Seek out sustainable palm oil products

Last week, my colleague Gemma Aspell argued that animal feeds, such as Palm Kernel Expeller, should be subject to regulatory reform. This week, I present the counter-argument.

Of course, the global palm oil industry is deeply problematic. Palm oil production has been linked to deforestation and child labour abuses.

However, suggesting that New Zealand farmers should therefore be prohibited from using Palm Kernel Expeller (which is a by-product of palm oil production) as animal feed ignores the benefits of PKE and the progress being made to reform the palm oil industry.

Palm oil is mostly produced from the African oil palm, which grows well in Indonesia and Malaysia, and supports productive and profitable industries in those countries. Palm oil offers a significantly greater yield, at a lower cost of production, than comparable vegetable oils such as sunflower, soybean or rapeseed oil.

The World Wildlife Fund encourages the use of palm oil that it is produced and sourced in an environmentally-friendly manner. The Roundtable on Sustainable Palm Oil is an industry led body which aims to make sustainable palm oil the norm. Currently, 19% of the world’s palm oil is certified by the RSPO as certified sustainable palm oil. 

What does all this have to do with farmers?

First, it is unfair to suggest that New Zealand’s farmers support the deforestation and child labour abuses caused by palm oil production.

For example, Landcorp has stopped using PKE, citing a need for its partners and customers to know that can trust it to farm sustainably.

Similarly, in 2016, Fonterra stopped sourcing palm products from plantations owned by IOI Group, after the company was implicated by a Greenpeace report into forest fires in Indonesia. Fonterra has also introduced a milk grading system which effectively imposes threshold limits on use of PKE.

Second, PKE is a cheap and useful feed which, as was discovered in 2012-13, is a saviour during drought.

Finally, regulation of a useful and well-understood product should only be imposed if there is clear evidence that the regulation would either reduce harm or provide some corresponding benefit.

Unfortunately, even if New Zealand farmers stopped using PKE tomorrow, the palm oil industry would not change.

However, our farmers can exercise their power as consumers within the palm oil industry by supporting organisations like the Roundtable on Sustainable Palm Oil, and by being prepared to pay a premium for sustainably produced PKE.

This positive price incentive is the most likely mechanism for real change in the production of palm oil and PKE.  

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document. 

If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser. 

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Sean Maskill