About 70% of the sustainable product is exported to the US and Europe, a market in crescent demand for ecological products
???????????? interviewed Yasmina Neustadtl, Outreach & Engagement Manager at RSPO (Roundtable on Sustainable Palm Oil) in Latin America. The NGO is one of the leaders for sustainable palm oil certification worldwide. In this interview she explains about the certification process and market for the product.
AgriBrasilis – What is RSPO certification? What are the steps to archive the certificate?
Yasmina Neustadtl – The RSPO certification is a sustainability certification focused on people, planet and prosperity, which certifies the palm oil production and supply chain certification. RSPO’s aim is to unite palm oil’s key stakeholders and create a sense of shared responsibility among growers, manufacturers, refiners, retailers, investors and NGOs, as well as governments and consumers.
We focus on the whole supply chain of palm oil, from the very beginning, the plantation, until the very end of the supply chain, such as the refining process and the final consumer goods manufacturer.
We have three certifications in our process. The first one is the scope for the grower itself, either a grower company or a small farmer; the second one is the supply chain, so once the fruit is already picked and it goes into a mill, we certify the whole process until the consumer goods manufacturing process; the third is a specific certification for smallholders. Smallholders are farmers who have less than 50 hectares of land. We have those three scopes and our certification focuses on people, planet and prosperity.
AgriBrasilis- What parameters and criteria are considered to become a certified plantation?
Yasmina Neustadtl – RSPO certification is an extremely complex certification, so regarding the steps to obtain this certification it’s better understood if we divide by different standards we have. Starting with the grower, to obtain the certification, the grower has to fulfill our Principles and Criteria which we call our main core or the skeleton of the RSPO. The first step is to join RSPO. This membership process itself has a part of due diligence and a series of studies regarding the land, such as land use change analysis and High Conservation Value assessment. After this series of analysis and approval, that are both social and environmental, the grower gets granted RSPO membership.
Once the grower is a member, the company can start the certification process under our P&C certification which are a number of indicators related to people, planet and prosperity. If the grower meets all the criteria, it goes to an audit. This step is carried by a Certification Body, which is a third-party auditor which will audit the grower, and if the grower meets the Principles and Criteria, they will be granted certification for a 5 year span, which needs to get re-audited on a yearly basis.
The mills and refineries of palm oil also need to be certified under our Supply Chain Certification standard because it is a way to guarantee the traceability of certified sustainable palm oil, in other words, we want to make sure the company is selling only the certified oil it bought. In this sense they will be unable to purchase 1 ton of certified raw oil and then sell it as 100 tons of certified oil. The supply chain certification is a more comprehensive process in terms of “what comes in” and “what comes out” for volumes of certified oil. This part of certification is based on making sure that whatever is coming from a certified plantation in terms of volumes is being sold according to that.
For small farmers, the certification is based on the Principles and Criteria but catered to a smallholder.
AgriBrasilis – Is the certification a need (for the producer) or a benefit (for the consumer)?
Yasmina Neustadtl – Definitely it starts as a benefit for the consumer, because the consumer is who drives the demand for certification, the one who holds the power over the final product and demands it to be certified, which will guide the market. The driver usually is the market, but it definitely benefits the grower as well, there are many improvements of their plantations once they get certified. I like to say that with certification, growers are “cleaning up the house”, because once they comply to our Principles & Criterias they realize that as they become more sustainable, they are producing more fresh fruit bunches per hectare, also becoming more profitable by getting rid of any unnecessary costs. In the past it was believed certification was mainly a consumer aimed benefit, but nowadays many farmers are seeing the need to get certified in order to improve production significantly and become more competitive.
AgriBrasilis – Are the market prices for certificated products higher than the prices for non-certified products?
Yasmina Neustadtl – As a certification scheme, RSPO does not participate in negotiations, but there is a premium paid for certified and sustainable palm oil. We do not know how much that is because it is a strict negotiation between seller and buyer, but there is a market price that is set for certified vs. non-certified products.
We have different models of certification for the supply chain. Identity Preserved, Segregated, Mass Balance and Book & Claim.
Identity Preserved means that all the oil bought by the mill is certified and 100% traceable to one grower. From the very beginning the oil is set in a specific tank, sent in a specific shipping container and the consumer goods manufacturer only uses this material to produce their final product; Segregated is similar to Identity Preserved but the palm oil supply can come from more than only one certified plantation and gets mixed with other certified oil;
Mass balance is a process that allows the mixture between certified and non-certified oils. The reason behind it is that some companies do not have access to certified oil only. What these companies can do is buy part of their entire capacity of certified oils and mix with non-certified oils but can only certify the respective quantity of certified oils that were bought; The Book & Claim model of certification is when a grower has a certain quantity of sustainable oil that was unable to be sold as certified due to marketing reasons, and then sell this quantity as non-certified oil. The RSPO recognizes this grower by alloting credits that can be sold to companies that want to support certified sustainable palm oil but do not have access to it. It can be seen as similar to a Carbon Credit.
AgriBrasilis- What is the reach of certification in Latin America? How much is exported and who are the main buyers?
Yasmina Neustadtl – The reach of certification in Latin America at the moment is around 20 to 25%, this represents around 1,2 million tons of the whole production of palm oil on the region. This is actually a great number, Latin America is the fastest growing region regarding certified palm oil. It is hard to say how much is exported because we are talking about 12 producing countries, and different countries export to different places. In 2019, a million tons of palm oil had been certificated and about 70% was exported, but these numbers increased significantly since then. The largest amount goes to the US and Europe because they represent the main buyers of sustainable palm oil. In Latin America the situation is different, because the drive in this region for Certified Sustainable Palm Oil is not as large as it is elsewhere.
Malaysia and Indonesia contribute about 85% of global production of palm oil, Latin America represents about 7% of the total. What is really making a difference on this continent is the increase of certified areas, as there is a vast quantity of land that can be destined for the growth of sustainable palm oil. For example, in Brazil there are many empty pastures and in Peru there are many unused lands that used to be destined for the production of Coca, both examples of lands with a lot of potential for the production of palm.
AgriBrasilis- What is the market trend about certification?
Yasmina Neustadtl – We notice that the market trend is a steady increase for certified products because it is one of the safeguards to ensure that final products are free from deforestation, child labor, free from human rights abuses, etc. In the US and Europe the market for certified products is advanced. In Latin America, the market is not as energetic, but the consumer is increasingly interested in having certified products. Brazil has one of the largest vegan movements in the world, and these people seek not only vegan products, but also certified products such as organic. This is common in larger countries like Brazil, Mexico and even Argentina, where the market pressure is stronger and this is also something what we are working on. Meeting large companies and making sure they are committed to being certified and sustainable before the trend hits them. We have great examples of companies worldwide and in Brazil a great example is Natura. It is one of the RSPO members that owns companies worldwide. Natura is one of those companies that is very committed to sustainability not only in Brazil, but globally. We believe that we will see more sustainably driven companies like them, which will set the pace for the certification processes in Latin America.