Preview of RSPO 8th General Assembly

We have been in Kota Kinabalu, Sabah, to attend the Roundtable for Sustainable Palm Oil's 9th Roundtable since Tuesday 22nd Nov. Today, the 8th General Assembly is being held. As such, we at Khor Reports thought to have a glance at what's coming up and point our readers to some pertinent links and information. Our comments in blue.

RSPO market updates on its website here, Do take a look for the latest figures. Looking forward, from about 5 million MT of certified product available, the submitted time-bound plans promise another 9 million MT. Thus, a total of 14 million MT will be available each year in a few years to come. On the buy-side, the just launched WWF Scorecard for palm oil buyers has found that 2015 demand for sustainable palm oil product is expected at 3.5 million MT each year. Depending on timing and new demand appearing, this suggests risk of some 11.5 million MT surplus supply. WWF did a study of buyers from Europe, Australia and Japan. RSPO is hoping to increase demand from key growing markets like China and India. It is also encouraging Dutch proposals that EU reduce import duties for sustainable palm oil vs non certified palm oil. EU by end 2014 will require labelling of all edible oils used on product packs i.e. the "vegetable oils" label will have to list out which oils were used. All these factors should help boost demand for sustainable products.

GreenPalm certificates pricing from its website here, Price today is $1.59. It had fallen to US 50 cents and below in recent weeks. This compares to premium available from ISCC that ranges USD40-50, according to our contacts in the bio-fuels segment.

Resolution 6b: New Vision and Mission statements for the Roundtable on Sustainable Palm Oil; Executive Board of the Roundtable on Sustainable Palm Oil...... This is in answer to last year's MPOA / GAPKI resolution to review the "existing structure of the RSPO EB to reflect a better balance between the various stakeholders." The Executive Board / EB has reverted with a new Vision Statement for the RSPO which is: “RSPO will transform markets to make sustainable palm oil the norm”..... We are not sure precisely how the new Vision and Mission addresses the concern of MPOA / GAPKI that grower representation on the EB should be increased. Anyhow, GAPKI is no longer part of the RSPO. The Indonesian RSPO Growers Members now have a caucus, lead by Bapak Bambang Dwilaksono of First Resources, Bapak Edi Suhardi and Dr Gan Lian Tiong of Musim Mas, judging by the sign-offs on their resolutions. Indonesian grower interests have signed off on three resolutions, while Malaysian grower interests have only signed off on one. A MPOA representative was reported to suggest a halt in certification, but there has been no announcement or action by Malaysian companies on this suggestion.

Resolution 6c: Creation Of New Category Of Ordinary Membership For ‘Transnational Companies And Organisations’; Malaysian Palm Oil Association, FELDA, PT Musim Mas, Rabobank, HSBC Bank Malaysia Berhad, Unilever, and Growers from the Rest of the World...... This is also in answer to the MPOA / GAPKI resolution to review the "existing structure of the RSPO EB to reflect a better balance between the various stakeholders." The vertically integrated oil palm growers are seeking an additional seat on the EB. The big groups include Wilmar and Sime Darby.

Resolution 6d: Request for all RSPO Ordinary members to submit Time Bound Plans; The Zoological Society of London, WWF International, Conservation International,
Fauna and Flora International......This year, 66% of growers (Total no. members in category: 83), 43% of processors and traders (Total no. members in category: 146), 70% of consumer goods manufacturers (Total no. members in category: 105) and 76% of retailers (Total no. members in category: 25 members) have submitted annual progress reports to the RSPO1. Therefore, as many as 148 out of the 359 (41%) RSPO members in these categories did not submit a progress report.... This would require the members who are still in "wait and see" mode to have to act, and implement the RSPO P&Cs for their segment, across 100% of their production. RSPO is rather unusual in requiring 100% implementation. Other agricultural certification systems, like the Roundtable for Sustainable Soy, allow for partial certification (although for some key basic criteria, complete adherence is required).

Resolution 6e: Carry Forward of unsold certified sustainable palm products; Indonesian RSPO Growers Members......This reflects the grower's concern (and some frustration) at market offtake shortfalls for certified products. In recent months, this has stood at some 50%. A presentation by Kraft highlighted that this level of market off-take is quite "normal." In general, it would therefore seem that sustainability certification is generally more enthusiastically done by producers while buyers are more laid back about buying this. Perhaps the first group is keen to compete with each other for market access to the top buyers, and the buyers are more gradual and cautious, and keen to achieve sustainability with low or no premium? Whatever is the case, it looks like its a buyer's market in the food segment.

Resolution 6f: There is a need for a more balance representation in the RSPO Grievance Panel and a time-frame for closing of the complaints & grievances process.; Indonesian RSPO Growers Members......The composition of the core Grievance Panel is made up of the RSPO President (Unilever), environment (WWF Switzerland), social (Oxfam), producer (Malaysian Palm Oil Association) and the Affiliate Member (Dato’ Henry Barlow). Additional RSPO Ordinary or Affiliate Members may be called-upon to participate in the Grievance Panel as deemed appropriate by the core Grievance Panel......(The resolution proposes that ) The RSPO restructures the core members of Grievance Panel to include a representative from Indonesian Grower and that the RSPO reviews the grievance procedure to include a time-frame to close the case upon agreement by the alleged member to the recommended action of the Grievance Panel..... This likely reflects the rise of conflicts and frustration with the timing of dispute resolutions. Of late, social issues have become quite prominent, as evidenced by Oxfam's recent report on land grabbing (highlighting Sime Darby's Sanggau case) and several cases are also highlighted on the website of the Forest People's Programme (includes a complaint against Sime Darby in Liberia). A significant case is that of "IOI-Pelita," resulting in a halt to all certificate issuance to the IOI Group when they could not resolve the matter in 28 days. At the side-lines, we at Khor Reports hear that quite a few growers were busy in meetings with NGOs on various such cases. It would be good to have updates on the allegations and the cases, so as not cause unnecessary damage to reputations and to clarify the issues and how they were resolved (if found true).

Nominations for Executive Board elections for Category: Processors and Traders; Organisation : Olam International Ltd; Name of Nominee : Vasanth Subramaniam; Designation : Senior Vice President and Head of the Palm Business..... Olam is very fast-growing agricultural products supply-chain manager. It is moving aggressively upstream, into oil palm developments in Africa.

Self-nomination for candidate to the RSPO Executive Board, GA8 2011; Name of Organisation: Fauna & Flora International (FFI); Membership Category: Environment / Nature Conservation NGOs; Nominee: Darmawan Liswanto (Passport: Darmawan Lie); Designation: FFI Indonesia Country Programme Director......

RSPO Treasurer’s Report. Financial results for the year ended 30 June 2011. The RSPO group recorded a surplus of RM1,017,000 for the year ended 30 June 2011 (2010: RM2,253,000). Subscription income increased to RM3,975,000 from RM3,314,000 as membership numbers rose to 689 at 30 June 2011 (2010: 480). Income from sustainable palm oil trade rose to RM5,095,000 from RM2,822,000 the previous year, increasingly the main source of RSPO income. Operating costs increased as planned, to RM6,116,000 (2010: RM2,730,000)......