Malaysian Palm Oil Association to exit Roundtable on Sustainable Palm Oil grouping?

KUALA LUMPUR: The Malaysian Palm Oil Association (MPOA) is believed
to be mulling over a decision to quit the Roundtable on Sustainable Palm
Oil (RSPO) grouping by the end of the year, revealed industry sources.
The
130-member MPOA is the single largest integrated voice that represents
the local private plantation industry, including plantation giants such
as Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, United Plantations Bhd and Felda Global Ventures Holdings Bhd.
Apart from the MPOA, industry sources told StarBiz
that at least two local plantation companies which are MPOA members and
pioneering members of the RSPO have also cited their intention to quit
the RSPO.
“Right now, the MPOA members are considering several
options, including the official launch of the Malaysian Sustainable Palm
Oil (MSPO) standard, as well as the outcome of the RSPO's 11th Annual
Meeting in Medan, Indonesia, in November before making the exit
decision,” added a source who attended the closed-door MPOA AGM here
yesterday.
Of the total estimated five million hectares planted
with oil palm in Malaysia, three million hectares belong to the estate
group and 1.5 million hectares to smallholders.
The MPOA members'
hectarage represents about 70% of the three million hectares under the
estate group. MPOA Class 1 members with a hectarage exceeding 40,000ha
and direct members of RSPO include the top plantation giants.
Other
MPOA members under Class 2 (over 5,000ha to 40,000ha), Class 3 (500ha
to 5,000ha) and Class 4 (40ha to 500ha) are mostly non-RSPO members with
no certified sustainable palm oil (CSPO) production.
To recap,
in October 2011, the RSPO, a multi-stakeholder organisation which
provides voluntary certification for the production of CSPO by oil palm
planters, received a big slap in the face when Gapki, an association
representing over 500 Indonesian plantation companies, decided to quit
the grouping.
Gapki pointed out that it wanted to fully commit to
the Indonesian Sustainable Palm Oil (ISPO) scheme - a sustainability
platform made mandatory to all plantation companies in the republic.
In
recent years, it is widely known that oil palm planters - both members
of Gapki and MPOA - have been getting apprehensive with the RSPO's
failed attempt to improve the slow take-up rate of the CSPO by major
Western palm oil-consuming nations.
More recently, many RSPO oil
palm grower members were very dissappointed with the RSPO's newly
revised Principles and Criteria (P&C) 2013 which includes the
greenhouse gas (GHG) emissions criterion for the production of CSPO for
planters.
According to plantation industry players, the newly
revised RSPO P&C would make it more challenging and costly for
Malaysian oil palm planters and growers to secure the coveted
“voluntary” RSPO certification.
On average, a local oil palm grower will need to fork out about RM10 for the production of one tonne of RSPO-certified palm oil.
“But
with no premium on the CSPO produced currently, planters cannot even
cover their production cost under the old P&C. Less can be said
about the newly revised P&C that includes the GHG criterion,” said
the sources. Furthermore, the new GHG criterion in the RSPO P&C will
not be able to fully guarantee better sales of growers' CSPO, given the
already lacklustre offtake in the existing premium oil (minus the GHG
requirement) in the Western export markets.
Both Malaysia and Indonesia are the world's top crude palm oil producers, accounting for about 80% of total production.