October 30, 2012 / 10:31 AM / in 5 years

China, India should cut tariff to boost green palm oil demand-RSPO

SINGAPORE, Oct 30 (Reuters) - The world’s largest edible oil buyers China and India should reduce import tariff to spur demand for eco-friendly palm oil, industry body Roundtable on Sustainable Palm Oil (RSPO) said on Tuesday.

Formed in 2004, the RSPO brings together plantation firms, consumers and green groups to promote the supply of palm oil produced from estates that do not harm wildlife or cut forests to expand.

Take up of more expensive green palm oil has been dominated by the European Union, with price-sensitive India and China with their billion-plus populations slow to order cargoes, said RSPO President Jan-Kees Vis.

“You would only need to shave a tiny proportion from the import tariff in order to make CSPO (certified sustainable palm oil) competitive with non-certified palm oil,” Vis told reporters at the sidelines of the RSPO meeting in Singapore.

India and China account for almost 30 percent of global palm oil consumption in 2011, according to the U.S. Department of Agriculture data, making them key in RSPO’s campaign to get more plantations to produce eco-friendly cargoes.

“Both markets are very price sensitive, and even though the sustainability premium is not high, any premium is a problem,” Vis said.

A lower import tariff for green palm oil could attract producers to grow more sustainable palm oil, which currently has an annual output capacity of about 6 million tonnes -- roughly 12 percent of global palm oil production.

Chinese import duty for edible vegetable oils is at 9 percent, and 2 percent for industrial palm oil use. For India, there is no duty on CPO imports, while the refined palm oil attracts a duty of 7.5 percent.

But Vis, who is also the global director of sustainable sourcing development at Anglo-Dutch consumer goods giant Unilever , said the RSPO had to work with local industry players to push for these tariff cuts.

“If we as the RSPO board walk into the government office in New Delhi, I don’t even think they will grant us an interview. So we have to work with the local players,” Vis said.

Talks are in progress to convince the Chinese government to consider the proposal, but Vis said that the process could be a long one.

“We are working with the Chinese chamber of commerce for food and agricultural products. They are supporting the sustainable palm oil network in China,” Vis said. “We’re trying to get it into the next five-year plan.”

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