Greener palm oil needs more Asia support: Unilever

LONDON Tue Oct 19, 2010 1:04pm EDT

LONDON (Reuters) - Palm oil buyers in India and China need to join those in Europe in signing up for a certification scheme to promote sustainable palm oil, consumer goods giant Unilever said on Tuesday.

The Roundtable on Sustainable Palm Oil (RSPO) an industry body of consumers, green groups and plantation companies, was formed in 2004 and aims to promote growth and use of sustainable oil palm products.

"We need to increase the uptake of certified oil in the market," Jan Kees Vis, global director sustainable sourcing development at Unilever told Reuters. "We know that the demand from Europe is not enough."

Annual production capacity of RSPO-certified sustainable palm oil jumped over the 3 million tonnes mark last month, according to the Roundtable. Certification for green palm oil started in August 2008.

"Global production is about 45 million tonnes -- India takes 8 million tonnes, China 7 million tonnes, Europe about 6 million tonnes, United States and Egypt 1 million tonnes," added Vis, who was elected to lead the RSPO at its conception in 2004.

Unilever, the world's top palm oil buyer, uses palm oil for products like Dove soap and Stork margarine.

The Anglo-Dutch firm said in April that it would more than double this year to 400,000 tonnes its purchases of palm oil production certified as sustainable.

But the certified palm oil sector has been plagued by weak demand due to the higher cost involved.

Palm oil planters have also complained that premiums for eco-friendly palm oil are not high enough to encourage production.

"There is more production at the moment than there is demand and if that continues, the incentive for more growers to get certified will diminish," Vis said. "We need to get the Indian and the Chinese market involved, which is difficult to do."

"We do need to involve more smallholder farmers," added Vis, speaking ahead of the RSPO's annual meeting in Jakarta from November 8-11.

SMART RESPONSE AWAITED

Indonesia is the world's No. 2 producer of the vegetable oil.

But accusations from green groups over deforestation have led to firms such as Burger King, Nestle and Unilever to stop buying palm oil from firms, such as PT SMART Tbk.

In August, SMART, which is part of Singapore-listed Golden Agri-Resources, got a mixed score card in an independent environmental audit.

Greenpeace has accused the palm oil giant of clearing peatland and forests with high conservation value that shelter endangered species.

"The verification exercise was fine," said Vis. "We are waiting for a response from PT SMART -- a response in terms of an improvement plan or programme to be put in place.

"So far, we're encouraged by the level of co-operation we see from PT SMART with certifiers and the willingness they have to communicate and discuss the findings."

Vis added that Unilever would like to see Golden Agri-Resources become a member of RSPO, and make a public commitment to have all their holdings certified in a certain time-frame.

Unilever expects to buy between 1.2 million and 1.5 million tonnes of palm oil this year, unchanged from 2009.

"It is a real mixed (economic) picture, so the real trick for a company, is to allocate resources into the markets that show potential for growth," he said.

"Palm oil is the cooking oil of the 2 billion poorest people on the planet. Population growth is going to happen, so that's where markets will grow -- Central Asia, Africa, South East Asia."

(Reporting by Michael Taylor; editing by William Hardy)

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