Understanding the Palm Oil Supply Chain
Plantation
Miller
Transporter
Supplier
Retailer and Manufacturer
Consumer
(you!)
Oil palm is a remarkably efficient crop which provides the majority of the world’s vegetable oil
as well as valuable revenue for the developing countries where it is grown. For these reasons,
abandoning the production and use of palm oil is not a realistic option. Yet the continuing
expansion of non-sustainable oil palm plantations continues to be a primary threat to
biodiversity, particularly as the palm oil growing industry spreads beyond Southeast Asia to
other continents. Palm oil is truly a global commodity both in its production and use.
Photo Credits: Perry van Duijnhoven
ndtable on Sustainable
S
Palm
P
Oil (RS
SPO) is a muulti-stakehollder group w
with members
The Roun
representting palm oill growers an
nd producers, suppliers, rretailers andd manufacturrers, social
organizattions, conserrvation NGO
Os and goverrnmental andd financial innstitutions.
The objective of the RSPO
R
is to promote
p
a sttandard of paalm oil prodduction that iis socially,
economiccally and env
vironmentallly acceptablle.
In 2007, the RSPO developed a set
s of “Principles and Crriteria” to serrve as a guidde for palm ooil
producerrs seeking to meet these goals.
g
Produ
ucts approve d as containning “Certifieed Sustainabble
Palm Oill (CSPO)” usse palm oil that’s
t
been sourced from
m plantationss following thhe RSPO’s
Principlees and Criteria:
-
Commitment
C
to transpareency
Compliance
C
with
w applicab
ble laws and
d regulationss
Commitment
C
to long-term
m economic and financiaal viability
Use
U of approp
priate best prractices by growers
g
and millers
Environmenta
E
al responsibiility and con
nservation off natural resoources and bbiodiversity
Responsible
R
consideration
c
n of employ
yees and of inndividuals annd communiities affectedd by
grrowers and mills
m
Responsible
R
development
d
t of new plan
ntings
Photo Credit: P
Perry van Duijnhooven
The sustainable production of palm oil, however, is not without additional costs. Some of these
costs are reflected in growing processes and techniques, while others are associated with
bringing CSPO to market; most notably that of ensuring the segregation of CSPO from nonsustainably grown palm oil throughout the supply chain. As these extra costs are passed along,
there is a domino effect of increasing prices for suppliers, manufacturers and, of course, the
consumer.
Nevertheless, it is critical for the health of the planet – and the survival of orangutans - that the
demand for and use of CSPO continues to rise. Fortunately this has been the trend for the past
three years as, according to the RSPO, purchase of available CSPO has gone from 25.3% in 2009
to 46.2% in 2010 to 70% in 2011. Currently, the amount of “available CSPO” is equivalent to
approximatley10% of the global market or 5 million tones.
The role of the manufacturer is one of the most important in maintaining this trend.
Without pressure from manufacturers (and assurances that extra costs will be covered), suppliers
won’t push mills and growers to produce CSPO. By the same token, manufacturers will not push
suppliers to source CSPO for their products if they don’t feel their customers – the consumer –
will pay increased prices. For this reason, maintaining open lines of communication between
consumers and manufacturers is critical to driving the demand for CSPO in the palm oil industry.
2015 is the target year for companies to source 100% CSPO in their products. While many
retailers and manufacturers are members of the RSPO, not all have made a commitment to reach
this goal. Among those who have, there is significant variation in their level of commitment –
some planning to take a considerably more active role than others.
GreenPalm Certificates are available for those companies interested in
supporting the production of CSPO even before they are able to use it – or to supplement
whatever portion they are currently using as they work towards the 100% mark.
RSPO certified palm oil producers are invited to register a quantity of their product with the
GreenPalm programme. By awarding one GreenPalm certificate for each ton of palm oil that has
been sustainably produced, certified palm oil producers are rewarded for their efforts and
provided with a mechanism to earn revenue. They can then put those certificates up for sale on
the GreenPalm web based trading platform where retailers and manufacturers bid for and buy
them on line as a way of supporting the sustainable production of palm oil. Most importantly,
GreenPalm certificates provide an incentive for growers to continue to produce sustainable palm
oil even when CSPO sales are down, bridging the gap between a company’s intent to source
CSPO and its immediate ability to do so.
The Philadelphia Zoo applauds those retailers and manufacturers that have made the
commitment to source 100% CSPO by 2015. As a means of encouraging these companies to
meet the challenges they will encounter along the path to sourcing CSPO, we intend to engage
our audiences in the palm oil issue, providing them with opportunities to share positive feedback,
advocate for CSPO and express their interest in purchasing products made with the protection of
wildlife and the planet in mind.
Photo Credit: Perry van Duijnhoven