Dutch proposal to end EU duty on sustainable palm oil gains momentum

28-Sep-2011 - Last updated on 29-Sep-2011 at 08:25 GMT

A call from the Netherlands to end European import duty on sustainably produced palm oil has been welcomed by the Roundtable on Sustainable Palm Oil (RSPO). The proposal is designed to encourage the uptake of sustainable palm oil by offsetting some of the added costs.

The European Union currently charges a 3.8% import duty on crude palm oil. The Dutch Product Board for Margarine, Fats and Oils (MVO) believes that abolishing the EU import duty on sustainable palm oil will remove a significant barrier to its market uptake in Europe.

Typical estimates put the extra cost of farming palm oil sustainably at between $7 and $10 per tonne.

The MVO's proposal calls for the duty on CSPO imported from Malaysia and Indonesia for use in consumer goods to be abolished. Currently, crude palm oil for use in non-food products and palm oil originating from nearly all other producing countries are exempted from import duties.

Darrel Webber, RSPO secretary general, said: "The Dutch industry initiative once again places the Netherlands, the largest palm oil importer and processor in Europe, at the forefront of spearheading market transformation towards sustainable palm oil. The RSPO commends and supports the MVO's resolution."

Rapid growth

The RSPO's Certified Sustainable Palm Oil (CSPO) scheme began in 2008 and now covers close to 5m tonnes, or around 10 per cent of global palm oil production.

"The commitment towards 100 per cent CSPO by 2015 on the demand side by many established global organisations — including processors, traders, consumer goods manufacturers and retailers – has been a major driver in getting growers on board,” said Webber.

The uptake of available CSPO has also grown quickly, up to 56% in 2010 from 26% in 2009. But this still means that almost half the CSPO produced last year wasn’t sold through any of the specialist supply options. It entered the global supply chain somewhere in the same way as standard palm oil and didn’t command a premium.

Supply chain

“[The removal of duty] would help in terms of reducing cost but it’s only looking at one step in the supply chain,” said Simon Chrismas, business development executive with the RSPO-endorsed sustainable palm oil product certification scheme, GreenPalm.

GreenPalm is designed to encourage greater support for sustainable production among end-user manufacturers, whatever their supply chain looks like.

Rather than physically segregating the CSPO from standard oil, which would be more expensive, GreenPalm awards sustainability certificates to eligible growers for every tonne of CSPO they produce. They can then sell these certificates on to manufacturers who want to use the GreenPalm logo on their products.

“GreenPalm doesn’t follow the physical flow of the product, but it allows all end manufacturers to support sustainable production. A company may be manufacturing a standard biscuit or soap using standard palm oil and that’s fine,” Chrismas told this publication.