UN Unilever NV

A proposed new planting rule by the Roundtable on Sustainable Palm oil, that requires oil palm growers to get approvals from local communities, will improve the industry's image, a company executive at Unilever NV (UN) said Friday.

The industry has previously faced criticism by environmental groups that it cleared forest lands to cultivate oil palms.

The new planting procedure--proposed by environmental groups and set to be adopted at the upcoming Roundtable conference in Jakarta next week--requires oil palm growers to prepare correct regulatory permits, documents that identify areas that fall under primary forest, or peat soils, and for new oil palm plantings from Jan. 1, 2010.

Many growers say they are burdened with too many RSPO requirements and the new planting procedure would slow oil palm expansion particularly in Indonesia, leading to higher prices in the longer term as global demand increases.

"The planting rule is the only way to make sure planters adhere to RSPO principles and requirements," the Netherlands-based Jan Kees Vis, global director for sustainable sourcing development at Unilever, told Dow Jones Newswires via telephone.

Jan Kees, also president at RSPO, said the planting rule would also put to rest deforestation charges made by environmental groups.

The planting rule, if implemented, would also require growers to address all grievances with local communities before they commence operations on new areas.

The RSPO, an industry consortium, was formed by the World Wildlife Fund and Unilever in 2004, which is adopting stringent and sustainable practices for palm-oil cultivation after palm oil producers in Malaysia and Indonesia were charged by environmental groups with cutting down forest trees and draining peat lands for oil palm cultivation.

The allegations led to blacklisting of some plantation firms by major food producers as they rushed to protect global brands by jumping on the sustainable bandwagon, demanding environmentally friendly palm oil.

Most palm oil producers have made that pledge to be fully certified by the RSPO in the next few years, but Jan Kees warned against a tendency to delay certification plans until demand picks up.

"I would agree with planters that the uptake is slow currently. However, Unilever and WWF are working hard to convince other companies to source sustainable palm oil. Through ongoing efforts, I expect demand for sustainable palm oil to pick up considerably in the next six months," he said.

Demand for green palm oil has so far reached only 1.40 million tons while total supply reached 3.2 million tons a year, according to data from the RSPO.

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com

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