EU labelling law adds impetus to the sustainable palm drive

By Annie Harrison-Dunn

- Last updated on GMT

Will new consumer information law turn food firms away from palm completely or towards certified palm?
Will new consumer information law turn food firms away from palm completely or towards certified palm?

Related tags Palm oil Board of directors

Changes to European labelling laws meaning the specific source of vegetable oil must be declared on pack could drive more food manufacturers to certified sustainable palm oil, according to one grower.

The European Food Information for Consumers Regulation (FIC), set to come into play December 13, will mean that 'vegetable oil' on ingredient lists will longer suffice. The specific source - i.e. sunflower, rape seed, palm - must be stated.

Talking with European press at their Roundtable for Sustainable Palm Oil (RSPO)-certified site in Malaysia, the Danish brothers Martin and Carl Bek-Nielsen behind United Plantations said this development could be the fire needed to spur manufacturers to commit to purchasing certified palm oil.

Martin Bek-Nielsen, executive director for the company, told FoodNavigator: "I think the labelling will make a big difference because brand manufacturers will then be forced either to switch away from palm or publicly promote palm. They'll have to make a decision."

While the labelling change does not directly reference on-pack RSPO approval, he said it would mean manufacturers would no longer be able to hide. 

"If there's palm in it and it's not RSPO-labelled then all the brand manufacturers are going to be criticised like anything and they will not want that."

He envisioned greater consumer pressure on manufacturers and supermarkets when it was revealed just how many products contain palm oil - around 50% of all consumer goods.

However pricing remained an issue and the brothers expressed frustration at manufacturer and even consumer reluctance to pay the price for certified commodities. Currently RSPO-certified palm oil accounts for 18% of the world's supply - but about 50% of that goes unsold as certified. Instead this oil is sold as normal 'uncertified' oil, with a price tag to match.

Making the distinction

Martin Bek-Nielsen conceded that the label law could go either way - make food firms reconsider their use of palm oil completely, or make them reconsider the type of palm oil they use.

"I don't know if we'll see a huge uptake in demand because some people will say: 'There's palm oil in it, we don't want palm.' But I think we'll see a wonderful, awaited move from not just saying it's either palm or no palm, towards distinguishing between palm or certified palm in a much more balanced manner."

"We're not interested in people banning palm because there are some rogues cutting down the forest. We would like consumers to say at least: 'Okay we will ban palm if it's not sustainable palm. But we'll support palm if it's sustainable.'"

Putting your money where your mouth is

However the pair said there remained a disconnect between this European consumer demand for sustainability and traceability, and the commitments made to buying RSPO oil. They said they were never able to sell 100% of their stock at its official certified price, a value that accounts for the extra production and segregated supply chain costs incurred, adding roughly 10-15% to the final product price.
They said it was time certified producers were given their due; they had been told consumers wanted certified sustainable palm oil and had therefore jumped through various costly hoops to achieve these standards. Now it was time for food manufacturers to honour that and pay the premium price.

Carl Bek-Nielsen, vice chairman and executive director for the firm, said incentives would be key as currently smallholders would not take the financial risk of going certified without the guarantee of a premium pay back.

"What message does it send the growers? We want certified palm oil, but we don't want to buy it."

He said if consumers were faced with two similar finished products on a supermarket shelf they would often chose the cheapest. He said more consumer understanding was needed, which could be helped by some kind of scorecard of producers rating their sustainability and traceability.

Yet ultimately this market tide depended on the commitments of big multinationals. "You can't just push the growers, because the growers have been pushed a lot. Now it's time to push the demand. The supply is there now, but the demand is not."

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