What is palm kernel expeller?
I’m sure most people have heard of palm oil, and a lot of environmental conscious people may try and avoid products containing palm oil given the environmental effects surrounding its production (these will be discussed later). There are many organisations that campaign against the use of palm oil and inform consumers about the vast array of products that contain palm oil and brands that are palm oil free.
These organisations include: Rainforest Rescue; Rainforest Action Network; Unmask Palm Oil; and Auckland Zoo. Auckland Zoo have even developed palm oil-free shopping guides to make it easier for consumers to avoid palm oil.
Palm kernel is less known about and it is very rarely campaigned against. Perhaps this is because its use is much less widespread – all the palm kernel imported into New Zealand is used for dairy feed. It may have more to do with not wanting to take a stand against the dairy industry. Although this didn’t stop Greenpeace.
So what exactly is Palm Kernel? Palm kernel expeller, known as PKE for short or palm kernel meal, is a product left after the oil is extracted from the palm seeds of the oil palm. After oil extraction and the flesh of the fruit has been stripped, the solid part of the seed kernel is mashed to make PKE. The main products from oil palm are crude palm oil, palm kernel oil (used mainly in foods, cosmetics, and biofuels), and PKE, used predominantly for animal feed and power generation. Increasingly, PKE has been used as a standard input of production for dairy farming in New Zealand. Now, there little way to know if most of the milk sold in stores is produced without palm kernel, unless it is labelled as palm kernel-free.
Figure 1: Images of palm kernel. Clockwise from top left: Palm oil plantations (by Achmad Rabin Taim from Jakarta, Indonesia); palm oil tree with palm fruit (by CEphoto, Uwe Aranas); palm kernels (by Yemisi Ogbe, CC).
How much PKE does New Zealand use?
Imports of PKE into New Zealand began in 1992 with 15 tonnes. Very little was imported until 1999 and since then imports have increased substantially to 2 million tonnes in 2014, costing almost NZ$500 million  (Figure 2).
Figure 2: Quantity and cost of palm kernel imported into New Zealand from 1999 to 2014. Data source: Statistics New Zealand (2015)
Demand for PKE in New Zealand escalates particularly in times of drought, flooding and volatile milk prices . The dairy industry argues that PKE is the only alternative (in intensive systems) during drought conditions . These demand peaks are likely to increase as drought events are predicted to amplify with climate change . The impact of drought events were particularly evident in 2008, when PKE imports rose significantly, and early 2013.
Where is PKE grown?
Palm plantations are mainly situated in South East Asia. Indonesia is the largest producer of palm kernel with over half of the total production and together with Malaysia produces 85 per cent of the total PKE  (Figure 3).
Figure 3: The total production of PKE for the top producing countries and the rest of the world (other) in 2012 and 2014. Data source: Index Mundi (2004)
Palm oil production is rapidly increasing; the UN Food and Agricultural Organisation (FAO) estimated global oil palm cultivation increased from 3.6 million ha in 1961 to 13.2 million ha in 2006 . In 2011, an area of 7.8 million ha was under cultivated palm oil in Indonesia . Between 2012 and 2014 palm kernel production increased by 17 per cent.
Who are the biggest consumers of PKE?
In 2014, New Zealand imported 40 per cent of the total globally traded PKE and consumed 30 per cent of the total PKE produced, becoming the biggest single consumer of palm kernel globally  (Figure 4). The second largest consumer comprised of 27 countries in the European Union. Palm kernel consumption in New Zealand increased by 20 per cent from 2012 to 2014.
Figure 4: Global imports of PKE for the top consumers in 2012 and 2014. Data source: Index Mundi (2014)
What are the environmental impacts of palm kernel?
Since PKE is derived from palm oil production, we must take into account the effects of palm oil plantations and not just dismiss palm kernel as a by-product.
The production of palm oil generates numerous environmental impacts, including deforestation, often by extremely destructive methods; biodiversity loss; and greenhouse gas emissions.
Rainforest and peat destruction
Palm oil production is a major driver of deforestation in South East Asia – areas of rainforest and peat lands are converted to palm plantations as the industry expands . At current deforestation rates, the United Nations Environment Programme (UNEP) warned that 98 per cent of Indonesia’s rainforest could be destroyed by 2022 and lowland forest much sooner . It is estimated that over half of the planting of oil palm between 1990-2005 in Malaysia and Indonesia involved clearing native forests, despite producers asserting that forests are not being cleared to grow oil palm .
Palm oil producing companies often breach conditions required by law and destructive techniques often go unreported, thus the situation is probably worse than reported. For example, one particular company, Sinar Mas, was found to be operating illegally without carrying out Environmental Impact Assessments before clearing in eight out of eleven concessions examined . Additionally, deep peat forest was cleared for palm plantations on two Sinar Mas concessions in breach of Indonesian law.
Conversion to oil palm plantations from forests results in significant biodiversity losses. Palm plantations (like all monocultures) are less complex than natural forests and support far less biodiversity. For example, the conversion of primary and logged forests to oil palm plantations in Malaysia was found to decrease forest birds species richness by over 70 per cent and butterflies species by around 80 per cent .
Palm production is also one of the leading threats to the orang-utan and the Sumatran tiger, among other species, due to the loss of natural forest habitat . The Borneo Orang-utan is classified as endangered, with estimates of between 45,000 and 69,000 left in the wild , while the Sumatran tiger is listed as critically endangered with a population possibly less than 500 . Areas cleared for palm oil across the Island of Borneo are part of the last refuges for the critically endangered orang-utan.
Greenhouse gas emissions
It has been estimated that Indonesia and Brazil produced 55 per cent of emissions from tropical deforestation between 2000 and 2005 . Moreover, Indonesia has the fastest deforestation rate of any major forested country, losing 2 per cent of its remaining forest every year . Indonesia was ranked the eighth largest global emitter of GHG emissions in 2010 .
The main GHGs emitted by palm oil plantations are carbon dioxide, methane and nitrous oxide. Deforestation and the clearing of peatlands releases carbon dioxide from biomass destruction, which can continue over many decades after deforestation has occurred . Carbon dioxide is also emitted from energy for production operations and inorganic fertiliser manufacture. Methane is released from palm oil mill effluent and nitrous oxide is released from soil from the application of process residues and fertilisers as well as the depletion of soil organic matter.
Peatlands store between a fifth and a third of the total carbon contained in terrestrial biosphere, but cover just 3 per cent of Earth’s land surfaces. Deforestation and burning of peatland in Indonesia releases about 1.8 billion tonnes of GHG emissions every year , equaling around 4 per cent of global GHG emissions . The production of one tonne of PKE was estimated to emit up to 18.2 tonnes of carbon dioxide equivalents (CO2-e), depending on prior land use .
So how is dairy connected to this?
Fonterra obtains its PKE from Wilmar International, the largest trader of palm oil and kernel with a reputation as one of the most environmentally destructive palm companies.
Wilmar has been implicated in cases of rainforest destruction, illegal burning, and social conflicts over community lands . In 2012, Wilmar was ranked the world’s worst company for corporate sustainability and environmental impact out of 500 global companies by Newsweek .
However, the Ministry for Primary Industries claims New Zealand plays no part in the destruction in South-East Asia, claiming that the expansion of the industry and deforestation is driven by the demand for palm oil alone, not other palm products. Claims are made that palm kernel is only a low-value by-product of palm oil , that is “otherwise burnt or left to rot on the ground” .
However, according to the Malaysian Palm Oil Board, PKE is “an important product from the oil palm industry” which generates substantial export earnings for Malaysia . In 2014, 52 per cent of the value of PKE imported into New Zealand was from Malaysia ($255 million) . Thus, New Zealand imports of PKE are an important part of the palm industry, as New Zealand is the biggest single country importer of PKE.
Are there sustainable palm plantations?
The Roundtable on Sustainable Palm Oil (RSPO) is a voluntary certification scheme set up in 2002 to obtain palm oil from sustainable sources. However, the RSPO has failed to deliver major changes on the ground. Members of the RSPO, which include companies such as Unilever, Cadbury and Nestle, are dependent on suppliers that are involved in deforestation and peatland conversion . The RSPO is required to carry out assessments before plantations are certified sustainable. However, assessments are not carried out in many plantations that are certified and there is little traceability  so consumers do not know the origin of their palm products. It is suggested many companies use the RSPO certificate as a way of ‘green washing’ while not changing business practices . With weak standards on GHG emissions, and poor monitoring and enforcement of standards, the RSPO is justifying further expansion of palm plantations and increasing demand for palm products by creating a deception of sustainable palm oil.
In June 2015, around 20 per cent of global palm oil was certified by the RSPO . However, the proportion of PKE that is certified may be much smaller. Fonterra claims New Zealand imported PKE comes from sustainable sources , but according to Dr Vengata Rao, secretary-general of the RSPO, “very little expeller cake coming into New Zealand [in 2008] would have been RSPO certified at all” . In total, it was estimated that only about 80,000 tonnes of RSPO certified PKE was on the market between August 2008 and August 2009  and in 2008, only about 15,300 tonnes of PKE was produced in Wilmar RPSO certified mills in Malaysia , representing about 5 per cent of New Zealand imports from Malaysia in 2009, or 1 per cent of total PKE imported into New Zealand . Even if all of it was brought by New Zealand, the other 99 per cent of PKE imported into New Zealand came from unknown sources.
In 2009, Fonterra became a member of the RSPO  – which is a start in acknowledging the problem with palm oil. However, as discussed before, this certification scheme cannot be entirely trustworthy.
The New Zealand dairy industry is a key player in purchasing palm products, accounting for a quarter of worldwide palm kernel expeller consumption. By importing products that are associated with environmental destruction and high GHG emissions, the dairy industry are risking the reputation of not only themselves but other export industries and New Zealand’s ‘clean green’ image. This may harm New Zealand’s export revenue.
Other issues with importing PKE
Biosecurity risks from importing palm kernel include importing insects, risks from soil contamination and foot and mouth, as well as food safety issues . Two Federated Farmers members visited Malaysian palm factories in 2012 and observed birds, rodents, monkeys and cattle near processed PKE in an area of known foot and mouth outbreaks . They reported that post-production handling and storage of PKE poses severe risks and breaches New Zealand’s Health Import Standards (HIS). HIS set out requirements that must be met to mitigate the risk associated with importing PKE. To eliminate risk from foot and mouth and for New Zealand biosecurity protection, products are required to be heat treated and stored in bird-proof facilities to avoid contamination . However, representatives from Federated Farmers were told that biosecurity was a not a matter for the Malaysian Government or the palm industry and that it would be the responsibility of the New Zealand Government to ensure the product was not contaminated when it arrived at the border. Furthermore, the Federated Farmers members argued that contamination occurred during stages of storage and processes after PKE production, and heat treatment (which is carried out as part of the crushing process, not for biosecurity purposes) occurs weeks or even months prior to export. Therefore, heat treatment cannot be relied on for biosecurity protection as it is too early in the process.
The majority of PKE is sold to commodity traders who consolidate products at the port for bulk export so there is little traceability to the factory where the products came from . This is inconsistent with industry claims that imported PKE is sustainably sourced and health standard approved as it is not known which plants imports come from.
The dairy industry argues that PKE is only 1 per cent of what dairy cows are fed . For such a small amount, it begs the question why New Zealand imports a product with such high environmental, social, biosecurity, and health implications. One postulation is that farmers are pressured to produce more milk just to maintain profits . New Zealand farmers have to complete globally to produce increasing amounts of milk powder for growing developing nations. Farmers must also meet Fonterra’s growth production goal of 4 per cent per annum . To produce more from the same amount of land, farmers become dependent on inputs such as supplementary feed and fertilisers. If the impacts of the inputs are not questioned or acknowledged, and hence not implicated in the products image, use of inputs will continue.
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