- Makers of iconic snacks like Snickers and Kit Kat have pledged to only use deforestation-free palm oil, but a new report says deforestation-linked palm oil may still be finding its way into their products.
- That’s because much of the dairy that goes into these foods comes from cattle raised on palm oil-based animal feed, whose import into the U.S. doesn’t account for whether it derives from deforested land.
- The report found 13 of the 14 biggest dairy processors in the U.S. — including Mars, Nestlé and Mondelēz — don’t provide information about how much palm oil-based animal feed they use in their supply chains.
- It calls on the Consumer Goods Forum (CGF), of which many of these companies are members, to include this so-called embedded palm oil in their deforestation-free policies, similar to how the CGF has a policy for accounting for embedded soy.
JAKARTA — Consumers in the U.S. might be unknowingly exposed to palm oil products that come from deforestation, despite major consumer goods producers there adopting zero-deforestation pledges. That’s because these companies, which include the makers of iconic foods like Snickers, Kit Kat and Nutella, don’t account for the significant role that palm oil-based animal feed plays in their supply chains, according to a new report.
Its relatively low price and extremely versatility mean palm oil has become the most widely used vegetable oil in the world. In the U.S. itself, palm oil can be found in roughly half of all packaged goods in the average grocery store, from shampoo to cookies and crackers.
Palm oil is also increasingly being used as an additive in livestock feed, particularly for dairy cows. As such, it has become “embedded” in consumer goods products deriving from dairy, such as milk, cheese, ice cream and chocolate.
This indirect use of palm oil is often overlooked in the zero-deforestation accounting process, despite its growing use, according to a report by U.S.-based advocacy group Rainforest Action Network (RAN). The report found that palm oil-based animal feed is now the single largest palm oil product category imported by the U.S., accounting for 36% of all palm oil imports into the country by weight.
This dairy — “embedded” with palm oil, some of which may be associated with deforestation — then enters the supply chains of major food producers. And these producers, despite their public pledges to avoid deforestation-linked products, are largely ignoring this source of palm oil in their accounting, according to the report.
The report analyzed 14 of the largest dairy-processing and consumer goods companies operating in the U.S.: Arla, Dairy Farmers of America, Danone, Ferrero, Frontera, FrieslandCampina, Lactalis, Mars, Mengniu, Mondelēz, Nestlé, Saputo, Unilever and Yili.
The report found that 13 of them don’t provide information about how much palm oil-based animal feed is used in their supply chains.
The only company that provides such information is Unilever, which says that embedded palm oil in its dairy supply chain in 2022 accounted for just 3%, or 30,0000 metric tons, of its overall palm oil consumption.
Thirteen of the 14 assessed companies also don’t mention embedded palm oil in their “No Deforestation, No Peatland, No Exploitation” (NDPE) policies, and as such have no commitments to sourcing only deforestation-free embedded palm oil. Only Danish-Swedish dairy giant Arla’s NDPE policy explicitly states that it applies to palm oil-based feed used in its milk supply chain.
“When companies have adopted palm oil policies, they completely refuse or haven’t considered palm oil use in their dairy supply chain,” RAN forest policy director Gemma Tillack told Mongabay. “Lack of attention to this issue means that it hasn’t [been] accounted for in companies’ NDPE policies, or if it’s included, it’s not adequately enforced.”
Import-export oversight
This oversight extends to both importers and exporters of palm oil-based livestock feed into the U.S. The report assessed 24 exporters based in Indonesia and Malaysia, the world’s top two producers of palm oil, and 17 U.S. companies that import palm oil-based animal feed.
It found that 15 of the 24 exporters companies and 15 of the 17 importers companies don’t have public NDPE policies. These 15 exporting companies account for two-thirds of exports to the U.S. by weight.
The report also found that 28% of U.S. imports of feed-grade palm oil products came from Indonesia, the country with the highest deforestation rates associated with palm oil. That makes it likely that such problematic palm oil has found its way into dairy products like milk and confectionaries regularly consumed by Americans, according to the report.
Deforestation-free claims
Without adequately accounting for embedded palm oil in their NDPE policies and supply chains, consumer goods brands can’t guarantee that their products are deforestation free, even if they claim that’s the case, RAN said.
Nestlé, for instance, says 96.0% of its “primary supply chain” of palm oil in 2023 was deforestation-free, but makes no reference to embedded palm oil in that claim.
If embedded palm oil were accounted for, then Nestlé’s deforestation-free claim would fall to about 72%, according to RAN’s analysis. It based this on the assumption that 10% of the milk the company sources was linked to palm oil-based animal feed.
This large variance means deforestation-free claims by the likes of Nestlé and others might be inaccurate or misleading, the report said.
Responding to the findings, Nestlé said the figures used by RAN and the corresponding assumptions are incorrect, but didn’t provide details about its concerns.
The failure to account for embedded palm oil in supply chains could have broader implications for these brands, as most of them also do business in the European Union. The EU market will, from the end of this year, be subject to a deforestation-free regulation known as the EUDR, which will ban the import of commodities like palm oil and its derived products if they’re associated with deforestation.
To prove that the products they bring into the EU aren’t linked to deforestation, companies have to be able to trace the products all the way back to the production units and ensure no deforestation has taken place there after a cutoff date of Dec. 31, 2020.
The RAN report’s revelations suggest it’s unlikely that companies like Danone and Ferrero — which are headquartered in the EU and source much of their milk from there — as well as Nestlé and Unilever — which have significant operations within the EU that process dairy products — can guarantee the deforestation-free status of their animal feed imports.
As a result, the EUDR should be of particular concern to these companies, the report said.
Call for action
The failure to account for embedded palm oil in their supply chains and NDPE policies is an “industry-wide problem that needs an industrywide solution,” the report said. It called on the Consumer Goods Forum (CGF), a network of the world’s largest consumer goods brands, to encourage its members, including Danone, Ferrero, FrieslandCampina, Nestlé, Mars, Mengniu, Mondelēz and Unilever, to include embedded palm oil in their NDPE policies.
So far, the CGF has failed to do so, RAN noted.
It has also failed to include embedded palm oil in its road map that sets the expectations for how members of its so-called forest-positive coalition should implement NDPE policy commitments in the palm oil sector. The coalition aims to accelerate efforts to eliminate deforestation from the supply chains of each member.
This is in contrast to the CGF’s initiative for the soy industry, which has its own road map that details the types of “embedded soy” products that need to be accounted for — such as soy used in feed mix for animal products and soy embedded in meat, dairy and eggs used in processed food.
“We need to see these commitments in place to ensure palm oil-based animal feed is not a new leakage market,” RAN’s Tillack said.
Banner image: Deforestation for oil palm in the Amazon rainforest. Image by Rhett A. Butler / Mongabay.
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