Palm oil's sustainability story 'not there yet', but market buoyant in South East Asia: Cargill boss

By Tingmin Koe

- Last updated on GMT

Cargill Asia boss Peter Van Deursen believes that palm oil will remain important, given its economic efficiency.  ©iStock
Cargill Asia boss Peter Van Deursen believes that palm oil will remain important, given its economic efficiency. ©iStock
Sales across South East Asia’s palm oil sector remain strong, despite a regulatory and retail backlash in Europe, Cargill’s Asia boss has insisted.

In an interview with FoodNavigator-Asia during the Food for the Future Summit, Peter Van Deursen, CEO of Cargill (Asia Pacific) said that the palm oil market is growing regionally, citing exponential growth in palm oil producing countries of South East Asia.  

In Europe, the European Parliament has voted overwhelmingly to ban the use of palm oil in all European biofuels by 2020 while, just this month, Iceland, a UK supermarket chain announced that it will stop using palm oil​ in its products by the end of this year.

It said that it would replace palm oil with oils and fats that “do not destroy the rainforest”​.

Despite retailers shunning its sales, Van Deursen believes that palm oil will remain important, given its economic efficiency, which he believes is often overlooked amid discussions tainted with “a lot of emotions.”

“Palm oil is the most versatile oil, the cheapest oil to produce and actually the highest yield. So for the impact on environment, if you do it the right way, it has a lower impact than all the other oils.But that story is not out there yet, so people believe if you do palm oil, then it’s bad. ”

He added that with the world population growing, substituting palm oil with alternatives, such as soy or sunflower, will be unsustainable.

As such, he said the sustainable use of palm oil is paramount.

And, ultimately, it is the rules of supply and demand that will determine the place of palm oil in the market.

“At the end of the day, it’s the consumers who decide, not the government or companies.”

In 2014, Cargill pledged to build a “100% percent transparent, traceable and sustainable palm supply chain by 2020.”

Its 2017 update reported that the firm had achieved 100% traceability to mill for key destination markets, and is now seeking to advance traceability to the plantation level.

Technology and cooperation

Sustainable production and transparency were two prevailing themes at the event, held in Singapore last week.

When discussing business sustainability in Asia, corporate leaders from Olam and General Mills cited technological advancements and partnerships as examples of solutions that they have adopted to achieve more sustainable outcomes.

Christina Law, Group President (Asia & Latin America) of General Mills, shared that the company has worked with businesses to enhance honey supply, as the number of bee colonies has been dwindling by 30% yearly due to environmental causes.

Noting the need to balance sustainability and profitability, Sunny Verghese, Co-founder and Group CEO of Olam International, said that it is important for corporations to “first build the link between building sustainability assets and how we can create long term value”​, for sustainability efforts to resonate with shareholders.

Van Deursen added that leveraging on technological innovation can also help balance sustainability and profitability.

He emphasised the use of “technology with a purpose” ​which is “driven by business case”​, an example of which is iQShrimp, a predictive software that Cargill has introduced. The software uses machine learning and sensors to provide shrimp producers with real-time visibility into their operations.

Another way of ensuring sustainability is to work with rival companies.

“We have our own rules, but for something like climate change, we will need to work together​,” he added.

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