of non-sustainability and deforestation that impact on fair trade and sustainable producers, and skeptics who do not believe growing sustainable palm oil is possible, Mr Dias agrees that these issues can impact sales for Agropalma and other environmentally and socially responsible producers - in a positive or negative way, depending on the situation. “If a client replaces palm oil for another kind of oil, every company that produces palm oil loses. On the other hand, it can be a good opportunity if a palm oil buyer avoids a supplier whose social and environmental performance is suspect, and starts looking for a substitute supplier who will offer palm oil from an acceptable production process”.

And what about those skeptical? “Anyone who studies a little about sustainability knows that it is related to all production activities, to identify and mitigate negative impacts and to define the right technology and procedures to implement, says Dias. This is a technical issue that can be measured, assessed, analyzed and verified. Producers of the same product can be compared and their performance monitored year after year.” The most difficult task is to define the indicators to measure the level of sustainability for an organization or economic sector.

“Given we sell the palm oil mostly to the US and Canada, Casino’s decision will most likely not affect us in a very large manner unless it is just part of an anti-palm movement, “says Jenelle Ludwig Krause of US based distributor Ciranda®, a worldwide supplier of organic commodities such as palm oil. “To Agropalma there are more opportunities than losses, since the company has strong environmental and social management programs, systems and certifications, and the market is developing new important quality requirements and processes beyond the standard traditionally required,” says Dias.

Agropalma’s plantations are located in a region where almost all native vegetation was already removed for cattle and agriculture. Today, there are almost 40 thousand hectares of palm oil plantations and 64 thousand hectares of primary forest reserves at Agropalma’s operations in Para, north-east of Brazil, with 193 plant species living under the palm trees. Environmental agencies have also identified 389 bird species and 37 species of medium and big mammals at the plantations, including six birds and six mammals considered endangered species.

Currently about 10% of Agropalma’s oil production is organic certified. The EcoSocial seal for fair trade practices applies to its organic line. Under the family agriculture program, 185 small neighboring palm oil producers receive technical assistance and a premium price. Agropalma pays them for their production of palm oil in an effort to divert them from cutting the primary forest and burning trees for coal - the additional income and investment in community projects reflects strong commitment to environmental and social principles. Agropalma’s efforts for its 5,000 employees move far beyond the minimum standards of sustainability achieved by many palm oil suppliers.

“Looking at a situation holistically is so important when making a decision like that (banning palm oil)”, says Ms. Ludwig Krause. “Unfortunately, consumers often see the issue as black and white instead of all the variations of gray that are reality. Hopefully we can continue to educate people about the benefits of sustainable palm such as the fact that it yields up to 13 times more oil than the same acreage of other seed oils”, she says.