Chinese group to support sustainable palm oil amid stagnant sales

An industry consortium of China-based producers and buyers of palm oil has pledged to support sustainably made palm oil at a time when Malaysian manufacturers are complaining of low sales due to high prices.

A new group of China-based palm oil producers and buyers last week said it would support the purchase, promotion and use of palm oil that has been accredited as sustainable. It also promised to invest in sustainable production of the oil overseas.

China is the world's largest importer of palm oil. Green groups hope that the vow will boost sales, as only 2.5 per cent of the total certified sustainable palm oil output has been sold, according to figures from Roundtable on Sustainable Palm Oil released in May.

The low uptake has been blamed on higher prices for the certified palm oil, which have led to it being sidelined as purchasers turn to cheaper, uncertified alternatives.

The certification process involves hiring auditors to ensure the oil is produced without felling rainforests, and also requires producers to build new storage tanks and processing plants to ensure the certified oil remains separate from plants from uncertified plantations.

Oil from producers undergoing certification typically sells at a $50 (£30) premium on the standard wholesale price of $600 a tonne.

Malaysian Palm Oil Council chief executive Yusof Basiron told Reuters news agency that he believes the higher cost is serving as "a trade barrier in disguise", with domestic producers having "been led down the path of false hope in selling environmentally certified palm oil [while] buyers are not keen on paying for the premium".

He warned that "if buyers are clearly not interested, the palm oil suppliers will have to change tack. This is still a business, after all."

WWF hopes that the pledge by Chinese industry members will have an effect on other markets, particularly the UK, which received its first shipment of sustainable palm oil last year.

"Given the massive volumes of palm oil now being purchased, any move China makes towards using sustainable palm oil will have a big influence on protecting tropical forest resources in South East Asia and other areas," said Adam Harrison, senior policy officer at WWF. "Hopefully, this will be an incentive for the UK to up the ante in sourcing more sustainable palm oil too."