Thursday, September 22, 2011

Do we need the RSPO?

Do we need the RSPO?
A QUESTION OF BUSINESS
By P. GUNASEGARAN

Oil palm growers may have done the wrong thing when they let the Roundtable on Sustainable Palm Oil decide what kind of palm oil is sustainable
IN April 2008, Unilever, one of the world's single largest consumers of vegetable oil, came under attack. Its UK offices came under siege from orang utans, or rather Greenpeace activists dressed as those adorable, cuddly creatures.
Eight of them managed to climb on to a balcony at one of the Unilever buildings and their antics in orange furry suits and monkey masks to make them resemble those “people of the forest” got coverage around the world. A great gimmick.
Greenpeace's beef, which is not entirely correct: Forests, the orang utan's habitat, are being cleared in Borneo to be replanted with oil palm and that Unilever is a large purchaser of the resultant palm oil.
Basically the non-governmental organisation or NGO was lobbying consumers to boycott a range of consumer products from Unilever and indirectly putting pressure on all palm oil growers worldwide by asking whether they produce “sustainable” palm oil or not.
The Roundtable on Sustainable Palm Oil or RSPO was formed in 2004 out of similar pressure over years. Basically it is a grouping of oil palm growers, users and interested parties which has now agreed on certification as to what constitutes sustainable palm oil.
That's a long list but at the top of that is one condition that palm oil should not be produced from the clearing of forests. Others include social criteria such as treating employees well, not displacing indigenous people etc.
Malaysia has officially stopped clearing virgin forests and apparently that has resulted in Malaysian producers considering themselves as having an advantage relative to Indonesian producers. Hence, some of them believed they could get a competitive advantage over Indonesian producers if they go the RSPO way and get their palm oil certified as sustainable.
But they may have shot themselves in the foot. Increasingly, they may be finding that some of the conditions imposed are onerous and difficult in terms of implementation and that the RSPO is being controlled by other interests and they have little say in what it does.
For instance, how does one ensure that all production going into a mill or a refinery is from certified sources and can one get enough input even then? If supply is “contaminated” with a bit of uncertified oil palm or palm oil, does the entire batch become uncertified?
And who are these people who certify the oil?
That oil palm growers have allowed themselves to be pressured and seduced to believe that RSPO-certified palm oil is the key to their survival may turn out to be one of their bigger mistakes in life, something they may have cause to regret unless they do something about it.
The RSPO is comprised of a whole lot of members other than growers. The growers do not exert significant influence over the body and have instead relinquished this to a body of people who may not be that independent, especially in terms of their stance towards deforestation and issues affecting oil palm growers.
According to the RSPO website, Malaysia has 95 members and Indonesia 79 out of 495 members. That's 37% in total but European members total 280, accounting for 57%.
Indonesia and Malaysia produce some nine tenths of the world's palm oil but their members in the RSPO total less than half that.
Or take composition by category. Oil palm growers have just 87 members, a mere 18% but palm oil processors and traders have 191 members or 39% while consumer goods manufacturers and retailers have 186 members or 38%. Again, growers are swamped.
Perhaps there are executive board provisions for growers, but no. It looks bad, real bad. They have four allocations, the same as for NGOs, with two for environmental ones and two for social ones. Palm oil processors, consumer goods manufacturers, retailers, and bankers and investors have two each, again swamping growers.
That means oil palm growers are overwhelmed three to one by others on the executive board. The current secretary general in fact was a representative of WWF International on the executive board from 2007 to 2009. Can growers expect their interests to be well-represented under such circumstances? No, not at all.
How growers have allowed themselves to be so weakly represented on the RSPO to the extent that they have much less say than others is impossible to understand. At the least, they should have had an equal representation it's their product which is being certified.
A look at two videos on the RSPO website indicate the bias towards deforestation and the obsession with orang utans, the primary marketing tool of NGOs in their fight against use of palm oil in developed countries.
One is by the WWF, an organisation which routinely raises funds by alleging that many animals, including the orang utan, are near extinction. Predictably, the orang utan is again showcased in this video and the message is forests cannot be cleared. Many Malaysians will challenge the view that orang utans are an endangered species in Malaysia.
How forest resources are used is a sovereign right and others are entitled to object if the clearing is done in an improper manner. The RSPO cannot be the final arbiter of how the forests should be used which needs to balance the development needs of the country and the need to maintain eco biodiversity. Even RSPO's own video rolls out the orang utan yet again although the message is not so strident in terms of forest clearing and makes some admission of oil palm's advantages over other crops.
Growers have one thing going for them and it may be more important than any other economics. The demand for vegetable oil is skyrocketing from year to year as demand from China and India and other developing countries increases rapidly. Certification won't matter in scarcity.
Palm oil growers have put themselves in a tough spot but it is quite easy to get out of it. Malaysia and Indonesia produce nine tenths of the world's palm oil. If both these countries don't participate in RSPO there is no RSPO. Period.
Managing editor P Gunasegaram wonders why there can't be roundtables on sustainable production for a whole lot of other goods and services such as laptops, notebooks and tablets, cars, trucks, trains and planes, Hollywood movies, TV serials and singing stars, subprime mortgages, Wall Street bonuses and derivatives the list can go on and on