Here’s an unusual development for you: supermarkets causing the baking industry headaches. This time it’s over an issue that’s as slippery and brain-busting as a block of shortening on a bakery floor: palm oil.

All of the retailers have made public targets for suppliers to move into some kind of sustainable palm oil supply chain by 2012-2013. For this, everybody along the chain needs to have certification (apart from the supermarkets, of course). On the face of it, this should be a simple change. Alas, the path to full segregatio is as confusing as bag of baboons.

The Roundtable on Sustainable Palm Oil (RSPO see page 30) lists four supply chain options, the most popular of which has been buying green palm certificates the easiest one to implement. With this approach, the palm oil you use is not necessarily from a sustainable source, but you pay a premium through certificates, which goes to help growers convert to sustainable farming. This means you can say you are helping the cause, if not yet using sustainable palm oil. Increasingly, retailers are asking for ’segregated’ palm oil that is, the oil itself is from a guaranteed sustainable source.

Competitive costs

The cost of segregated oil is becoming ever more competitive, since New Britain Palm Oils in Liverpool the world’s first refinery dedicated to segregated RSPO-certified sustainable oils, sourced from its own operations in Papua New Guinea introduced segregated palm oil to the UK, with no premium. So if the cost barrier is being overcome and availability of sustainable palm oil is good, it should be a painless switch, right? Wrong! While the UK palm oil market is targeted to go fully segregated by 2015, some retailers are beginning to demand that all their products contain only segregated palm oils. The problem is that bakers are not ready for a fully segregated supply chain, and this applies from blended margarine down to tin release agents.

"I think there is a lot of misunderstanding in the industry, particularly from the supermarkets, about what the reality is with regards to sustainable palm," says Stephen Bickmore of oils supplier Vandemoortele, which currently offers three of the four RSPO options. "People are buying certificates or joining the RSPO or Green Palm scheme, or getting their supplier to get certification. There’s traceability (in the chain), but retailers are saying, ’That’s not really what we’re looking for we want to be able to make a claim that everything we buy is sustainable’. In order to meet that, everybody along the line has to get themselves in a position to physically buy sustainable palm oil."

The issue is not the availability or cost of segregated palm oil, it’s the unique ways in which it’s used in the baking industry. "Once you start mixing palm oil with other products, such as with margarines and fats that are a blend of rapeseed oil and palm derivatives, then it’s a different ball game," he says. "It’s a big problem and we’re trying to communicate to the market exactly what the situation is."

This is because palm oil is fractionated into Olein (liquid fat) and Stearin (hard fat) only the latter of which is used in bakery. Palm oil contains only 20% Stearin. "On an EU level, there is a shortage of Stearin, because most people are using it within a margarine or a bakery fat," explains Judith Murdoch of oils supplier AAK, which is offering a series of round-table meetings to help the industry come to grips with the issues.

"The supply of sustainable palm oil is available to the majority of people if they so wish," she adds. "The issue which everyone misses is that 70% of the palm oil sold in Britain is as a blend or a derivative. Very few bakers will be buying straight palm oil. I could sell you a tanker of RSPO-certified palm oil tomorrow. However, when you start talking about bakery fats, it’s more complicated. The difficulty is that some of the supply of fractions and derivatives is not readily available right now. That’s why the bakery market cannot yet gofully segregated."

Suppliers are moving over to sustainable oils for example, AAK can currently supply segregated pumpable shortening and liquid bread fats; Vandemoortele will be certified to supply segregated products from next year; and Nortech is now supplying segretaged oil and shortening. CSM is a member of the RSPO and marketing manager David Astles says the firm is still encouraging customers to purchase GreenPalm trading certificates.

Transforming the palm oil industry

Last month, GreenPalm sold its millionth certificate, which general manager Bob Norman believes is evidence that certificates remain a valid way for businesses to help transform the palm oil industry. "When GreenPalm began, there were plenty of doubters telling us businesses wouldn’t go for it they’d be scared of greenwashing claims, and they’d worry about the fact that GreenPalm doesn’t involve buying actual physical sustainable palm oil," he recalls. "Some of the world’s biggest and most powerful food businesses have seen the value of GreenPalm and recognised that driving positive change is not only about buying sustainable palm oil for their own products and claiming to be clean and green it’s about changing the entire palm oil industry from the very centre. It’s about everyone using their buying power to play a role in tackling the problem itself."

While it will take the industry some time to reach critical mass, the switch to wholly segregated palm in the UK is inevitable. Wholesaler BAKO recently announced that all bakery fats in its BAKO own-label ’Classic’ range of shortening, cake margarine, pastry margarine and bread fat would be made using sustainably produced palm oils. This has propelled sales especially of the cake margarine and has meant the craft sector can join in. "Our customers have confirmed that they believe the use of sustainably sourced products is important to them and that they see how this factor can be used as a valuable point of differentiation," says Nicola Wood, marketing executive for BAKO. "This offers them unique benefits when promoting their product offering to the

environmentally aware consumer on the high street."

The issue is set to get further traction following the unveiling of a new consumer trademark last week, designed to help shoppers distinguish products that use sustainable palm ingredients and encourage more companies to commit. However, very few people are expected to find space on label-crowded packs for a complicated issue that few consumers let alone manufacturers or retailers understand. "Having a corporate statement is far more beneficial," advises Murdoch.

"The commitment to GreenPalm certificates or purchasing segregated material is a major step forward for what is a global problem, which affects all of us, and it’s not a fad. Premium-wise, it’s no longer a barrier. It’s important for businesses to understand what palm they’re using and what it means to their business. All the big retailers are asking for it; some of the foodservice guys are not into it yet; but it does give you a point of difference. Market that and use it to your benefit don’t see it as a negative."

What is the RSPO?

The Roundtable on Sustainable Palm Oil (RSPO) was formed in 2004 to create more environmentally friendly ways of producing palm oil, to curb the destruction of tropical forests and protect the interests of people in the regions, in countries such as Indonesia and Malaysia, where 83% of the palms are grown. Members of the RSPO and participants in its activities come from a variety of backgrounds, including oil palm growers, manufacturers and retailers of palm oil products, environmental NGOs, social NGOs, financial institutions, traders and processors.

Action points to become sustainable on palm oil
lBecome an RSPO member
lCarry out an audit of your fats and oils
lConsider buying certificates or sourcing fully sustainable oils
lConsider whether to make it a corporate pledge or extend it to an on-pack claim.

For a full list of principles and criteria on sustainable palm oil, go to: http://bit.ly/9hhFAE