COMMENT:

What do the following generic products have in common: biscuits, muesli bars, ice cream, detergent, soap and cosmetics? And anything fried?

Answer: they all probably contain 'vegetable' oil, the most likely source of which is the Palm.

Palm oil has a creamy texture and is low cost, so it is the oil-ingredient of choice for many processors.

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Health benefits are claimed by some groups as a reason to consume palm oil. Environmental degradation is cited by others as a reason to avoid it.

And New Zealand has been caught up in the debate because the dairy industry imports approximately 2 million tonnes of Palm Kernel Expeller (PKE - the waste material left after the oil is extracted).

Environmental activist group Greenpeace has linked the use of PKE by dairy farmers to deforestation and biodiversity destruction.

However, a quick examination of the data reveals that the value of PKE is approximately 1 per cent of the Palm Oil industry, and New Zealand's share, even at retail prices paid by the farmer, is less than 0.5 per cent...so dairy cows aren't the driver.

A further factor to consider is that importers of PKE have pledged to use sustainable sources – hence the role of Wilmar and the certification schemes.

Discovering that Wilmar had been supplying some PKE from non-sustainable sources came as a shock to many.

While the developed world argues the pros and cons of palm oil, an important factor is often overlooked. Palm oil has been responsible for economic growth in developing countries.

Ryan Edwards, writing as a post doctorate Fellow at Stanford University last year, estimated that at least 1.3 million rural Indonesians were lifted from poverty during the 2000s exclusively due to the growth in the palm oil sector.

"The palm oil boom thus accounts for a sizeable share of the roughly ten million people lifted from poverty in this decade when national economic growth and poverty reduction slowed, and anti-poverty programs expanded rapidly," he wrote.

Economic growth in Bintulu, Malaysia, due to palm oil and fossil fuel extraction has allowed the building of hospitals, schools and universities. The focus on education is high, as is the development of housing to replace cardboard shantytowns.

Good news for these palm oil producing areas is that the demand is projected to increase.

FAO's Food Outlook, released in July this year, suggests that 'conspicuous growth in palm and rapeseed oil… are poised to outweigh a drop in global soy oil output'.

The challenge for rapeseed oil production is the banning of neonicotinoid insecticides in some areas of the world, which means that such pests as 'flea beetle' can't be controlled – so farmers simply aren't planting the crop.

This is likely to mean increased demand for palm oil. FAO indicates that Indonesia is the leader in expansion of the palm oil industry, followed at some distance by Malaysia.

The outlook also points out that "compared with last year, both countries face a slowdown in growth, mainly reflecting slower expansion in mature areas due to ongoing replanting efforts…"

The focus of the industry is not on deforestation to bring new land into production at the expense of tropical forests and the biodiverse species contained within them; it is on replanting of dedicated areas.

Assisting the palm oil plantations to achieve sustainable production systems should be the focus for the future.

This will almost certainly mean that the consumer must pay more for the product.

The value of the industry is not in the waste product (now termed a by-product because a use has been found for it in feeding animals), but in the products that people buy on a daily basis in the supermarket for food and cosmetics, without realising the implications behind the ubiquitous 'vegetable oil' description.

Calling for better labelling will increase price.

Calling for better sustainability certification schemes will increase price.

Making different choices in the supermarket will increase the bill to pay.

Avoiding palm oil altogether will reduce income in developing countries.

The decisions ahead are not easy to make but avoiding considering the impacts and those of the alternatives will result in unintended consequences.

As for the PKE – it assists with keeping animals well fed during untoward weather events when the grass doesn't grow. The alternative is that it goes to waste.

- Dr Jacqueline Rowarth has a PhD in soil science and has been analysing agri-environment interaction for several decades. She has a 5 per cent shareholding in a 56ha dairy farm in the Waikato.