Is India ready for sustainable palm oil?

G Chandrashekhar | Updated on January 13, 2018 Published on February 20, 2017


With industry backing and consumer awareness, eco-friendly palm oil can find a lucrative market in the country

In recent years, rising incomes, expanding population and extant low per-capita availability have combined to boost India’s edible oil consumption.

Given that domestic production is far short of consumption demand, the annual volume of vegetable oil import has escalated in India steadily and stood at about 14 million tonnes worth $10 billion (more than ₹65,000 crore) in 2015-16. That makes India the world’s largest importer of cooking oils.

Palm oil easily constitutes over two-third of India’s burgeoning vegetable oil import. India’s preference for palm oil is the result of a combination of factors — economical price (in relation to competing oils), proximity of the origin (Indonesia, Malaysia) and short voyage time.

Not many takers

For some time now, palm oil has been facing attacks from environmentalists. They complain that promotion of oil palm plantation causes irreparable ecological damage and entails destruction of rainforests and habitat, displacement of native animals and pollution.

As a result, many food companies around the world stopped using palm oil.

Clearly, the Earth’s risk profile is changing. Global warming and climate change are well recognised as real threats to human welfare.

Hence, stakeholders continue to debate risk reduction strategies including ‘reduce, recycle and reuse’. Sustainability has been a buzz word in recent years.

So, is palm oil a threat to the environment or is it a part of sustainability solution?

Arguing that the allegations against palm oil are motivated and misinformed, the palm oil industry in Malaysia started a decade ago what is known as Roundtable on Sustainable Palm oil (RSPO) and sought to actively advance sustainability principles in palm oil production.

Currently, about a fifth of palm oil production is said to be sustainably produced.

However, awareness about sustainable palm oil (SPO) is rather low, if not non-existent, in India despite being a large market. Policymakers, consumers and even business houses have little knowledge as to what constitutes sustainable palm oil and how it is produced.

To be sure, the country has been an importer of palm oil for well over four decades, although the sustainability issue is of recent origin.

On their part, overseas producers had always treated palm oil business as mere commodity trade; and now, with attacks from activists gaining credence, they are scurrying to push ahead with supplies of certified sustainable palm oil (SPO) as an eco-friendly commodity.

Ignorant industry

Many associated with this business are blissfully unaware of even the basics of sustainability, leave alone SPO.

Interestingly, it was in September 2015 that the United Nations replaced Millennium Development Goals with ‘Sustainable Development Goals’.

SDG has set 17 goals to ‘transform the world’ and these goals are to be achieved by 2030. Broadly, the goals seek to end poverty, protect the planet and ensure prosperity for all.

A close study of all the 17 goals and palm oil’s relationship with them would clearly suggest that palm oil can help advance as many as 12-13 goals. In other words, palm oil is a good candidate to advance UN SDG.

That said, one is not sure if even palm oil producers realise or recognize the role the commodity can play in advancing SDG.

So, instead of treating palm oil as mere commodity trade, it is necessary to treat it as a commodity helping advance SDG.

The general perception about the oil needs to change through strategic communication. It should be commodity palm oil no more; but ‘palm oil for advancing SDG’.

A genuine move

Such a pitch will surely help repel the attacks of activists. However, it is important for producers to let the world know that SPO is not a marketing gimmick, but a genuine development agenda.

The question often asked by many is whether India is ready for the palm oil sustainability challenge. In fact, I would like to argue that the question is inappropriately worded and, hence, should correctly be phrased as: Are palm oil producers ready to face the challenge of cracking the Indian market open for sustainable palm oil?

After all, India is a highly price-conscious market with little knowledge about or care for sustainable products.

For promoting SPO in India, some policy support will help. Import of certified SPO may be encouraged. Use of SPO may be included under CSR initiatives. Large corporate houses can take advantage and possibly advance their sustainability credentials.

In addition to use as a cooking medium in households, institutions and processed food industry, palm oil has non-food industrial applications too.

The oil is used in soaps, detergents, surfactants, cosmetics and many others.

Demand for SPO for non-food industrial application will surely depend on many factors including whether the end product is sustainably produced.

It is believed that major industry players have made time-bound commitment (by 2020) for converting to only certified sustainable palm oil.

The writer is an agribusiness and commodity specialist

Published on February 20, 2017
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