KUALA LUMPUR (June 18): Hindustan Unilever Ltd’s (HUL) decision to reduce palm oil content in its soaps by 25% could have serious implications for millions of oil palm farmers worldwide, particularly smallholders, a grouping of five major palm oil importing countries in Asia — India, Pakistan, Sri Lanka, Bangladesh and Nepal — warned.

In a statement on Tuesday, the not-for-profit Asian Palm Oil Alliance (APOA) said it has urged HUL to reconsider its decision, highlighting the broader impact on the incomes of small-scale farmers dependent on oil palm cultivation. HUL, a unit of British-Dutch company Unilever, is India's largest fast-moving consumer goods company.

India primarily imports palm oil from Indonesia, Malaysia, and Thailand. According to data from the Malaysian Palm Oil Board, Malaysia exported 2.81 million tonnes of palm oil to India in 2023, accounting for 72% of Malaysia’s total palm oil exports to the South Asian region.

APOA was responding to The Economic Times report that HUL is reducing the use of palm and its derivatives in soap by 25% to offset rising palm oil prices and environmental concerns.

"While we acknowledge that palm oil prices are currently higher than before the Covid-19 pandemic, this increase is primarily due to rising input costs. Needless to say, palm oil prices are influenced by other edible oil prices, like soya and sunflower oil. To single out palm oil for unwarranted criticism appears a bit unfair and uncalled for," said the alliance.

It added that commodity prices are influenced by demand and supply factors, and that palm oil is no different.

As such, it urged a balanced perspective that considers the broader socio-economic benefits of palm oil.

"Numerous studies in Indonesia, Malaysia, and Ghana highlight its pivotal role in uplifting smallholder livelihoods and reducing poverty. Moreover, initiatives like India's National Mission on Edible Oils-Oil Palm (NMEO-OP) underscore palm oil’s critical contribution to economic empowerment.

"The replacing of palm oil with cheaper substitutes undermines global efforts to secure living wages for workers and incomes for farmers. Ironically, Hindustan Unilever advocates 'living income to break the cycle of poverty, unlock true potential and growth, and raise living standards'," APOA highlighted.

It pointed out that HUL’s environmental rationale warrants careful scrutiny.

"The efficiency of oil palm cultivation in terms of yield per hectare and resource use efficiency remains unmatched by alternatives. Notably, HUL has been a stalwart in promoting sustainability certifications like RSPO (Roundtable on Sustainable Palm Oil) yet reducing palm oil use may undermine these efforts and jeopardise smallholder incomes,” it said.

In light of these concerns, the APOA has suggested several actions for HUL’s consideration. These include providing transparent, scientifically supported evidence comparing the environmental impacts of palm oil and its substitutes on an industrial scale, increasing procurement from smallholder farmers, and aligning with NMEO-OP objectives to support sustainable livelihoods.

Additionally, it recommended investing in joint initiatives with producers to enhance sustainability practices, including research into sustainable farming techniques and community development.