'Create virtuous cycle' to ensure sustainable palm oil

Alvin Foo Straits Times 1 Nov 12;

THE fast-rising demand for palm oil globally makes it crucial to address the environmental and social problems created in its production, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.

A "virtuous cycle" of demand and supply involving producers, intermediaries and consumers must be created to ensure sustainable palm oil.

He was speaking at the 10th Annual Roundtable Meeting on Sustainable Palm Oil at Resorts World Sentosa.

Mr Tharman cited trade publication Oil World, which forecast that world demand for palm oil will be 40.4 billion kg in 2020, almost double the amount produced in 2001.

He said: "This rapid future growth makes it all the more important that we address the environmental and social problems created in the course of palm oil production."

The main issue relates to the potential role of palm oil plantations in deforestation, he said. The clearing of forests for land to grow palm oil has been the main source of deforestation in South-east Asia.

He said: "There is also a real risk that we will reach tipping points in forest conversion where critical biophysical functions are disrupted, leaving the region increasingly vulnerable to droughts, fires and floods."

Another major issue is haze pollution. The total number of hot spots recorded in Sumatra was 12,750 as of September, a little higher than that seen during the previous peak year of 2006.

Mr Tharman, who is also Finance Minister, said: "We have to do more, through joint efforts by the public and the private sectors, to resolve this problem."

Eliminating palm oil production is not viable, he said. "It will simply divert the demand to alternative edible oil crops which are of lower yield, and likely cause more harm to the environment in the long run."

Instead, Mr Tharman called for the creation of a "virtuous cycle of consumers, intermediaries and producers across the value chain with an interest in ensuring sustainable palm oil".

He urged the Roundtable on Sustainable Palm Oil (RSPO) to intensify its work with buyers and consumers so that they better recognise the value of sustainable palm oil.

RSPO is a global not-for-profit body with more than 1,000 members from the industry, including producers, processors, manufacturers, retailers, banks and investors. It aims to develop and implement global standards for palm oil.

He said: "RSPO remains the most suitable platform for all stakeholders to work together to tackle the environmental and social challenges surrounding palm oil production."

He also highlighted the role of non-governmental organisations such as the World Wide Fund for Nature (WWF) in promoting sustainability. For instance, WWF uses satellite technology to help identify firms burning forests.

Ambassador-at-Large Tommy Koh said in his keynote address that Singapore has a stake in RSPO even though there are no palm oil plantations here. That is because the Republic is a major centre of oil trading, including vegetable oils trading, and will gain if all palm oil plantations in Indonesia, Malaysia and elsewhere meet the RSPO standards.

Palm oil plantation owners responsible for sustainable production: stakeholders
Thomas Cho, Dylan Loh Channel NewsAsia 31 Oct 12;

SINGAPORE: Changes to the European Food Information Regulations will mean labels have to identify the specific types of vegetable oils that have been used.

Businesses are already starting to implement the change, and it will be mandatory on all food products from 13 December 2014.

Palm oil growers should ensure that its products are cultivated in a socially responsible manner, as buyers are increasingly insisting that palm oil products come from sustainable sources.

This was the call made at a gathering of stakeholders across the palm oil sector in Singapore.

Some 800 delegates attended the 10th Annual Roundtable Meeting on Sustainable Palm Oil in Singapore to shift their business model towards sustainable palm oil production.

Palm oil is widely used in food and cleaning products, including confectionery, cosmetics and cleaning agents.

Global demand for palm oil has been on the increase due to the declining supplies of soybeans, grapeseed and sunflower seed.

Each hectare of palm oil plantation can, on average, produce four tonnes of oil more than any other crops.

But palm oil plantations can create environmental problems such as deforestation, which lead to carbon dioxide emission and pollution from haze.

As at September 2012, the total number of hotspots that are recorded in Sumatra stood at 12,750 - higher than the previous peak year of 2006, according to data released at an ASEAN conference in Bangkok held on 26 September.

Some plantation owners have raised concerns that converting to higher-cost sustainable palm oil production may hurt their profitability.

But there are others who remain committed.

Palm oil produced from sustainable methods trades at 20 ringgit, or US$7 more than ordinary crude palm oil.

Khairudin Hashim, group head of sustainability and quality management at Sime Darby Berhad said: "We have been practising sustainability since we were involved in the plantation industry. Looking into sustainability, you are providing a reasonable income to the growers, you are looking after the environment and naturally the profit will come."

There are 20 Singapore-based firms that are involved in palm oil trading activities.

Mr Tharman Shanmugaratnam, Singapore's deputy prime minister and finance minister said: "Our role is basically in the palm oil trade; we have the infrastructure and we (are located) next to the world's largest palm oil producers and that makes us a convenient venue, convenient base for the major resource companies and commodity trading companies."

Meanwhile, some planters have called for banks to help finance projects to promote sustainability.

"Singapore stakeholders like bankers, financiers and investors need to get involved," said Edi Suhardi, director of sustainability at PT Agro Harapan Lestari.

"They have to promote investments to the companies who are actually producing the CSPO (certified sustainable palm oil)."

Separately, environment ministers from Brunei, Indonesia, Malaysia, Singapore and Thailand agreed that plantation companies and land owners should be held responsible and accountable for much of the pollution from haze.

The ministers met in Bali, Indonesia on Wednesday.

They noted there are technologies that can improve hotspot monitoring.

They support the idea of forming a technical task force to develop a platform to monitor fires in the region.

They acknowledged that greater transparency is needed so that plantation companies and land owners responsible for the haze can be held accountable.

They noted the ASEAN Specialised Meteorological Centre's expectation of more rain as the traditional dry season in the southern ASEAN region ends in mid-October, and that would lessen hotspot activities.

But the countries agreed to maintain vigilance and continue the sub-region's commitment to tackle land and forest fires, and minimise the spread of transboundary smoke.

Global exports of palm oil is projected to rise to 42.6 million tons this year, the highest in at least five years, according to WorldOil.

Despite the increase in supply, analysts say the demand for palm oil is unlikely to wane soon, given the wide variety of the crop's usage.

- CNA/xq