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Failure to support greener palm oil may lead industry to abandon environmental measures

Consumer apathy towards eco-certified palm oil have undermined efforts to improve the environmental performance of the industry, a top industry official told Reuters.

Speaking with Reuters in an interview Tuesday, Malaysian Palm Oil Council Chief Executive Yusof Basiron said buyers have shown little interest in paying an eight percent premium for palm oil certified for being produced at a lower cost to the environment.

“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,” Basiron told Reuters in an interview.

“The market signal is very clear. We can supply at a premium but if buyers are clearly not interested, the palm oil suppliers will have to change tack. This is still a business, after all.”

The cost of RSPO certification runs at $50 per ton of crude palm oil, which currently wholesales at around $600 per ton. Certification costs include restrictions on land use and production methods, additional storage tanks to keep “green” palm oil separate from conventional palm oil, and third party auditing.

In May, the Roundtable on Sustainable Palm Oil (RSPO) — the certification standard for palm oil — reported that less than three percent of the certified palm oil had been purchased since it became available in November 2008. The lackluster sales figures showed that environmental groups have failed to drum up support for certified palm oil.

“This sluggish demand from palm oil buyers, such as supermarkets, food and cosmetic manufacturers, could undermine the success of sustainability efforts and threatens the remaining natural tropical forests of Southeast Asia, as well as other forests where oil palm is set to expand, such as the Amazon,” David McLaughlin, vice president of agriculture for WWF, an environmental group that is part of the RSPO, said at the time.

WWF plans to soon launch a “name-to-shame” report listing major brands that are failing to support greener palm oil.

Environmental groups and scientists say that oil palm production has driven large-scale destruction of rainforests across southeast Asia over the past two decades, triggering the release of billions of tons of carbon dioxide emissions and imperiling rare species, including the Sumatran tiger and the orangutan. The palm oil industry maintains that its crop is highly productive, requiring less land and costing less than other oilseeds like soy and canola, and has improved living standards for millions.

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