KL-based palm oil watchdog must tackle climate emissions, small farm challenge
17.12.2023 (New Straits Times) - When the Roundtable on Sustainable Palm Oil (RSPO) was set up two decades ago, as the palm oil industry struggled in the wake of Southeast Asian forest fires that provoked global outrage, reining in tropical forest losses was a top priority.
But today, critics question the palm oil watchdog's relevance as it struggles to manage other fast-rising concerns, from the industry's climate change impact to its limited benefits for small-scale farmers, and whether price-sensitive Asian buyers can be persuaded to buy greener oil.
Octogenarian M.R. Chandran, the head of Malaysia's palm oil growers' association when he helped create the global standard for sustainability, said reducing emissions and tackling climate change will be crucial in the coming decades.
"Addressing climate change (is something) we have to do," Chandran, now RSPO adviser, said at the organisation's 20th anniversary meeting last month. "Our carbon footprint has to be addressed."
Palm oil is the world's most widely used edible oil, found in everything from margarine to soap, but it has faced scrutiny from green activists and consumers, who say its production has provoked rainforest and peatland loss, fires and worker exploitation.
Since its start in 2004, the RSPO has grown to more than 5,500 member growers, traders, retailers and advocacy groups.
It has tightened standards to include a ban on felling forests and converting peatlands for plantations, as well as greater protection for labour and land rights.
Cutting down forests has major implications for global goals to curb climate change, as trees absorb about a third of the planet-warming emissions produced worldwide, but release carbon back into the air when they rot or are burned.
The Kuala Lumpur-based RSPO recently completed a five-year review of standards and expects to roll out changes by mid-2024.
No-deforestation rules, which Chandran called the RSPO's greatest achievement, will not be watered down, said chief executive officer Joseph D'Cruz, better known as JD.
But he also said that the industry should look to reduce emissions and tackle climate change.
J.D., who was appointed in March last year, said improving soil carbon and cutting methane releases from palm oil mills are some of what's needed.
Over the last two decades, pressure from environmentalists and consumers has pushed big companies that produce, trade or buy palm oil to tackle labour abuses on plantations and commit to ending deforestation, with some success.
Deforestation rates in Malaysia and Indonesia, the world's top two palm oil producers, have fallen in recent years, said nonprofit World Resources Institute.
But smallholders, who account for about 40 per cent of oil palm plantation areas in Indonesia and Malaysia, have largely been left behind, say industry analysts.
Globally, there are more than seven million small-scale oil palm growers and only about 170,000 are RSPO-certified.
"The greatest difficulty for RSPO is to be relevant to independent smallholder palm producers," said Matthew Spencer, global director for landscapes at sustainable trade foundation IDH.
Joko Prasetyo is head of the Association of Independent Oil Palm Smallholders, a collective of RSPO-certified farmers in Sumatra backed by Indonesian producer Musim Mas.
Prasetyo, 49, who has a 10ha farm, has seen his yields rise 60 to 75 per cent by adopting better farming practices through RSPO certification.
But he does not receive a better income for the ethical oil he produces.
"I want to have a premium price but, for now, with the benefits of increased yields, we can offset it," he said.
Prasetyo is not alone in missing the premium price benefits RSPO certification is supposed to bring.
RSPO-backed palm oil represents about 20 per cent, or 15.4 million tonnes, of global production, but just 80 per cent of certified oil is sold at a premium.
While the RSPO certification scheme is backed by many European buyers, boosting demand for sustainable palm oil in India, China and Indonesia, where buyers are more price-sensitive, will be important in the years to come.
Without a boost in demand for certified oil from Asian markets, RSPO could lose its relevance, especially as the European Union and the United States increasingly turn to regulation in place of reliance on voluntary standards like RSPO, green groups said.
* The writer is from Reuters