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CONFIDENTIAL. This document contains trade secret information. Disclosure, use or reproduction outside Cargill or inside Cargill, to or by those employees who do not have a need to know is prohibited except as authorized by Cargill in writing.
Palm Oil in the EU Market: Issues and Challenges
www.cargill.com
POTS KL 2014
Marta Zuluaga Zilbermann
The EU landscape
Palm oil in the EU market: issues and challenges 2
MAIN ISSUES AND CHALLENGES FOR PALM OIL
Little knowledge and awareness by average consumer of the realities of palm oil coupled with negative media campaigns lead to negative perception
Issues relate to sustainability and/or health/nutritional aspects of palm
Debate happening at national and EU level
Concerns leading to industry and government commitments, product reformulation and ‘free of palm’claims in certain markets
Palm oil in the EU market: issues and challenges
Index
• Importance of EU market for palm oil • The EU: common institutions and decision-making process• EU Policy developments and impact on palm oil • National markets developments: focus on palm
3
Palm oil consumption
Palm oil in the EU market: issues and challenges 4
2012 2006 Consumption Change
India 7585 3074 147%
Thailand 1341 684 96%
Colombia 926 482 92%
Indonesia 6978 3711 88%
Nigeria 1805 1025 76%
USA 947 569 66%
EU27 6149 4447 38%
Pakistan 2039 1601 27%
China 6089 5449 12%
World TOTAL 52088 36972 41%
Source: OilWorld/FEDIOLFigures in 000 tones
The EU InstitutionsA NEW LANDSCAPE
Palm oil in the EU market: issues and challenges 5
Presentation Title-Date6
The European Union, what is it...?
28 member states…
Palm oil in the EU market: issues and challenges 7
The European Commission- promoting the common interest
Jean Claude JunckerPresident of the European Commission
The European Parliament- voice of the people
Martin Schulz, President of of the European Parliament
The European Council The Council of Ministers- Voices of the Member States
Donald Tusk, President of the European Council
8
With common institutions…
http://www.youtube.com/watch?v=d0diZ48_q7U
Palm oil in the EU market: issues and challenges
9
2014: a year of change…A new European Parliament
And a new European Commission...
Palm oil in the EU market: issues and challenges
How EU laws are made...
10
White paper/consultati
on
European Commission proposal
European Parliament 1st reading
Council of Ministers 1st reading
Second reading IMPLEMENTATION
Palm oil in the EU market: issues and challenges
EU policy developments and impact on palm oil
Palm oil in the EU market: Issues and challenges 11
EU Health and Nutrition agenda –food
- EU requirement to label botanical origin of vegetable oils and fats as from 13 December 2014
- EU Commission report on transfatty acids (TFA) by 13 December 2014
- EU Action Plan on childhood obesity to be implemented at national level: will cover reformulation and SAFA amongst other
- EU High Level Group on Nutrition & Physical Activity- EU SAFA objective - Target level for industry commitments: 5% reduction from current
levels by 2015, another 5% reduction by 2020
- Implementation taking place at national level
- European Food Safety Agency (EFSA) upcoming scientific opinion on 2-MCPD, 3-MCPD, 2-MCPD esters, 3-MCPD esters, and glycidyl esters. Will perform a risk assessment and look at the occurrence of these compounds in food products
Palm oil in the EU market: issues and challenges 12
13
Sustainability agenda overview-biofuels and food
• Strong drive of climate change agenda: EU heads of State recent agreement on climate change, renewable energy and energy efficiency targets post 2020
• Shifting focus towards harmonized analysis of environmental impacts (carbon, water, biodiversity, land use) of productson a life cycle basis (across all stages of supply including prior land use and consumer phase) and information to consumers
• Including analysis of impacts of EU consumption patterns on third country deforestation
• General push for:• More transparency and information to consumers • Better understanding environmental impacts of products • Drive for improvements along the chain
Palm oil in the EU market: issues and challenges 13
Biofuels
Palm oil in the EU market: issues and challenges 14
Current legislative framework • Fuel Quality Directive (FQD)- 6% greenhouse gas (GHG) reduction target
in carbon intensity of road transport fuels in 2020 • Renewable energy directive (RED)
• 20% renewable energy by 2020 • 10% renewable energy in transport by 2020
• comes attached with sustainability criteria around land use change (no sourcing from high conservation value land) and GHG reduction targets
Current debate - Indirect Land Use Change Legislative (ILUC) Proposal
- capping use of first generation biofuels (from agriculture raw materials)
- Adding ILUC factors to the GHG saving profile of biofuels
Future - Political direction on 2030 climate change and renewable energy targets
just agreed - Uncertain future for biofuels
-European Commission defining environmental criteria and guidelines for calculating environmental profile (carbon, water, biodiversity, etc) of food & feed products – discussion on policy options in 2016. Policy may come in 2018
-Voluntary excercise at industry level on same: The EnviFood Protocol
-EU starting to study impact of EU consumption patterns on 3rd country deforestation – possible Deforestation Action Plan 2015
Food and feed
Palm oil in the EU market: issues and challenges 15
DG Environment Study on Deforestation
http://ec.europa.eu/environment/forests/impact_deforestation.htm
Palm oil in the EU market: issues and challenges
Some policy recommendations included in the study:- Extension of biofuels
sustainability criteria to food
- Extend FLEGT (forest sustainability system) to other commodities
- Mandatory labelling of the forest footprint of (food) products
- Increase import tariffs/attach sustainability criteria to commodities associated with deforestation
16
-EU Action Plan on Deforestation
-Increased scrutiny around tropical crops: soy and palm
-Draft Communication on Sustainability of the Food System
-Draft Methodology for Sustainability Criteria for Key Food Commodities
-More focus around Resource Efficiency: waste and water
Upcoming EU initiatives in the pipeline..
Palm oil in the EU market: issues and challenges 17
National markets developments: focus on Palm
18 Palm oil in the EU market: issues and challenges
Industry behaviour Alliances
Palm oil debate Europe
• Refiners & PO producers aligned in EPOA, focus on PO and health
www.palmoilandfood.eu• Trade organisations aligned in
ESPOAG (European Sustainable Palm Oil Advocacy G )
• International manufacturers often committed to use CSPO only by 2015
• Palm oil free labelling: increase in 2013
• Main focus is on sustainabiity• Generally consumer little awarenes of what palm oil is
• Health and sustainability issues closely linked
• increased political debate on health aspects of palm oil
• High influence of France, Belgium and Norway
• Increased debate on guidelines SAFA intake
Debate Intensity
Health
Sustain-ability
Source:EPOA
stable - potential riskcriticalhighly critical
Palm oil issues in Europe
Source:EPOA
Palm oil in the EU market: issues and challenges 20Source: EPOA
Debate focused on health or sustainabilityat local level
Palm oil debate differs per country
driven by SUSTAINABILITY -
increased focus on
HEALTH – use of palm oil free labeling
Low attention to either
SUSTAINABILITY or HEALTH aspects
HEALTH aspects widely
discussed – use of palm oil free
labelling
Low attention –Main focus on
SUSTAINA-BILITY and quality issues
Debate Intensity
Health
Sustain-ability
Source: EPOAPalm oil in the EU market: issues and challenges 21
22
Main developments at Member State level…
Source: EPOA
Sweden (and rest of Scandinavian countries): Sustainability main issue. Nutrition becoming very prominent
UK: no major public debate on palm oil’s impact on health and nutrition. Sustainability is main issue
Germany: Health related aspects discussed within limited circles. Main focus on palm oil sustainability
Palm oil in the EU market: issues and challenges 22
23
Main developments at Member State level…
Source: EPOA
Belgium: Sustainability was main topic up to 2012. Since 2013 debate has switched to health and nutrition due to regulatory activities
France: Focus is slightly more on nutrition but sustainability is still quite prominent. The two issues often discussed together
The Netherlands: Sustainability is the main issue. Attracts lots of media attention
Palm oil in the EU market: issues and challenges 23
Current players in Europe
RSPOSustainabili
tyPO supply chain
EPOANutritionLipid
nutrition scientists
ESPOAGSustainabili
ty + nutrition
EU politicians & regulatory
European Palm Oil Alliance
European Sustainable Palm Oil Advocacy Group
Round Table on Sustainable Palm Oil
France / Belgium
Norway (SwedenDenmark)
Germany/UK
EU
consumers, & local stakeholders: local politicians, regulatory &policy makers, retailers, NGO’s
EU trade organisations
Members RSPO, Incl. retailers
Outside EU: Main PO producing countries
Focus regions
24
Source: EPOA
25 Palm oil in the EU market: issues and challenges
Outreach campaigns