Europe is “pivotal” in shifting the global market to sustainable palm oil, new report flags

2022年10月13日,在过去的二十年里,欧洲has been a frontrunner in sustainable palm oil with the EU market reaching high levels. However, total palm oil imports are decreasing. The bloc notably accounts for 45% of total global use of certified sustainable palm oil, indicating this drop could leave a substantial mark on industry’s overall transition to transparency.

New data collected by NewForesight and commissioned by the Roundtable on Sustainable Palm Oil (RSPO) also reveals that the consumption of palm oil is increasing in other parts of the world where the market for sustainable palm oil products is still in its infancy.

In this context, the report underscores the importance of maintaining Europe’s role in helping to shift the global market to sustainable palm oil.

Additionally, it outlines why completely switching out palm oil from recipes may not be suitable in the long term.

“As the data shows, we have seen a spike in sustainability communications. In Europe, licenses for the use of the RSPO Trademark on products have doubled between 2020 and 2021, with those for corporate communication tripling in the same period,” comments Francesca Morgante, RSPO’s senior manager for Europe.

The new report, “Sustainable Palm Oil: Europe's business - fact, analysis and actions to leverage impact,” was jointly commissioned by the European Palm Oil Alliance (EPOA) and IDH - the Sustainable Trade Initiative.

From 2020 to 2021, global palm oil production rose by 2%.Global outlook of palm oil
Global production of palm oil has been climbing rapidly for five decades and is expected to grow at a compound annual rate of 5.1% in terms of revenue from 2022 to 2030, according to the new report.

From 2020 to 2021, global palm oil production rose by 2%, led by five countries: Indonesia and Malaysia (together responsible for 83% of global production), Thailand, Colombia and Nigeria.

Globally, the leading palm oil consuming regions (in decreasing order) are Indonesia, India, EU-27, China, and Malaysia.

Meanwhile, consumption in the EU-27 (-8%), China (-5%) and Malaysia (-2%) has decreased. Despite this trend, global palm oil use increased by 2% from 2020 to 2021, driven by increases in palm oil use in Brazil (+20%) and the US (+16%), outlines NewForesight.

Of the dominant consuming regions, Indonesia (+10%) and India (+8%) show an increase in palm oil consumption between 2020-2021. In July, India made moves toacquire almost five million metric tonsof palm oil from Malaysia until the end of the year.

Europe is deemed the “global front-runner” when it comes to promoting certification in the palm oil supply chain, as the largest consumer of RSPO certified sustainable palm oil (CSPO) consumption. Its dominant share accounts for 45% of total global CSPO use.

“Europe has been an important pillar of the global sustainable palm oil movement and will have a strong role to play in driving future sustainability initiatives,” stress the report’s authors. “European-based companies bear significant responsibility for the ongoing success of this movement.”

Strategic role of Europe
The establishment of national initiatives for sustainable palm oil across different European countries have played a key role in stimulating the demand and have inspired similar actions in other regions.

But the decline in European market demand for sustainable palm oil could present challenges for the producers leading the transparency movement. NewForesight’s report details that Europe’s total use of palm oil has decreased from 8.39 million metric tons in 2019 to 7.48 million metric tons in 2021.

This decline is largely due to sectors other than food, such as oleochemical and feed. Demand for palm kernel expeller – a common additive to animal feed – decreased from 2.25 million metric tons in 2019 to 1.76 million metric tons in 2021.

Simply switching oils is “not a future-proof path,” the report argues.Risks of switching out palm oil
To mitigate the adversities stemming from production of palm oil, palm oil end-users may consider using alternative vegetable oils that they regard to have less potential for negative environmental and social impacts – such as rapeseed, soy or sunflower.

Three facts underscore why switching oils is “not a future-proof path,” the report argues. Firstly, satisfying current palm oil demand would actually require more agricultural land than currently under oil palm cultivation.

“Oil palm has high yields compared to other crops, producing more oil from less land,” detail the authors. “Palm oil yields can range between 1.8-6.4 metric tons per hectare, while yields for rapeseed and sunflower are only 1 metric ton per hectare and 0.8 metric tons per hectare respectively.”

“Replacing the demand for palm oil with other vegetable oils means that more land area would have to be cultivated globally – potentially leading to increased land conversion, forest loss or other damaging effects.”

Secondly, oil palm cultivation provides an economic livelihood for many people in rural areas. “Switching to other vegetable oils could potentially negatively affect the livelihoods of millions of smallholders,” note the authors.

While the majority of global palm oil production comes from oil palm plantations operated by large commercial estates (accounting for 60% of global palm oil production), the other 40% is produced by over seven million smallholders.

“Moreover, as in many agricultural commodity sectors, the number of smallholders relative to large estates is increasing rapidly,” the authors reveal. “In Indonesia, the area cultivated by smallholders expanded from 1.6 to 5.8 million hectares between 2001 and 2018, an increase of 262.5%.”

“These smallholders could potentially lose their primary source of income if companies stop buying palm oil.”

The role of smallholder farmers in the palm oil sector is often overlooked in the sustainability agenda, as policies tend to focus on large industrial plantations, according to the recently publishedPalm Oil Barometerby Solidaridad.

By Benjamin Ferrer

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