Palm Oil

Heavy global demand for vegetable oil has made palm oil the most widely used vegetable oil across the world.
It 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. Palm 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.

We believe that advocacy and helping instill 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. With an additional 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. Part of our approach includes collaboration with similar-minded organisations and NGOs who are working on the ground. This includes transparency of our supply chain and traceability of the product we use. We are committed to sourcing only sustainably harvested palm oil and are working with suppliers to achieve this by 2020.

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

  • Been an RSPO member since 2009. 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 worked with The Forest Trust (TFT), a leading NGO supporting sustainability transformation in the palm industry, to evaluate performance of our supply chain and compliance with our standard. So far, we have confirmed 96.7 percent traceability to mill – knowing the source.

  • All our Palm Kernel Expeller, a by-product of the palm oil industry, is supplied by Wilmar International, who was the first to implement ‘No Deforestation, No Peat, No Exploitation.’  They have a strict ban on deforestation and exploitation of labour.

Palm oil is used for a variety of reasons including to enhance texture and to bond (emulsify) ingredients or to provide supplementary fats. Palm Kernel Expeller (PKE) is a by-product of the palm oil industry and is used a supplementary feed for cows, such as during drought when grass growth is low. We sell PKE through our rural retail stores.  

PKE is brought into New Zealand by a joint venture between Wilmar International and Fonterra. The joint venture company is called International Nutritionals Limited. Wilmar was the first to implement a ‘No Deforestation, No Peat, No Exploitation Policy’ and is leading industry suppliers in changing practices, working with The Forest Trust to drive sustainability transformation on the ground.