What are the issues with RSPO and can MSPO be a game changer ..

At the fifth The Star Roundtable on Palm Oil, industry captains – IOI Corporation Bhd CEO Datuk Lee Yeow Chor, Malaysian Palm Oil Council CEO Tan Sri Dr Yusof Basiron, United Plantations Berhad vice chairman and chief executive director Datuk Carl Bek-Nielsen, Felda Global Ventures Holdings Berhad group president and CEO Datuk Zakaria Arshad, Kuala Lumpur Kepong Berhad CEO Tan Sri Lee Oi Hian and Sarawak Oil Palms Berhad group CEO Paul Wong – discussed RSPO and MSPO certification and standards.

When RSPO members go against the movement’s aims.

THERE has been some level of uneasiness within the Roundtable on Sustainable Palm Oil over issues such as its own members using the “no palm oil” label on their products. Datuk Carl Bek-Nielsen, as co-chair of the RSPO board of governors, spoke out on this in Bangkok last month. How can we resolve the situation?

Bek-Nielsen: Over the last 15 years, the issues concerning global warming have intensified. In some countries, it has become rather extreme and ignores the plight of less developed nations which see issues such as food security and poverty alleviation superseding that of mitigating greenhouse gas emissions. Some regions, like in Europe, are adamant that we need to do something about global warming, and because of this there are many ramifications, not just for industries, but in the end how we choose to live our lives.

For us out here in the developing world, it is very much like walking past a restaurant where the rich world is having an eight-course dinner. These richer nations have reached developed status and their bellies are full. They then invite us in for a cup of tea, and when we join them, they say we must now split the bill equally. We have got to try and balance the picture without going overboard.

In that sense the RSPO has a vital role to play through engagement with a multi-stakeholder process and where one accepts that there are balances which need to be struck without losing sight of the target when it comes to producing palm oil in a sustainable manner.

In this connection I see four big problems with the RSPO.

First, we are neglecting the importance of the smallholders. I spoke out about this recently in Bangkok. The RSPO is setting the ceiling too high for the smallholders to cling on to. We cannot ignore that we have a huge segment of society which is dependent on the oil palm, a vast majority of which are smallholders. To many of them the aspirations of the RSPO are simply too high to reach and if this is not properly addressed, the RSPO could face a Brexit moment as a large segment of the smallholders may just say “enough is enough”.

The second problem is related to the uptake of sustainable oil. How can we have a situation where only 50% of sustainable palm oil is taken up? Believe me, many growers have taken a leap of faith, they have voluntarily joined the RSPO and fulfilled the criteria of producing sustainable palm oil. It is now time for the other members to live up to their part of the equation so that much more attention is directed to driving up demand for RSPOcertified palm oil so the imbalance between supply and demand can be harmonised.

Thirdly, there is the “no palm oil” labelling issue. On behalf of the growers it is my obligation to state that we cannot accept nor condone the RSPO’s current rules whereby RSPO members themselves are allowed to use the “no palm oil” labelling. The RSPO has 3,080 members today and there are 489 products belonging to RSPO members that officially state “no palm oil”. That is a 16% increase since Jan 1 this year. How can we be members of an organisation that promotes production and uptake of sustainable palm oil and yet it allows its own members to go out there and declare that their products have “no palm oil”. This is an unfortunate example of hypocrisy.

The final issue that we are fighting for is termed as “commensurate effort”. There must be a level playing field for all members. It is not right that we growers alone are pulled around the circus arena and asked to do backward somersaults. There must be a commensurate effort for all members. In other words if we push, you push. If we pull, you pull. And if we produce, you should buy or promote the buying. Otherwise, why should growers continuously be requested to produce certified sustainable palm oil when there is only 50% of the produce taken up?

MSPO a game-changer

Local certification can be the alternative for smallholders.

SHOULD the Malaysian Sustainable Palm Oil standard be mandatory accreditation for all local players? Can MSPO rival the RSPO?

Lee Yeow Chor: I believe that the MSPO could potentially be a game changer for the Malaysian palm oil industry in terms of sustainability. It has been two years since it was first introduced but being voluntary and having insufficient promotion, there has been a lukewarm response from producers.

Nevertheless, I believe a certification system administered by the Government – with a good set of domestic laws to support and govern the planting industry, and that has entered into a number of international conventions on the part of the environment, labour, standards and others – is a potentially good scheme.

I do think it should be mandatory, but having said that, there are now several certification schemes breaking into the country, and of course the most prominent one is the RSPO. Many of us are on RSPO certification, especially the larger companies, and having to go through many certification schemes at the same time can be quite onerous for the planters. Planters are already having a tough time managing their plantations.

So while I advocate that the MSPO be made mandatory, it has to take into account the requirements of all the different certification systems and streamline its procedures for certification for those who have already obtained similar certifications under other schemes.

Zakaria: At FGV, we are ready for MSPO certification to be made mandatory. We previously withdrew our RSPO certification because we were having issues on the part of the settlers. We had to provide them with training.

However, in terms of accreditation for our factories, we have no problem with that. So if it is made mandatory, we are prepared for it.

Malaysia and Indonesia, we are the biggest producers of palm oil. I think we should go for MSPO. Why should we be dictated by the non-producers of palm oil?

Yusof: MSPO can be a strategic process to allow for mandatory certification for sustainable palm oil in Malaysia. The proper protocol is still being designed to ensure its implementation meets international standards while allowing for affordability to all segments including the smallholders.

Wong: For Sarawak Oil Palms Bhd, we are already 50% certified and by next year we will be 100% certified under the MSPO. I believe that MSPO is a national standard and it would be good if we could present ourselves as a nation that has a stringent set of sustainability standards.

At the same time, I do not view MSPO as competing with RSPO. They can co-exist and complement one another. It is not that one is better than the other. Both standards should serve their purpose, while the RSPO remains voluntary. I believe that MSPO should work and gain acceptance by all parties – consumers, buyers, trade partners and NGOs. The RSPO, of course, gives us access to certain markets like Europe. So as I said, the two standards could co-exist, but for different reasons.

Lee Oi Hian: This is where I disagree. You cannot have palm oil producing countries auditing themselves and saying that this is acceptable to the consumer. The consumers want an independent body where they have a say because they are paying for our products.

I am not downplaying the MSPO but our first priority is undoubtedly the RSPO – we have to be clear on that. I think Malaysia and Indonesia should both support the RSPO because you cannot have a fragmented industry where everyone holds to a separate set of standards. Having said that, I think it is the right of every nation to have its own sustainability scheme to regulate or help certain segments of the industry which are not as progressive, such as smallholders.

For us bigger plantations, we want RSPO certification. We would also like to see the MSPO being successful. However, if a company is already RSPO-certified, you should allow exemptions on certain areas that are not covered by the RSPO – you can audit us on that. In that way, the MSPO can focus on bringing the rest of the industry together to the same standards as the bigger plantations.

FGV has its own sustainability team and so do other companies like United Plantations and IOI Corp. If I own one plantation of 50 acres or even 5,000 acres, how can I afford to hire a sustainability team? This is where the MSPO should come in.

The RSPO gives us access to other markets. At the moment it is Europe, and in the future it will be the rest of the world. Trends are changing and it is hard for us to fight this. We have to see how we can adapt to the changing trends and make ourselves sustainable.

Today, the plantations companies are getting some premium from the sale of sustainable oil but how do we share some of this with the smallholders? This should be a major priority for the MSPO scheme, that if the smallholders get through the requirements, then some of this premium can be passed on to the smallholders. The role of the MSPO should be to create value particularly for the smaller plantations and smallholders.

Bek-Nielsen: Is the MSPO better than the RSPO? In my view, they do not have to compete. In fact, they should complement each other in helping to improve the image of palm oil.

But whether we like it or not, this is ultimately about credibility and for certain markets you need to have the endorsement of NGOs in order to do business. If the MSPO cannot do that, and cannot ensure that deforestation stops, it will simply have no credibility for certain markets. This is a strength which the RSPO offers to its buyers, and governments in the EU are really starting to recognise the RSPO certification system.

What we have been recommending to the industry for the last two years is that the MSPO has a huge role to play, particularly within the smallholder segment. Today, 40% of Malaysia’s palm oil is produced by smallholders. In Indonesia it is just over 50% and in Thailand, 80%.

That is where the RSPO has fallen short. It is only looking at the ceiling and it has lost sight of the floor. The MSPO can learn from this and consider leaning itself against the United Nations Fair Trade mechanism to help create a platform that will help smallholders improve on their agricultural standards, yields and ultimately their well-being. That is what we want and this would give more credibility to the MSPO and do more justice to those who are most in need of help.

However, if we think that the MSPO is going to be better than or equal to the RSPO, then we are simply not being realistic. So yes, I am in support of the MSPO being made mandatory, but not for companies that already have RSPO certification. We should not try to over-regulate or make processes more bureaucratic for the industry. We are busy enough as it is with managers and engineers suffering from paper overload in what is supposed to be a paperless society.

So yes, I am in support of the MSPO being made mandatory, but not for companies that already have RSPO certification. We should not try to over-regulate or make processes more bureaucratic for the industry. We are busy enough as it is with managers and engineers suffering from paper overload in what is supposed to be a paperless society.