Wednesday June 1, 2005, 5:39 pm KUALA LUMPUR (Dow Jones)--The palm oilindustry plans to unveil in November a set of standards on environmentallyfriendly and socially responsible production practices, marking a majorstep forward in the fledgling cooperation between the industry andnon-governmental organizations.Set up in mid-2004, the Roundtable On Sustainable Palm Oil, or RSPO, asthe multiparty association is better known, had as its initial task theformulation of a credible definition of sustainable palm oil.Now, about a year later, the grouping of sides that have long been at oddsover environmental and rights issues is close to making a breakthrough."Our main focus so far has been to develop a set of criteria on whatsustainable palm oil entails. We set up a working group in October andwe've had two draft documents that have come out for public consultation,"the RSPO's newly appointed secretary-general Andrew Ng said in aninterview."The goal is to have the (final) criteria document launched at our 3rdRoundtable meeting in November."That meeting is scheduled for Nov. 22-23 in Singapore, a key regionalfinancial center neighboring two of the world's largest palm oil producers- Malaysia, where the Rasp's secretariat is based, and Indonesia.The criteria on sustainable palm oil will cover various aspects of palmoil production, including legal, economic, technical, environmental andsocial aspects.Admittedly, some aspects are more complicated, if not contentious, thanothers, which is why defining sustainable palm oil has been a longprocess, Nag said.Issues like optimizing productivity, zero-burning, integrated pestmanagement and waste management are among the easier aspects, sincegenerally, they are already being practiced in the industry."But then, there are some really difficult issues like biodiversity -things that the plantations industry has not done before and that takestime to be explained," Ng said."So, pulling people together and narrowing the gap is part of the wholelearning process that everyone is going through."Just as in the development of any multilateral agreement, the wordings tobe used in the RSPO's criteria document can also be the subject ofopposing views that take time to be resolved, Ng added.

More Work To Be DoneTo be sure, when the criteria document is launched, it will mark anoteworthy achievement in the efforts of the palm oil industry and NGOs toput aside their differences and work together.However, the RSPO's work will be far from finished, with even moredifficult tasks still to come.Once sustainable palm oil is defined, the subsequent, and no less crucial,question for the RSPO to answer is how the criteria will be put intopractice, Ng said."The immediate challenge will be the uptake, adoption, implementation andverification of the criteria," Ng said.Among the major issues the RSPO will have to mull over will be thepossible introduction of a certification system to recognize sustainablepalm oil and verification by way of an audit.The RSPO will also be looking at fine-tuning its sustainable palm oilstandards into more detailed, country-specific terms."The next step is a process of national interpretation - taking a veryglobalized, generic set of criteria down to national-level discussionsinvolving more national-level stakeholders," Ng said.Oil palm smallholders, in particular, would require special consideration,since they clearly lack the size and scale of larger plantation companies.According to official data, Malaysia's individual smallholders, excludinggovernment schemes, account for about 10% of the country's total oil palmplanted area of around 3.9 million hectares.The smallholder sector is even larger in Indonesia, making up 30% of thecountry's 5.3 million hectares of oil palm area."We recognize that we need to address smallholders separately. They cannotbe integrated within the larger criteria. There has to be aninterpretation just for them, especially for Indonesia," Ng said.The criteria development also doesn't stop at the upstream, productionend.For palm oil to be truly sustainable, other segments of the industry -including processing, manufacturing and trading - also need to comply withsound environmental and social practices, Ng said."We should look at setting criteria for the rest of the supply chain. Thekey is to ensure that sustainability goes all the way through and thatthere's a level of consistency across the board," he added.

Membership Growing RapidlyThe palm oil industry's record on environmental, conservation and rightsissues has been questioned in past years, with groups in Europe among themost vocal critics.The RSPO was formed to address those concerns.Starting with just a handful of participants, the group has since expandedimpressively.It currently has over 80 members ranging from oil palm growers toprocessors, traders and retailers as well as banks and environment, natureand social NGOs from all over the world.Ng said the growing membership indicates increasing global awareness forsustainable palm oil, not just in Europe and not just confined to theedible oils sector."Our most recent applicant is the largest processor in China, so it's veryinteresting to suddenly see an organization from China wanting to comeonboard," Ng said, referring to China National Cereals, Oils andFoodstuffs Corp.Biodiesel companies have also joined RSPO, he added.The use of palm oil for fuel has been on the rise in recent times, as highpetroleum prices have prompted governments to look for alternative energysources.