Monday, 15 March 2010

Palm oil from the Mersey that will spare the jungle

From The Sunday Times
February 28, 2010

Palm oil from the Mersey that will spare the jungle

Harvested palm oil fruit

Vast tropical plantations have sprung up to feed our appetite for the versatile ingredient but they have led to rampant deforestation and habitat destruction in countries such as Malaysia and Indonesia.

However, a British company will open a refinery in Liverpool next month that it says will provide a third of Britain’s annual consumption from sustainable sources. United Biscuits, the maker of Jaffa Cakes and Hula Hoops, has signed up to take palm oil from the refinery, as has Jordans, the cereal maker.

Nick Thompson, chief executive of New Britain Palm Oil, the FTSE 250 firm behind the project, expects other companies to follow. He said: “This cuts another link out of the chain where we would otherwise not have control of the product. We can now guarantee it at every step in the chain.”

Being able to slap a “sustainably sourced” badge on product packaging is important. Palm oil has become a minefield for companies. In 2008 two sites owned by Unilever, the consumer-goods giant, were besieged by protesters dressed as orangutans, one of the more visible victims of the palm-oil boom. Last year Cadbury pledged to stop adding it to its Dairy Milk bars in New Zealand after consumer protests. Supermarkets such as Waitrose and Sainsbury have pledged to move to 100% sustainable sources.

The Roundtable on Sustainable Palm Oil (RSPO), a cross-industry group including growers, retailers and campaigners, is the arbiter of sustainability. It has a detailed set of criteria ranging from local land use and waste treatment to relations with the community. Ultimately, suppliers have to be able to prove that at every step from the plantation to the end-product their responsibly grown and processed oil has not been mixed with batches that are not.

That’s expensive. Sustainable batches can cost 50% more due to the added logistics and handling involved. Take-up has been slow: less than 5% of the world supply is certified as sustainable.

Alan Chaytor, executive director at New Britain, said: “There is obviously going to be a lag before palm oil in all its forms can move this way. The food companies haven’t exactly set themselves stretching targets.” Food giants such as Tesco and Nestlé, for example, have said they will convert to sustainable sources but not before 2015.

New Britain’s plant at Port Sunlight will be fed by the firm’s plantations in Papua New Guinea. With the new plant’s capacity of 150,000 tonnes a year — Britain consumes 500,000 annually — the company said it has the economies of scale to allow it sell the oil for the same price as the non-certified alternative.

Challenges remain, however. Last week it paid $175m for an 80% stake in three giant plantations in Papua New Guinea owned by Cargill. The American agribusiness giant sold out, just five years after buying them, amid persistent criticism from campaign groups over its activities in Papua New Guinea and other countries. The plantations New Britain bought are not RSPO-certified and the company said it will keep the output separate from the rest of its operations until they are.