Palm oil in China
Imports will increase dramatically as living standards increase. Demand is expected to grow at about 10% a year, to reach about 8.6 million tonnes in 2015 and 12 million tonnes in 2020.
More than 5,000 companies in China are known to be end users of palm oil. Many of the large companies are vertically integrated and are involved in many parts of the palm oil supply chain, from importing, processing and manufacturing to retailing.
Some are state-owned enterprises such as COFCO, privately-owned Chinese companies such as Kerry Oils & Grains, Longwit and Master Kong, and multinational companies such as Bunge China, Cargill China, Nestlé China and Wilmar China.
Some of the vertically integrated companies trading palm oil command an extremely large share of the market, and will play a pivotal role in shifting the market toward sustainability.
Sustainable palm oil is a new concept for most Chinese companies. They operate in an extremely price sensitive market and are unlikely to move toward more sustainable practices without a strong business case and a strong signal from the government. Consumer demand for sustainability is still low.
These are some of the reasons why WWF feels that scoring the performance of Chinese companies would not be informative or helpful at this time. China is not just a consumer of palm oil. In order to reduce its dependence on foreign importers, China has recently invested in production, through government banking arms and bilateral agreements, in Indonesia and Malaysia, as well as in Africa.
WWF would like to see the government, financial institutions and private companies align their overseas plantations with RSPO guidelines in order to ensure a more responsible global agricultural footprint for China.
In 2008, the China Chamber of Commerce for Import and Exports of Foodstuffs, Native Produce and Animal By-Products (CFNA), with WWF’s support, began to participate at RSPO roundtables and to hold seminars on sustainable palm oil for its members.
In 2009, WWF-China and CFNA launched the China Sustainable Palm Oil Network, to support sustainable palm oil in China as well as the production of sustainable palm oil in China’s overseas investments.
The network includes Kuala Lumpur Kepong Berhad, Solidaridad China, Unilever and Wilmar International, and now seeks to expand the group to include more multinational as well as Chinese-owned companies and to collaborate more closely with the RSPO.
These initiatives recognize that multinational companies that have made global commitments to sustainable palm oil should lead the way by operationalizing their commitments in China.
By showing that it is possible to use certified sustainable palm oil in the Chinese market, they will set a powerful example for other companies in China as well as for Chinese authorities.