Palm Oil

Heavy global demand for vegetable oil has made palm oil the most widely used vegetable oil across the world
We believe that advocacy and helping instill practices and structure in the industry is the best approach to create lasting change. palm oil is used in hundreds of products by a wide range of companies. The majority of the world’s palm oil comes from South East Asia. 

Products are raising concerns, because of the increasing deforestation of indigenous forest in this region, which is being converted to plantations for agriculture products, like palm oil. Concerns include environmental and social issues arising from deforestation, abuse of worker rights and the impact of those on local communities.

Our position

Fonterra supports the production of certified sustainable palm oil.

Palm oil and palm kernel oil are vegetable oils derived from palm fruit which are widely used by food manufacturers globally in an extensive range of products. Both are used by Fonterra as an ingredient in some products to enhance texture and to bond (emulsify) the ingredients, or to provide supplementary fats.

Sustainability is a priority for us, and this includes being careful about where we source our ingredients. We support the production of certified sustainable palm oil and Fonterra is a member of the Roundtable on Sustainable Palm Oil (RSPO).

We believe that advocacy and helping instil practices and structure in the industry is the best approach to create lasting change. Simply banning some agricultural products, will likely mean production will shift to other agricultural commodities, perhaps with additional risks. With another 1 billion people in the world by 2030, we need to transform food production to deliver sustainable nutrition. We need to make sure food production is efficient and does not drive further deforestation or environmental degradation, but in fact, helps protect and restore ecosystems.

Achieving change will help the tens of thousands of people involved in the industry as well as the environment.

Actions we’re taking

Part of our approach includes collaboration with similar-minded organisations and NGOs who are working on the ground. This includes working towards transparency of our supply chain and traceability of the product we use. 

We have been active in palm product sustainability since 2009 and have taken the following actions:

  • RSPO member since 2010. The RSPO is committed to making sustainable palm oil the norm.
  • Established a Palm Product Standard in 2016 to ensure the products we use meet sustainability best practices. All our vendors of palm products must publicly commit to “No Deforestation, No Peatland Development, and No Exploitation” and have business processes in place to meet compliance.
  • Fonterra has worked with The Forest Trust (TFT), a leading NGO supporting sustainable transformation in the palm industry, to evaluate the performance of our supply chain and compliance with our standards. So far, we have confirmed 96.7 percent traceability to the mill – knowing the source.
  • Using our online portal, we expand our assessment and engagement with vendors globally to better understand the practices and manage risks in their supply chains.
  • Working to implement our updated Palm Products Sourcing and Procurement Standard, driving harder towards 100% certified segregated supply and introducing supply chain audits.

By volume, 97% of all direct palm oil being purchased by our New Zealand business and 100% of all direct palm oil being purchased by our Australian business is certified as segregated supply. It is purchasing for our operations in Saudi Arabia and Indonesia where most of our remaining improvement is required. For the 2022 calendar year, 74% of Fonterra’s global palm oil use was certified as segregated supply.

All Fonterra Brands New Zealand products fully comply with Australia, New Zealand and international food safety standards.

Fonterra provides details of palm oil sustainability performance in its Annual RSPO report available here.

Palm Kernel Expeller (PKE)

Palm Kernel Expeller is a by-product of the palm crop. Originally treated as waste, it is now used as an effective supplementary feed for animals, including dairy cows in New Zealand when there is less grass growth, for example during a drought. 

Our farmers are aware of the need to source this responsibly, and we test milk to detect if the expected low use of PKE is being exceeded. We believe our focus on influencing primary palm production is the best way to deliver sustainably produced PKE.

We work closely with The Forest Trust and our suppliers to increase traceability and transparency, as well as support sustainability transformation in the palm sector.

Wilmar Policy

Wilmar mill lists

Wilmar Grievance page process updates

Agrifeeds PKE supply chain