A recent report released by the Forest Carbon Partnership Facility – which is administered by the United Nations Development Programme in PNG – recommends burdening PNG’s entire palm oil sector with costly certification requirements that deliver negligible benefits. The recommendation was included alongside calls to restrict the amount of land available for agriculture in PNG.
The report makes a set of unsupported statements about the palm oil certification scheme administered by the Roundtable on Sustainable Palm Oil (RSPO), a body founded and supported by anti-commercial agriculture NGOs including the WorldWide Fund for Nature (WWF). The UNDP report claims that palm oil certified by the RSPO commands a compelling price premium. For at least half of the certified palm oil produced, this is not the case, as there is simply not enough global demand for sustainable palm oil to absorb all of the certified product. As a result, half of all certified palm oil is sold as uncertified product, commanding no premium at all.
The report also includes the claim that certified palm oil is sold to “premium markets”, referring to the UK, Germany and the Netherlands. A quick look at market research sites demonstrates that there is little to no difference in prices paid for palm oil imported into Europe or India. Prices are decided by supply and demand, and none of the European countries identified in the report consumes as much palm oil as either Indonesia, India or China.
The UNDP report states that if new PNG palm oil operations are allowed to choose whether or not they want to apply for RSPO’s voluntary certification, then this risks the reputation of PNG palm oil. Therefore, the report tells us, “…there is a need for a regulatory standard or policy at national level to maintain the reputation of Papua New Guinea in terms of sustainability.”
This is nonsensical. As stated in the report, in Indonesia – the world’s largest producer of palm oil – just 17% of production is RSPO certified. The fact that 83% of production is uncertified does not have any influence on the reputation of the certified product. There is no country that produces only certified palm oil, so there is no reason to believe that the existence of uncertified product damages the reputation of the product that is certified.
If the business case for RSPO certification is as strong as the UNDP report contends, then a regulation to make it mandatory is unnecessary. Firms that believe certification makes good business sense will vote with their feet. Those that do not will still have to comply with PNG’s environmental policies and regulations.
Balancing environmental concerns against the need for development is an important process, and the PNG government, landowners and the agricultural sector need to work together to set informed policy that delivers the greatest benefits for the least costs. Third-party sustainability certification is an option for all palm oil producers, but it should not be mandatory, as this would put the power to make decisions regarding PNG’s most commercially important agriculture sector in the hands of environmental activists such as WWF.