Oil palm growers to push for change

This is written by my colleague Rupa Damodaran.

KUALA LUMPUR: Disgruntled oil palm growers want the Roundtable on Sustainable Palm Oil (RSPO) to “bring some direction” to the world’s largest commodity certification body, with a Malaysian or Indonesian as the head.

Thi is because they have been overlooked by the RSPO. Planters are taking advantage of the rescheduled annual general meeting today to push for some sweeping changes to the eight-year old outfit.

The eighth AGM which was scheduled to be held in Kota Kinabalu was postponed in November 2011 when the quorum fell short of 47 votes to meet the 50 per cent criteria for the overwhelming attendance.

Zurich-based RSPO which has its secretariat based in Kuala Lumpur, is currently headed by Jan Kees Vis from Unilever since 2004.

Oil palm growers, through the Malaysian Palm Oil Association (MPOA), make up only 17.2 per cent (103) of the total membership of 599. 

Majority of the members are palm oil processors and traders and consumer goods manufacturers with 213 and 205 representatives respectively.

“It has lost direction of what it had set out to do and has instead become a club for multinational companies, consumers and non-government organisations (NGOs),” lamented a member of the growers fraternity.

“The impasse we face today is because growers are not satisfied. From the start, we’ve toiled to meet the standards required. Although the CSPO (certified sustainable palm oil) is flowing now, the offtake has not matched the supply.”

One of the resolutions MPOA hopes will be adopted today is a moratorium on the RSPO certification. “There is no point in producing more CSPO if there is no demand for it and if the market does not value CSPO compared with regular non-certified palm oil.”

In 2011, only 52 per cent of the CSPO was taken up by consumers where the actual physical offtake was only 17 per cent.

MPOA says the 2.30 million tonnes or 48 per cent of CSPO produced was not taken up by the market. "This significant annual surplus in the production of CSPO drove the original projected premium down from US$50 (RM151) per tonne to an actual US 50 cents (RM1.51)."

It is also upset that there is no differentiated market access for CSO and it is being traded in the normal market which would dilute the value of palm oil.

"This situation discourages existing RSPO growers from expanding their certified areas and new entrants from investing in the certification. It is also difficult to encourage smallholders to adopt it."

On the choice of the president for RSPO, MPOA said the appointment should not be decided by the board but by the entire membership for a limited two terms. "The larger the membership, the more accountable he should be to all groups, instead of getting elected by the (current) star chamber of Europeans when it is the Asians who are growing the stuff."

It was also felt that the current 16-member board is not well represented and being more European, representing various sectors - oil palm growers, consumer goods manufacturers, retailers, palm oil processors and traders, environmental/nature conservation NGOs.

Malaysia and Indonesia form the bulk of the membership as the top two palm oil producing countries and they account for 73 per cent of the world's net exported oils and fats.

Together with the Indonesian growers, the MPOA also proposed that for a general assembly to be valid, there must be representation from every member category.

The daggers may be drawn for today's meet by the growers, but the RSPO is likely to be here to stay. "We need the RSPO (certification) otherwise certain markets, namely the EU and the US, will be locked up against us," said another grower.

On the take-up of CSPO, he said the situation has improved compared with six months ago. Many of the misgivings of the growers, he said, were due to the ineffectiveness of their representatives to the board when the Principles and Criteria and other aspects of the RSPO were discussed over recent years.

He also argued that Kees Vis may be quite difficult to replace, considering that he comes from Unilever, which is the biggest buyer of palm oil with 1.3 million tonnes per year.

Meanwhile, RSPO adviser M. R. Chandran said the postponement of the AGM has delayed the review of the P&C, which was drafted five years ago. "It is a crucial year for us as we have to get all the experts together to review all eight principles and 38 criteria."

Leave a Reply