The great palm oil debate: how the consumer turned an industry on its head

Palm oil has received a great amount of attention in recent months. Heightened consumer awareness surrounding palm oil farming practices has resulted in protests and boycotts the world over, causing producers to re-think the ingredient composition of many of their processed offerings.

Social media outlets have been rampant in naming and shaming manufacturers who use palm oil in their products. Supermarket giant, Woolworths, suffered a massive belting for the inclusion of the controversial ingredient in its hot cross buns earlier this year and Arnott’s has also copped a lot of flack for including it their popular Shapes range.

But what exactly is palm oil? Where does it come from and why is it so controversial?

What’s with all the bad press?

According to Food Standards Australian and New Zealand (FSANZ), palm oil is vegetable fat which is obtained from the fruit of the African oil palm tree. Palm oil contains a significant amount of saturated fat, similar to coconut oil, and is a popular ingredient in many processed foods.

Current regulations state that palm oil doesn’t have to be labelled as palm oil, and may be used under the more generic guise of ‘vegetable oil.’

FSANZ previously rejected an application for the mandatory labelling of palm oil in July 2008. The application focused on environmental concerns rather than food and safety standards and as such, FSANZ had no legal capacity to hear the case.

Contrary to Australian regulations, The Food Information Regulation published by the EU will require all types of vegetable oil used in food, including palm oil to be stated by 2014. Canada and the US also require palm oil to be labelled.  

Approximately 87 percent of palm oil is produced in Malaysia and Indonesia, with Australia importing around 130,000 tonnes of palm oil each year, according to WWF.

Palm oil is the world’s most widely used edible oil with an estimated 50 percent of products on Australian supermarket shelves comprising the ingredient. The widespread popularity of palm oil is due to its attractive price tag and the fact that it promotes a longer shelf life when compared to butter and other oil alternatives.

The controversy surrounding palm oil relates to mass deforestation which is taking place in Malaysia and Indonesia to make way for palm oil plantations, with obvious implications for native species, especially the endangered orangutan.

WWF has estimated that around 300 football fields’ worth of forest native to the orangutan is cleared every hour.

Why would food manufacturers use palm oil?

According to the Roundtable of Sustainable Palm Oil, the oil palm plant is entirely GMO-free and yields up to 10 times more oil per unit than soybean, sunflower or rapeseed oil.

The rise in demand for palm oil has also been largely attributed to the move away from trans-fats in the early 2000s. Palm oil offers a low trans-fat content for a cheap price, which is a welcome alternative for many food manufacturers.

Palm oil is typically used to produce an extensive range of processed foods including margarine, ice cream, biscuits, chocolate, chips as well as baked and fried foods.

Palm oil kernels, a by-product of palm oil production, are used for stockfeed because of its high fibre content, energy and protein as well as favourable levels of residual oil.

According to CHOICE, the leading brands in the Australian grocery aisles including Coca Cola (SPC Ardmona), Goodman Fielder, Nestle and Arnott’s all use palm oil and label it as vegetable oil.

Is there a solution?

WWF-Australia and the Australian Food and Grocery Council (AFGC) recently developed a report providing an assessment of facts, myths, issues and challenges surrounding the palm oil debate. The report provides a springboard for action to increase the amount of palm oil derived from sustainable sources.

"It lays out a way forward, including the need for better understanding of supply chains, better alignment of supply-side and demand-side expectations, and work to overcome significant logistical challenges,” said Gary Dawson, CEO of AFGC.

WWF- Australia’s CEO, Dermot O’Gorman said that the switch to sustainable palm oil is critical to the preservation of the environment and many engendered species.

“Companies must ensure that unsustainable practices are phased out; governments must support corporate commitments with appropriate incentives and land use planning policies,” he said.

Many other vegetable oils including canola oil, have been adopted by fast food outlets as an alternative to palm oil, including KFC which recently announced the use of Australian-grown canola oil.

The report states that a major challenge lies in the move away from stearin, which is palm oil in its solid state. Stearin is a popular ingredient in baking applications due to its hard composition, low cost and lack of trans-fats. Traditional alternatives, butter and hydrogenated fats, are typically higher in cost and contain trans-fats.

Other, more cost effective alternatives include more stable versions of canola, soy and sunflower oils however these products still hold a heftier price tag when compared to stearin.

How would a change to sustainable practices affect producers?

The costs associated with switching to sustainable palm oil production are a major factor in determining buy-in from food manufacturers. Some of the big players in the Australian industry however, Woolies and Coles, have already committed to make the switch.

Woolworths has committed to only use Roundtable on Sustainable Palm Oil (RSPO) certified sustainable palm oil by 2015 in all private label products. The supermarket giant is now a member of the RSPO and has committed to using only certified sustainable palm in their hot cross buns for Easter 2014, following the consumer backlash earlier this year.

Coles, now also a member of RSPO, has made a similar move by committing to use only certified sustainable palm oil in all Coles-branded products by 2015. The retailer said that it has already removed palm oil from some of its bakery products.

The current global supply of certified palm oil is sitting at around 15 percent of the world’s total production, resulting in supplies of the sustainable alternative to be somewhat limited at this stage.

The reality of a sustainable switch

Palm oil production is vital to countries such as Malaysia where it accounts for approximately six to seven percent of GDP and employs a significant proportion of the country’s workforce.

The movement towards sustainable production needs to have buy-in from governments to ensure a smooth transition from current conventional practices, ensuring that farmers receive adequate income and incentives to make the switch. This will undoubtedly require a great deal of co-operation from parties on each side of the debate.

The push for sustainable palm oil is a true testament to the power of the consumer. Widespread campaigns reporting on the unfavourable production methods of palm oil has undeniably turned the industry on its head.

The consumer really does have more power than you think.

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