Monday, 2 November 2009

Q+A: Palm planters, buyers and NGOs face off at roundtable

Mon Nov 2, 2009

By Niluksi Koswanage

KUALA LUMPUR (Reuters) - The palm oil industry confronts critics and consumers in a meeting this week in Malaysia as it looks to beef up green standards that already include commitments to preserve rainforests and wildlife.

The Roundtable on Sustainable Palm Oil (RSPO), whose members include buyers and NGOs, wants to discuss standards on greenhouse gas savings that palm oil should achieve before the Copenhagen climate change talks in December.

But with European firms reluctant to take up pricier palm oil certified under RSPO and a longstanding tussle between environment groups and the palm oil industry over its green credentials, the meeting may fall apart, observers say.

Here are some questions and answers on the issues that will be raised during the RSPO meeting, the seventh since 2001:


Palm oil producers have been at loggerheads with green groups over how the tropical oil's impact on the environment should be calculated as they try to counter criticism that the industry fuels climate change.

Planters in top producers Indonesia and Malaysia say that oil palm estates can act as a carbon sink and that a major CO2 saving can come from capturing methane, a powerful greenhouse gas emitted during processing.

Environmentalists say any expansion of plantations should be stopped as chopping down and burning rainforests produces the most emissions in the life cycle of oil palm estates.

Both groups agree that expanding into carbon-rich peatland forests found mostly in Indonesia are a no-go, a rare consensus that may help them to hammer out an agreement for an industry standard on palm oil's greenhouse gas savings.


The Malaysian and Indonesian governments are not a part of the RSPO and their own development policies for the industry make it difficult for planters to become eco-friendly.

For instance, Indonesia ended a freeze on new permits for developing estates on peatlands early this year as it seeks to expand the industry, a key revenue earner.

Planters who are RSPO members have pledged to stay away from peatlands and other natural forests but say they will lose valuable expansion opportunities to other companies who do not belong to the RSPO.


Price-conscious shoppers in Europe, a key palm oil consumer, have found it difficult to stomach higher-priced palm oil that has been certified under RSPO as the global economy takes its time to recover.

Much of the extra cost comes in hiring auditors to ensure palm oil is produced without harming wildlife and oppressing local communities as well as building new storage tanks and processors to "green" the supply chain.

Producers say their efforts have been wasted as European supermarkets are just passing the costs to the consumers without sharing the burden and warn that they might turn their backs on the RSPO.

Some European buyers have tried offering discounts although they say that food demand has been weaker across the board due to the economic crisis.

But many European retailers and manufacturers have yet to take up green palm oil in a big way, a scorecard by WWF has shown.