Conference season (update 6): downstream merchandising for sustainable palm oil

6 December 2014: downstream merchandising issues for sustainable palm oil

On Wednesday morning I had a long 1 hour session to present on "Downstream merchandising of palm oil - adjusting for sustainability" with a Q&A after. Thanks to Trueventus for inviting LMC International. 

I presented on various key statistics for downstream example the oddity of number of trademarks on sustainable palm oil versus number of products being launched with the troubling "palm oil free" label. 

One palm oil merchandiser (some months ago) pointed out to me that certification to use a trademark to highlight the presence of palm oil is not what many manufacturers want to do. They would rather remain silent on the issue. This may explain the above factoid. Because of this apparent shyness, the logic is that a (presumably cheaper) traceability program that is more inclusive of the supply chain is a good alternative as it may be that the need is for a sort of insurance on the supply chain and not marketing publicity. Let's see how the marketing on sustainability / traceability evolves on this.

Downstream players also need to pay attention to their upstream sourcing strategies as traceability both within and outside certification points to a palm oil mill risk rating system.

29 November 2014: checking out Indonesia snack foods and sauces (post GAPKI)

Post conference, I hit the super market next to the conference venue and stocked up on Indonesia snack foods (instant noodles with a wonderful range of local regional tastes; flavoured chips / crisps from tapioca - spicy ones with lime / lime leaves especially caught the eye e.g. keripik singkong balado dengan daun jeruk) and ready mix sauces for Indonesia favourites like soto ayam, sop buntut, opor ayam and more. Indonesia domestic consumption of palm oil is very big, given the country's large population. However, I agree with a friend that the supermarket aisles in Thailand may have an even larger range of domestic processed and ready foods.

Shopping basket of Indonesia processed snacks and sauces

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29 November 2014: Day 2 at GAPKI conference, Bandung

Day 2, I was the first presentation of the day at the morning session in the technology grouping. However, while sustainability may be a technical and/or CSR issue, I focused on the commercial and strategic business issues relating to it.

At technology session

Price outlook speech

This website was pointed out to be for Indonesia palm oil information: http://www.sawit-center.com


28 November 2014: At GAPKI conference, Bandung

Day 1 was busy with meetings. President Jokowi unable to attend after all. It's a huge crowd here. Good to see industry friends and meet more.

 

I was here two years ago (venue was Bali), speaking on sustainability and I'm speaking on the same topic early this morning, with some nice data courtesy of work at LMC International. It's a big crowd here and its one of the must-go events of the palm oil calendar (with the highest production values and effort).

At GAPKI's Bandung conference this afternoon, Dr James Fry of LMC International (yes, where I work) will be talking about the energy sector prices in relation to palm oil prices. Energy sector cost of production indicators will also be referred to. That will be worth checking out.
Oil price news (update 5): OPEC keeps production up and oil prices drop, /khorreports-palmoil/2014/10/oil-price-news-its-fallen-from-105-110.html

at the GAPKI gala dinner

at the GAPKI opening on Day 1

View of Bandung

 

  

26 November 2014: Post RSPO RT 12 and ICIS Asian Surfactants

These were two useful events. Papers not freely downloadable though.

Our summary of RSPO RT12 here:
/khorreports-palmoil/2014/11/rspo-roundtable-rt12-2014-is-around.html and also search "RT12" in this site.


12 November 2014: MPOC POTS KL 2014 download link

Palm Oil Trade Fair and Seminar (POTS) Kuala Lumpur 2014 - Download Presentation

http://mpoc.org.my/Palm_Oil_Trade_Fair_and_Seminar_(POTS)_Kuala_Lumpur_2014_-_Download_Presentation.aspx


5 November 2014: At OFIC KL 2014 conference.

MOSTA is the key organiser.  OFI Congress Programme - organised by MOSTA; http://www.ofievents.com/asia/ofic. Awaiting downloadable presentation.

 

This is AOCS speaker on consumer attitudes and a nice infographic on GMO.

 

Palm oil on fast-track vs. others

The Star reports, October 11, 2011, "Demand for certified sustainable palm oil surges 70%":
RSPO president Jan Kees Vis said in a statement that “the current number sparks hopes that a breakthrough is near.”“Historically, there has always been a delay in market take-up versus production increase, as buyers of large companies have to commit as long as a year in advance to buy raw materials,” he said. “They will only sign on to what they are sure they can actually purchase from the market in the future,” he added. Secretary-general Darrel Webber also noted that “a significant number of retailers, consumer goods manufacturers, processors and traders have committed to 100% CSPO by 2015.”..........

Khor Reports comment:
a) The increase in market off-take to 70% from its recent plateau at 50% will surely be welcomed by producers of CSPO. Perhaps buyers have been reacting to the recent flap at RSPO: the withdrawal of GAPKI and the call associated with MPOA for a 3-year moratorium on certification (but with no corporate reactions yet).
b) Sometime ago, Unilever said that they accounted for some 50% of CSPO purchases. As the lead product manufacturer in RSPO, perhaps Unilever stepped up its buying recently? This company is one of the key drivers of the agriculture sustainability sourcing via the WWF-driven 'roundtables schemes'.
c) Let's take a quick look at Unilever's commitments on sourcing sustainable inputs. The graphic below shows that palm oil is on the fast-track with a 'by 2015' target, while other competing oils will be sustainably sourced only by 2020. Moreover, news reports say that Unilever seeks to replace palm oil in its Dove soap and lotions within a few years. In this regard, palm oil has been selected as the oil most in urgent need of sustainable requirements (and some replacement).
d) The palm oil fast-track by buyers has only been exceeded by the fast-track that growers have taken in providing RSPO CSPO to the market. With the recent sharp rise in CSPO, it appears that palm oil is some 7-9 years ahead of its competitor oils - soybean oil, rapeseed oil and sunflower oil.
e) This assumes that many manufacturers also use Unilever's timeframe and that the other oil growers take a more moderate approach e.g. the more business-friendly RTRS / soy roundtable allows for partial certification while RSPO requires rapid or 'challenging' timeframe for 100% certification.

MPOA calls for halt to new RSPO certification?

“We want to see the current RSPO certified palm oil production of 5.1 million tonnes be fully taken up by Western buyers,” said MPOA vice-chairman Boon Weng Siew. Of the total RSPO-certified palm production, MPOA claimed that only 40% was taken up while the CSPO premium had plunged to only 30 US cents compared with US$50 per tonne in 2008.... Bek-Nielsen...said the world palm oil producers must unite and stressed that “We should not certify any new production units unless demand matches the supply of CSPO. It is time for the end-users to live up to their rethorics.”... An industry member of MPOA said the association might seek for a three-year moratorium to stop Malaysian planters from pursuing their on-going RSPO certification at the RSPO 9th Annual Meeting Roundtable in Sabah next month....“We will strongly push for this agenda,” he said. This is in view of the pledges given by Western food and consumer goods to use only CSPO in their operations by 2015.... reports The Star, 6 Oct 2011, "Malaysian Palm Oil Association won’t quit Roundtable on Sustainable Palm Oil," http://biz.thestar.com.my/news/story.asp?file=/2011/10/6/business/9638574&sec=business.

Khor Reports comment: Hot on the heels of last week's pullout from RSPO by GAPKI, Malaysia's key producer association affirms its membership, but calls for a halt to new certification. There has been a small glut in RSPO CSPO or certified sustainable palm oil, as the enthusiasm of producers for this sustainable product has not yet been met by sufficient buyer interest. Last year, we at Khor Reports speculated in our newsletter #2 that producers might seek to clear the overhang, but we had no idea then what might be the mechanism (download our report and refer to page 6, Option E: https://sites.google.com/site/khorreports2011/palmoil_strat_analysis/khorreport002-palm_oil-rspo_growers-100826.pdf?attredirects=0&d=1). It will be interesting to look out for corporate reactions to the recent moves by GAPKI and MPOA.

For more background, please refer to other postings in this blog, and Khor Yu Leng's article in Lipid Technology, "The oil palm industry bows to NGO campaigns," May 2011, http://onlinelibrary.wiley.com/doi/10.1002/lite.201100106/abstract.

Khor Yu Leng was interviewed for today's The Edge Daily: "Independent agribusiness analyst Khor Yu Leng, who has tracked sustainability certification practises, says oil palm players cannot be blamed for wanting a more level playing field with other types of vegetable oil producers. “RTRS, the standard for sustainable soybean, is more business friendly versus the RSPO, despite their being sister organizations,” she said. She thinks the palm players will move towards having more than one type of certification, to meet different market needs."