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New agreements on fully segregated sustainable palm oil supplies from PNG

11 August 2013

According to articles published on the website Foodnavigator.com, a new commercial agreement has been concluded between New Britain Palm Oil Ltd (NBPOL), based in Papua New Guinea (PNG), and Olenex, a joint venture between ADM and Wilmar International, “to supply 350,000 tonnes of fully traceable segregated palm oil per year” to processing facilities in the UK and Germany. This will supply approximately “10% of [the] palm oil used by the food industry in Europe each year” in the form of 100% segregated – i.e. kept separate from non-sustainably produced – palm oil, with full traceability to sustainably managed production areas, making it much easier for manufacturers to guarantee the use of sustainably sourced palm oil in their food products. According to the companies involved in the agreement, the new joint venture will provide “unprecedented supply chain collaboration” in the supply of sustainably produced palm oil.

Food manufacturers who are committed to using sustainable palm oil have welcomed the agreement. Representatives of one of the manufacturing companies served by the joint venture arrangement, the Ferrero Group, maintained that the initiative would enable the company “to purchase their ingredients in a responsible manner ahead of target”, that is, faster than the nominal commitments already made by the company.

This comes against the background of criticism by the World Wide Fund for Nature (WWF) of the Roundtable on Sustainable Palm Oil (RSPO) system of sustainability certification. WWF claimed that while the RSPO’s revised principles and criteria were “a step in the right direction”, they were nevertheless “insufficient to prevent deforestation because they do not require producers to account for greenhouse gas emission and clearance of carbon-rich peatland”. WWF called on progressive companies to set and report on particular performance standards within the framework set by RSPO. More generally, environmental NGOs are urging the RSPO to become tougher with its members in living up to RSPO standards in all their palm oil operations. 

Editorial comment

The creation of a dedicated, segregated and sustainable palm oil supply chain, linking palm oil production in PNG to the European food industry, can be seen as a timely response to recent criticism of perceived shortcomings in the RSPO system of sustainability certification (see Agritrade article ‘ RSPO members questioned over sustainability of palm oil production’, 28 April 2013). It places NBPOL in a position to effectively address processor, retailer and consumer concerns over the integrity of sustainability claims.

Equally, it would appear to place NBPOL in a good position to respond to any future EU moves towards linking market access for palm oil to sustainability certification. The issue of linking market access to compliance with sustainable production practices is already a matter of concern in the PNG and wider Pacific fisheries sector.

The experience of NBPOL could potentially hold lessons, in terms of market positioning and supply chain development, for other ACP supply chains facing demands for increased sustainability certification (e.g. the horticulture sector, where major market components – such as the Dutch market – are moving to having all produce certified as 100% sustainably produced by 2020 (see Agritrade article ‘ Sustainability concerns go mainstream in Dutch fruit and vegetable sector’, 29 July 2012).


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