Uncovering the Hidden Costs of Palm Oil in Animal Feed: A Deforestation Crisis Unmasked

Palm oil, a ubiquitous ingredient in countless consumer products, has long been linked to severe environmental and social consequences, particularly in regions like Indonesia and Malaysia where the majority of global production occurs. However, the true extent of the problem extends far beyond the visible supply chain, as a significant portion of palm oil is now being used as an additive in animal feed, often hidden from public view and accountability.

Exposing the Unseen Impacts of Embedded Palm Oil

The Alarming Rise of Palm Oil in Animal Feed

While palm oil is widely recognized as a leading contributor to deforestation, the growing demand for its use in animal feed has emerged as a concerning trend that threatens to undermine global efforts to protect our forests. Initially, animal feed contained palm kernel expeller (PKE), a by-product of crushing palm kernels. However, new palm oil additives, such as "palm fat," "palmitic acid," "rumen-protected fats," or "calcium salt," have become increasingly popular, particularly in North America, where up to 90% of dairy farmers in Canada utilize these ingredients to boost milk production and quality.The surge in demand for these palm oil-based feed additives has led to a significant increase in their global trade, with major exporters like Indonesia and Malaysia supplying countries with large dairy industries, including the United States, the European Union, Japan, Australia, New Zealand, South Africa, and various Middle Eastern and South American nations. This trend has raised serious concerns about the potential for deforestation and human rights abuses, as the production of these palm oil derivatives is often opaque and lacks the same level of scrutiny as virgin palm oil.

Tracking the Elusive Trail of Embedded Palm Oil

Tracing the flow of palm oil-based animal feed in global trade is a daunting task, as the lack of specific trade codes makes it challenging to accurately monitor and account for these products. However, a recent analysis of over 30,000 shipments of palm oil products to the United States in 2022 revealed that feed-grade palm oil was the largest imported category, making up more than a third of the country's total palm oil imports.This finding underscores the significant role that embedded palm oil plays in the global supply chain, often hidden from view and unaccounted for in the sustainability commitments of major consumer goods companies. Many of these companies claim to have "deforestation-free" supply chains, but their policies and reporting often fall short, failing to include the palm oil used in animal feed.

The Paradox of Self-Governance and the Challenges of Transparency

The adoption of "No Deforestation, No Peatland, No Exploitation" (NDPE) policies by companies has been touted as a solution to the palm oil crisis. However, a recent study published in the Journal of Business Ethics highlights the inherent "paradox" in this approach, as companies are often caught between the financial costs of implementing these policies and the potential damage to their public image if they do not.This dilemma is further exacerbated by the lack of consistent and transparent reporting on the use of palm oil-based animal feed. While some companies, like Unilever, have provided estimates of their embedded palm oil usage, the majority of major dairy and consumer goods companies remain opaque about the extent of their reliance on this controversial ingredient.

Regulatory Efforts and the Challenges Ahead

The introduction of the European Union's Deforestation Regulation (EUDR) in 2023 has the potential to address the issue of embedded palm oil, as it mandates companies trading in commodities like palm oil to ensure their products are not linked to deforestation. However, the effectiveness of this regulation will depend on the ability of companies to accurately track and report on the palm oil used in their supply chains, including animal feed.The analysis of customs data from 2022 reveals that a significant portion of palm oil-based animal feed exporters from Indonesia and Malaysia to the United States either lacked NDPE policies or failed to adequately report on their implementation. This lack of transparency and accountability poses a significant challenge for European importers seeking to comply with the EUDR and ensure their products are deforestation-free.

The Role of the Consumer Goods Forum and the Need for Comprehensive Action

The Consumer Goods Forum (CGF), an industry-led network of over 400 companies, has made commitments to stop deforestation, but its efforts have fallen short. While the CGF's Palm Oil Roadmap includes the adoption of NDPE policies, its methodology for calculating "Palm Oil Deforestation and Conversion Free" volumes does not explicitly address the need to include palm oil used in animal feed.This omission is in stark contrast to the CGF's approach to soy-based animal feed, which is included in its roadmaps for ensuring "forest positive production." To truly address the palm oil crisis, the CGF and its member companies must enforce NDPE policies that encompass all palm oil products, including those used in animal feed, and ensure transparent reporting on their progress.

The Path Forward: Transparency, Accountability, and Comprehensive Solutions

Addressing the hidden costs of palm oil in animal feed requires a multifaceted approach that prioritizes transparency, accountability, and comprehensive solutions. Companies must adopt strict NDPE policies that include all palm oil products, including those used in animal feed, and commit to transparent reporting on their progress.Regulatory bodies, such as the European Union, must also strengthen their oversight and enforcement mechanisms to ensure that companies comply with deforestation-free commitments. The Consumer Goods Forum and its member companies must lead by example, setting the standard for responsible palm oil sourcing and usage, and holding all players in the supply chain accountable.Ultimately, the solution to this crisis lies in the collective action of companies, policymakers, and consumers. By shining a light on the hidden impacts of palm oil in animal feed and demanding comprehensive, transparent, and accountable solutions, we can work towards a future where the production and consumption of palm oil no longer comes at the expense of our planet's precious forests and the communities that depend on them.