At a glimpse, it does look like a good strategy for the Roundtable on Sustainable Palm Oil (RSPO) to launch a trademark that will appear on the packaging and labels of palm oil-related products traded in the world markets.
The trademark will create strong awareness among global consumers that they are purchasing certified sustainable palm oil (CSPO) derived from reliable and sustainable sources.
Slated to be registered in over 60 countries, the trademark will also to a certain extent, help to address the constant pressures by the NGOs as well as Western retailers and consumer goods producers demanding palm oil producers to practice sustainability standards in their entire production value chain.
Currently, many global food-based and household products like margarine, cookies, chocolate, soap and cosmetics are using palm oil as one of the raw materials in their manufacturing activities.
On the part of RSPO, the body for palm oil certification, it expects the brand new trademark would help consumers to make a well-informed choice for products containing CSPO. This in turn is set to boost the global demand for the premium product.
Interestingly, while the RSPO is confident that its trademark would play a key role in stimulating better demand for CSPO, its own members particularly oil palm producers and plantation owners in Indonesia and Malaysia have contradicting views on its success.
For example, the Indonesian Palm Oil Producers Association or Gapki was not entirely impressed with the new RSPO trademark.
According to some of the Gapki members, the use of the trademark holds no significant benefit to palm oil producers and will not help to push up the prices of certified palm oil products.
Despite the RSPO’s existing certification, they claimed that the acceptance level for CSPO had been slow among consuming nations. From its initial premium of about US$40 to US$50 per tonne higher than the non-certified palm oil back in 2008, the CSPO premium now has narrowed to merely US$9 to US$10 per tonne due to smaller demand.
A local industry player also voiced a similar view saying that the problem was never on supply but more on the demand factor. From the supply side, many palm oil producers from Malaysia and Indonesia had gradually complied with the RSPO sustainable standards.
On the other hand, there are not many palm oil buyers out there willing to commit into paying a premium price for CSPO.
This has been the crux of the problem since the first launch of CSPO the world demand for CSPO had turned sluggish compared with the non-certified palm oil.
The RSPO, meanwhile, had estimated that the annual production capacity of RSPO-certified production units now at 4.2 million tonnes, or 9% of the world’s palm oil production of 46 million tonnes.
About 54% of the total RSPO certified palm oil comes from Malaysia, followed by Indonesia at 35% and the remaining from Papua New Guinea, West Africa and South America.
