Segregated sustainable palm oil will be available on the European market in the coming months, as IOI-Loders Crokaan and New Britain open dedicated refineries. The news marks the latest step towards changing the commodity supply chain.
Palm oil is commonly used in food and personal care products, but its use has come in for criticism in recent years as increasing demand has led to deforestation in parts of Asia, and the destruction of habitats and ecosystems.
The multi-stakeholder Roundtable for Sustainable Palm Oil (RSPO) has been working towards turning the supply chain around towards sustainable practices, but the complexity of commodity supply chains means it is hard to ensure sustainably produced oil is kept apart from non-sustainable oil.
In order to prepare the market and meet demand, two interim schemes have been in operation. One, known as Book and Claim, allows manufacturers to buy GreenPalm vouchers equivalent to the palm oil volumes they are using, but the actual oil they receive is not certified sustainable. With the second, called Mass Balance, a proportion of the oil received is certified sustainable.
IOI-Loders Croklaan will be able to supply certified sustainable palm oil that has been kept segregated throughout the supply chain as of June, when it will open a new dedicated refinery in Rotterdam. The oil originates from plantations it owns in Malaysia.
Marc den Hartog, executive RSPO board member and IOI sales and marketing director, told FoodNavigator.com that initially the segregated oil will be an add-on product, making up around 10 per cent of its total palm oil offering. It also supplies Book & Claim and Mass Balance oil.
But the company is hoping to have certification for all its plantations by the end 2011, which will allow it to completely change over.
While segregated palm oil currently commands a premium of 5 to 10 per cent over the price of non-segregated palm oil, this premium is expected to come down as demand and supply increase until it is eventually just a small admin fee.
“The whole purpose of the RSPO is to promote growth and transform it to a sustainable commodity market,” said den Hartog.
IOI Loders Croklaan’s announcement coincides with UK firm New Britain declaring this week that its new Liverpool refinery will be up and running from April, handling only segregated oil from its Papua New Guinea plantations.
But den Hartog said ownership of a vertically integrated supply chain is not a prerequisite for segregated oil supply. Indeed, it is very important for the RSPO that plantation companies and smallholders are working towards certification for sustainable oil, although it may take them longer.
IOI is working with smallholders on some projects, especially to educate over effective use of land. Palm plantations already give a 5 to 10 times higher yield per hectare than other oilseed plantations, and IOI manages to increase this another 1.5 times.
“Using land more effectively can help avoid issues like deforestation,” den Hartog said.
IOI made its announcement at a seminar in Paris yesterday, to which French food manufacturers and other stakeholders were invited to learn about and discuss issues surrounding palm oil sustainability.
The event was expected to attract 100-150 people, but more than 200 turned up on the day.
Den Hartog said there has been much attention to palm oil in France in recent weeks, especially given announcements made by supermarket group Casino and manufacturer Findus.
The success has led the company to considering running similar events in other European countries this year, so RSPO members can discuss issues directly with the local food industry.