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Source: Reuters

REFILE-INTERVIEW-"Green" palm planters struggling to find buyers

Published: 30 May 2009 18:05:34 PST

* Green palm planters struggle to find buyers

* Green palm oil output to double to 3 mln tonnes in 2010

* Palm oil users need to step up consumption of green palm

JAKARTA, May 27 - Palm oil planters in the world's top two producers Indonesia and Malaysia are struggling to find buyers for their eco-friendly palm oil, an industry official said on Wednesday, threatening to slow momentum.

Under fire from green groups and some Western consumers, the palm oil industry established the Roundtable on Sustainable Palm Oil (RSPO) in 2004 to develop an ethical certification system that includes commitments to preserve rainforests and wildlife.

"As for demand, the volume that is currently available versus the offtake, there is a mismatch," Vengeta Rao, secretary general of the RSPO, said on the sidelines of a palm oil conference.

He said the industry had so far sold only 15,000 tonnes of certified green palm oil since the first shipment last November while output might have reached around 600,000 tonnes.

"As volume starts to increase, demand tends to lag behind," said Rao, adding the current gap between demand and output was not desirable and demand needed to be stepped up.

"So users will be asked to show their commitment to use green palm oil," he said.

He said the mills that have been certified had the capacity to produce 1.5 million tonnes of palm oil annually now.

"Keep in mind that 1.5 million tonnes was suddenly available. Users may have already had earlier buying commitments. They cannot cancel and decide I am going to buy certified palm oil. So there is a lag," he said.

The first sale of the certified products hit the market last November with a shipment from Malaysia to Rotterdam.

The 500-tonne shipment was produced by United Plantations <UTPS.KL>, with Unilever <ULVR.L> and Britain's third-largest grocer J. Sainsbury <SBRY.L> among the buyers.

The issue of "green" palm remains contentious and some conservation groups argue that the current voluntary rules are not effective in protecting the environment.

Rao said some producers with integrated operations had been using green palm for internal production of byproducts, while others had sold it jointly with non-certified palm.

He said every six months there would be additional supply of 500,000 tonnes of green palm, meaning 3 million tonnes could be available by 2010.

"If demand does not pick up or come close to production, the momentum will slow down. Companies will still seek certification but the urgency to do so will ease," he said, adding RSPO needed to assess which side was not fulfilling its commitments. (click on [ID:nLL003511] for factbox on "green" palm in high street shops)

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