THE BURDEN OF RSPO CERTIFICATION COSTS ON MALAYSIAN PALM OIL INDUSTRY AND NATIONAL ECONOMY
Yusof Basiron Foong-Kheong Yew

Abstract
The study shows that subjecting the total production of Malaysian palm oil to RSPO certification can place a heavy toll on the palm oil industry. By using 2014 as the base year of the study, it costs RM 851 million annually to undergo and to maintain RSPO certification. This amount is equivalent to 4.3% of the total Malaysian government’s expenditure on healthcare. It is also equivalent to 1.6% of that spent on education and manpower training for the whole country in that year. With a lukewarm uptake of certified sustainable palm oil (CSPO) by the consumers at only 45% of that produced, the study shows that the extra revenue obtained from sales of CSPO and certified sustainable palm kernel oil (CSPKO) cannot cover the expenditure incurred for certification. As a result, the Malaysian palm oil industry will have to bear a total loss of RM758 million annually.

The certification of palm oil using RSPO is only a means to justify that the palm oil is, indeed, sustainably produced. It is also to be noted that not all oils and fats used for food in the world need to be certified for their sustainability. Thus, it is felt that since the sales of CSPO and CSPKO do not derive economic benefits, the money that would be used to certify the entire palm oil production of Malaysia could, instead, be channelled for use in much needed, important and beneficial national social activities such as the provision of better healthcare, education and manpower training for the people. The money could also be diverted to carry out activities that significantly lower the carbon footprint of the Malaysian palm oil industry. One such activity is to capture methane in the palm oil mills. In addition, it is also known that the activities and travel needed to carry out RSPO certification will result in an additional carbon footprint for certified palm oil. As such, certified palm oil has a higher carbon footprint than non-certified palm oil. By using a very simplistic model here, the amount of RM 851 million needed for RSPO certification, if sourced from sales of petroleum, has a carbon footprint, on an annual basis, amounting to 1.6 million tonnes CO2 equivalent. One tonne of certified palm oil carries an extra 81.3 kg CO2 carbon footprint more than non-certified palm oil. As such, users of certified palm oil will, of course, have higher carbon footprints.
27 April, 2016
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