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Indonesia, Malaysia eye joint campaign in Europe to counter palm oil critics

Indonesia, Malaysia eye joint campaign in Europe to counter palm oil critics A mini tractor grabber collects palm oil fruits at a plantation in Pulau Carey, Malaysia, on Jan. 31, 2020. (REUTERS/Lim Huey Teng)
A. Ananthalakshmi and Mei Mei Chu
Kuala Lumpur   ●   Tue, January 19, 2021 2021-01-19 15:46 116 0920e6703081f028872405a5260d05df 2 Business Indonesia,Malaysia,palm-oil,European-Union,joint-campaign,CPOPC Free

The world’s top producers of palm oil, Indonesia and Malaysia, are looking to join forces for the first time to run an advocacy campaign in Europe, where increasingly tight regulations are threatening sales in their third biggest market.

Through the platform of the Council of Palm Oil Producing Countries (CPOPC), the two countries have sent out a request for proposals to hire an advocacy firm to run a campaign in Europe this year to counter criticism, three sources familiar with the matter said.

The joint advocacy efforts for palm oil, an ubiquitous commodity used in everything from lipstick and pizza to biodiesel, underscores the increasing regulatory challenges and reputational damage faced by the industry.

The producers of palm oil, grown primarily in Indonesia and Malaysia, are accused of clearing vast areas of biodiversity rich rainforests in Southeast Asia and exploiting migrant workers.

Read also: Palm oil exports expected to improve next year amid global economic recovery

The European Union is set to ramp up discussions this year on several legislations on deforestation and sustainable food systems - as part of the European Green Deal - that could restrict the use of palm oil in food and fuel.

The CPOPC, dominated by Indonesia and Malaysia, is looking to launch the campaign soon to change perceptions of palm oil in the United Kingdom and certain countries in the European Union, the sources said.

They did not want to be identified as they were not authorized to talk to the media.

The plans have not been finalized and subject to discussions between the producers, they said.

The CPOPC did not have an immediate comment.

While Malaysia and Indonesia have done some targeted advocacy and lobbying before, this is the first time they are working together to fight the growing sentiment against the commodity.

The two countries together account for about 85 percent of global palm oil output, and compete for the same export markets. Indonesia alone produces close to 60 percent of the world’s palm oil.

Read also: Indonesia imposes higher export levies amid year-end rally in global CPO prices

India and China are much bigger buyers of palm oil but sentiment in Europe is crucial to protecting the reputation of the commodity globally.

Malaysian officials warned this month that the new legislation being discussed in the EU will affect the commodity’s sales to the bloc, particularly its use in food products - which account for about 70 percent of palm oil’s use globally.

The EU finalized a rule in 2019 to phase out palm oil from renewable fuel by 2030 due to deforestation concerns.

Consumer sentiment has also been turning against palm oil despite some efforts by producers to promote their sustainability measures.

Some in Europe have called for a boycott and companies have been introducing “palm oil-free” products.

Read also: Malaysian palm oil giant hit with US ban over abuse concerns

EU imports in the 2020/21 season are forecast to fall to the lowest in a decade at 6.7 million tons, down 8 percent from the previous season, according to data from the United States Department of Agriculture.

While the decline is partly due to lower demand amid the coronavirus pandemic, the Malaysian Biodiesel Association (MBA) said it is a significant reflection of the growing “no palm oil movement”.

“We’re no longer talking about EU regulations against palm oil, we’re talking about a whole generation of citizens who believe palm oil is really bad,” MBA deputy president Long Tian Ching said at an industry conference this month. “Consumer minds are now so negative that it would be a difficult battle to win over their hearts and wallets.”