Tuesday October 4, 2011
At last, some good news on the international front for palm oil
Commodities Talk- by Hanim Adnan
IT is quite heartening to know that palm oil has gradually been garnering more positive support on many international fronts after being put in a bad light by Western non-governmental organisations which linked the industry to forest destruction.
The latest is that the European Union (EU) flagship energy policy - the EU Renewable Energy Directive (EU RED) - has been deemed discriminatory and a barrier to trade with regard to imported biofuel feedstock, including palm oil, by German economist Dr Gernot Pehnelt.
Pehnelt challenged the EU RED to recalculate the default value assigned to palm oil - which is a major biofuel feedstock.
His research has concluded that a more accurate default value for palm oil is between 37% and 44%, and as high as 52% for palm oil used in electricity generation.
To this end, the Malaysian palm oil industry has sought to communicate to the commission the inaccuracy of its default values and the discriminatory nature of the directive.
Hopefully this will encourage continued dialogue with the commission, and a change in the values for Malaysian palm biofuel exported to the EU.
Of interest too is the remark by a former adviser to the previous US president Bill Clinton, Dr Robert Shapiro who criticised the ongoing debate among Australian legislators to impose mandatory palm oil labelling in food products and consumer goods.
Shapiro said the Australian proposal miscontrued several important environmental issues.
The principal cause of deforestation in Malaysia and elsewhere is not palm oil development, but poverty and subsistence farming which force desperate people to consume forests for fuel.
“Malaysia's programme for palm oil development has confronted this problem head on, with measures that have enabled thousands of landless farmers to establish their own farms to cultivate oil palm, cocoa and rubber.
“These successes in improving the standards of living of landless farmers and other palm oil industry workers have been publicly recognised by the United Nations and the World Bank.”
Shapiro's comments lend further credence to the warnings of incompatibility of the legislation with World Trade Orgnaisation rules - warnings that have been reiterated by the Plantation Industries and Commodities Ministry, Malaysian Palm Oil Council and several Australian government ministries.
It is estimated the cost of the palm labelling legislation to Australian businesses is likely to exceed A$150mil which is unwarranted given the current global economic crisis.
Another positive news flow which will make the Roundtable on Sustainable Palm Oil (RSPO) smile with pride is the move by a Dutch industry body seeking its government to lobby the EU to abolish the 3.8% import tax imposed on sustainable palm oil used for food manufacturing.
The Dutch Product Board for Margarine, Fats and Oils said it was important to reduce the cost of certified sustainable palm oil (CSPO) as buyers wanted lower prices in economic crisis.
Currently, food producers in the EU are under pressure from environmentalists to use CSPO, which accounts for 10% of their total output and is more expensive than regular palm oil because of the costs associated with certification.
Many food and consumer goods producers in the West have pledged to use CSPO in their operations by 2015.
As for the RSPO, it will continue to push for the promotion of CSPO globally.
The latest victory is getting US-based global retailer Walmart, confectionery producer Hershey and financial services leader Citigroup to become its members.
Currently, some five million tonnes of CSPO are produced from plantations, sprawling over one million hectares.