Palm oil special

Europe: When dogma makes way for karma

By RJ Whitehead

- Last updated on GMT

Europe: When dogma makes way for karma

Related tags Palm oil Fat

Do consumers vote with their feet when it comes to palm oil? Probably not — or at least that seems to be the case in emerging markets, where the lion’s share of palm oil is processed and consumed.

Manufacturers there are looking for the best prices they can get — that’s the point of business. And with some minor exceptions, consumers don’t care if their toothpaste has sustainable or unsustainable palm oil in it. 

People like to fight for good causes up to the point that convenience gets in the way of ideology. After all, you can’t have dogma stamping on your karma.

To a large degree palm oil, regardless of its source, meets the market’s requirements, and that has determined the huge growth of the crop.

It all boils down to simple economics: palm oil is cheap and it works well as an ingredient. It affects all areas of our consumption.

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But Europe is different. The EU is one of the biggest consumers of palm oil, taking around 15% of global production every year. And according to a report from the International Institute of Sustainable Development, the bloc increased its overall use of palm oil by 40% between 2006 and 2012, from 4.5 to 6.4 million tonnes

In spite of the regular and very public outcries by the media and environmental groups towards this seemingly villainous commodity, it doesn’t appear that people have been cutting palm oil out, but it seems they have been developing a better knowledge of the issues and the reality.

We can see that consumers’ awareness for sustainability issues is growing, which is really key​,” says Sabine Nafziger, secretary general of Chocolate, Biscuits and Confectionary of Europe (Caobisco) industry association.

By choosing products containing sustainable palm oil instead of saying no to palm oil altogether, European consumers can directly support the development of more sustainable plantations in producing countries, such as Indonesia and Malaysia​.” 

According to Darrel Webber, secretary general of the Roundtable on Sustainable Palm oil, consumers now have options if they are put off the idea of palm oil for environmental reasons. They can look for the RSPO Trademark, which began to appear two years ago.

Since [its launch], more and more mainstream brands have begun to use this on their products​,” Webber says. “Today, we have hundreds of products using the trademark and we have also developed a consumer website that carries information on the product ranges around the world that use sustainable palm oil​.”

But the amount of certified sustainable palm oil (CSPO) that is sent for export is small — around 15% of the overall quantity. Of that, only half is branded sustainable, while the rest goes with regular exports.

Although the uptake has been strengthening in recent years, it has been slower than soy, with 52% of its sustainable oil being taken up by the market.

One reason for this slow adoption might come from the rise of emerging markets, where India and China alone represent 30% of global palm oil consumption. India, for example, is the world’s biggest importer and the quantity it buys is expected to have increased by 5% this year to 8.7m tonnes. The market is also extremely price sensitive, so cheaper palm oil will always trump certified sustainability.

Likewise China, another emerging nation that is seeing its demand for edible oils and fats skyrocket because of greater affluence and changing food tastes. Again, the way in which the palm was grown takes a back seat to its ease and cost of delivery.

In 1990, the per-capita consumption of oils and fats in China was around 7kg — today it is 25kg. When you have a billion people and consumption shoots up like that — and oil palm will be the biggest beneficiary — one can only imagine where that will leave supply in the not too distant future. 

When economic growth takes place, one of the first things people do is change their diets. Once the poor, who have steamed their food for generations, gain additional income, they will start to use oils and fats to cook with. When they have even more money, they will start eating out at fast food restaurants.

As a result, there needs to be some viable incentive for these markets to increase their sustainable imports. 

The use of Green Palm certificates — which initially provide lower barriers to entry for sustainable palm oil without adding costly complications in logistics and processing with initial volumes — can and should play a key enabling process to facilitate and introduce certified sustainable palm oil into these vital markets.

In Europe, however, governments have set out to impose penalties on the use of palm oil, ostensibly on the back of health concerns — but more likely to protect palm’s rival edible oils that are grown across the continent.

According to Nafziger, it is the fatty acid composition of the food consumed that should be considered rather than the oil or fat the fatty acid comes from.

Oils and fats consist of a mixture of fatty acids, which influence their texture and functionality. Sustainable palm oil is a key ingredient for the food industry due to its superior sensory characteristics, as well as nutritional and functional properties​,” she says.

It has a high melting point and is solid at room temperature. This property determines the consistency, the texture, the melt-in-the-mouth-feel, “spreadability” and oxidative stability of a fat. No other alternative edible vegetable oil, naturally solid at room temperature and providing the same functional properties, exists in sufficient quantity​.”

Nafziger adds that Caobisco’s members accept paying a premium for CSPO, and have committed to buy — or are currently buying — only sustainable palm oil by 2015.

Inneke Herreman, secretary general of the International Margarine Association of the Countries of Europe (Imace), is scathing towards attempts by European governments to impose taxes on food products based on their content in palm oil and derived oils, dismissing them as “discriminatory, inefficient and counter-productive​”.

She says: “Taxes introduce a discriminatory element between different food products based on subjective criteria.

In 2006 a WHO review investigating the effectiveness of economic instruments found ‘no direct scientific evidence of a causal relationship between policy-related economic instruments and food consumption, including foods high in saturated fats’​.”

The RSPO’s Webber adds that governmental messages like these can be misleading for consumers. 

Replacing palm oil is not the right solution to address the environmental and social problems associated with oil palm cultivation for two reasons: first, changing to other types of vegetable oil would mean that much larger amounts of land would be needed land; and secondly, palm oil plays an important role in the reduction of poverty in the areas where it is produced​. 

The best and most sustainable solution is to switch to sustainable palm oil rather than to other vegetable oils​.” 

This is one of the rare instances where the views of producers, industry and even some prominent environmental groups happen to converge.

WWF, for example, actively encourages retailers and manufacturers to purchase CSPO produced according to standards set by RSPO — of which it is a member.

CSPO… provides assurance that valuable tropical forests have not been cleared, and that environmental and social safeguards have been met during the oil's production​,” WWF tells its members.

Perhaps it’s now time to focus on the positives of the debate. Palm oil use will rise, but shouldn't sustainable shipments outpace this growth.

Related topics Markets All Asia-Pacific Supply chain

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