Editorial: Rejecting unsustainable palm oil

The Jakarta Post | Mon, 12/21/2009 8:55 AM | Opinion

European industrial buyers have begun extending compulsory green certification from wood-based products to palm oil, as evidenced by the bold decision last week by Unilever, the world’s largest industrial consumer of crude palm oil (CPO), to cancel new contracts with Indonesia’s largest producer, the Sinar Mas group.

The giant Anglo-Dutch group, which processes about 1.5 million tons of CPO a year into soap, margarine, cosmetics and ice cream, explained it took the bold measure after being shown photographic evidence from Greenpeace of Sinar Mas clearing rainforests in protected areas.

Environmental NGOs will certainly welcome the move in light of forcing CPO producers in the country to develop plantations according to the principles promoted by the Roundtable on Sustainable Palm Oil (RSPO).

The dramatic expansion of Indonesia’s palm oil plantations over the past decade has made the country the world’s largest CPO producer with an estimated output of 20 million tons this year. But that massive development has been attacked by most national and international NGOs as the main driver making Indonesia the world’s third largest emitter of CO2 after China and the United States.

As the chair of the Kuala Lumpur-based RSPO, Unilever should indeed take the leadership in prodding other large industrial buyers to source their CPO only from suppliers whose production processes have been certified as being in compliance with RSPO principles on sustainable plantation management.
It is a pity, though, that since the promotion of sustainable CPO early last year, Unilever has so far sourced only about 15 percent of its CPO needs from RSPO-certified producers, although three major companies — London Sumatra, Hindoli (a subsidiary of the US-based Cargill) and Musim Mas — have been certified by the RSPO.

Sinar Mas is also a member of the RSPO, but has not yet received certification, which is based on a comprehensive, strict audit of production processes and management practices. The financing muscle, as shown by the highly respected Unilever with its recent decision, will go a long way in supporting the environmental movement to eventually make all oil palm estates in Indonesia sustainably managed.

But again it is regrettable that market leader Unilever, is committed to totally outsourcing its CPO from RSPO-certified suppliers only by 2015, while more than one millions tons of RSPO-certified supplies from Indonesia and Malaysia remained and unsold.

What makes the RSPO, founded in 2004, an ideal forum is that its founding members and current membership include such respectable NGOs as the WWF, Sawit Watch, Oxfam, large consumers as Unilever, and major CPO producers in Malaysia and Indonesia.

The right mix of members and sponsors (consumers, producers and civil society organizations) will throw out any perception that the RSPO is a subterfuge by developed countries who want to protect their own edible oil industries (mainly corn, soybean and peanut).

Moreover, the principles of sustainable management as promoted and assessed by the RSPO in its certification process cover such elements as transparency, legal and regulatory compliance, best production practices, environmental responsibility and commitments to local community development.

Large industrial consumers should be willing to pay a premium for RSPO-certified palm oil, otherwise there will be no incentives for producers to abide by RSPO principles, especially because buyers in Asia and elsewhere still accept non-certified CPO.

s a new organization, the RSPO understandably has many shortcomings, but as British Energy Minister Joan Ruddock stressed last month, the UK government championed the RSPO despite the limitations of its certification system.

Sharing the burden of producing sustainable biofuels

Rhett A. Butler and Lian Pin Koh, The Jakarta Post,

Jakarta | Fri, 15/01/2010 10:08 AM | Opinio


Palm oil is one of the world's most traded and versatile agricultural commodities. It can be used as edible vegetable oil, industrial lubricant, raw material in cosmetic and skincare products and feedstock for biofuel production.

Growing global demand for palm oil and the ensuing cropland expansion has been blamed for a wide range of environmental ills, including tropical deforestation, peatland degradation, biodiversity loss and CO2 emissions.

In response to these concerns, a group of stakeholders - including activists, investors, producers and retailers - formed the Roundtable on Sustainable Palm Oil (RSPO; www.rspo.org) to develop a certification scheme for palm oil produced through environmentally- and socially-responsible ways.

It is widely anticipated that the creation of a premium market for RSPO-certified sustainable palm oil (CSPO) would encourage palm oil producers to improve their management practices.

However, the RSPO faces several challenges, including the high cost of undergoing certification that currently is entirely borne by producers, and a lackluster demand for CSPO. Following the first shipment of CSPO to Europe in November 2008, less than 3 percent of the total volume of CSPO produced (*1.05 million tons) had been sold.

Even after a year, in October 2009, only *200,000 tons of CSPO (*19 percent) had been purchased by manufacturers of palm oil products.

The reason for the slow demand for CSPO is unclear, but is likely due to the global financial downturn causing buyers and manufacturers to be less willing to switch to premium palm oil.

The economic crisis may have also affected efforts to promote sustainable consumerism in countries, such as China and India, which are the world's largest importers of palm oil. A further factor could be a lack of consumer confidence in RSPO's credibility; stoked by activists' accusations that certification is the industry's attempt at greenwashing to mislead consumers.

On the other hand, other environmental groups warn that if the RSPO should fail in its endeavor, the palm oil industry will likely revert to business-as-usual practices that will continue to harm the environment.

Here, we argue that the financial burden and risk of producing sustainable palm oil should not fall solely on producers; instead these costs should be shared among key actors along the palm oil supply chain that includes both traders and buyers.

We further argue that at the national level some countries may be more financially capable than others in creating a stronger demand for premium palm oil.

As a thought exercise, we developed an "ability-to-pay" index that identifies the richest and largest palm oil importing countries as those that are most morally obligated to contribute to developing a successful CSPO market to raise the environmental performance of the palm oil industry.

In its simplest formulation, this ability-to-pay index could be a multiplier function of two metrics - a country's per capita import volume of palm oil and its per capita Gross Domestic Product (GDP).

Import is a more appropriate metric to consider than consumption because countries that benefit from importing and re-exporting palm oil (i.e., traders) are also obligated to reduce the environmental impacts of their profiteering activities.

Based on 2007 values of these two metrics), we calculated the ability-to-pay index for 156 countries (see table). The top 10 countries on this list are: the Netherlands, Germany, United States, United Kingdom, Japan, Italy, Belgium, China, France and Spain.

The Netherlands justifiably tops the list, being both the second largest importer (1.24 million tons) and the largest exporter (1.25 million tons) of palm oil; and ranks among the richest industrialized nations in the world (per capita GDP: US$46,750). Indeed, six of the "Group of Eight" or G8 nations are represented in this list (i.e., Germany, United States, United Kingdom, Japan, Italy and France).

In contrast, although China is the world's largest importer of palm oil (5.4 million tons), by virtue of it being significantly less affluent (per capita GDP: $2,575) than other major palm oil importers, it is ranked eighth on our list. China also happens to be the only developing country in this group.

What are the financial implications of switching from uncertified to certified palm oil for the country and individual consumer? We based our estimates of the cost of large-scale adoption of CSPO on a palm oil price of $781/ton (2006-2008 average) and an estimated 15 percent price differential between uncertified and certified palm oil.

We found that Indonesia - the world's largest palm oil producer - which consumes 4.9 million tons of palm oil annually (2008 values), would incur an additional cost of $571 million by switching from consuming uncertified to certified palm oil; whereas for the United States, which consumes 960,000 tons of palm oil annually (and is experiencing rising palm oil demand), the added cost would be $112 million.

For the individual consumer in Indonesia, he or she would need to spend an additional $2.50, which represents 0.13 percent of his or her annual income (per capita GDP); whereas an American consumer would only need to spend an extra $0.40, equivalent to 0.0008 percent of his or her yearly income.

Thus, an individual in a developing country such as Indonesia not only has to shoulder the cost of producing sustainable palm oil, but he or she would also be much heavily burdened by switching to using sustainable palm oil, compared to a consumer in a richer nation such as the United States.

Given the anticipated growth in global demand for edible vegetable oils and biofuels, a certification scheme could prove to be an attractive financial incentive - a key "pressure point" of the industry - for farmers to improve their environmental performance.

However, for any certification scheme to be credible and feasible, its financial burden would have to be appropriately shared among different stakeholders. In particular, as suggested by our analysis, the richer buyers and traders of palm oil have a moral obligation to ensure the success of certification.

Rhett Butler is founder of mongabay.com, an environmental science news website with a focus on tropical forests.

Palm Oil Chemical Composition

The oil palm produces two types of oils; crude palm oil (CPO) from the fibrous mesocarp and crude palm kernel oil (CPKO) from the kernels. Although both oils originate from the same fruit, palm oil is chemically and nutritionally different from palm kernel oil. It is one of the only two mesocarp oils available commercially, the other being olive oil.
In conventional milling process, the FFB’s are sterilized and the fruitlets stripped off. The loose fruitlets are then digested and pressed to extract the CPO. The kernels are separated from the fibrous mesocarp in the press cake and later cracked to obtained CPKO.

Chemical composition
The palm oil and palm kernel oil are composed of fatty acids, esterified with glycerol just like any ordinary fat. Both are high in saturated fatty acids, about 50% and 80%, respectively. The oil palm gives its name to the 16 carbon saturated fatty acid palmitic acid found in palm oil; monounsaturated oleic acid is also a constituent of palm oil while palm kernel oil contains mainly lauric acid. Palm oil is the largest natural source of tocotrienol, part of the vitamin E family. Palm oil is also high in vitamin K and dietary magnesium.

Palm oil, being a vegetable oils, is cholesterol-free. Having a naturally semi solid characteristic at room temperature with a specific origin melting point between 33ºC to 39ºC, it does not require hydrogenation for use as a food an ingredient.

CPO is deep orange red in colour due to the high content of natural carotenes. Palm oil is rich source of carotenoids and vitamin E which confers natural stability against oxidative deterioration.

Fractionation separates oil into liquid and solid fractions. Palm oil can be fractionated into liquid (olein) and solid (stearin) components.

Palm oil has a balanced ratio of unsaturated and saturated fatty acids. It contains 38.7% oleic acid (monounsaturated fatty acid), 10.5% linoleic acid (polyunsaturated fatty acid), 44.3% palmitic acid, 1% Myristic acid, 4.6% stearic acid (saturated fatty acid) and 0.9% other acids. This composition results in an edible oil that is suitable for use in a variety of food applications.

Carbon emissions may cost RI dearly

Adianto P. Simamora , The Jakarta Post ,

JAKARTA | Fri, 03/06/2009 9:37 AM | National

Peatlands for palm oil: Peatland is drained to make way for the cultivation of oil palms in Central Kalimantan. Indonesia is home to the world’s largest peatland areas. Scientists have warned that peatland reclamation could increase the release of carbon emissions stored in its area, leading to the worsening of global warming. (Courtesy Of The Indonesian Peat Land Association)

Indonesia suffers an estimated US$1 billion in potential losses each year from the release of carbon stored in its tropical forests’ peatlands, a study has revealed.

Mitsuru Osaki, a professor at Hokkaido University’s Graduate School of Agriculture in Japan, said the potential losses were due to poor management combined with the massive opening of peatlands for agriculture, such as in Central Kalimantan.

“If we convert it to the price of carbon, Indonesia loses about $1 billion annually, equal with the release of 0.6 gigatons of carbon dioxide [CO2],” he said Thursday on the sidelines of an international conference on carbon management in peat forests in Central Kalimantan.

Asked about the peatland condition in Indonesia, Osaki, involved in a study on peatlands in Kalimantan from 1997 to 2007, said it was “terrible, with no management of peatlands.”

Osaki, together with a team of 16 Japanese scientists, will conduct another five-year study to calculate the total carbon in the country’s peatlands.

The study will be jointly conducted with Indonesian scientists from the State Ministry for Research and Technology, the National Standardization Agency (BSN), the University of Palangka Raya, the Indonesian Institute of Sciences (LIPI) and the Indonesian National Institute of Aeronautics and Space (Lapan).

Tropical peatlands — including swamps and forests found in Indonesia, Malaysia, the Amazon lowlands and central Africa — are estimated to reach 42 million hectares and contain 148 gigatons of CO2.

Rising levels of CO2 emissions add to the greenhouse effect, thus increasing the temperature in the atmosphere, widely blamed for climate change effects.

Bambang Setiadi, chairman of the Indonesian Peatland Association, told the conference Indonesia had about 27 million hectares of peatlands, mostly in Kalimantan, Sumatra and Papua.

“Indonesia’s peatlands store between 10 and 32 gigatons of CO2,” he said.

(JP/Irma)

The depth of the country’s peatlands ranges from 1 to more than 12 meters. About 42 percent of the peatlands are more than 2 meters deep, with deposits of 77 percent of total peat carbon.
Bambang, who is also BSN chairman, said deforestation and repeated forest and peat fires significantly contributed to carbon release.

“Fires have become the most dangerous threat to Indonesian forests and peatlands in the past 15 years,” he said.

Studies show peat deposits in Southeast Asia could be wiped out by 2040 due to fires.

Bambang added that up to 0.6 gigatons of carbon released into the atmosphere in 2006 were due to peat fires.

He said carbon release from reclaimed peatlands could not be avoided. However, improved land management could lower the peat carbon loss rate.

LIPI peatland scientist Herwint Simbolon said the building of canals in peatlands would only accelerate the release of carbon.

“The fact is, carbon release is far higher than storage in peatlands, because the use of canals has sped up carbon release,” he said.

The government is currently drafting a presidential decree on peatland management, in a bid to cut CO2 emissions from peatlands.

Agriculture Minister Anton Apriyantono issued a ministerial decree last month to allow oil palm companies to expand into peatlands with a depth of less than 3 meters.

A report in 2006 from Wetlands International said Indonesia’s peatlands emitted around 2 billion tons of CO2 a year, far higher than the country’s emissions from energy, agriculture and waste, which together amounted to 451 million tons.

This places Indonesia as the world’s third largest CO2 emitter after the United States and China.