Malaysia says palm oil industry challenged to meet green standards by 2020

KUALA LUMPUR (Reuters) - The Malaysian palm oil industry is facing “significant challenges” in complying with a national green certification standard by next year, with over a third of plantations yet to meet the sustainability standards, officials said on Monday.

FILE PHOTO: A worker unloads palm oil fruit bunches from a lorry inside a palm oil mill in Bahau, Negeri Sembilan, Malaysia January 30, 2019. REUTERS/Lai Seng Sin/File Photo

The Malaysian Sustainable Palm Oil (MSPO) certification, which requires growers to meet certain standards on protecting the environment and workers’ rights, is set to be mandatory from January 2020.

As of the end of October, about 58.3% of 5.85 million hectares (14.5 million acres) of land under oil palm cultivation had achieved MSPO certification, Chew Jit Seng, the chief executive of the Malaysian Palm Oil Certification Council, said at an industry conference. The Council is the state agency managing the green certification program.

Malaysia, the world’s second-biggest palm oil producer, introduced the MSPO standard in 2015, following concerns that the global palm oil green standard by the Roundtable on Sustainable Palm Oil (RSPO) was too expensive for domestic growers.

“As we enter 2020, significant challenges remain towards achieving 100% mandatory MSPO certification,” Teresa Kok, the minister in charge of palm oil, said at the conference.

Certification among small holder farmers, who account for nearly 40% of Malaysia’s total palm oil production, was particularly low because of concerns they will not be able to recover the high costs of complying with the regulations, she said.

“Many independent smallholders do not have the financial muscle and clout to initiate audit and certification on their own. There is simply no economic scale,” Kok said, adding that the government has granted incentives and soft loans to encourage the farmers to become certified.

Producers of palm oil, a commodity used in everything from ice cream to lipstick, are blamed for destroying forests in Southeast Asia, in part by using slash-and-burn techniques that blanketed Singapore, Malaysia and Indonesia in smog in September.

Indonesia, the top producer, and Malaysia together account for 85% of global palm oil output.

The European Union introduced a law earlier this year to phase out palm oil from renewable fuel by 2030 due to deforestation concerns.

Sustainability certification has helped eased some of those concerns, though a majority of the palm oil produced globally does not have the green certifications.

International green certification standards are currently set by the RSPO, a regulator whose members include consumer companies, retailers, traders and palm growers. Only a fifth of last year’s global palm oil output of 68 million tonnes had RSPO sustainable certification.

Reporting by A. Ananthalakshmi; Editing by Christian Schmollinger