MARKET DEVELOPMENT
Demand For Sustainable Palm Oil Forecast To Double To 11 Million Tonnes By 2020
Demand For Sustainable Palm Oil Forecast To Double To 11 Million Tonnes By 2020
26/10/2015 (Bernama) - Rabobank forecasts that global demand for palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO) will double in five years, growing to 11 million tonnes by 2020 from 5.3 million tonnes in 2014.
A new report released by Rabobank today titled, 'Many Flavours of Sustainable Palm Oil', showed that almost all palm oil traders and suppliers in Europe and the United States would sell certified palm oil by 2020 - these markets currently account for up to 90 per cent of demand.
In Asia, more companies are expected to increase commitments to sustainable palm oil in the next five years and demand for RSPO-certified palm oil would reach 2-3 million tonnes, the Netherlands-headquartered Rabobank said in a statement Monday.
Indonesia and Malaysia currently produce 90 per cent of total global palm oil inventory.
Rabobank predicted that production of certified palm oil (CPO) would will reach 20-24 million tonnes over the same period, with capacity growing at a compound annual growth rate of 64 per cent, from 619,000 tonnes in 2008 to 11.9 million tonnes in 2014, it said.
"Many industry players are committing to sustainable palm oil in response to increasing calls from consumers across the globe, but complex supply chain and inventory challenges are creating a gap between demand and supply," its Director, Food & Agribusiness Research & Advisory, Pawan Kumar was quoted as saying in the release.
He said more companies are also developing their own additional standards on top of those required by RSPO in efforts to be sustainability leaders, creating challenges for the sustainable palm oil global supply chain as traders battle to match customers' demands with the right levels of traceability.
"This represents considerable opportunities for niche players and dedicated suppliers with vertically integrated supply chains who specialise in highly traceable palm oil.
"Niche or small volumes will prevent economies of scale and result in premiums for sustainable palm oil with more stringent criteria," said Pawan.
Currently, the book & claim and mass balance sourcing options are used most often, but the market is moving towards more stringent certificates such as the Segregated and Identity Preserved models that required CPO volumes to be kept separately during transport, storage, and processing.
As the palm oil supply chain faces increasing complexity, it would be crucial for RSPO-certified suppliers to keep their criteria attractive to branded manufacturers, such as the development of RSPO Next currently being worked out.
This could also help reduce complexity in supply chain.
Darrel Webber, RSPO Secretary-General said: "Since its inception in 2004, the RSPO has worked on an inclusive model that meets companies where they are and pushes them towards continuous improvement.
"It's good to see that this approach is not slowing us down in moving towards our 2020 targets and market transformation."
Rabobank recommended these developments in palm oil should be watched by other commodity markets such as soybeans and sugar where food manufacturers are also shifting to more sustainable purchasing requirements.
A new report released by Rabobank today titled, 'Many Flavours of Sustainable Palm Oil', showed that almost all palm oil traders and suppliers in Europe and the United States would sell certified palm oil by 2020 - these markets currently account for up to 90 per cent of demand.
In Asia, more companies are expected to increase commitments to sustainable palm oil in the next five years and demand for RSPO-certified palm oil would reach 2-3 million tonnes, the Netherlands-headquartered Rabobank said in a statement Monday.
Indonesia and Malaysia currently produce 90 per cent of total global palm oil inventory.
Rabobank predicted that production of certified palm oil (CPO) would will reach 20-24 million tonnes over the same period, with capacity growing at a compound annual growth rate of 64 per cent, from 619,000 tonnes in 2008 to 11.9 million tonnes in 2014, it said.
"Many industry players are committing to sustainable palm oil in response to increasing calls from consumers across the globe, but complex supply chain and inventory challenges are creating a gap between demand and supply," its Director, Food & Agribusiness Research & Advisory, Pawan Kumar was quoted as saying in the release.
He said more companies are also developing their own additional standards on top of those required by RSPO in efforts to be sustainability leaders, creating challenges for the sustainable palm oil global supply chain as traders battle to match customers' demands with the right levels of traceability.
"This represents considerable opportunities for niche players and dedicated suppliers with vertically integrated supply chains who specialise in highly traceable palm oil.
"Niche or small volumes will prevent economies of scale and result in premiums for sustainable palm oil with more stringent criteria," said Pawan.
Currently, the book & claim and mass balance sourcing options are used most often, but the market is moving towards more stringent certificates such as the Segregated and Identity Preserved models that required CPO volumes to be kept separately during transport, storage, and processing.
As the palm oil supply chain faces increasing complexity, it would be crucial for RSPO-certified suppliers to keep their criteria attractive to branded manufacturers, such as the development of RSPO Next currently being worked out.
This could also help reduce complexity in supply chain.
Darrel Webber, RSPO Secretary-General said: "Since its inception in 2004, the RSPO has worked on an inclusive model that meets companies where they are and pushes them towards continuous improvement.
"It's good to see that this approach is not slowing us down in moving towards our 2020 targets and market transformation."
Rabobank recommended these developments in palm oil should be watched by other commodity markets such as soybeans and sugar where food manufacturers are also shifting to more sustainable purchasing requirements.