‘Mediocre uptake’: Sustainable palm oil experts lament lack of demand from large Asian markets and urge government action

By Pearly Neo contact

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The uptake and demand for certified sustainable palm oil in major Asian markets is extremely low compared to available supply despite the demand for rigorous sustainability certification processes. ©Getty Images
The uptake and demand for certified sustainable palm oil in major Asian markets is extremely low compared to available supply despite the demand for rigorous sustainability certification processes. ©Getty Images

Related tags: Palm oil, Asia, sustainable, Rspo

The uptake and demand for certified sustainable palm oil in major Asian markets is extremely low compared to available supply despite the demand for rigorous sustainability certification processes, and experts are urging local governments to take stricter action.

Large Asian markets such as China and India show extremely low demand and uptake of certified sustainable palm oil (CSPO) in contrast with their large populations and general palm oil consumption.

“[There is]minimum pull for CSPO from markets such as India and China at just 5% and 2% respectively – [the rest still goes to conventional palm oil],”​ Roundtable for Sustainable Palm Oil (RSPO) Strategic Stakeholder Relations Director Salahudin Yaacob said during his presentation at the recent International Palm Oil Sustainability Conference (IPOSC).

“Demand for CSPO in producing countries are almost non-existent as well – As a whole, just 4% of the uptake in Malaysia is CSPO, and 2% in India. This is likely because the awareness on sustainability is still very weak in the region.”

Some of palm oil’s biggest critics are also the largest consumers of CSPO, namely Europe at 62% and North America at 70%.

“[RSPO-certified] grower members are generating around 15 million MT of CSPO, of which around 50% is being taken up through the RSPO trading system, and some significant volumes are also being taken up by the market through other schemes – [but] but progress is very slow in major [Asian] markets, not to mention [mediocre] uptake of CSPO has also been observed in the producing countries,”​ Salahudin said.

“We know that we need to increase demand and use of CSPO in the big four consumer countries (India, China, Indonesia and Malaysia), [and we need the] awareness and support from all sectors, particularly governments, to help in pushing the uptake in these countries.

“Malaysia and Indonesia, as the major producer countries, need to show to the world that they trust that CSPO is good for the people and planet, and local consumers do demand and take up CSPO.

“Government intervention is important in ensuring more uptake [as the government] is also a consumer, and more importantly a consumer with power and influence.”

Amongst his suggestions for governmental intervention to boost CSPO uptake included clear policies to support the production and use of CSPO, specific carrot and stick initiatives to encourage businesses to uptake CSPO, and making CSPO mandatory in government procurement policies.

“For example, events run by the government agencies [can] make it compulsory for the organiser to only use CSPO in preparing food. Before COVID-19, such government meetings in Malaysia involved food preparation for thousands of people daily, so imagine how much CSPO would be consumed if all hotels, restaurant and caterers were mandated to use sustainable cooking oil,”​ he said,

“Such mandatory requirements will have a clear snowball effects resulting in making sustainable palm oil the norm.”

Malaysian perspective

The Malaysian Sustainable Palm Oil (MSPO) certification scheme believes that it holds the key to the ‘missing link’ to the sustainability gap in Malaysia, but also agreed that governments play a major role here.

“[The] potential impact of national sustainability schemes such as MSPO on the ground is  much  greater, being  backed  by governments to cover the entire industry, unlike voluntary  market  driven systems,”​ Malaysian Palm Oil Certification Council (MPOCC) CEO Chew Jit Seng added at the conference.

MPOCC runs the development and operations of the MSPO certification scheme.

“After more than four years of voluntary implementation, initially with a low rate of uptake, the government decided that MSPO would be made mandatory on January 1 2020 (2021 for smallholders) – this applies to all industry players within the palm oil industry,”​ he added.

In addition to making the scheme mandatory, the Malaysian government has previously also offered incentives at a nationwide scale and set aside funds to encourage local firms to go through the MSPO certification process.

Earlier this year, MPOCC also set its sights on food manufacturers producing palm-based products, requesting these firms to display the MSPO logo on product packaging.

"Companies, farmers and palm oil manufacturers are required to have the MSPO certificate but the use of the MSPO logo on product packaging is not mandatory – [so far], only two companies are displaying this logo,”​ MPOCC chairman Muhtar Suhaili said at a public event.

"We encourage palm oil-based product manufacturers to display the MSPO logo if they get the supplies from palm oil companies that have MSPO certificates, and we are ready to help any interested companies.”

Related topics: Ingredients

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