News Column

Commodity alliance proves to be sustainable

February 16, 2014

Zaidi Isham Ismail



IN 2004, the world's palm oil industry saw the arrival of the Roundtable on Sustainable Palm Oil (RSPO).

RSPO is a not-for-profit association that unites stakeholders from seven sectors of the industry to ensure its long-term sustainability.

The parties involved comprise palm oil producers; palm oil processors or traders; consumer goods manufacturers; retailers, banks and investors; environmental and non-environmental; and non-governmental organisations (NGOs).

However, nine years down the road, discontentment begin to rumble from Indonesia and Malaysia, the world's top two palm oil producers, respectively.

The two countries have accused the RSPO of having strayed from what it set to do in the first place, which is for the betterment of all sectors, instead of being biased, skewed and favouring only European consumers and the NGOs.

Regardless of all the brickbats, the RSPO is arguably the world's most successful commodity alliance and other commodity groups from around the world can learn a thing or two from the organisation.

Adviser to its executive board, M.R. Chandran, said the grouping has managed to achieve the best results ever among all the commodities in the world such as timber, cocoa and tobacco.

"The RSPO has achieved a lot more in the past six to seven years. Sixteen per cent of the world's crude palm oil production is expected to be certified by 2015.

"We have worked so hard to ensure that a fifth of the world's palm oil production is certified sustainable palm oil.

This is much better compared with the Forest Steward Council, which has less than 15 per cent of its timber certified since its establishment in 1993.

Chandran said the RSPO has grown from strength to strength, with 1,300 members in over 50 countries - and counting. So much so that even governments want to become its members, which is highly unusual.

However, the RSPO is expected to face numerous hurdles with the setting up of the Malaysian Sustainable Palm Oil this year, alongside the already successful Indonesian Sustainable Palm Oil, all jostling for the world's most efficient crop.

Notwithstanding their differences, commodity alliances can take the cue from the RSPO on how to move forward as a unit able to inspire and pressure governments to change policies and pacify (to a certain extent) all stakeholders under its roof.

Chandran said the RSPO will see changes in the future, such as more power for the secretariat and the appointment of an executive secretary, instead of the exe-cutive board, to provide direction and advice.


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Source: Business Times (Malaysia)


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