Choices available for sustainable palm oil credentials

At the recent PORAM Annual Forum, Khor Reports spoke on the topic of sustainability certification options.

The outlook for the certification for sustainable palm oil is getting a lot more complex. It appears that stakeholders are wrestling for control over the palm oil policy agenda, after it was so readily snapped up by the Roundtable on Sustainable Palm Oil (RSPO) and its key movers in the last few years.  The RSPO is the palm oil industry’s current super-standard and by some measures it is probably the most successful voluntary standard in agriculture product certification. However, the RSPO has some issues: a) its exclusive approach makes it de facto regressive as it set out to focus on the largest corporations, b) it has large gaps with policy in producer countries, c) its first-mover monopoly has been dissipating to the ISCC whose stronger commercial grounding is a contrast to the RSPO’s relatively disappointing low premium and supply glut; d) there are significant worries that the RSPO will be pressured to raise its standards by non-member NGOs; and e) it proposes large financial compensation charges on grower members – this could amount to USD billions and it might open them to national and international lawsuits. This is from the perspective of palm oil industry players. From the viewpoint of other NGOs, it is not doing enough. And here, we see the new combination of The Forest Trust and Greenpeace coming in to usurp the RSPO's prime position while relying on it i.e. launching RSPO+ efforts. TFT/Greenpeace worked to great effect in causing GAR/Sinar Mas to adopt strict standards including no planting on peat and using a 35 tonnes carbon per hectare ceiling for new land development in a pilot project. We can expect the TFT/Greenpeace program to be marketed to more companies, both buyers and plantations.

In light of such trends, it is no surprise that there are clear signs that big grower and buyer members of the RSPO have been setting up various alternatives. Some may worry about a trajectory of excessive demands and so they seek to hedge their bets. Others may be seeking better alignment for multi-product supply-chains. Some want to show they can do more than RSPO e.g. Ferrero working with TFT/Greenpeace standards. Whatever the reason, key stakeholders have been actively pushing for new certification options which may better retain industry control. Will this dilute the impact of RSPO’s perilous promotion of trade restrictions? Thus, we see the introduction of state-initiated and supra-national facilitated schemes. These could gain market share if voluntary standards are impaired by poor alignment at the structural or policy level e.g. many voluntary conservation areas are untenable. Palm oil industry certification could be quickly moving toward the complexity seen in other sectors such as forestry and soy. How will NGOs react to such a shift? The palm oil industry will need to ensure good practices and maintain buyer acceptance. The grower segment and key supply-chain choke-points are under pressure, and they will need to put in additional resources for advocacy and negotiation on market access and more.

Bottom-line: Under sustainability, the supply-chain model has to be short and simple. Big and complex won't work well under traceability requirements.

We would appreciate your feedback

Could you spare us 5 minutes to share your feedback? Please click here: Khor Reports reader survey

Over 1000tc/ha carbon stock in one oil palm cycle

In an analysis that is thorough in inclusion of carbon in all elements in palm oil from oil palm roots to fronds, cover crop, ffb and efb, and pome, AAR gives a one cycke carbon accumulation measure of over 1,000 tonnes carbon per hectare.

Khor Reports comment: This will be an eye opener in the contestation over palm oil sustainability. This is a vast difference to figures used by the TFT/Greenpeace schemes that use an old indicator of 35 based on an indeterminate number of old studies. Ngo-driven voluntary certification efforts are hampered by literature reviews of uncertain quality and citing often dated studies. The AAR study is a good scientific counterargument. It should generate a flurry of scientific studies to review uncertain measures and indicators used in many voluntary standards. What will happen to high carbon stock arguments? Some big players are said to be ready settle on 75+ tonnes carbon per ha. They might want to make more studies. AAR is a joint research unit of KL Kepong and Boustead.  

Sustainability impacts supply-chain

Unilever said that it would only buy traceable palm oil by end 2014. One of the top buyers of palm oil, the Anglo-Dutch consumer goods manufacturer has been among those leading the charge in sustainable palm oil. It has worked closely with WWF and others in leading the Roundtable on Sustainable Palm Oil (RSPO). It is notable that "At the end of 2012, only around 5% of its palm oil was traceable and certified, a company spokesman said. Part of the problem is that the vast number of suppliers Unilever works with means the company struggles to keep tabs on where each batch of palm oil originates.... Unilever will cut its roster of suppliers to between 10 and 20 from well over 100 as it adopts traceable sourcing. Of those, "six or seven will do around 70% of volume," (Unilever) said... Another tactic Unilever is using to improve the sourcing of its palm oil is to control the process from the earliest stage. The company is already partway through building a $100 million palm-oil plant in Indonesia, and Mr. Engel said similar investments would be considered in the future" (Wall Street Journal, 12 Nov 2013).

Comment: Khor Reports' view on the consolidation of the supply-chain with increased leverage for retailers and buyers is panning out. Shorter and simpler supply-chains are the order of the day. Large complex supply-chains are now facing NGO criticisms, notably on third-party purchases from non-certified sources. We have noticed that the palm oil industry at large has been relatively uncaring of happenings at the RSPO (i.e. its something for the big players and only for the European market). However, smaller producers and smallholders in developing countries should now sit up and look out. Could they be increasingly side-lined in a palm oil supply chain that will increasingly favour larger producers, those with simpler supply-chains and those in regions with a comparative advantage in sustainability? This will solidify market tiers with discount/premiums for what is a basic agri-commodity product of bulk usage. This is unusual as certification was typically not for bulk but for niche usage e.g. FSC, Fair Trade and organic. The trajectory of sustainability in palm oil continues to surprise with the speed of its evolution and the speed of the relative decline of the negotiating power of producers. Relative to soybean oil, palm oil producers face tougher and more costly standards. Might this accelerate the convergence of unit costs? Palm oil producers have enjoyed relatively high profit margins over a long period of time. Is this set to normalize? Perhaps many also don't really mind if the speed of expansion slows. This might be supportive of prices?

UPDATE on 18 Nov 2013: Khor Reports has discussed the regressive unfairness of the structure of voluntary standards such as the RSPO. Now it looks like a big NGO-buyer processor effort could result in more serious impact on the entire palm oil supply chain. Industry leaders are starting to express worries of the unfairness of current proposals on smaller producers and farmers who supply the bulk of SE Asia palm oil. Indonesia players also point out that the push could result in a politically untenable situation for 2014. if large swathes of smaller producers end up as "ineligible suppliers" within a short time frame; assuming enough big players sign on (it may not take many). The impact on the supply-chain of the current proposals among dominant players could be significant with uncertain and unintended outcomes on spatial supply-chain & logistics, lost crop & dropping FFA quality etc. NGO pressure is particularly strong on a key part of the supply-chain. This bears watching. Have the dominant players fully assessed the potential impacts and outcomes?

Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (now available)

Click here to view full newsletter, pdf:   http://tinyurl.com/mbhthpb

Earlier, we had released some of the draft articles in this blog. Click on the links below!

KHOR REPORTS' PALM OIL NOV/DEC 2013, ISSUE 5: Feeding Africa, Asian companies eye West Africa consumers with palm oil, instant noodles and more
Feature: Indomie, Unilever & Olam in W Africa. Instant noodles & global hunger
Indonesia’s landholding ceiling, Felda Global deals & more
Biofuel policy cooling and boost, Neste Oil’s renewables
Sustainability: more certification, snacks & supply chain
Preview: RSPO hot topics

Contents:
Editorial - unprecedented policy challenges, time to restrategize?
Indonesia ceiling on landholdings.
Felda deals & more.
Biofuels policies falter but Indonesia boosts.
Neste Oil’s renewables.
More certification.
RAN on snackfoods & supply chain.
RSPO preview.
Feature:  West Africa. Instant noodles.
Key vegetable oils.
Weather outlook.
CPO technical view.
Price charts.


Source: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)

Upcoming talk: What next for palm oil certification?

With the expanding options available in certification of sustainable palm oil, we look at some of the rationales and issues.

Khor Reports will be presenting its views at Palm Oil Refiners’ Association Malaysia’s (PORAM) upcoming annual forum on 22 November 2013:
o #1 Are sustainability standards helping or hampering growth / market access?
o #2 Is the RSPO’s market position wobbling?
o #3 Who’s involved in setting trade policy & market access for palm oil?


We have also been interviewed by Indonesia industry magazines on this topic, specifically on the market chatter that the Malaysia Palm Oil Association (MPOA) taking a similar track to Indonesia’s GAPKI in walking out the RSPO. We have a client update on this, in a question & answer
format.

The state of palm oil sustainability certification is now in high flux. Please call us for more insights and intelligence.

Sample:

Q. RSPO doesn’t seem to be a full solution for palm oil companies trading with the EU and the USA, what do you think?
A. It ironic that the RSPO, which early on stated that it sought to help the palm oil industry to maintain market access has shifted. It turned to lobbying to limit market access for non-certified (i.e. non-RSPO members) to the big developed and developing markets. RSPO representatives have been sking big markets to put up tariff differentials against non-RSPO palm oil. This is unfortunate, as it  would hit smaller producers’ market access more than the big plantations. RSPO has been very focused on larger producers; putting into practice WWF’s strategy that tackling the biggest players will do the most to “transform the market” whereas working with individual consumers and small  producers is just not effective. As a development economist trained to care about improving circumstances for the less advantaged players and seeking “first-best” policy options, I have to question the rationale of the RSPO. Why is it designed to mainly support the biggest companies? Smallholder development has been a side-show so far. As a result of this skewed approach and its policy to promote trade barriers, the RSPO approach is de facto regressive i.e. disadvantageous to smaller palm oil producers and farmers who are not their core target members. Organizations like the International Trade Centre (set up by the WTO and the UN) ask whether private standards are “boom or bust” for producers; without terribly encouraging findings for producers.

Q. If both Indonesia and Malaysia stop participating in the RSPO, what would be the impact?
A. If you mean the withdrawal of big plantations from their RSPO membership, that would be quite a move that would startle the RSPO. They would have to fall back to national certifications such  as ISPO and MSPO or new private standards such as ISCC-Plus. They would have to ensure buyer acceptance of these certification schemes. What is interesting is that big buyers themselves are paving the way for alternatives to RSPO. It is well known that buyers are fast launching in-house sustainability protocols or standards that straddle multiple private certifications, one being the RSPO. After all, they do have to deal with the procurement of many products. What is also promising is the  role of multilateral organizations in capacity building in the palm oil sector. The World Bank was attacked by NGOs campaigning against palm oil, but they can be there to help. The United Nations Development Program (UNDP) is now assisting on a study of ISPO and RSPO. Notably, the UNDP has a Sustainable Palm Oil effort funded by some big global buyers. This should be a good thing for the promotion of ISPO, and a possible challenge to RSPO’s first-mover monopolistic position. The future will see further improvements of sustainability in palm oil. But I think that some of the overly narrow NGO approaches will be challenged by the expanding role of the multilaterals. They are likely to bring in a more holistic approach that is also caring of smallholder development and their market access. Khor Reports has always believed that sustainability schemes have to be cost-effective as well as inclusive of small players, to be internally as well as externally sustainable. Crucially, there also needs to be benchmarking against other schemes, such as that for soybean oil, a key competitor vegetable oil. Palm oil is a basic commodity. Being too adventuresome in allowing unpredictable cost escalation (even for a good thing like sustainability) will not serve the industry or global consumers well. There are many ways to do the right thing. The options are expanding.

NGO powerplays roil palm oil certificat​ion. Back to B2B?

One of the casualties of NGO wars over palm oil may be RSPO as it and WWF gets pulled along by NGO demands for more. GAR has seen the outcome of TFT efforts on its behalf. Interestingly, the Nestle name altogether disappeared from its high carbon stock solution. In a bold and  courageous move, GAR and its consultants brought in Greenpeace.

Growers will be disappointed that sustainability certification efforts become destabilised by demands on high carbon stocks as well as the risky RSPO HCV compensation fees proposals that may amount to added cost of USD70* per tonne or more for newer estates (we update for a higher cost estimate as we get feedback that social compensation may double environmental compensation fees).

B2B efforts may get a boost as companies tire of their sustainability efforts being damaged by NGO tussles. There are new supply chain demands too - focusing on third-party purchases. In this, Wilmar is widely regarded as the most vulnerable. Few businesses, including buyers, will want to deal with escalating uncertainty in sustainability certification. Look out for more buyer standalone protocols that start to offer alternatives to the RSPO and other NGO mediated schemes? Growers will then have to mull over the many sustainability schemes emerging.


Note: RSPO RT11 is just around the corner, and this event is often a trigger for new policy moves. In the last two weeks or so, our channel checks focused on Malaysia and Singapore-based palm oil players. We found significant shifts in thinking about certification efforts.


Please also check out our upcoming newsletter: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)

RSPO Hot topics for Roundtable 11 at Medan, Indonesia

RSPO’s proposed Compensation Procedure is a bold gambit at changing plantation company behaviour by altering and controlling certain cost parameters. Financial analysts will be reaching for their spreadsheets for the first time on a sustainability issue. Don’t be surprised if the growers trot out some lawyers to review this. We conservatively estimate an initial payment of USD 500 mill from growers, mostly to NGOs for conservation.

RSPO’s Roundtable 11 will be in Medan, Indonesia, on 12-14 November 2013. It will focus on the revised Principles & Criteria (RSPO Standard 2013). The size of the RSPO membership, at over 1,300, may make it more unwieldy along with this format.

Key topics for RT11?
1. Certification of independent smallholders in Malaysia and Indonesia; fund & other support.
2. Executive Board joint-leadership?
3. Development of revised National Interpretations for Standard 2013.
4. Fire in oil palm plantations & reliable maps on landownership.
5. Potential demand for non-oil sustainable products (EFB, PK shell etc) and the need for a traceability mechanism (revision of the RSPO Supply Chain documents to come)
6. Members who need more challenging time bound plans for production and consumption.
7. China & India market development.
8. RSPO+ standard? Greenpeace advocates the Palm Oil Innovation Group.

Contact khorreports(at)gmail.com for a customized review of RSPO Resolutions

Source: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)

Editorial: Time for new strategies?

There’s a pricey proposal from the RSPO and increased supply-chain pressure. Key markets cool while producer biodiesel efforts slowly get into gear. Add on Indonesia’s shift to implement a landholding ceiling and Malaysia’s policy adjustments for sustainability. Top this all off with no clarity on a trajectory for haze smog alleviation. Overall, the palm oil sector faces unprecedented cost parameter and growth model challenges. Time to restrategize?

First, reconsider the role of palm oil in local energy use. Malaysia’s biogas directive is a good starting point. Set for 2014 launch, it requires every mill to set up a biogas facility for methane capture; presumably to improve the greenhouse gas (GHG) profile for Malaysian palm oil. Aside from implementation and technological risks, there are obvious suggestions to improve Malaysia’s feed-in tariff for biogas power and allow easier grid connection. Khor Reports suggests a feasibility study on microgrids for remote areas. In the semi-urban zone this might challenge an incumbent power utility and it would work less well in countries with subsidized power. However, could this help firmly establish the localized use of palm biogas, biomass and biodiesel? Many developing countries sorely need power in certain rural areas. They could encourage mills siting next to a mining facility or another energy hungry user. Economists might plan for processing clusters that could aid rural development.

How about on sustainability? Redd+ efforts are of interest to policy makers, despite Ecuador’s Yasuni alternative funding model finding insufficient takers. The opportunity cost may have long pointed to oil palm development instead of conservation. How can this be improved for viability? Peat lands are probably the prime areas for such efforts and new proposals at the RSPO could tilt the financial calculus. What about the RSPO? It has helped some large plantations maintain market access to the large global brands. Khor Reports has long been of the view that its exclusive / non-inclusive strategy has obvious limits. Its planners poorly recognize the fact that small farmers in developing countries just aren’t like those back home in Europe. How will even more exclusivity via the Palm Oil Innovation Group become of general relevance? Notably, the RSPO’s gold standard approach already has limited if no hope of addressing key problems, including the annual peat smog. Thus, we challenge sustainability experts to this task: get rid of the peat smog problem within three years. NGOs and corporate players from various sectors (not just palm oil) need to get “down and dirty” to effect change at the local and provincial levels. Help small growers and farmers. Do something about raising the water tables in fire prone areas? Governments could facilitate. The current voluntary, top-down (so called market-led) efforts, hardly seem fit for such purpose. What can sustainability do for the peat smog that hits annually? We need a new bottoms-up approach.

In this issue, we feature Asian palm oil and consumer good companies eyeing West Africa’s market prospects, with instant noodles as a key product. I eat more than the average 14 packs per year, helping global consumption exceed 100 billion packets in 2012. Some academics reckon it has helped alleviate global hunger. While interest of the EU and US in biofuels dips, Neste Oil’s renewable fuel business boosts its prospects. In sustainability, certification is expanding and NGO campaigning in the US is in the limelight. What are hot topics for the upcoming RSPO Roundtable? Its proposed Compensation Procedure bares its financial teeth, with retroactive charges and fees on non-RSPO. Khor Reports conservatively estimates an initial USD 500 mill paid by growers, most likely into NGO hands for conservation.


Source: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)

Biodiesel: Neste’s renewables rise

Despite the apparent dipping interest of the EU and US in biofuels, Neste Oil’s renewable fuel business is boosting its prospects. The Finnish refiner, one of the top buyers of palm oil in the world, is bucking the malaise in the European refinery sector.

“Neste Oil is the best-performing major European energy stock (rising 78%, year-to-10 September)… after saying full-year earnings will exceed analyst estimates as renewable-fuel sales gain… particularly in the North American markets. As Neste’s NExBTL product meets (California’s) own standards, it could sell about 290,000 tonnes this year of the biodiesel there, or about 18% of total production... Neste is benefiting from increased demand for biodiesel. The EU (encourages) land-transport energy from renewable sources… The guidance upgrade was mainly due to low palm oil prices and high Renewable Identification Number prices in the US (bloomberg.com, 10 Sep 2013).
Neste Oil’s model focuses on serving local markets, ultra-modern technology and biofuels. Neste Oil targets mostly the Baltic markets (68% of its sales), Europe (20%) and the United States, Africa and Asia (12%). Neste's heavy focus on biofuels made from palm oil and animal fats turned profitable in the first quarter of 2013. It plans to increase annual renewables output by 15% to 2.3 mill tonnes by 2015. In the US, which buys 35% of Neste renewables, biofuels use was set to double by 2020, Neste said (reuters.com, 16 Sep 2013).

The company has two fossil fuel refineries, in Finland, and three renewable diesel refineries (Finland, Singapore and Rotterdam). All Neste Oil’s NExBTL diesel plants are ISCC-certified and have an EPA Certificate of Registration, for the EU and US markets respectively. Neste Oil has also “developed its own voluntary sustainability verification scheme applicable to any renewable raw material… (it) broadly mirrors the ISCC certification… (with) separate sections devoted to the certification of renewable raw materials, fuel refining, and logistics (company website, 21 Oct 2013). Neste Oil reports only buying CPO that is traceable with known origins, and with reportable and verifiable Greenhouse Gas emission values. It is committed to only using 100% certified palm oil by end of 2015 (company report, 25 Sep 2012).

Source: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)

Biofuels policies: EU & US cool while Indonesia boosts

In early September, the European Union (EU) fixed a 6% limit on the use of crop-based biofuels in ground transport; cutting back the previous requirement that at least 10% of energy for road and rail transport should come from renewable sources by 2020. This caps the potential for increased demand. In the longer-term, analysts say that this may reduce the EU’s imports of biodiesel. The USDA’s outlook for EU biodiesel consumption is +1.1% from 11.9 bill liters in 2013F to 12bil liters in 2014F, with imports forecast +5.9% from 1.7bil to 1.8bil liters respectively.   USDA estimates EU biodiesel refining capacity at 24.5 bill liters in 2011, with utilization only at 45% (AmResearch, 19 Sep 2013). The EU states agreed to impose punitive duties on biodiesel imported from Argentina and Indonesia; provisional tariffs were in place in May and by end November, duties of EUR217-246 / USD296-336 and EUR122-179/USD166-245 per tonne apply respectively. Both will challenge the duties (reuters.com, 23 Oct 2013).

“The negative development in EU is expected to be mitigated by positive developments in Indonesia. Recall that Indonesia raised the blending rate for biodiesel to 10% from 7.5% this month. B10 will be imposed on industrial users this month while B20 will take effect for power plants starting from January 2014.  In line with this development, Biofuels Digest reported that PERTAMINA will hold a tender this week to buy 6.6 bill litres of palm-based biodiesel for its requirements in the coming two years. National production is roughly 5.6 bill litres annually from 25 different producers” (AmResearch, 19 Sep 2013). 

Reuters reports (11 Oct 2013): “In a leaked proposal that would significantly scale back biofuel blending requirements next year, the U.S. Environmental Protection Agency (EPA) says the blend wall - the 10% threshold of ethanol-mixed gasoline that is at the crux of the lobbying war - is an "important reality." The agency's rationale for a cut in the volume of ethanol that must be blended echoes an argument the oil industry has been making for months: the U.S. fuel chain cannot absorb more ethanol. Few retailers are able to sell ethanol blends beyond the 10% maximum, or willing to take the legal risk that comes with it, they argue. The words will cut deep for proponents of biofuels. They have argued for years that the blend wall is largely a fiction constructed by an oil industry that doesn't want to cede any more share of a shrinking U.S. gasoline market.” The volume of corn-based ethanol will be reduced by 800 mill gallons to about 13 bill gallons versus the law’s required 14.4 bill gallons for 2014F. The EPA proposal has to be approved by the White House Office of Management and Budget.  This would not be positive for biofuels and it could result in excess supplies of corn; the USDA expected about 33.8% of US corn to be used for ethanol in 2013F/2014F (AmResearch, 14 Oct 2013).

Could this presage a lower blending of soybean oil in US biodiesel? Could there be a similar “blend wall” in biodiesel to impinge on higher blend rates in palm producing countries? Their political-economic situations are likely different enough from the US for a strong implementation push. In which case, a question remains: when will the legal risks of higher blends by covered?

Source: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)

Palm oil sustainability certification: more and more

UPDATE on 12 Nov 2013: Unilever is expected to set its new commitment. Currently: 100% traceable by 2020.

Indonesia Sustainable Palm Oil (ISPO) has an ambitious target for end-2014 certification by its palm oil companies. Earlier, the Agriculture Ministry spoke of sanctions including revoking the licenses of palm oil companies if they do not attain ISPO, which is mandatory. This aims to enhance practices with better implementation of Indonesia legal and regulatory requirements. “Certain ISPO standards are less strict than CSPO standards, and the cost of certification per hectare is lower. The ISPO was created after the Indonesian Palm Oil Association (Gapki) exited the RSPO in 2011, after a series of conflicts linked to environmental standards.” In March, ISPO certificates were handed over to to 10 palm oil companies for their certified estates. These included Musim Mas, Sari Aditya Loka 1, Swadaya Andika, Laguna Mandiri, Ivo Mas Tunggal, Hindoli, Gunung Sejahtera Dua Indah, Gunung Sejahtera Ibu Pertiwi and Perkebunan Nusantara V (Investor Daily in jakartaglobe.com, 11 Mar 2013).

The Roundtable on Sustainable Palm Oil (RSPO), a voluntary scheme, consisting of various stakeholders from growers, NGOs and financiers has enjoyed high visibility. However, it is the ISCC which has likely gained stronger commercial traction. Unlike the RSPO, it offers a decent premium to its users. It certifies for the EU biofuels market. Notably, one of the biggest palm oil buyers in the world, Neste Oil, reports only about 20% of its certified product being covered by RSPO certificate, while the ISCC is its mainstay. Recently, ISCC launched a certification for food, ISCC-Plus. RSPO NGO members brushed aside their worries over the food vs. fuel debate and allowed the introduction of a certification for biofuel users, RSPO-RED. How will RSPO and ISCC duke it out for market share, now that they are on the same turf?

Is a RSPO+ standard in the offing? This could be triggered by the successful campaign by Greenpeace against Golden Agri / Sinar Mas. The NGO was at hand when the plantation giant studied some of its land concessions considered as degraded. NGOs prefer this land type for palm oil expansion. The findings were quite negative for land development as the carbon ceiling measure operationalized the definition of usable land to immature scrub land. Greenpeace successfully pushed for the 35 tonnes carbon per ha ceiling on the Indonesian group’s pilot. Working on this project was The Forest Trust (TFT, a facilitator to the timber trade). Nestle set to investigate its palm oil supply-chain but it is no longer named in the project. Instead TFT and GAR bravely brought in Greenpeace. RSPO says it welcomes the Greenpeace-led Palm Oil Innovation Group (POIG, launched Jun 2013), which has lured in just a handful of its grower members including Golden Agri / Sinar Mas. The WWF (founder and key mover of the RSPO) has come out to criticize its own creation and jumped onboard with POIG. So, what’s next in the small world of voluntary palm oil certification? Keep an eye on WWF – Greenpeace moves while Unilever is expected to set its new commitment.

Malaysia Sustainable Palm Oil (MSPO), a certification standard developed by the Malaysia Palm Oil Board was launched mid-year. We hear that the logistics of the certification process is being established. Might there be an announcement on this during 4Q2013 with an eye to certificate issuance in 1Q2014? This is voluntary, but a mandatory scheme is being considered. The creation of national eco-certifications such as ISPO and MSPO should be no surprise. It is standard practice in various agricultural crops that national schemes sit alongside global and regional voluntary schemes.
Few governments and national industries are so fully trusting as to outsource policy making to voluntary multistakeholder bodies. These often become de facto dominated by a few NGOs and companies. With the proliferation of eco-certification available for palm oil buyers, the question is how well each scheme is marketed and how buyer acceptance evolves. In the timber sector, recent data shows that 2/3 market share has gone to national certification and 1/3 to voluntary stakeholder schemes.


Source: Khor Report's Palm Oil Nov/Dec 2013, Issue 5 (released)