FrieslandCampina backs bid to remove EU palm oil levy

By Jane Byrne

- Last updated on GMT

Related tags Palm oil Sustainability Indonesia

Dairy group Friesland Campina has welcomed the call from a Dutch trade group to end the European import levy on sustainably produced palm oil and claims it could encourage greater uptake among brand owners.

“We think abolishing the duty will remove a barrier in a very cost sensitive market, and it will also eliminate an excuse - buyers cannot claim anymore that it is the premium refraining them from buying sustainable oil,”​ said Anneke Assink, group procurement manager, FrieslandCampina.

From this year, the dairy company has pledged to only use palm oil in its products that has been sourced from Roundtable on Sustainable Palm Oil (RSPO) approved suppliers.

Last month, Netherlands based-trade group, Margarine, Fats and Oils (MVO), also claimed that removing the EU import levy on sustainable palm oil would see greater volumes bought by European manufacturers.

Typical estimates put the extra cost of farming palm oil sustainably at between $7 and $10 per tonne.

The MVO's proposal calls for the duty on CSPO imported from Malaysia and Indonesia for use in consumer goods to be abolished. Currently, crude palm oil for use in non-food products and palm oil originating from nearly all other producing countries are exempted from import duties.

Sitting it out until 2015

However, Assink told the dairy company does not perceive price to be the main obstacle in terms of food producers switching to sustainable palm oil.

“We suspect that a lot of buyers think palm oil will become sustainable "automatically" in 2015 so their attitude is one of ‘why bother to implement a sourcing policy now?’”

Guarantee from buyers needed

The best and quickest way to increase the volume of segregated palm oil as well as to lower the logistic costs, continued Assink, is a guarantee from buyers in Europe for consistent demand for physical sustainable palm oil.

“If more buyers in destination countries stepped into the market, this would give an extra incentive to sellers and gives them more critical mass throughout the entire supply chain which will thus reduce costs.”

Buyers can use other options "to get started", ​added the procurement manger.

“If segregated palm (kernel) oil is not yet available, buying the oil via the [RSPO approved] mass balance model is a good interim solution giving a clear signal to the sellers’ market there is physical demand for sustainable oil.”

And she argues that consumers need to be made more aware of the fact that palm oil is used in many supermarket products.

Assink was speaking at a seminar on assuring the supply of sustainable palm oil in London last month.

Indonesian withdrawal

Meanwhile, the Indonesian Palm Oil Association (GAPKI) has withdrawn from the RSPO, which currently offers the only international audit scheme for producers of certified sustainable palm oil (CSPO).

RSPO brings together a range of stakeholders, including environmental groups, to support more sustainable palm oil production. GAPKI has now pulled out of RSPO in favour of Indonesia’s own sustainability initiative, ISPO.

“The main reason for the withdrawal is that the Government of Indonesia is introducing ISPO, which will be backed by law and regulation, whereas RSPO is voluntary,”​ GAPKI spokesman Fadhil Hasan told our sister site “The withdrawal from RSPO does not mean in any way that GAPKI is no longer committed to sustainability.”

However, ISPO is not yet firmly established - the first clutch of ISPO auditors were only appointed in July and the national roll-out is scheduled for completion by 2014.

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