With the European Union Deforestation Regulation (EUDR) implementation date drawing closer, it is almost all that those in the commodity business can talk about – including us.
However, Europe’s role in shaping the future of sustainable palm oil extends beyond regulatory changes. Europe has been and continues to be, a key supporter of the global sustainable palm oil movement, wielding substantial influence in driving sustainability initiatives worldwide.
Europe: Championing sustainable palm oil
While Europe’s total use of palm oil has decreased from 8.39 million MT in 2019 to 7.48 million MT in 2021, it remains a strong advocate of the global sustainable palm oil movement.
European-based companies play a part in the ongoing success of the sustainability movement. The numbers speak for themselves: Europe leads the world in Certified Sustainable Palm Oil (CSPO) consumption, making up a staggering 45 percent of the global total. Notably, Europe’s commitment to sustainability is exemplified by its embrace of CSPO and Certified Sustainable Palm Kernel Oil (CSPKO), with 93 percent of palm oil imports for food, feed, and oleochemicals being certified sustainable.
Beyond the market, various EU countries have created national sustainability projects for palm oil. These organisations have boosted the appetite for sustainable palm oil and have educated the public on the transformation in the palm oil sector over the past years.
A good match
As a region whose international palm oil exports heavily rely on Europe, Latin America’s (LatAm’s) palm oil industry is greatly affected by any shifts in the European market.
Fortunately, it is well-positioned to produce palm oil responsibly. Not only does it already produce the highest percentage of Certified Sustainable Palm Oil (27 percent) of all regions worldwide, it also has a history of delinking deforestation to palm oil by using previously cleared land for plantations.
And as the second-largest palm oil producing region in the world, with great growth potential, it can help to meet the mounting global demand for palm oil. With the EUDR on the horizon, these favourable conditions for sustainable palm oil production makes it the ideal candidate to feed the EU market.
A foot in each world
As a global company with a strong foundation in both locations, Sinar Mas Agribusiness and Food is well-placed to support and connect both buyers in the EU and palm producers in LatAm.
We entered the EU market early on in 2015 as Victory Tropical Oil. Initially focused on building a presence in the Mediterranean, we swiftly developed a robust Crude Palm Oil (CPO) distribution business. Our original business used a Cost, Insurance, and Freight (CIF) model – selling in bulk to a distributor who would then take it to the end consumer.
But we aim to value-add for our customers. Today, our role goes beyond that of a commodity supplier; we function as supply chain managers as well. Through nurturing our customer relationships, we gain insights into their preferences and buying patterns, enabling us to customise our supply chain management accordingly.
Our biggest achievement? Trust from our customers.
“We have invested a lot of time and effort to understand our customers and build that level of trust. And that is paying off. We have customers who in the past asked us for several quotes before deciding to buy from us or our competitors. Now, these same customers just ask us: What can we supply? There’s no negotiation on the price anymore. They believe that we are competitive, but what’s far more important is that they appreciate and need our level of service, our way of managing their supply chain,” said Maarten van der Hoeven, Head of Europe and LatAm.
We bring the same relationship mindset to LatAm. As a producer of palm oil ourselves, we understand very well the challenges palm oil producers in LatAm are facing. We also share the same interests in maximising yields and having a sustainable transition to responsibly produced palm oil.
Our goal is not quick one-off trades. We would like farmers, the true custodians of the land, to get a seat at the table and be able to contribute to the agenda for sustainable production.
We are here to link LatAm palm producers to the EU market with competitive prices, by bringing them on board our journey to feed and fuel the world sustainably.
With a foot in each world, Sinar Mas Agribusiness and Food serves as an effective bridge between the EU and LatAm. We also bring to the table our years of experience as one of the biggest sustainable palm oil producers globally.
“This is where we unite our strength in origination in LatAm together with our strength in distribution and commercialisation in Europe,” said Gerardo Pla Otanez, General Manager of Europe & LatAm.
From palm oil to relationships with our partners, we are in the business of growing.
Whether you are a LatAm palm producer or an EU palm buyer, if you are interested in working with us, contact us here.