Tuesday, 11 November 2008

Rise in weeks in certified non-rain forest palm oil

Rise in weeks in certified non-rain forest palm oil

Mon Nov 10, 2008
By Michael Hogan

HAMBURG (Reuters) - Exports of palm oil, certified as produced using farming which has not involved destroying tropical rain forests is expected to rise in coming weeks, the head of German edible oil industry association OVID said on Monday.

The first consignment of palm oil certified under the new program Round Table for Sustainable Palm Oil (RSPO) was scheduled to be unloaded in Rotterdam this week.

"This will be the first symbolic step and then we expect a very rapid move forward," OVID chief executive Petra Sprick told Reuters.

"We expect that between 500,000 to 750,000 tons of certified palm oil will be sold on the world market by the end of this year. I believe the majority of this will come to Europe."

"This would mean that certified palm oil will now become available in commercial volumes for the first time."

Asian and South American countries have been criticized by environmentalists for expanding palm oil production by cutting down tropical rain forests, in a controversy which has also been felt by industrial palm oil buyers in Europe and elsewhere.

The RSPO was established in 2004 on the initiative of environmental pressure group World Wildlife Fund, bringing palm oil producers and consumers together to create a certification system.

Germany's giant vegetable oil industry has supported the initiative.
Sprick said the system will bring large volumes of certified palm oil on the global market in coming weeks from the two main palm oil exporting countries, Malaysia and Indonesia.

Certified palm oil will cost about $50 a ton more than non-certified oil, she said. It was expected that European buyers would be the major buyers prepared to pay the extra premium, Sprick said.

A major European processor, Unilever (ULVR.L: Quote, Profile, Research, Stock Buzz), has already publicly stated it would use it, and she hoped others would follow.

"We hope that three million tons of certified palm oil will be available on world markets in 2009," she said. German oilseeds analysts Oil World estimates that about 35 million tons of palm oil are exported globally annually.

The certification process had moved forward faster than expected. However, the first certified volumes would be under a "book and claim" system under which certificates are issued for palm oil produced under sustainable farming methods.

Certification did not cover the entire palm oil logistics chain, which meant certified and non-certified oils could still be mixed together. Later certification stages would aim to stop this

"This is the beginning which we want to create a financial incentive for the farmers to fulfill sustainability criteria," Sprick said.

"This will encourage more certification and hopefully create a critical mass with high enough volumes for a segregated system with a physical identity of the sustainably-produced palm oil through the production chain to the end user."

(Editing by James Jukwey)