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Plentiful supplies of CSPO in Malaysia, but low demand

By Kacey Culliney, 11-Jan-2012

Related topics: Market Trends, Sustainable sourcing

There is currently an oversupply of certified sustainable palm oil (CSPO) in Malaysia due to a lack of demand from industry players, according to leading politician in that country.

Tan Sri Bernard Compok, minister of plantation industries and commodities, said there is insufficient take up of CSPO despite producers throughout Malaysia working hard to meet international requirements for sustainable practices and certification, reported Malaysian media outlet, The Star.

The Malaysian lawmaker, who was speaking at the Sabah Wildlife Conservation Colloquium, added that working towards international standards on sustainability in palm oil production is costing producers more and this is reflected in the price of CSPO.

Typical estimates peg extra costs of farming palm oil sustainably at between $7 and $10 per tonne.

Indeed data from the Roundtable on Sustainable Palm Oil (RSPO) shows a clear gap in current supply and demand of CSPO.

Analysis showed that supply of CSPO in November last year was around 450,000 metric tonnes, yet sales were pegged at only 180,000 metric tonnes.

Driving and motivating take-up

Darrel Webber, secretary general of RSPO, said that boosting demand for CSPO is a key priority for the organisation.

“The uptake has been steadily increasing, but it continues to require accelerated commitment,” Webber told FoodNavigator.com in an emailed statement.

He notes an increase in demand for CSPO from 25.3% in 2009 to 46.2% in 2010 and 51.2% as of November 2011.

WWF scorecard

Webber said that initiatives that will support the tracking of and motivation for companies along the palm oil supply chain to use more CSPO in their products include the WWF Palm Oil Buyers Scorecard.

Launched in November 2011, it measures the commitment and performance of major retailers and manufacturers regarding use of CSPO.

“It acknowledges that companies have shown progress in terms of procurement of CSPO and is a reminder to companies that have failed to live up to commitments,” he added.

Webber said that the RSPO trademark logo will be a core part of its strategy in stimulating demand for sustainable oil, but added that the organisation is “beyond merely a certification scheme or standard.”

“We are a multi stakeholder initiative that represents the production front; demand end and everything in between,” he said.

The dynamics and system are in place to meet targets, he said, it is only a matter of time.

One of its biggest current challenges for the RSPO is ensuring conditions are in place in two of the biggest consumer markets for palm oil, India and China, for greater take-up of CSPO, with the organisation conducting outreach work to create awareness in both these countries.

Pledges made

The RSPO’s work has triggered a host of industry pledges committing to sourcing 100% CSPO for use in their food and personal care products within the next few years by multinationals such as Unilever.

However Anneke Assink, group procurement manager at Friesland Campina, previously told FoodNavigator.com that there is attitude exists among some food makers that all palm oil will be ‘automatically’ sustainable by 2015 and so they see little point in implementing sustainable palm oil sourcing policies now.