MARKET DEVELOPMENT
Adam Minter, Bloomberg View: Corporate America Helping Address World’s Palm Oil Crisis
Adam Minter, Bloomberg View: Corporate America Helping Address World’s Palm Oil Crisis
18/02/2015 (Waco Tribune-Herald) - You probably had some palm oil today. If it wasn’t in your toothpaste or your shampoo, it was in the margarine you had at breakfast. Found in roughly half of the products sold in modern supermarkets, it’s the world’s most popular edible oil.
It’s also the cause of one of the world’s biggest environmental catastrophes, the decimation of southeast Asia’s rainforests. Indonesia has lost enough rain forest to palm plantations since 1967 to cover the entire state of Kentucky. And that’s not just horrible for Indonesia. The typical method for clearing rainforests in southeast Asia is to burn them to the ground, which releases vast quantities of the greenhouse gases that cause global warming. According to one peer-reviewed study, the rainforests burned in 2010 in just one Indonesian state produced the same carbon emissions as 28 million cars.
The basic problem is that the companies that use palm oil in their products usually have little clue where it comes from because there are so many middlemen between them and the people growing the palm trees. If they knew they could pay similar prices for palm oil that didn’t endanger the planet (and infuriate activists), many of them would stop buying it from rainforest arsonists.
Fortunately, that seems to be exactly what’s starting to happen.
Around five years ago, a group of activists came up with a simple idea they called traceability: Companies should be able to know the entire life story of the palm oil they buy, all the way down to the mills where it’s processed, and the very plots of land where it was grown. That way, the theory went, they could avoid buying from plantations carved out of recently cleared rainforest and buy instead from older plantations or newer ones on less-endangered land.
The industry is now starting to catch on. Three weeks ago, Wilmar International, the world’s largest palm oil supplier, posted information about its mills and plantations in southeast Asia to a new website that anyone — rivals, NGOs, journalists — can access by requesting a password.
The website doesn’t just include the names of the mills from which it buys palm oil -— it lets visitors check whether they’re in an area that’s been deforested. It also lets people file formal grievances with Wilmar against mills and plantations that seem to be acting unscrupulously.
Will it work? That’s hard to say right now. According to Forest Heroes, an NGO that’s helping Wilmar compile the data on its website, the company is trying to achieve an unprecedented level of transparency for an agricultural supplier. Meeting those high ambitions won’t be easy.
But in another sense, the traceability campaign is already a success. Companies that use palm oil are beginning to hold themselves to higher environmental standards than they ever have before. Palm oil buyers like Kellogg and General Mills have pledged to follow Wilmar’s lead. And Krispy Kreme and Dunkin’ Donuts, among many other consumer product companies, have already committed to using only traceable palm oil for their caloric treats.
PepsiCo — which uses palm oil in popular snacks like Doritos and Fritos — has been a prominent holdout, but it’s probably only a matter of time until it embraces full traceability standards. They’re already earning the ire of activists who argue there’s no reason PepsiCo shouldn’t investigate its palm oil supply back to its source, just like its competitors.
The new system isn’t without its flaws. It could be gamed, for example, by mills that lie about where they’re buying raw palm oil from. But traceability might be the last chance for what remains of southeast Asia’s rainforests. And if it all works according to plan, consumers will be able to do their part, one oily doughnut and margarine tub at a time.
Adam Minter is based in Asia, where he covers politics, culture and business.
It’s also the cause of one of the world’s biggest environmental catastrophes, the decimation of southeast Asia’s rainforests. Indonesia has lost enough rain forest to palm plantations since 1967 to cover the entire state of Kentucky. And that’s not just horrible for Indonesia. The typical method for clearing rainforests in southeast Asia is to burn them to the ground, which releases vast quantities of the greenhouse gases that cause global warming. According to one peer-reviewed study, the rainforests burned in 2010 in just one Indonesian state produced the same carbon emissions as 28 million cars.
The basic problem is that the companies that use palm oil in their products usually have little clue where it comes from because there are so many middlemen between them and the people growing the palm trees. If they knew they could pay similar prices for palm oil that didn’t endanger the planet (and infuriate activists), many of them would stop buying it from rainforest arsonists.
Fortunately, that seems to be exactly what’s starting to happen.
Around five years ago, a group of activists came up with a simple idea they called traceability: Companies should be able to know the entire life story of the palm oil they buy, all the way down to the mills where it’s processed, and the very plots of land where it was grown. That way, the theory went, they could avoid buying from plantations carved out of recently cleared rainforest and buy instead from older plantations or newer ones on less-endangered land.
The industry is now starting to catch on. Three weeks ago, Wilmar International, the world’s largest palm oil supplier, posted information about its mills and plantations in southeast Asia to a new website that anyone — rivals, NGOs, journalists — can access by requesting a password.
The website doesn’t just include the names of the mills from which it buys palm oil -— it lets visitors check whether they’re in an area that’s been deforested. It also lets people file formal grievances with Wilmar against mills and plantations that seem to be acting unscrupulously.
Will it work? That’s hard to say right now. According to Forest Heroes, an NGO that’s helping Wilmar compile the data on its website, the company is trying to achieve an unprecedented level of transparency for an agricultural supplier. Meeting those high ambitions won’t be easy.
But in another sense, the traceability campaign is already a success. Companies that use palm oil are beginning to hold themselves to higher environmental standards than they ever have before. Palm oil buyers like Kellogg and General Mills have pledged to follow Wilmar’s lead. And Krispy Kreme and Dunkin’ Donuts, among many other consumer product companies, have already committed to using only traceable palm oil for their caloric treats.
PepsiCo — which uses palm oil in popular snacks like Doritos and Fritos — has been a prominent holdout, but it’s probably only a matter of time until it embraces full traceability standards. They’re already earning the ire of activists who argue there’s no reason PepsiCo shouldn’t investigate its palm oil supply back to its source, just like its competitors.
The new system isn’t without its flaws. It could be gamed, for example, by mills that lie about where they’re buying raw palm oil from. But traceability might be the last chance for what remains of southeast Asia’s rainforests. And if it all works according to plan, consumers will be able to do their part, one oily doughnut and margarine tub at a time.
Adam Minter is based in Asia, where he covers politics, culture and business.