Costly criteria, inadequate returns
December, 2018 in Issue 4 - 2018, Sustainability
A look into the future
Voluntary certification will only be successful if there is a price premium for the product. Successful schemes often cover a very small part of the market; for example only 17% of coffee supplies conform to the Fairtrade standard. A supply chain standard such as the POIG Charter can be enforced by food manufacturers, but is unlikely to be widely effective for a commodity such as palm oil, with many different uses and little consumer recognition. Government-enforced certification schemes such as the ISPO may be influenced by lobby groups and usually lack stringency.
A crucial question is whether we want as much of the industry as possible committed to the RSPO, or a limited part of the industry producing oil which meets the highest possible standards. In my opinion, the former is more important, but it seems clear that many producers are reluctant to join the RSPO, seeing certification as a cost, with little return in terms of price premium.
The profusion of different standards seems likely to undermine the RSPO. Thus we have the MSPO and ISPO introducing more grower-friendly versions of the original RSPO P&C, while RSPO Next and the POIG Charter aim to raise standards. One must wonder for how long major plantation companies will accept the limitations on new developments imposed by RSPO Next and the POIG Charter, when certified oil constitutes such a small percentage of total palm oil sales. The limitations on development risk destroying the historic role that oil palm cultivation has played in poverty alleviation. It must be recognised that agricultural expansion is the only viable route to economic development in some countries.
If the RSPO continues as at present, the future seems clear: CSPO will become more and more of a niche product. Responsibility for this lies mainly with those NGOs and food manufacturers who have pushed for ever higher standards, rather than encouraging the rest of the industry to come on board. The use of a niche product may be a selling point for some palm oil users, of course, so perhaps the users have a different objective from the NGOs.
To avoid this outcome, it is essential that uptake of CSPO is increased. There is an obligation under the RSPO Code of Conduct for palm oil processors, traders and users to give active support to growers but, far from supporting the CSPO market, some manufacturers who are members are advertising products as ‘palm oil free’. This is clearly against the spirit of the RSPO, even if the Code of Conduct does not explicitly forbid it.
Consumer demand for sustainability comes mainly from Europe and North America; in 2016, those two regions imported 11.6 million tonnes of palm oil. Thus the maximum demand for CSPO may be no more than the current certified volume. However, many palm oil users are multinationals with worldwide sales. Perhaps user members should be obliged to publish, and be audited against, time-bound plans to move to 100% CSPO, just as producers are audited on time-bound plans for all their production to be certified. Some members have published plans, but these have been voluntary and are not a requirement of membership. If all the CSPO is taken up and there is further unmet demand, the price premium should increase, and the plantation industry might start to see that there is an advantage to RSPO membership.
At the same time, RSPO and NGO members should strongly emphasise and publicise the validity of the ‘book and claim’ supply chain, so that users can obtain CSPO without the unnecessary additional costs of segregation. If the RSPO succeeds in making CSPO ‘the norm’, the price premium would disappear, but uncertified oil would probably become saleable only at a discount to CSPO, giving the same net result.
RHV Corley
Plant Physiologist & Consultant on Tropical Plantation Crops Research
A longer version of this paper was published in The Planter, 94: 355-366, 2018.
