New Britain Palm Oil Limited (NBPOL) and Wilmar International have agreed to process and jointly market palm oil in Europe.
The deal is said to involve the refinement at Wilmar’s Brake refinery in Germany of up to 300,000 tonnes per annum of fully traceable certified segregated palm oil (CSPO) from NBPOL’s estates
Palm oil is used in 1 in 10 products in the supermarket including bread, crackers, chips, confectionery, margarine and cereals, as well as personal care and beauty products such as soap and lipstick.
The European market uses five million mt of the ingredient per annum.
Meeting demand for CSPO
When asked what the impact of this deal would be in terms of European food and cosmetics manufacturers' palm oil usage being more sustainable, Alan Chaytor, executive director of NBPOL said:
“From the Brake refinery, NBPOL & Wilmar have committed to supply 300,000mt pa of segregated CSPO. Through our Liverpool plant we already have currently 150,000mt per annum and a further 120,000mt pa from our refinery in Papua New Guinea.
So all in all that's just shy of 600,000mt of efficient segregated CSPO capacity - that's perhaps 12 per cent of European demand."
Alessandro Cagli, corporate social responsibility director, the Ferrero Group, said the chocolate maker welcomed the move, adding that the two palm oil players were "serious'' about increasing CSPO supply in Europe.
Palm oil variants
NBPOL said that the palm oil will be available from Wilmar’s refinery in Brake, Germany in a whole range of products in 100 per cent segregated sustainable format from mid-2012.
Chaytor commented that this facility “already has refining capacity for refined palm oil and palm kernel oil, [as well as] fractionation capacity for stearin, olein and interestification.”
And NBPOL added that its refinery in Liverpool and Wilmar’s plant in Brake will assist the other in the specific palm oil product formats that they individually do not have.
According to Chaytor, the bulk of food producers' palm oil needs are from the three or four basic refined grades “as clearly evidenced by the actual refining capacity installed in Europe.”
He argues that the industry should focus on buying these mainstream palm oil products first and the much lower volume of the many smaller derivatives will naturally follow.
Death knell for offset certificates?
This deal, commented Chaytor, ensures that fully segregated, traceable and certified sustainable and affordable palm oil will be made available in enough product specifications and formats that “food manufacturers throughout Europe will no longer need to buy palm oil offset certificates.”
Indeed, the executive director argues that many “view green certificates with a great deal of suspicion as to what effect, if any, purchasing them has on making the palm oil industry sustainable.”
Chaytor said that under the current certificate trading system, buyers have little idea where their oil actually comes from and “the vast majority is from uncertified sources.”
“We feel that this is not widely understood and we don't think it is what consumers want in their products,” remarked the NBPOL executive director. “Additionally, the entire system including all the associated claims is unaudited and therefore open to abuse. We just feel the concept is flawed and potentially misleading.”
He argues that for those products which are not currently available in fully segregated format, companies are not restricted to green certificates but also have the option of a Mass Balance claim.
“We agree with several of the major retailers that Mass Balance is a much more progressive step toward promoting wholesale conversion as, unlike certificate trading, it is directly linked to physical supply,” continued Chaytor.
Cost factor
When questioned on whether the higher cost is still a huge factor in a lot of food manufacturers not switching to CSPO the NBPOL spokesperson said:
“Well if companies are going to come close to meeting their commitments on sustainable palm oil use, then they have to start somewhere and this deal marks an important step along that path."
Chaytor claims that due to the scale and efficiency of the arrangement with Wilmar, coupled with its Liverpool refinery, the two firms can offer a huge range of fully traceable and certified oils with commodity style economics that make it more affordable.