A government agency governing the palm oil industry will adopt guidelines next month that will impose fines on consumer goods firms like Unilever and Nestle if they don’t begin buying extra green palm oil to help reduce deforestation in Southeast Asia, the regulating body mentioned.
The growers, though, say palm oil buyers like Unilever, Nestle, Procter & Gamble, and PepsiCo share responsibility since they don’t purchase enough sustainably produced oil, undermining efforts to reward those who adopt greener practices and reduce deforestation.
In 2018, growers produced around 13.5 million tonnes of green palm oil – which costs more to grow and process – however, about half of it was sold at premiums to conventional palm oil.
Planters received premiums of as much as $50 a tonne for green palm oil right after certification was started in 2004, however, now they get as little as $1 to $30 over conventional palm oil costs of around $500 a tonne.
That makes it hard to cover the additional costs of sustainable palm oil, which, according to Simon Lord, chief sustainability officer at Sime Darby, amount to $8-$12 a tonne.