FGV: RM34.5m to get RSPO cert for 70 palm oil mills

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) said yesterday it will cost RM34.5 million over three years to obtain Roundtable on Sustainable Palm Oil (RSPO) certification for its 70 palm oil mills.
Earlier this month, FGV voluntarily withdrew the RSPO certificates of 58 mills throughout Malaysia, which took effect on May 3.
Group president and CEO Datuk Zakaria Arshad said yesterday FGV has had problems with the RSPO certification as some of its smallholders do not comply with requirements in certain areas such as safety gear, waste disposal and handling of chemicals.
He said the withdrawal will enable FGV to roll out its sustainable plantation practices programme for 102,100 smallholders, which includes intensive training and awareness campaigns on certified sustainable palm oil.
“Getting the smallholders to understand the importance of global market needs is crucial in preparing them for a competitive edge against uncertified oil,” he told reporters at a briefing yesterday.
The programme will take three years and FGV will engage certification bodies to audit all its 70 (palm oil mill) complexes. The 70 complexes will receive the RSPO certification in stages and FGV targets to get 15 certified this year.
Prior to the withdrawal, about 60% of the 102,100 smallholders were already certified, forming 35% of the RSPO certified smallholders globally.
Zakaria said there are two parts to the RSPO certification – environmental and social.
“We are very clear on the environmental part. Our issue is the social part: how to get smallholders to comply 100%,” he said, adding that the RSPO is a collective certification.
Zakaria said the premium that RSPO certification fetches does not cover the cost to smallholders. Cost of certification is about RM11.5 million annually and there is also cost of compliance such as providing proper housing and safety equipment.
“FGV has always believed the smallholders are key in the global production of palm oil. However, when it comes to certified sustainable palm oil (CSPO), the standards sometimes marginalise the smallholders.
“Certification is a long, tedious and complicated process, which is above and beyond the reach of individual smallholders,” he added.
Zakaria said RSPO needs to re-examine its certification process for smallholders if they want more of them to apply sustainable practices.
He said FGV and its smallholders, which make up about 30% of its CPO production, should not be penalised just because a minority do not meet sustainability practices.
On the financial impact of the RSPO withdrawal, Zakaria said it is very minimal, as trading in normal CPO will resume as usual. The impact is less than 1% on the group’s revenue.
As for long-term contracts, he said the impact depends on the terms and conditions, and the group has already made the necessary arrangements with its customers.
“Our CSPO customers in Europe and the US will be temporarily affected but trading will resume as soon as our complexes are re-certified in phases.”
Zakaria denied claims the withdrawal was due to FGV’s peat lands in Sarawak. “This is not true as we are not the ones who developed these HCV (high conservation value) peat lands in Sarawak.
“The size of peat land in our plantation in Sarawak is 209.87ha. This plantation was developed in 1987, way before the formation of RSPO, and is clearly not covered by the standard and we can’t go retrospectively on this aspect. This has nothing to do with our withdrawal,” he said.