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.

 

RSPO RT12: at the exhibit - online information (update 1)

21 November 2014: ZSL rating of palm oil companies

Ranking the world's best - and worst - palm oil companies in terms of sustainability by  mongabay.com; November 20, 2014; http://news.mongabay.com/2014/1120-palm-oil-sustainability-rankings.html#sthash.GU8j77hn.dpuf

 

18 November 2014: WRI's Global Forest Watch

 

We stopped by the exhibition stand of World Resources Institute. They have good online data mapping info to show on issues related to palm oil and environmental issues such as deforestation, fire and peat.

 

 see more at: commodities.globalforestwatch.org

 

Here's some excerpts from write-up by Mongabay.com on deforestation and transparency:

 



Surprising reasons to be optimistic about saving forests by Rhett A. Butler, mongabay.com

November 14, 2014; Note: this is the first draft of a commentary I submitted to Yale Environment 360 last month. A final first-person version is available at A Conservationist Sees Signs of Hope for World’s Rainforests; "....Tropical forest loss has remained at stubbornly high since the 1990s, declining from an average of 11.3 million hectares during the decade to roughly 9.3 million hectares per year between 2009 and 2012. Ranking at the top during both periods were the usual suspects: Brazil and Indonesia, both of which have extensive forest cover and surging agribusiness sectors....  But hidden in these high level numbers is a trend that holds important implications for efforts to conserve the world's forests. Today forests are more often cleared to produce commodities for consumption in urban markets and for trade, rather than for subsistence by poor slash-and-burn farmers. In other words, the tropics are shifting from poverty-driven to profit-driven deforestation.
Most companies however don't move on their own—they are pushed, often by consumer-focused campaigns led by environmental groups, which leverage corporations’ sensitivity to criticism. The results since 2006 have been nothing short of astounding: dozens of the world's largest buyers and sellers of soy, palm oil, cattle, and wood pulp have established policies committing them to excluding deforestation—and social conflict—from their supply chains. The biggest coup came last month when Cargill, which sells $135 billion worth of commodities a year, committed to zero deforestation across all its supply chains.... At the highest level, satellite imagery is widely available and is increasingly incorporated into monitoring systems. For example, the Brazilian government and the Roundtable on Sustainable Palm Oil (RSPO), an eco-certification body, are now requiring "shape files" that detail the coordinates of landholdings. This data can be used to determine compliance with environmental regulations and standards....  Satellite data is also integrated into platforms developed by civil society. The best example is Global Forest Watch, a project led by World Resources Institute that takes data from a range of sources and puts it on a map, providing unprecedented insight into the state of the world's forests, including tree cover gain and loss, forestry concessions, and fire history. Its integration of bi-monthly MODIS data provided by NASA enables the platform to serve as a near-real-time deforestation detection system, similar to that implemented by Brazil about the time its deforestation rate began to plunge dramatically in the mid-2000s. A study published last year by the Climate Policy Initiative attributed three-fifths of that decline to Brazil's monitoring system. Now that functionality is global...." http://news.mongabay.com/2014/1114-reasons-to-be-optimistic-about-rainforests.html#sthash.s4Jk57kp.dpuf

RSPO RT12: Eye on resolutions (update 3a) - at the General Assembly,declaration of mills and ACOP reporting; 5.15pm

Note: Declaration of mills is a biggie! This sets stage for differentiation within certification and alters balances. 

20 November 2014 - at the General Assembly, declaration of mills and ACOP reporting; 5.15pm

Resolution: Declaration of mills.  Proposed by Unilever. To promote transparency, buyer has right to know which palm oil mills (and plantations) and PK crushers RSPO certified product comes from. This would help market transformation. Mass balance would be struggle, Unilever has identified 1800 mills in its supply chain and added information is needed.

Arguments against: This seems to make sense for non-certified product. But within certified sphere, this would create tiers of mills. IP and SG could be used instead (but even in SG trader might not provide information on mills; need this information to build roadmaps to increase origins to targeted). If you know mills beforehand, you can choose from whom to buy and this is not fair to RSPO members (in off-market deals you can ask for declarations of plantations; without transparency, hard to know whom to work with). Agropalma can be IP entirely. By tracing everything how does this affect MB? What is intention going forward with this added information - rather than buying from scattered pool of certified segregated, then will support identified mills and companies in supply base?

Supporting argument: With PalmGHG, let buyer decide which mill to buy from, lower versus higher emissions. Those with lower emissions has better market potential and price than those with higher emissions. An incentive for growers improve. Univanich supports this that mills that have gone beyond RSPO requirements can be recognized when selling Greenpalm certificates.

Outcome: 96 for 84 against. This was a tighter vote. Resolution passed.


Resolution: Change ACOP reporting period to calendar year and improve the ACOP. Proposed by German retailers.  Alignment to calendar year for consistency and reduce work load for most. Improved ACOP can do with more guidance to improve its quality - better explanation and terminology clarification. It is useful to have macro information to understand market progress and tipping point indicators.

Arguments against: Current period is 2-3 months lag on reporting and for Roundtable would end up with older data than what is current and might miss fast developments. Separately, what to do with the non-ACOP reporting members? Tighten to end of April, to accommodate March deadline for certificates.

Outcome: 131 for. Resolution accepted.


20 November 2014 - at the General Assembly, allow wider usage of RSPO trademark by non-SCCS members; 4.25pm

Resolution: Allow members not required to obtain supply chain certification to use trademark on pack. Proposed by a group of retailers. Covers cases where retailer own brand products made by OEM do not get limited by manufacturer permitting their information on pack and/or retailer not to disclose supplier. Asks RSPO to look into easing this usage limitation.

Arguments against: Taskforce is already discussing this, so we do not need this resolution at this time (proposer replies wants to prioritise this, a non-controversial issue, and get wider feedback from members on this). Risk that this might limit the work of the Taskforce (especially if rejected) - it should be left free to look at all possibilities.

Outcome: Request Taskforce look into this, and withdraw resolution.


20 November 2014 - at the General Assembly, seeking non-membership (avoids reporting) for small users; 4.10pm

 

Resolution: Supermarket retailers are making a case for small users of palm oil not to require RSPO membership while still allowing them to be supply-chain certified. The retailers report that 80% of volume with top 20 suppliers - own brand products by retailers; the rest average 5 tonnes palm oil per annum. They note it takes weeks or months to join RSPO and have to report ACOP and  other problems. September 2014, 606 Supply Chain Associates use less than 500 metric tonnes. If they do not renew it is 3% of RSPO membership income budget. Reduce burden on those with complex supply chains and low volume usage - they find reporting complicated and using many other ingredients.

• Example 1: A supplier makes 6 x M&S cheesecakes - palm oil use = 13 tonnes/year. Palm oil footprint = 4.77 tonnes/year. Ingredients: cake margarine 0.99 tonnes/year, Arobake 1.82 tonnes/year, Digestive biscuit buttons 1.89 tonnes/year, paprika extract 0.01 t/year, Aeroplus duo 0.06 tonnes/year
• Example 2: Supplier makes 11 different Ahold products (palm oil use = 89 tonnes / year). Product palm oil footprint 0.8 tonnes/year. Palm oil content 5%, 10.5 grams of palm oil per box. Many ingredients including fractionated PKO in vanilla yoghurt coating, and PKO in peanut coating.

Arguments against: This would lose information from these producers who use less than 500 tonnes. At the other end, grower smallholders have to be members and also go through tedious works and efforts in the P&C. Not fair to run away from the system. Compromises spirit of equality and fairness. 5 tonnes for cheesecake is equivalent to 2 hectares is same as smallholder farmer; his commitment should be matched as small user. Worrying signal on lower transparency. Concern that the high 500 tonnes bar encompasses so many RSPO members.

 

Outcome: Resolution withdrawn and request Board to look into it. 

 

 

19 November 2014 - mill risk zoning, info disclosure, ACOP, non-members, suspension

 

Start of Day 2. First chat with a downstream specialist. Concern on resolution to include mill and more info in RSPO systems. This would shift from a binary certified vs non-certified status of mills to open up to more nuance of mill and supply base attributes and logically to perceived risk status (traffic light labelling of mills).
 

Others are also concerned on resolution with info disclosure on both eTrace and Greenpalm to mill and beyond. But at the other end of the supply chain with a resolution for non -members to become chain of custody certified; does this mean they would be part of ACOP (which has a resolution to be strengthened) or not (if not asymmetry of information might grow with a lot more required from the upstream).
 

Also a resolution to empower the Sec Gen to have power to suspend members on recommendation of the Board. Suspensions on the mind?

 

 

RSPO RT12: On social and labour issues

We did not attend at these sessions yesterday but thanks to a reader for highlighting key issues:

a) A new Labour Working Group is being set up. This is expected to work on ultimately getting company-level worker collective bargaining in place.

b) In social assessments a new approach will come about. We think this will come to inform Compensation Liability on social issues. Currently only monetary and non monetary values and methods are set for environmental concerns.

We'll update as we hear and learn more. Likely these will be hot implementation topics to come as they get fleshed out. As ever, the devil is in the administration details.

RSPO RT12: David Suzuki – on human overconsumption, the need for diversity, local knowledge of sustainability, risks of monoculture, over fixation on the market economy

Dr David Suzuki of UBC – on human overconsumption, the need for diversity, local knowledge of sustainability, risks of monoculture, over fixation on the market economy

Problem of consumption driven by appetite for stuff is amplifying our ecological footprint. Our numbers, technological power, consumptive power and global economy makes this the Anthropocene epoch – where our species undermines the support systems of the planet. Man’s brain invented an idea called “the future” – we are the only animal who can deliberately avoid danger and seek opportunity– this foresight allowed humans to survive and make us the planet’s dominant animal. We are the factor affecting the earth. We are heading down a dangerous path.

Half of Nobel Prize winning scientists alerted us and the press ignored it. The scientists warned that if not checked, our current practices puts at risk what we wish for the future of human society - fundamental changes are needed to avoid the collision – atmosphere, water, forest, species, over population etc. No more than one or a few decades for our chance to avert these threats will be lost.

Diversity is important. At level of the species there is diversity – genetic polymorphism. Species that thrive have inbuilt level of diversity, not homogeneity. This is part of life’s reliance. At ecosystem level, the more diversity, the more resilient it is. As conditions around the world change, there is a diverse pool.

Diversity should be built into everything we do. Sustain that diversity. Monoculture over large renders any group vulnerable to change – climate, new pests and disease. It is a great threat to long term resilience and survival of live.

For 95% of human existence, we were nomadic hunter gatherers. You are utterly dependent on nature for your survival and well-being. As humans spread across the planet, we brought extinction with it. Humans extinguished woolly mammoths and more, even with simple tools.

Indigenous knowledge is based on place – hard won practical experience accumulated over long periods of time. This is priceless knowledge of how to live in that place. Priceless as it cannot be duplicated by science. Hard won knowledge on how to survive from year to year. So much loss of what was known – a lot of it had to do with sustainability. Diversity in this ethnosphere helped humans survive. But now we are monocultured around the planet with a narrow knowledge base.

In history, most humans were farmers and they know about weather, pollination, nitrogen fixing plants and they are embedded in nature. From 1900, and amazing change. World population tripled to 6 billion in 2000. Huge cities and many cities. Transformation from village farming animal to a big city dweller. You can spend days and weeks not going outdoors. In a city, our perception of nature changes – who needs that? You just need a job. Then the economy becomes the highest priority. Thus, the Canada Prime Minister says you cannot do anything about GHG emissions, it will spoil the economy. Elevating the economy above all.

CEO of logging company asked “are environmentalists” willing to pay for the trees. So long as you argue within an economic framework. The real reason for fighting on the forest was not on services for humans i.e. pulp and paper versus alternative income form berries, flower arrangement and maybe a cure for cancer? Ecological services are mere economic externalities. Environmentalists have failed to shift the frame set by economics.

If you’ve to breathe polluted air, you’ll get sick. You need clean water. Bottled water from Europe in Malaysia? That should be criminal! Food and soil are high priorities too. Then whether you’re in oil palm or oil; how you do it should not undermine these foundations for life.

You live in a world constrained by laws of sciences and we live within it. Remember we are animals, we are subject to laws of carrying capacity of ecosystems. We have exceeded our biosphere by consuming the way we are. We are taking away from what rightly belongs to our children and grandchildren by over consuming.

Capitalism and the market economy. We invented these things! We can change these things so they conform to laws set by the natural world. Some see a forest as a sacred grove, rivers as a circulatory system – others see it as pulp and paper, irrigation system etc. Is the earth our mother or the mother lode?

Note: a cautionary view on the global free marketism approach including consumerism and global supply chains for processed products!