Palm oil

The headline should not be confused with the slang that abbreviates the phrase “oil someone’s palm”, which means to derive a favourable outcome based on providing a monetary incentive; in other words, a bribe.

Palm oil is everywhere – in everything we consume – and, as of May 24, it is the subject of not one, but two, tariff investigations initiated by the International Trade Administration Commission of South Africa (Itac).

You will find palm oil in nearly 50% of supermarket-packaged products, such as pizza, doughnuts, chocolates, deodorants, shampoos, toothpaste and lipstick. Its scientific name is elaeis guineensis, but it is also called palmate, cetyl palmitate or octyl palmitate, to name a few. It is an edible vegetable oil that comes from the fruit of oil palm trees.

Two types of oil can be produced: crude palm oil, or CPO, which is extracted by pressing the fleshy fruit, and palm kernel oil, or white palm kernel oil (PKO), which is derived from crushing the kernel or the stone in the middle of the fruit. Oil palm trees, which are native to Africa, were introduced in Southeast Asia just over 100 years ago as an ornamental tree crop. Today, two countries, Indonesia and Malaysia, account for over 85% of the global supply, with 42 countries producing the remainder.

Owing to its wide range of uses and its relative affordability, palm oil has earned the title of the world’s most consumed and traded vegetable oil.

According to the World Wide Fund for Nature website, it’s important to understand that palm oil is, has been, and continues to be, a major driver of deforestation in some of the world’s most biodiverse forests, destroying the habitat of already endangered species. This forest loss, coupled with the conversion of carbon-rich peat soils, is throwing millions of tonnes of greenhouse gases into the atmosphere and contributing to climate change. Additionally, the palm oil industry has been associated with worker exploitation and the use of child labour. These are serious issues that the whole palm oil sector needs to address.

Against this backdrop, Itac has initiated two tariff investigations. The first focuses on the creation of manufacturing rebate facilities for palm oil and its fractions, particularly those refined, bleached and deodorised, but not chemically modified for use in the manufacture of soaps and organic surface-active products and preparations in the form of bars, cakes, moulded pieces or shapes. The second investigation targets palm oil and its fractions, partly or wholly hydrogenated, whether or not refined, but not further prepared for use in the manufacture of soaps and organic surface- active products and preparations, in the form of bars, cakes, moulded pieces or shapes. Comment is due by June 21.

The application was lodged by Unilever South Africa, which styles itself as #1 Top Employer in Africa. According to the application, the company faces challenges emanating from rising costs and inflation, as well as competition from cheaper imports. Moreover, Unilever stated that it was altering its formulation for producing soap bars to support its strategy of sourcing sustainable materials to prevent harm to people and plants. This formulation uses palm oil, which currently attracts a 10% ad valorem duty, and a rebate on the “general” rate of duty on imported palm oil is, therefore, necessary to maintain local manufacturing and competitiveness in the domestic market. While alternatives such as sunflower and soybean oils exist, they require additional processing, thereby increasing costs and making them less competitive than palm oil.

In your personal consideration of the suitability of palm oil products, there are a number of resources you could consider, which I was unaware of before I wrote this piece. One of these is the ‘WWF Palm Oil Buyers Scorecard (https://palmoilscorecard.panda.org/scores), which also allows you to consider a company’s ‘Global Position’ in its use of palm oils. Unilever plc placed 29 out of 285, scoring 19.14 out of 24 (https://palmoilscorecard.panda.org/scores/346).

According to the WWF, ironically, the best thing we can do is to “support sustainable palm oil and avoid boycotts since substituting other vegetable oils can lead to even further environmental and social harm”.