Good palm oil is possible. This is what it looks like, says Palm Done Right CEO
Started three years ago by Natural Habitats, a company that produces, collects, processes and trades organic and fair trade palm oil, Palm Done Right is an education programme aimed at engaging industry, consumers, the media and other stakeholders.
“Our collective aim is to raise the awareness of truly sustainable palm oil [so that] other producers that meet this highest standard of sustainability join the program, thus eventually becoming a collaboration of organic fair trade producers that can truly move the needle in impacting the palm oil industry.”
What is Palm Done Right?
Palm oil produced according to Palm Done Right standards – what Blomquist refers to as ‘conflict free palm’ - is produced organically, using natural pest management, multi-cropping and composting, in vertically integrated ‘farm to fork’ supply chains.
Only existing crop land or degraded land is used. Fruit is handpicked; farmers favour animal transportation where possible to cut down on fossil fuels; and farmers are guaranteed Fair For Life fair trade premiums. It also encourages farmers to diversify with other complementary crops, such as cacao, supplementing income and avoiding monoculture.
On its plantations, 80% of the land is used for cultivation, 5% for infrastructure, and 15% is left as a protected biodiverse environment. It also keeps a team of professional agronomists on hand who work with the local farmers and aim to combine their technical know-how with the farming knowledge of local communities.
It also develops community programmes that focus on local infrastructure, education and nutrition.
He sees the Palm Done Right model as going beyond other certification systems, such as the Roundtable on Sustainable Palm Oil's (RSPO) principles and criteria or the Palm Oil Innovation Group's (POIG) charter.
“This is not another certification system – we call it a movement," says Blomquist, who is also managing director of Natural Habitats US, and chief commercial officer of the Dutch parent company Natural Habitats BV. "Although Natural Habitats is fully RSPO Identity Preserved certified to meet some of the market’s insistence that we have it, the principals of Palm Done Right will always operate at a standard much higher than RSPO or POIG will ever operate.”
Who is buying Palm Done Right?
Currently there are only two companies supplying palm oil according to the Palm Done Right ethos, Natural Habitats and US personal care company Dr Bronner’s, but brands that buy their palm oil from Palm Done Right supply chains can use the trademark logo on their products and marketing materials.
Over half of the demand for Natural Habitat’s palm oil is in Europe, with around 60% of its supplies going to European buyers while 40% is destined for the US market.
Its largest European customer is German baby food and infant formula manufacturer HIPP followed by organic food manufacturer Rapunzel, also German.
It also sells to two companies producing margarine for the European market – “so any margarine, branded or private label, that is organic will have conflict-free palm”, says Blomquist.
In terms of how price competitive Palm Done Right is with other types, Blomquist says this depends on where it is grown.
“The premium for conventional South American sourced palm that would be a far more sustainable product than anything coming out of Asia. GreenPalm, RSPO or POIG, carries a premium of around 25%. Organic is closer to a 50% premium.”
Small fish in a big sea?
But the question remains, can the Palm Done Right model ever meet global demand for a commodity that is used for so many products from food to fuel to skin cream?
In 2016 Natural Habitats will have produced over 10,000 tons of palm oil and it expects to increase this to 20,000 within the next three years with its two current supply chains in Ecuador and Sierra Leone. Dr Bonner's produces between one and two thousand tons for its own brands.
Despite the environmental concerns surrounding current production methods, palm oil has good sustainable potential: it offers much higher yields than other crops - around 5-10 times more oil per acre than soy or canola.
It also produces fruit all year round, meaning a steady income for farmers.
Meanwhile, according to Euromonitor data, global palm oil production rose from 45.7 million tonnes in 2010 to 58.1 million tonnes in 2015. Palm Done Right volumes currently seem a drop in the ocean in comparison.
Natural Habitats aims to increase capacity in line with organic demand, which currently accounts for around 5-10% of the food market in the US and Europe depending on the product category.
By raising the profile of sustainable palm oil, Blomquist hopes demand for it will increase demand even more but he remains realistic about its limitations.
“I do not believe in my lifetime I will see organic being able to supply the global market. My hope is that what we are doing will grow to have enough impact to force change in Asia. Ultimately, palm oil has to be priced at sustainable market prices to support a more ethical and sustainable supply chain.”
Palm Done Right's impact may also be limited by its current geographical locations. Natural Habitats currently operates in Ecuador, Sierra Leone while Dr Bonner's is in Ghana, but most of the world's palm oil comes from Indonesia and Malaysia which together produce around 85% of the global supply, and it is in these countries that the negative impact of industrial palm production has been greatest, from peatland fires and deforestation to life-threatening haze.
Blomquist says he wants to expand it “to the front lines” – Indonesia and Malaysia. “Our long term goal is to create diversity in the supply chain and expand the organic model to other palm growing regions, including Indonesia and Malaysia. Currently, we do not see an environment where this model would be welcomed, in fact it would most likely be a threat.”