There’s a future for palm oil in the dairy supply chain, but sustainable sourcing matters

If not palm, then what? Understanding the complex story of sustainable palm and the vital role it plays in supporting global conservation efforts, local economies and the dairy supply chain.

From ice cream to livestock feed rations, palm oil is a common ingredient found throughout all stages of the dairy supply chain. Valued for its unique melting point, mixability and low odour, it has become one of the top global edible oils by consumption since the palm oil boom of the early 1990s, says Catherine Barton, Policy Lead on Deforestation-Free Commodities and Regenerative Agriculture for Chester Zoo.

“Palm is incredibly versatile and allows for manufacturing methods, product properties and extended shelf life that otherwise would not be possible if replaced with a different ingredient,” explains Ms Barton.

In on-farm dairy production this goes a step further, with palm oil fractions used in the manufacture of many types of rumen-protected fat supplements as highly energy-dense ingredients with unique fatty acid profiles. These supplements are targeted to improve various aspects of dairy production including milk yield, milk fat production and cow fertility, says Dr Richard Kirkland, Global Technical Manager and nutritionist for Volac Wilmar Feed Ingredients (VWFI).

These rumen-protected feed fat supplements deliver an energy concentration around 2.5-times that of cereals without disrupting rumen function as is the risk with liquid oil sources. Recent research has demonstrated contrasting nutritional effects of palmitic (C16:0) and oleic (C18:1), the two major fatty acids in palm oil, when supplemented to dairy rations. 

“Palm-based fat supplements help to optimise rumen conditions for improved digestion and utilisation of the entire ration. They also boost milk production outputs, allowing farmers to improve feed efficiency of their herds,” explains Dr Kirkland. “While energy supply can be increased with non-rumen-protected vegetable oils or cereals, these ingredients can be incredibly disruptive to rumen function with consequences to animal health and productivity.”

The improved production efficiency achieved on dairy farms translates into a similar picture of why sustainability discussions around palm oil aren’t so black and white, says Ms Barton. Compared to other vegetable oil crops, the amount of oil produced on 1 hectare of land growing palm would require up to 8 hectares of land from a different vegetable oil crop such as soya or rapeseed oil.

“When looking at what makes one commodity more sustainable than another, it must be both economically and environmentally feasible. When grown sustainably, palm checks those boxes,” explains Ms Barton. “From an environmental point of view, we need less land to produce the greater volumes of oil that are required for global consumption. The high yield also hits business targets for increased efficiency.” 

The creation of a sustainable palm industry

Since the early 2000s, huge strides have been made through collaborative efforts by palm industry stakeholders and NGOs to implement stricter production policies and to invest in palm production efficiencies to reset the industry with improved environmental and human rights practices, says Ms Barton. 

Chester Zoo is one of several independent organisations collaborating on on-the-ground conservation efforts in Indonesia and Malaysia to safeguard wildlife populations and prevent deforestation while working with local communities to create sustainable palm production systems and improve working conditions.

“Growing sustainable palm requires taking an entire ecosystem approach, and the only way to achieve this is by working at a community level to drive cohesive practices,” explains Ms Barton.

Alongside this work, many major palm industry suppliers have implemented their own sustainability programmes and policies. These include Wilmar International, the world’s largest palm oil trader, with the implementation of its No Deforestation, No Peat, No Exploitation (NDPE) policy in 2013. Following an update in 2019, Wilmar’s NDPE policy is the staunchest of any commercial company in the world, says Gersen Sumardi, sustainability manager for Wilmar Europe. This includes the immediate suspension of any supplier involved in verified cases of deforestation, and a ‘suspend first’ approach.

“Along with operating its own plantations, more than 90% of Wilmar’s total supply comes from third-party suppliers, which consist of around 900 palm oil mills. To ensure NDPE compliance is being met, a multi-pronged approach is taken to identify any risks before working with a supplier and to continue monitoring them,” explains Mr Sumardi.

This starts with Wilmar proactively monitoring grower practices through satellite surveillance systems, which notify the company of any alerts related to deforestation. To identify and assess any environmental and social risks, the company requires extensive reporting from suppliers. To allow for any on-the-ground reporting of malpractice, the company has also created a public and transparent grievance mechanism.

Since its ‘suspend first’ approach implementation in 2019, 12 supplier groups have been suspended due to deforestation. To re-enter Wilmar’s supply chain, Wilmar requires suppliers to meet certain criteria which include getting practices up to NDPE standards and rectifying any damage caused by malpractice. 

As the commercial leader for both production volume and NDPE policy, Wilmar’s strict policies have set the commercial standard for the majority of the supply chain, adding incentive to growers to implement best practices. 

“This limits market opportunities for any offenders who refuse to implement best practices,” says Mr Sumardi. “Wilmar’s reputation in the industry for NDPE requirements is highly respected, with the suspension in relationship with any supplier hurting their reputation throughout the supply chain.” 

Food industry sustainability certifications

While major commercial influencers in the industry have been active in palm production reform, third-party work has largely been led by the industry’s flagship independent certification programme, the Roundtable on Sustainable Palm Oil, commonly referred to as RSPO. Founded in 2004, the RSPO takes a multi-stakeholder approach, working with environmental organisations, palm oil producers, processors, retailers and investors to provide fully-certified and traceable sustainable palm oil products. The RSPO also provides full transparency on members, with annual palm usage reports and sustainability targets published for individual members on its website. 

Commitments to sourcing RSPO-certified palm within food production in the UK have been high, with nine out of the top 10 grocery retailers committing to sourcing 100% of palm oil for own-brand products as RSPO-certified (the only exception has been Iceland Foods, which has a ‘no-palm’ policy for own-brand products). The majority of these retailers are working towards 100% RSPO certifications in palm used by suppliers.

Key players in the UK dairy industry are no exception, with the top five milk buyers and manufacturers maintaining RSPO membership and the top four reporting 100% RSPO-certified palm used within their own manufacturing. Furthermore, on a farm level, some retailers and milk buyers also require dairy farmers to only source palm-based feed fat supplements that have RSPO-certified sustainable credentials. 

VWFI is a partnership company between animal nutrition company Volac International and Wilmar International. A global leader in feed fat research and product development, VWFI’s policy is to only use palm oil derivatives in products from sources that fulfil NDPE sustainability criteria or RSPO principles and criteria.

If not palm, then what? 

Looking ahead to the future of sustainable food production, Ms Barton says so-called “no-palm”  policies are not the answer. Instead, sustainable palm production needs to remain part of the food chain, with significant environmental and economic consequences if it does not.

“Growth in the palm industry to where it is now has already been established – trying to shut it down is only going to cause larger issues,” she says.

 From an economic standpoint, palm is the backbone of local economies within Indonesia and Malaysia where 85% of the world’s palm is grown. In Indonesia alone, the palm industry employs 4.5 million people, she says.

 “Going palm-free isn’t going to save wildlife or stop deforestation – it will only shift the problem elsewhere. Markets will open up to buyers who don’t have sustainability or human rights standards, or plantations will shift to a different commodity crop that doesn’t have any regulations. The global edible oil demand would also need to be met by crops that take up significantly more land and natural resources than palm, creating other environmental issues,” concludes Ms Barton. “The palm oil industry has had so much pressure over the years that it has been in the best interests of commercial stakeholders to adhere to sustainability standards and work with third-party organisations to improve and certify best practices. As a result, palm has the best criteria for any sustainable commodity available. There is a lot of good work being done in the industry to ensure high standards are maintained into the future.”