Only 10.5% members of the Indonesian Palm Oil Producers Association (Gapki) have the Roundtable on Sustainable Palm Oil (RSPO) status due to the high cost for certification and low premiums for sustainable crude palm oil (CPO).
“On paper, it’s been said one can get a premium of US$50 per tonne for RSPO certified CPO on top of the existing CPO market price. But in reality, the premium is more like US$10 per tonne,” Gapki secretary-general Joko Supriyono told StarBiz.
Of Gapki’s 380 members, about 40 were RSPO certified, said Supriyono. “It is expensive to get RSPO and the premium for certified sustainable palm oil (CSPO) is insufficient to cover the costs,” he said.
Palm oil producers are also reluctant to seek CSOP as the extra cost for the status is wholly borne by producers.
“Other key players along the palm oil supply chain do not want to share the added cost for sustainable certification. It is too expensive for many producers to bear all these added costs,” said Supriyono.
Nevertheless, giant international CPO buyers like Unilever, the world’s second largest consumer goods producer, is willing to pay a premium for sustainable palm oil.
Unilever sees sustainable palm oil as the way for the future and a must for all its long-term suppliers.
The company stopped buying palm oil from Indonesia’s Sinar Mas group’s palm oil unit, PT Smart, following claims from Greenpeace that the company was destroying forests and peatland.
According to Gapki, many Indonesian producers sell their CPO via the Green Palm trading programme with a premium of around US$5 per tonne.
“It is much easier and less complicated than selling to the Mass Balance where the premium is around US$10 per tonne,” said Supriyono.
The Mass Balance supply chain model monitors the trade of RSPO certified palm oil and its derivatives throughout the entire supply chain. “Only a very small number of producers sell to Mass Balance,” he said.
Source: The Star