How New Britain Palm Oil turns sustainability into profitability

New Britain Palm Oil has turned its philosophy of sustainable production into profits, according to Ian Orrell, Group Head of Sustainability. Speaking at the Business Advantage PNG Investment Conference in Brisbane, he warned of the need to improve the palm oil industry’s global reputation.

Orrell said New Britain Palm Oil (NBPOL) has now become PNG’s largest palm oil producer, representing about 83 per cent of national production.

‘It is the largest employer in the country, after the government, with almost 25,500 permanent employees on the payroll.

‘And these are not temporary employees or linked to contractors and subcontractors. These are full-time employees.

‘And, of all of these, only 106 expatriates, or 0.4 per cent. The rest being PNG nationals.’

‘Smallholders are an extremely important part of NBPOL’s upstream operations.

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‘Palm oil can be seen as intrinsically sustainable.‘

‘We support 17,500 smallholder farms, many of which have co-resident families: an estimated total population of about 150,000.

‘Smallholders represent about a third of our crop production.’

Sustainability

New Britain Palm Oil’s Ian Orrell. Source: BAI

Orrell said NBPOL was one of the founding members of the Round Table on Sustainable Palm Oil (RSPO), which brings together producers, processors, traders, manufacturers, retailers, banks and investors, and NGOs.

The RSPO sets the global standards upon which certification is based.

Orrell said the company received K33.8 million in RSPO premiums in 2017.

‘This is more than four times the total export value of PNG’s export of rubber.’

Reputation

Orrell said that palm oil can be seen as intrinsically sustainable.

‘Even though palm oil supplies over 36 per cent of global oil and fats, it only uses 5.5 per cent of the land cultivated for that global supply.

‘For a given area of land, oil palm can produce 10 times more oil than other seed oil crops. Palm oil also uses significantly less fertilisers and pesticides.’

The global reputation of palm oil, however, is ‘not so comfortable’, according to Orrell.

‘Almost all of NBPOL’s production goes to the European Union.’

‘Anti-palm oil lobbyists and the developed world in general are reacting to clear environmental and social abuses in South East Asia.

‘It has had a negative impact on all palm oil, whether sustainably-produced or not.

‘The commercial consequences are enormous.

‘The long-term commercial viability depends on addressing these market concerns.’

Access

Almost all of NBPOL’s production goes to the European Union, except for a small amount that goes to Switzerland.

Orrell said the company has duty-free access to the European market, but warns that the EU market is ‘extremely sensitive’ to sustainability issues.

‘Overseas buyers of PNG palm oil demand assurances that what they are buying is independently certified, sustainably-produced palm oil.

‘We have a closed supply chain with no chance of contamination.’

It is largely risk mitigation. PNG palm oil is actively sought by buyers.’

Twenty per cent of global palm oil is certified sustainable (CSPO), and the proportion is rising.

‘By 2020. CSPO is expected to be 100 per cent in Europe, 50 per cent in Malaysia and Indonesia, 30 per cent in India and 10 per cent in China.’

Diversification

Orrell said having certified sustainable production helps when accessing business finance.

It also allowed the company to diversify geographically.

‘We have a closed supply chain with no chance of contamination.

‘That led to the establishment of a state-of-the-art refinery in Liverpool [in England] in 2010.’

The company has set itself a number of aims in its efforts to maintain its reputation:

  • A fully traceable supply chain
  • No deforestation
  • No planting on peat
  • Greenhouse gas accountability and emissions reduction targets
  • No social or lands conflict
  • Human rights respected

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