Industry players and analysts had anticipated that the CPO export tax would resume in March given the recovery in the locally delivered CPO prices currently hovering at RM2,290-RM2,300 per tonne.
THE Roundtable on Sustainable Palm Oil (RSPO) was established in 2004, in response to the attacks on the industry on environmental and social grounds. Members include palm oil growers, traders, financiers and end-users, as well as concerned non-government organisations (NGOs). Its aim is to “transform markets to make sustainable palm oil the norm”, and to “advance the production, procurement, finance and use of sustainable palm oil products.”
These objectives are admirable, and essential to the improvement of palm oil’s reputation in some markets.
Here, I wish to give an outsider’s view on the extent to which these objectives are being achieved, and discuss what the future may hold for RSPO.
The certified sustainable palm oil (CSPO) by the RSPO constitutes less than 20% of world production, and users have failed to take up more than half the certified oil.
A majority of growers appear to regard the RSPO certification as “an unjustifiable cost” given that the price premium for certified oil is negligible. Despite admirable intentions, the certification for smallholders’ remains particularly weak.
Furthermore, a profusion of other sustainability certification schemes confuses the consumers and appears likely to undermine the RSPO. Far from ‘becoming the norm’, as was hoped, the RSPO certified palm oil will probably remain a niche product, unless steps are taken to increase uptake of certified oil.
Criticism
The RSPO has been criticised for being too lenient with member growers who fail to meet the criteria, but it must be remembered that membership is voluntary, and there are large markets for palm oil where sustainability is not yet an issue.
Perhaps, the most important criticism is that certification bodies have failed to identify unsustainable practices. Worse still, according to case studies listed by the Environmental Investigation Agency , in some cases the certifiers appeared to be colluding with plantation companies to disguise violations of the RSPO criteria.
It has been claimed that non-compliance by members is widespread, with some CSPO coming from recently deforested land.
Some suggested that the RSPO’s problems could be dealt with, and its credibility improved, by appointing an independent ‘watch dog’ group to monitor operations, such as the FSC-Watch, which oversees the Forest Stewardship Council for the timber industry.
The RSPO certification reports are reviewed before acceptance, but the reviewers report directly to the certification bodies, rather than to the RSPO, so they are not really independent.
The NGOs have criticised the RSPO for being too lax, but conversely, some of the criteria are criticised by growers as misconceived or unnecessary. Even the most committed growers have become disillusioned by apparently senseless decisions, and are frustrated by the bureaucracy.
For example, the complete New Planting Procedure has to be followed even when converting to oil palm from another crop.
There is no obvious logic to this; forest biodiversity and carbon stocks have already been lost.
Economic sustainability is important, and if a grower considers that conversion to oil palm is in his economic interest, the RSPO should not to prevent conversion.
The most important sustainability standards applied to palm oil are probably; the Indonesian Sustainable Palm Oil (ISPO), the Malaysian Sustainable Palm Oil (MSPO), the Palm Oil Innovation Group (POIG), together with the RSPO Next.
The RSPO had the important effect of provoking the development of ISPO and MSPO certification schemes. The ISPO certification is already a legal requirement for plantations in Indonesia, and MSPO certification may become compulsory in Malaysia.
In comparison, the RSPO has the most comprehensive Social Impact Assessment requirements, and the strongest measures for biodiversity protection. ISPO provides the least stringent protection for biodiversity, but the Indonesian government has imposed a moratorium on the clearance of primary forest.
This does not apply to secondary forest, however, and there are claims that large areas of primary forest have been classified as secondary, and thus fall outside the moratorium.
Neither the ISPO nor MSPO has cut-off dates for applicability of the criteria, and there are no explicit commitments to transparency and ethical conduct.
The RSPO also gave the greatest protection of human rights and community livelihoods, and ISPO the weakest.
These differences will lead to criticism of MSPO and ISPO, but a combination of compulsory certification and more ‘grower friendly’ criteria means that ISPO and MSPO may have a more significant influence on the behaviour of the palm oil industry than RSPO, whether or not the certification is accepted by NGOs and consumer countries.
The RSPO Next is a voluntary standard aimed at RSPO members who have exceeded the current requirements for certification.
A number of criteria are added to the P&C, including a commitment to no deforestion, with forest defined in terms of both biodiversity and carbon stocks.
The RSPO CEO has been quoted as confident that if RSPO Next is successfully implemented, it will only be a matter of time before it becomes the industry norm.
This seems unlikely, given the poor adoption of the basic P&C by the industry as a whole.
The future
A crucial question is whether we want as much of the industry as possible committed to RSPO, or a limited part of the industry producing oil which meets the highest possible standards.
In my opinion the former is more important, but it seems clear that many producers are reluctant to join the RSPO, seeing certification as a cost, with little return in terms of price premium.
If the RSPO continues as at present, the future seems clear: its certified oil will become more and more of a niche product.
Responsibility for this must lie mainly with those NGOs and food manufacturers who have pushed for ever higher standards, rather than encouraging the rest of the industry to come on board.
The use of a niche product may be a selling point for some palm oil users, of course, so perhaps the users have a different objective from the NGOs.
To avoid this outcome, it seems essential that uptake of CSPO is increased.
Far from supporting the CSPO market, some manufacturers who are members are advertising products as ‘palm oil free’. This is clearly against the spirit of RSPO, even if the Code of Conduct does not explicitly forbid it.
Perhaps members who are users should be obliged to put forward, and be audited against, time-bound plans to move to 100% certified oil, just as producers are audited on time-bound plans for all their production to be certified.
Some members have published plans, but these have been voluntary, and are not a requirement of RSPO membership.
If all CSPO is taken up and there is further unmet demand, the price premium should increase, and the plantation industry
might start to see that there is an advantage to RSPO membership.
At the same time, RSPO and NGO members should strongly emphasise and publicise the validity of the ‘book and claim’ supply chain, so that users can obtain CSPO without the unnecessary additional costs of segregation.
If the RSPO succeeds in making CSPO ‘the norm’, the price premium would disappear, but uncertified oil would probably become saleable only at a discount to CSPO, giving the same net result.
- R.H.V. Corley is a plant physiologist who worked in oil palm research in Malaysia for over 15 years. He was also the head of research for Unilever Plantations for a further 16 years, and is now a consultant on tropical plantation crops. This comment is based on a paper published by The Planter.
