ROUNDTABLE ON SUSTAINABLE PALM OIL

Dr. Vengeta Rao

www.rspo.org

RSPO Evolution

The oil and fats we consumeOils/Fats 2006Palm Oil 36,733Palm Kernel Oil 4,308Soyabean Oil 35,187Cottonseed Oil 4,917Groundnut Oil 4,497Sunflower Oil 11,094Rapeseed Oil 18,340Corn Oil 2,252Coconut Oil 3,166Olive Oil 2,746Castor Oil 524Sesame Oil 871Linseed Oil 710Total Vegetable Oils 125,345Butter 6,790Tallow 8,446Fish Oil 988Lard 7,877Total Animal Oils/Fats 24,101

“It has the scent of violets, the taste of olive oil and a color which tinges food like saffron but is more attractive” Ca’da Mosto,15th century explorer,on discovering palm oil.

“ slave trade had been abolished in 1807, and the merchants had quickly adapted to offering palm oil as an alternative export to slaves.” History of the Niger Delta

“ Well, most of them don't lather that much, because they are good and don't use evil palm oil. And lavender smells funny anyway, no? It smells like old ladies.” Blog posting, 17 November 2008

What is palm oil?WHAT IS PALM OILWhat is Palm Oil

Palm oil is used in more than half of packaged supermarket products today

What is palm oil?What is Palm Oil

0

10

20

30

40

50

1966 1976 1986 1996 2006

What is palm oil?X

1 m

illio

n to

nnes

Source: Oil World, MOPB, MPOC

World palm oil production has grown rapidly

What is Palm Oil

Palm oil is now the world's most-produced vegetable oil

Rapeseed14% Soy

29%

Palm30%

Other19%

Sunflower8%

What is palm oil?

Source: Oil World

What is Palm Oil

Palm Oil...

A highly versatile vegetable oilUsed in many food and non-food productsWorld’s top selling vegetable oil

are highly efficient oil producers...

They require less land than other crops to produce the same volume of oil

What is Palm Oil

Soybean: 0.36

Sunflower: 0.42

Rapeseed: 0.59

Oil palm: 3.68

What is palm oil?

Source: Oil World

Average yield per year (tonnes of oil per hectare)

What is Palm Oil

Increase in global oil

Increase in global oil

5 billion people use it

Large revenue earner for Indonesia and Malaysia, and largest for many rural regions

Significant share of market capitilisaton in large producer countries

Quarter billion people employed

More than 5 million smallholders

Why sustainable palm oil?

Why sustainable palm oil?

Forest, peatland conversion

Climate change

Biodiversity loss

Environmental issues in oil palm cultivation

Land ownership conflicts

Worker’s rights and conditions

Treatment of smallholders

Social issues in oil palm cultivation

Why sustainable palm oil?

Global Warming

Fires & Haze

Peat CO2

Why sustainable palm oil?

Other Similar Initiatives

FSC, etc: Forest Stewardship Council (FSC) MSC: Marine Stewardship Council (MSC) 4C: Common Code for the Coffee Community RSCE: Roundtable for a Sustainable Cocoa Economy RTRS: Roundtable for Responsible Soy Sugar: Better Sugar Cane Initiative Salmon and Shrimp: Better Aquaculture Dialogue BCI: Better Cotton Initiative RSB: Roundtable on Sustainable Biofuels

Started in 2003, with 7 members, initially B2B− Registered on 8 April 2004 as a not-for-profit Association

under Article 60 of the Swiss Civil Code “To promote the growth and use of sustainable palm oil

through co-operation within the supply chain and open dialogue with its stakeholders”

Secretariats in Kuala Lumpur (4 staff) and Jakarta (2 staff) Annual budget of USD 1m

The Roundtable

• Multi-stakeholder• Voluntary, self-organising• Transparent• Inclusive• Action oriented - tangible results• Committed to production and use of sustainable palm oil

RSPO Membership• Ordinary members from 7 sectors

– Oil palm growers– Palm oil processors and/or traders– Consumer goods manufacturers– Retailers – Banks and investors– Environmental/nature conservation NGOs– Social/developmental NGOs

• 2-year membership; € 2,000 per year (less for small growers and small NGOs)

• Affiliate membership: € 250 per year

Code of Conduct: “Every member supports, promotes and works towards the production, procurement and use of sustainable palm oil”

Annual progress reports

Grievance panel supervises compliance

RSPO Membership

Sector No of seatsOil Palm Growers 4Palm Oil Processors 2Consumer goods manufacturers 2Retailers 2Banks/investors 2Environmental NGOs 2Social/development NGOs 2

16

Members General Assembly (GA

RSPO GOVERNANCE

Executive Board (EB)

Current Issues, Developments and Challenges in RSPO-

2004 2005 2006 2007 20080

10

20

30

4 0

50

60

7 0

80

90

100

110

Growth in membership by category

Affiliate Banks/Investo rs Co nsumer Go o ds Manufacturers

Enviro nmental/Nature Co nserva-t io n NGOs

Oil Palm Gro wers Palm Oil Pro -cesso rs/T raders

Retailers So cial/Develo pmental NGOs

Num

bers

RSPO Membership

9

45

13

78

111

2310

MEMBERS (July 2009)Oridinary : 289 Affilate: 87

Banks/InvestorsManufacturersE NGOsOil Palm GrowersProcessor/TradersRetailersSocial NGOs

RSPO Members

Certification Systems

Certified palm oil

Principles & Criteria

Accreditation Requirements

Certification Process Requirements

RSPO

1261173985518 Continuous improvement

201577 Responsible development

2827116 Social consideration

171765 Environmental responsibility

363484 Best practices

2213 Financial viability

10932 Legal

8821 Transparency

Indicators(CWG)

Oct 2007

Indicators(CWG)

Oct 2005

CriteriaPrinciples

RSPO P&C for Sustainable Palm Oil Production

RSPO – Challenges ahead

CRITERIA BEING REVIEWED• Green House Gas Emissions

• HCV and Biodiversity indicators

• Integrated weed management

National Interpretation (PNG, Malaysia &Indonesia)

NI development (Colombia, Ghana, Thailand &Solomon Islands )

RSPO P&C - National InterpretationRSPO

National interpretation: Ensuring congruence between P&C and national laws, norms and values

RSPO P&C CERTIFICATIONRSPO

LIST OF APPROVED CERTIFICATION BODIES

Unit of CertificationRSPO

• CPO mill plus supply base

• All FFB from directly managed lands must be included from outset

• For associated smallholders, plan will be presented to verifiers to bring all in compliance within 3 years

RSPO P&C AssessmentsCertification process in review:• New Plantings – Procedures in place for P&C

assurances

• Certification System:- Clause 4.2.4 (Type and extent of verification

required for other units)

- Accreditation of Certification Bodies- Surveillance audits

RSPO Principles & Criteria for Sustainable Palm Oil RSPO

Audit announcementBy Certification Body (CB)

Minimum 1 months noticeInform relevant stakeholders in appropriate language and format and direct comments to

CB. Announcement on auditee’s website (if available)

The Path to RSPO Certification

Audit

Phase 1 - Documents, declarations, etc.

Phase 2 - Physical audit CB to provide competent lead auditor and audit team.

Audit Report

Summary Report for Public Comment (within 60 days after audit)

CB to issue ‘certificates’ For tonnage of oil . Information logged with Green Palm and Utz Central registry

Peer reviewAudit Review Panel

Approximate production volumes of RSPO certified palm oil and palm kernels based on certification to May 2009

PRODUCER CERTIFICATON

Company Country Mills CPO (mt) PK (mt)PKO (mt)United Plantations Berhad Malaysia 6 185,324 50,195New Britain Palm Oil (NBPOL) PNG 4 257,338 62,181Sime Darby Malaysia 5 183,785 41,721Kulim Bhd Malaysia 3 88,914 24,943Wilmar/PPB Oil Palms Malaysia 3 122,900 27,400PT Musim Mas Indonesia 2 135,000 31,250IOI Corp Malaysia 1 63,000 14,850SIPEF/ Hargy Oil Palms Ltd PNG 2 78,158 0 5,830Cargill/PT Hindoli Indonesia 2 51,344 12,122Kuala Lumpur Kepong-KDC Malaysia 2 92,000 22,000PT London Sumatra Indonesia 4 169,480 30,017 2,772TOTAL 34 1,427,243 316,679 8,602

SAMPLE RSPO CERTIFICATES

SAMPLE RSPO CERTIFICATE

Check & data transfer

Book & Claim system

Check & data transfer

Traceability system

Registration &Management

Audit result &certified volumeCertification

Bodies

Central DatabaseRSPO

RSPOCentral

Data Base

IP / Segregation;Admin Mass Balance

Certificate trading(book & claim)

Supply Chain Certification

Plantations

Refiners & Blenders Ingredient

Manufacturers

Retailers

Mill

Product Manufacturers

Transport & Shipping

The palm oil supply chain:

Many links

Potential for mixingSmallholders

From plantation to end user

Option 3 : Segregation“Fully sustainable, fully traceable”

Certified palm oil

Non certified palm oil

Option 2 : Mass balance“Partly sustainable, fully traceable”

% certified palm oil

Option 1 : Tradable certificates“Supports production of sustainable palm oil”

RSPO certificates

RSPO

Volume credit

Engaging Smallholders

RSPO

2007 Production distribution (ha) by type of farmProduction unit Malaysia % Indonesia %Smallholders 454,896 11% 2,565,135 39%Government estates 1,234,184 30% 687,847 10%Private estates 2,476,135 59% 3,358,632 51%Total 4,165,217 100% 6,611,614 100%

BRINGING SMALLHOLDERS INTO RSPO

RSPO – Involving SmallholdersRSPO

RSPO Smallholder CertificationRSPORoundtable on Sustainable Palm Oil

Generic Smallholder (Scheme) P&C by TFS4th and final draft approved by EB on 2/7/09

Generic Smallholder (Independent) P&C by TFSExpected to be completed in February'10

National Interpretation (Scheme) Indonesia (Ina SWG)

- 2nd 30 days public consultation - Trial auditing in progress

Malaysia (My SWG) - 1st 30 days public consultation

PNG (NI WG) – draft in review

RSPO Smallholder CertificationRSPORoundtable on Sustainable Palm Oil

Group Certification Scheme

- Based on smallholders coming together as groups and the application of internal control systems

- Basis for smallholder groups: cooperatives, independent mills, FFB dealers, etc.

Following is an extract from the Malaysian Prime Minister's 2009 budget speech on 29th August 2008

RSPO

"Malaysia is one of the largest palm oil producers in the world.To enhance global acceptance of palm oil, there is a need todemonstrate strong social and environmental responsibility in ourbusiness practices.In this regard, the government fully support the initiative by palmoil plantations to obtain Roundtable for Sustainable Palm Oil (RSPO)certification.The goverment will allocate RM50 million to provide RSPO Fund tosupport community prgrammes such as upgrading of schools inplantations, as well as implementing conservation programmes such asenhancing biodiversity in plantations".

RSPORoundtable on Sustainable Palm Oil

RSPO and Governments

An MoU between the Ministry of Agriculture of Indonesia and RSPO was signed on the 17th February 2009 to enhance fruitful cooperation in the socialisation, training and implementation of the RSPO P&C in Indonesia, in particular by smallholders.

RSPORoundtable on Sustainable Palm Oil

RSPO and Governments

Terima Kasih/Thank youRSPORoundtable on Sustainable Palm Oil

RT 7 November 2-4, 2009Hotel IstanaKuala LumpurMalaysia

Dogmatism domineers, pragmatism prevailsWe are kindred in our needs and hopes.