RSPO standard to be improved further

By ELAINE ANG
http://biz.thestar.com.my/news/story.asp?file=/2009/5/23/business/3956983&sec=business

THE Roundtable on Sustainable Palm Oil (RSPO) aims to continue to improve the RSPO standard, which it feels is among the best for any agricultural production in the world.

Secretary-general Dr Vengeta Rao agrees the RSPO standard is tough but points out that first achievers (of the certification) have received an encouraging premium for RSPO-certified palm oil and this is a helpful incentive for others to go for certification.

RSPO is a non-profit association that unites stakeholders from seven sectors of the palm oil industry – oil palm producers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation non-government organisation (NGOs) and social or developmental NGOs – to develop and implement global standards for sustainable palm oil.

However, Rao foresees more work to be done on the standards, more widely known as the principles and criteria, under the RSPO to encourage more certification and also to dispel further criticism heaped on the roundtable by environmental groups and NGOs.

He says the roundtable is currently looking into issues such as deforestation and biodiversity loss without losing sight of the relevance of national development plans and increasing global edible oil needs which palm oil is best placed to meet due to its natural high productivity.

Plantation companies in Indonesia and Malaysia, which together produce 87% of all palm oil, have come under fire for fuelling deforestation that contributes to the demise of animals such as orang utans and elephants.

There will also be opportunities for smallholders to obtain RSPO certification.

The roundtable is coming up with rules and criteria for the certification of smallholders due to their large numbers in Indonesia and Malaysia. The RSPO encourages the participation of smallholders through lower membership fees.

Smallholders need not be certified individually to lower costs – instead they can be audited for compliance and obtain group certification.

“We are also looking at ways to reduce green house gas emissions in producing palm oil, in particular where palm oil expansion is into high carbon-stock soils.

“All the issues are being addressed by expert multi-stakeholder working groups and there will be periodic public consultation in the course of the work,” Rao says.

So far, plantation groups that have entered RSPO certification include United Plantations Bhd, Kulim Bhd, Sime Darby Bhd, Perlis Plantations Bhd, IOI Corp Bhd and Kuala Lumpur Kepong Bhd in Malaysia; PT Musim Mas and PT Hindoli in Indonesia and New Britain Palm Oil and Hargy Palm Oil in Papua New Guinea.

According to Rao, most of the large palm oil players have had some if not most or all of their mills certified with certified volumes just over 1.5 million tonnes and possibly rising to about two million tonnes by June. He expects certification to continue with volumes of RSPO-certified palm oil rising but “the pace will depend on demand and price.”

“The demand for RSPO-certified palm oil and premia have reduced recently with the global economic downturn but the markets may pick up again,” he says.

However, the roundtable may have its hands full in promoting sustainable palm oil, especially in the European Union (EU), where there appears to be controversy about palm oil.

According to WWF International, only 1% of the sustainable palm oil available on the global market has been bought.

In a bid to speed up the “sluggish performance”, WWF said in a recent statement that it would assess the world’s major users of palm oil over the next six months and publish a Palm Oil Buyer’s Scorecard highlighting companies that support sustainable palm oil and exposing those who have not fulfilled their commitments to buy it.

The scorecard will rank the commitments and actions of major global retailers, manufacturers and traders that buy palm oil. Companies will be scored on a variety of criteria relating to their commitments to, and actions on, sustainable palm oil.

WWF helped set up the RSPO as an international body for the industry to develop sustainability standards.

WWF is asking all companies buying palm oil to make public commitments that they will use 100% certified sustainable palm oil by 2015; to make public their plans with deadlines to achieve this goal; and to begin purchasing certified sustainable palm oil immediately.

To add to the problem, the EU’s Renewable Energy Directive sets strict sustainability criteria on materials used to produce biofuels.

The directive, to be made into national law within the next 17 months, is perceived by many trade industry observers as a tactical unfair business practice and a non-tariff trade barrier move by the EU.

Rao, however, remains unfazed. He says the benefits of being RSPO certified should continue to encourage industry players to strive towards the certification.

“It provides palm oil players with premium prices and market preference,” he says. Going forward, Rao expects more companies and volumes to be certified.

“The standards and auditing will continue to be robust. We are also working towards more certification opportunities for smallholders.

“We are aiming towards a smaller footprint than previously for each drop of oil in an ever shrinking world,” he says.