Tuesday August 9, 2011
Head-on collision between palm oil certifications
Commodities Talk- by Hanim Adnan
TALKS about Malaysia introducing its own sustainable palm oil certification scheme have surfaced many times. But now they could become a reality following the recent directive by the Government for local oil palm authorities to work together to formulate a draft on the Malaysia Sustainable Palm Oil (MSPO) certification.
The proposed MSPO will see Malaysia joining Indonesia, which has launched its own palm oil certification body the Indonesian Sustainable Palm Oil (ISPO) in the middle of last year.
Indonesia has put in place over 100 ISPO requirements that were compulsory for all palm oil growers since January this year.
While the MSPO may unlikely be introduced within the next one to two years, industry observers said the formation of the ISPO and the MSPO would indeed challenge the role of pioneering “voluntary” palm oil certification body - the Roundtable on Sustainable Palm Oil (RSPO).
Why would Malaysia and Indonesia, the world's two largest producers of crude palm oil (CPO), take matters into their own hands by setting up their own certification body when there is the RSPO?
Does the world really need three palm oil certification bodies - the RSPO which is said to be the most balanced in terms of multi-stakeholder representation while ISPO and MSPO are initiated by the Governments of major palm oil producing nations?
The main complaint among oil palm producers was over the certified sustainable palm oil (CSPO) by the RSPO that was not getting good uptake or better premium in the major consuming nations.
To make matters worst, palm oil producers have become the constant target of NGOs some of which are members of the RSPO.
Many green activists blamed Malaysian and Indonesian plantation companies for deforestation, destroying the wildlife habitat and planting on peat land; thus increasing greenhouse gas emission in the environment.
In short, palm oil producers said the RSPO had not been successful in deflecting allegations of environmental groups on the palm oil industry.
Another claim is that the RSPO is still not globally recognised as its CSPO certification is based on a voluntary basis by the producers.
Furthermore, the RSPO certification has coverage limited only to palm oil in food-based products while other items including biodiesel which also uses palm oil is a big issue in Europe.
As for Malaysia's proposed MSPO, it is believed that the Malaysian Palm Oil Board will be spearheading the task.
There will be many criteria to consider in the formulation of the MSPO certification body given the broad section involving big plantation companies - those under government schemes like Felda, Risda and Felcra, independent palm oil estate owners and independent smallholders.
While the MSPO criteria will be made mandatory for the oil palm planters, one thing is for sure many of them do not want to be saddled with the high cost of certifying their operations in the past like the RSPO certification.