A new report released by the agri-business bank shows almost all palm oil traders and suppliers in Europe and the United States will sell certified palm oil by 2020. These markets already account for up to 90% of demand, it said.
In Asia, where the lion’s share of the crop is grown, more companies are expected to increase their commitment to sustainable palm oil over the next five years, with demand for palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO) expected to reach 2-3m tonnes.
Indonesia and Malaysia produce 90% of total global palm oil inventory. Rabobank predicts that production of certified palm oil will reach 20-24m tonnes over the same period, with capacity growing at 64%, from 619,000 tonnes in 2008 to 11.9 million tonnes in 2014.
Rabobank’s Pawan Kumar said many industry players are committing to sustainable palm oil, leading to substantial openings for suppliers with certified high levels of sustainability.
“This is in response to increasing calls from consumers across the globe, but complex supply chain and inventory challenges are creating a gap between demand and supply,” Kumar said.
“We’re also seeing more companies developing their own additional standards on top of those required by RSPO in efforts to be sustainability leaders, creating challenges for the sustainable palm oil global supply chain as traders battle to match customers’ demands with the right levels of traceability.
“This represents considerable opportunities for niche players and dedicated suppliers with vertically integrated supply chains who specialise in highly traceable palm oil. Niche or small volumes will prevent economies of scale and result in premiums for sustainable palm oil with more stringent criteria.”
The “book and claim” and “mass balance” sourcing options are used most often now, though the market is moving towards more stringent certificates, such as the “segregated” and “identity preserved” models that require certified volumes to be kept separately during transport, storage and processing.
As the palm oil supply chain faces increasing complexity, it will be crucial for RSPO-certified suppliers to keep their criteria attractive to branded manufacturers, such as the development of RSPO Next currently being worked out. This could also help reduce complexity in supply chain, the report said.
RSPO has naturally cheered the reports findings. Darrel Webber, secretary general, said RSPO has been pushing companies towards continuous improvement since the certifier was founded in 2004.
“It's good to see that this approach is not slowing us down in moving towards our 2020 targets and market transformation,” Webber added.
According to the Rabobank report, palm oil developments should be monitored by other commodity markets, including soybeans and sugar, where food manufacturers are also shifting to more sustainable purchasing requirements.
More news from Southeast Asia…
Minister: Singapore must develop its agricultural efficiency
Partnerships between government and industry, along with continuous innovation, are needed to strengthen Singapore’s food supply chain, the national development minister has admitted.
"By forging and maintaining close business links with new markets, importers will be better able to rebalance their different sources of supply, should there be any disruptions", said Lawrence Wong.
"If we continue to ramp up our local production in cost-effective ways, we can become more self-reliant over time.”
Singaporean farmers currently produce around 10% of the island’s demand for leafy vegetables.
“We can certainly increase this percentage because there are technologies that can enable us to raise our local vegetable production greatly.”
He said these include Sky Greens' vertical rack method, which produces at least five times more vegetables per hectare than conventional vegetable farming methods, with space efficiency being essential for agriculture in a country with limited growing space.
"Imagine if this happens across all our vegetable farms in Singapore. Then certainly our local produce can increase significantly, and that will go some way in terms of enhancing our resilience and our supply self-sufficiency," Wong added.
Speaking at a food industry convention, Wong also called for companies to invest in overseas farming, distribution and processing, as well as increase its bargaining power by tapping into third-party logistics service providers.
He said that the government is currently supporting farmers in purchasing technology to boost local production. So far, 20 farms from 17 companies have benefitted from a S$63m (US$45m) agriculture productivity fund that was launched last year.
$90m Nestlé noodle and drinks factory opens outside Kuala Lumpur
Nestlé has invested approximately RM378m (US$89m) in a new beverages factory and noodle line in Malaysia.
Both facilities are located in Nestlé’s largest manufacturing site of eight in the country, in Shah Alam, which employs close to half of the company’s workforce in the country.
The new factory will produce ready-to-drink products including Milo, Nescafé and Nestlé Omega Plus, for which Nestlé is seeing rising demand.
Building on the Maggi noodle range’s growing popularity in the country, where 1.7m packs are sold daily, Nestlé has also invested in a new high-capacity noodle line to produce Maggi Curry Noodles.
Over the past two years, Nestlé has invested more than RM600m (US$141m) as part of its long-term growth strategy in Malaysia.
Falling ringgit responsible for food trade deficit and rising consumer prices
The fast depreciating Malaysian ringgit has caused the value of imported foods to grow 2.33% to RM21.45bn (US$5.04bn) in the first-half of this year.
The equivalent trade last year was recorded at RM20.96bn, said agriculture minister Ahmad Shabery Cheek, adding that the weakening currency has led to increased consumer food prices.
In the first half of 2015, the ringgit weakened by 7.89% against the US dollar. At the same time, the trade deficit for food items came in at RM8.91bn, suggesting a financial year-end increase over last year’s figure of RM17.02bn. In 2011, the food trade deficit stood at RM13.95bn, the minister said.
Sustainable rice standard launched in Manila
The world’s first global standard for sustainable rice has been launched following work by the International Rice Research Institute and the United Nations Environmental Programme.
The Sustainable Rice Platform Standard and Performance Indicators for Sustainable Rice Cultivation will ensure that rice is sustainable, profitable for farmers and are healthy for consumers.
“The establishment of the standard addresses a long-neglected need for a globally critical crop and the standard represents a fundamental building block for developing the application of sustainability and informing policy formulation,” said UNEP regional director Isabelle Louis.
To adhere to the standard, rice producers must fulfil 46 requirements from eight aspects of rice cultivation, including farm, nutrient and pest management, water use, labour rights, and health and safety.
Some major food and agricultural companies have already committed to testing the Standard, including Kellog’s, Mars Foods, Louis Dreyfus Commodities, Ahold and Syngenta.
Mars Foods, maker of Uncle Ben’s, is aiming to achieve 100% sustainable sourcing its rice by 2020.
“With this Standard, we can get there. We are mapping out all our supply chains, auditing, and finding out where are the gaps,” said Kristin Hughes, global corporate affairs director.
The Standard can be downloaded from the Sustainable Rice Platform’s website.
KL ramps up food inspections after typhoid outbreak
An outbreak of typhoid in Kuala Lumpur has prompted food authorities to launch a clampdown in and around the Malaysian capital, shutting down more than 100 restaurants and food courts within less than a week.
Of the 221 restaurants given spot inspections by Kuala Lumpur municipality, 142 were told to close, according to media reports.
“Some premises were found with rats and cockroaches, while in some places their workers were not vaccinated for typhoid,” said Hayati Abdullah of the city’s health department.
Dr Hayati said the department regularly conducts inspections for cleanliness and sanitation.
“As of September this year, we had checked 5,243 restaurants and food outlets and issued 2,021 compounds to food operators and premises owners who did not adhere to the guidelines,” she said.
“A total of 852 premises had been closed due to unsatisfactory cleanliness since January.”
The municipality has also vaccinated nearly 30,000 food handlers for typhoid, Dr Hayati added.
China’s Thai food exports growing despite drop in other categories
Overall exports to China might be down this year, but Thailand’s food shipments have been growing due to increased demand, a financial strategist has claimed.
Uwe Parpart, managing director of Reorient Group, a Hong Kong-based investment firm, said China presents “a unique opportunity for Thai exporters who can discern and identify the food items in greatest demand”.
“Food is a critical category of consumption with large growth potential as the Chinese consumer is, and will remain, distrustful of foodstuffs made in China. Food imports in September were up 24% year on year by volume,” Parapet said.
He added that China's simultaneous cuts in interest rates by a quarter of a percentage point and the required reserve ratio by half a percentage point for commercial banks was part of Premier Li Keqiang's pledge to pull out all the stops for maintaining stable economic growth.
Malaysian youth not paying enough attention to diet
Young people in Malaysia are not consuming enough of the right foods after a survey into youth eating habits revealed lax eating habits, according to a minister.
Khairy Jamaluddin, minister for youth and sport, said the survey placed eating habits lowest out of seven health indicators for young people.
"This shows that many youths are not eating right in accordance with the healthy food pyramid and they prefer to eat fast food,” Khairy said.
"If we continue selling processed food in schools, it is like selling cigarettes to students.”
Malaysia is attempting to come to grips with a problem that does not only affect young people. The health ministry’s latest National Health and Morbidity Survey has also found that 18% per cent of adult Malaysians were obese compared to just 4.4% in 1996.
The percentage of overweight people is also on the rise.
Khairy has called on the government to consider youth eating habits as a guide when drafting policies.
Hi Southeast Asia to launch next year in Jakarta
Strong growth in Indonesia's nutrition segment has prompted the launch of a new industry event in the country next year under the Health Ingredients banner.
With nutraceuticals forecast to grow at 10% this year, and the Indonesian government streamlining the country’s health claims framework, Olav Masseling, the organisers’ brand director, said now is the right time to launch Health Ingredients Southeast Asia in Jakarta, during a year when its Food Ingredients show will take place in the city.
"We have a strong attendee base in Indonesia though Fi Asia,” said Masseling.
“We have learned that manufacturers are expected, in the coming years, to increase marketing of health and wellness products and product launches in the Asean region.
Indonesia, with a population of 248, people, has a large and growing internal market, he added.
“With many international ingredients companies looking to expand in the region, we have seized the opportunity to bring the advantage of these positive market attributes to our visitor and exhibitor client bases through the launch of Hi South East Asia 2016.”