The long way to sustainable palm oil

Indonesia’s Coordinating Minister for Economic Affairs Darmin Nasution has called on European countries to pay the premium for sustainable palm oil, affirms Eco-Business. Darmin explained that the cost of raising the sustainability standards of the industry “cannot be borne by producers alone”. “Unfortunately not many European countries (are) willing to pay extra for sustainability. Being sustainable requires effort and funding – this cannot be borne by producers alone,” said Damin to a 400-strong industry audience on the 16th of March. He noted, however, that following the successful Paris Agreement on climate change inked in December in the French capital, “we expect this condition to improve”.

Palm oil is a productive, high-yielding and versatile vegetable oil. But the industry has been tarnished by business practices that have led to deforestation, labour exploitation and biodiversity loss, among others. It is only in recent years that palm oil producers and traders – under growing pressure from consumers and activists.

The country has established a certification called Indonesia Sustainable Palm Oil (ISPO). The total plantation area with ISPO certification has reached 1.2 million hectares (ha), accounting for 11 per cent of total area planted, with 6 million tonnes of crude palm oil (CPO) - or 23 per cent of a total export of 25.6 million tonnes – certified.

While the price difference between non-certified and sustainable palm oil fluctuates, industry experts said the latter fetches between US$5 and US$23 more per tonne than non-certified options. Currently, a tonne of palm oil is trading at about US$560.