Monday, April 05, 2010

Palm Oil Has To Meet The Heightened Demands Of Globalisation

The nature of globalisation is that you can sell your goods and services to all corners of the globe, but you will also have to meet "desired standards" imposed by various governments and NGOs. If you are part of the palm oil supply chain, you have to meet the basic requirements. You just cannot say to hell with it. As a seller of goods or services, we just try to meet the changing demands of consumers. Companies and governments of good governance and strong CSR objectives have to do things better, not because it impacts your bottomline but because its the right thing to do.

Powerful activist groups such as Greenpeace knows that on its own it has little leverage to effect a change in corporate behaviour or government policies. The most effective is to exert pressure where the wallets are - the big buyers. Nestle and Unilever are very very big consumers, and they certainly don't need to to be in the limelight for using palm oil that they do not where they come from or how they were cultivated.

Its like Starbucks which tries to jump ahead of the curve by paying a "decent sum" to struggling coffee bean producers in third world countries by cutting out the many layers of middlemen. Its the way of the new world, some may pooh-pooh the high-falutin requirements as increasing the cost of production, etc. but I think we behave the way we do with the information we have. Twenty years ago, the dissemination of information may be poor and our understanding of various issues may be blighted because of the way things are.

The internet has been the great equaliser. Now we know better not to consume sharks fin or goose liver produced by irresponsible farmers. We also know that bears paws and tiger penises are really pretty stupid, unnecessary and diminishes the already vastly diminished fellow earth inhabitants.

I am totally on the side of most Malaysian palm oil producers, we just have to toe the line. We have to set out what is propaganda, unfair demands, with doing what is right. To that end, why is mainstream media again censoring what we should be hearing or learning - there are so many reports out on palm oil deforestation, reports by Greenpeace, Friends of The Earth, Unilever's position, the scathing BBC documentary, etc. Do not try to shield the Malaysian public from information, even when the information may be slanted, respect your fellow citizens a bit la, let us make up our own minds on the issues. I mean, bloody hell, we need not even read about the effects, we have been actually breathing in the fucking open burning all the way from Indonesia - at least let us read about it and know whats fucking up the air that we breathe. The latest rhetoric came from France, although the biggest press circus on the issues came from British press, and many UK firms have been named and shamed already.

PARIS, April 1 (Reuters) - French firms have stepped up restrictions on the use of palm oil, decried for being linked to deforestation in Asia, in a move that may boost demand for local oils but some warned it could raise new food and land problems. The debate about palm oil's impact on the environment has intensified after green groups published reports last month blaming the way key producers were sourcing their oil by destroying rainforests and threatening endangered species. In France it was amplified by a television broadcast that condemned food makers' use of cheap palm oil to cut costs and referring to health concern that its high level of saturated fat could raise cholesterol and heart diseases.

I agree with most of the concerns on the need to have sustainable palm oil policy, but I get mad when these buggers bring up the "saturated fat, high cholesterol and heart diseases" imbalance again. If you want to use that argument, put palm oil next to all cooking oils, then make the same claims. You cannot just say that AirAsia is cheap and excellent, you have to put it next to competitors in the same category and mark off point by point why it is so. If not, anyone can just say that butter clogs your arteries... fullstop ... that is just stupid and is part of the global propaganda waged by the soy bean, rapeseed, etc.. producers.

The British Clampdown

Most British manufacturers and retailers including Boots, Morrisons and Waitrose have done little to limit the environmental damage done by the production of the world's cheapest vegetable oil. In a survey of leading European food and household firms, the World Wide Fund for Nature (WWF) said that only Sainsbury's, Marks and Spencer and a handful of other companies had made substantial progress towards sourcing sustainable palm oil.

Continental retailers came out worst in the survey of 59 firms, with many French, German and Dutch chains making no effort to prevent the huge problems caused by the oil's production. The WWF disclosed that 40 of the 59 companies had not bought any oil certified sustainable by the Roundtable on Sustainable Palm Oil (Rspo) – which sets environmental standards for the £16bn-a-year industry, the most important of which is a ban on planting new oil palms in virgin forests.

Of 25 UK companies, 14 had not bought any Rspo oil – Aldi, Associated British Foods, Croda international, Boots, Warburtons, Britannia Food Ingredients, Waitrose, Morrisons, Jordans Ryvita, Northern Foods, Reckitt Benckiser, Co-op, Premier Foods and Tesco. Out of a maximum of 29 points, WWF scored them between 0 and 16.

However, seven British firms were among the best 10 performers Europe-wide, including Sainsbury's, Marks and Spencer and Cadbury. Among foreign companies, Nestlé, ranked mid-table, this week committed to switching to 100 per cent Rspo oil by 2015.

Unilever has stopped accepting palm oil from an Indonesian planter after a damning BBC documentary showing rainforest clearing, according to the Indonesian Palm Oil Board. Unilever, which is part of the Roundtable for Sustainable Palm Oil (RSPO), did not have a contract with Duta Palma (a known offender), but had been receiving oil from the planter via traders. Two months ago the consumer goods giant brought an end to a $33m supply contract with Indonesian supplier PT Smart.

Unilever, which uses palm oil in its Flora and Stork margarines, Dove toiletries and Persil washing powder among many other products, announced that it is cutting links with Sinar Mas, Indonesia’s largest palm oil company. Unilever is acting after being shown photographic evidence of Sinar Mas clearing rainforest in protected areas, including reserves for the country’s endangered orang-utan population. It cancelled the £20 million annual contract recently after learning that Greenpeace was about to publish a dossier of evidence. Funnily though, Sinar Mas is part of RSPO???!!!... go figure. The RSPO, which also includes Sinar Mas, is a self-regulation body that aims to prevent illegal forest clearance. Environmental groups have criticised it as toothless and an obstacle to independent scrutiny. To access Unilever's beautifully produced PDF on their sustainable products policies, click here:

It pays to read through Unilever's document as it already sets out really what is "required". Companies in the palm oil supply chain basically needs to evaluate every step of their production and distribution processes to make sure they try to comply with the principles set out below - then get a proper certification.

Sustainable agriculture / Our definition

Sustainable agriculture is productive, competitive and efficient, while at the same time protecting and improving the natural environment and conditions of the local communities.

Sustainability principles
Unilever believes that sustainable agriculture should support the following principles:
• It should produce crops with high yield and nutritional quality to meet existing and future needs, while keeping resource input as low as possible.
• It must ensure that any adverse effects on soil fertility, water and air quality and biodiversity from agricultural activities are minimised and positive contributions are made where possible.
• It should optimise the use of renewable resources while minimising the use of nonrenewable resources.
• Sustainable agriculture should enable local communities to protect and enhance their well-being and environments.

Since 1998, we have been measuring data against these indicators on our own plantations and using the findings to benchmark and improve sustainable agriculture best practice for palm oil and other crops. Pamol, Unilever’s palm oil plantation company in Malaysia, follows accepted best practices for management of its operations and is striving to improve sustainability still further. Liquid effluent from its two mills is used as a water feed and fertiliser for trees, reducing the amount of synthetic nutrients needed. Leguminous ground cover is grown to prevent soil loss, fix nitrogen and encourage beneficial insects that are natural predators of tree pests. Owls are encouraged to control rats, and empty bunches from the mills and palm fronds are left to decompose naturally under the trees, providing nutrients and helping to curb weed growth. Steep hillsides are left as natural forest, which provides a wildlife refuge, and hunting is not permitted. In addition, Unilever has formed a small taskforce to develop a more transparent sourcing system and standards for palm oil, including contracts, specifications, quality assurance – tracking and tracing – and best practice criteria for plantations. This taskforce aims to work more closely with suppliers who are able and committed to deliver these criteria and who we also hope share our enthusiasm to see progress in the industry on quality assurance and sustainability.

Unilever is the world’s biggest consumer of palm oil and has pledged to buy only from certified sustainable plantations from 2015. This year, 85 per cent of its palm oil was uncertified. Waitrose said this month that all the palm oil in its own-brand products would be from sustainable sources by 2012.NestlĂ© has announced its commitment to using only Certified Sustainable Palm Oil (CSPO) by 2015, when sufficient quantities are expected to be available.

The Facts

Fact #1: The growth of the palm oil industry in Indonesia has turned the country into the third-largest emitter of CO2, after China and the US. Indonesia has the fastest rate of deforestation, losing an area the size of Wales every year. Deforestation contributes 15-20 per cent of global greenhouse gas emissions and is one of the key issues debated at the Copenhagen climate change summit.

Fact #2: As the world's oil palm is the highest-yielding commercial oilseed, palm oil production offers more vegetable oil per unit of area than other widely-grown crops including soy, canola, or rapeseed. Thus oil palm expansion on abandoned agricultural lands could offer producers a more effective way to sustainably meet growing demand for vegetable oils than with other oilseeds.

Fact #3: Environmentalists are most concerned by palm oil production that comes at the cost of carbon-dense and biologically-rich rainforests and peatlands. Since 1990 more than half of plantation growth has occurred at the expense of natural forests, boosting greenhouse gas emissions and increasing the vulnerability of endangered species like orangutans, Sumtran rhinos, pygmy elephants, and Sumatran tigers to extinction in the wild. Plantations have also been strongly associated with social conflict in some areas.


said it would not cancel palm oil supply contracts with Malaysia's IOI and that it was confident the planter would address concerns over logging forests raised by a green group. IOI Corp, Malaysia's No. 2 planter, had dismissed the report by Friends of the Earth that it cleared rainforests on Borneo island to expand, saying the allegations were inaccurate.

"We believe IOI is a very responsible supplier and are confident that if there is truth in the current allegations, IOI will address them," Unilever Head of Sustainability Jan-Kees Vis told Reuters in an emailed response on Monday. "There are no plans to cancel any contracts with IOI."

IOI owns about 80,000 hectares of land on the Indonesia side of Borneo island -- a resource rich, forested region that is the frontline for expanding oil palm estates. The Friends of the Earth report also claimed that IOI practiced open burning and drained peatlands, prompting the firm's key customer Neste Oil to say it would conduct its own probe into the matter. IOI supplies palm oil to the Finnish refiner's biofuel plants in Europe.

IOI said in a statement on Friday, without going into the details, that it had set up a clear action list and timeframe to address Friends of the Earth's remaining concerns after meeting with the green group. Both Unilever and Neste Oil have said their supply contracts with palm oil firms include clauses that allow for termination of the agreement if the suppliers are found to be damaging the environment.


see said...

I believe there is a tinge of protectionism here especially when it comes to the Europeans. The brooha about carbon credits is another moot point where it is actually trade protectionism in disguise & Asia should be careful there. In any case, have these bleeding heart liberals considered that to make edible oils greener, it would push up the cost? Have their bleeding hearts considered then how the third world poor gonna afford it? Eat dirt & grass ah?

Poh Soon said...

We have to get our perspectives right here. The economic and overall human benefits of OP development are not in doubt at all. However, palm oil is usually a very small component in food products and e.g. compared to the cereals and other short-term vegetable oils where the environmental impacts are higher, its crop hectarages are relatively much smaller. Yet, palm oil was picked up as the first food crop for certification. Why?
The OP plantation industry is largely aware of and made large strides in mitigating the environmental impacts. The real outstanding issues are mainly in reduction of biodiversity (for which the states must leave large enough nature reserve areas and corridors), lack of sustainability in development of large areas of 'fragile' soil and steep terrain which should be best left uncultivated (e.g. certain woody peats) and infringement of local land rights of natives.
The fact is that all forms of crop cultivation will have an environmental impact and fortunately, of the major food crops, the oil palm has probably the least.
And incidentally, Unilevers has sold off all their plantations here just as the great push for 'sustainability' was taking place.This is a great pity as they could have showcased their efforts to the rest of the industry or was their timing good?