Consumers shun 'green' palm oil

Malaysian Palm Oil Council says 'we have been led down the path of false hope in selling environmentally-certified palm oil'

THE slow uptake of pricier "green" palm oil in European supermarkets may see Asian producers focus on cheaper variants that have been sustainably sourced in the first place, a Malaysian palm industry official says.

The extra cost lies in hiring auditors to ensure palm oil is produced without felling rainforests and building new storage tanks and processors to keep the supply chain "clean", but this has not worked with consumers, Malaysian Palm Oil Council chief executive Tan Sri Dr Yusof Basiron said.

Price-conscious shoppers are now finding it difficult to think green in the global downturn, food manufacturers and supermarket chains have said, and the economics does not help.

Palm oil undergoing an ethical certification process trades at a US$50 (US$1 = RM3.54) premium to wholesale prices, now at US$600 a tonne, halving its discount to rival soyaoil, industry watchers say.

"We have been led down the path of false hope in selling environmentally-certified palm oil and now the buyers are not keen on paying for the premium," Yusof said in an interview in Kuala Lumpur yesterday.

"It's clear that all these demands from the NGOs to be environmentally sustainable, which we obviously have been for many years and decades, is just a trade barrier in disguise."

Malaysia and Indonesia ship 34 million tonnes of the vegetable oil globally, with the European Union taking up roughly 15 per cent for food and fuel requirements, industry data showed.

In recent years, European lawmakers and green groups moved to cut region's targets on traditional biofuel use and called for an ethical certification system in the food sector because of fears that rapid estate expansion to keep up with global demand encouraged deforestation.

Malaysia hit back, saying its oil palms were planted on agricultural land long cleared of forests. But it went along with Indonesia to support the certification system. - Reuters