Keith Woodford assesses the case for using PKE as a dairy feed supplement, and the wider use of 'vegetable oil' in our food

By Keith Woodford*

In recent weeks, palm kernel extract (PKE) has been in the spotlight. The key reason for this has been the decision by Landcorp to phase out its use on their farms. This has brought back into focus Fonterra’s 2015 recommendation to farmers to only use 3kg per cow per day. It has also given a platform for various other groups to promote their own perspectives.

Amongst the environmental groups, there are two polar perspectives. Greenpeace says we should stop using all PKE. However, the World Wildlife Fund (WWF) says that palm oil production is OK as long as it sustainable, and certified by the Roundtable on Sustainable Palm Oil (RSPO).

Before everyone gets too entrenched into positions for and against, it is worthwhile noting a few key features of the palm oil industry, and in particular, the ubiquitous use of palm oil within our food.   WWF estimates 50% of products in the supermarket contain palm oil.   That includes hair conditioner, toothpaste, lipstick, soap, detergent, chocolate, ice cream, biscuits and bread. According to the WWF, even instant noodles contain about 20% palm oil by weight, having been pre-cooked in this oil.

In New Zealand, we do not require palm oil to be labelled as such within foods, and so typically it is simply labelled as ‘vegetable oil’. In this form, it is even present across the globe in many brands of infant formula, including Australasian brands. 

In my household we use a spread which is prominently labelled as ‘made from sunflower seed which contains naturally Omega 6 and vitamin E’.  There is no mention of palm oil, but close scrutiny of the underside reveals that ’vegetable oils’ are included. Almost certainly that means palm oil.  Similarly, scrutiny of various packaged biscuits, muesli bars and confectionery in our cupboards show that nearly all contain ‘vegetable oil’, aka palm oil.

Whereas palm oil is what drives the palm oil industry, PKE, variously described as ‘palm kernel expeller’, or ‘palm kernel extract’, is definitely a by-product. No-one develops palm oil plantations for this by-product, in the same way that no-one in New Zealand has a dairy farm for the purpose of producing cow hides. It is simply something that occurs along the way. 

Oil palms originally came from equatorial Africa, but they grow particularly well in Indonesia, Malaysia and parts of Papua New Guinea. I have never worked in the industry, but I have visited palm oil plantations on multiple occasions when working in those countries on rural development projects. The obvious downside of palm oil plantations is that they are single species and hence do not support a diverse wildlife. However, they do suck up carbon from the atmosphere, just like all trees do. Typically, they also make lots of money.

The other environmental downside is the way that natural forests have been destroyed, particularly in Indonesia but also Malaysia, so as to plant palm oil. This is has occurred in a lax regulatory environment and with much of the land clearing being illegal. These environmental issues reflect poorly on the governments of those countries, and also on some big agribusiness conglomerates. 

In the developed world, we tend to conveniently forget how some of our own agricultural industries were also developed from rain forest.  Indeed, in New Zealand, although we stopped chopping down native forests a generation ago, we have still been burning down young pine plantations within the last 15 years, having decided at the time that dairying was a better land use.

The environmental debate as currently framed comes down to two perspectives. The first is that palm oil products should be eliminated from our world. The second is that palm oil products are OK as long as produced sustainably.

In practice, there is absolutely no chance that palm oil is going to be eliminated from our food chains. It is simply far too useful and valuable.  Yes, the fat is largely saturated (as are dairy fats) but saturated fats have been developed in nature for a purpose. It’s all about moderation.

The alternatives to palm oil all have their own health and environmental problems, and are considerably more expensive.   As for health issues associated with feeding PKE to cows, I am aware assertions but no cogent scientific evidence for negative effects on either the cow or on the health benefits of the milk.

So farmers who use PKE could be justified in asking, why all the focus on PKE, given that it is a by-product, and that eliminating its use will actually do nothing for the environment?

From Landcorp’s perspective, the answer would seem to be that public perceptions are important and that use of PKE is inconsistent with the development of their Pamu brand. Similarly, the Munchkin folk who contract Synlait to make a grass-fed infant formula require that no PKE be used.  In both cases, I will be very interested to see whether they can obtain the additional premiums they seek for being ‘PKE-free’.

Fonterra’s advice to farmers requesting they use no more than 3kg per cow per would seem to be based on similar market perceptions. However, Fonterra has yet to demonstrate that it can gain any premiums for its WMP on the basis of its grass-fed cows.  On international markets, Fonterra tends to be the WMP cellar dweller for price relative to European products.  And it is very hard to get premiums of this type for either commodities or food service, given that the base product subsequently loses its identify as just one component of a consumer product.

Over the last 12 or so years, New Zealand’s annual use of PKE has gone from nothing to over two million tonnes, with latest data showing imports have now dropped to just under two million tonnes. Farmers have used the product because it is so easy to use, requiring minimal infrastructure, and without the animal health problems that can occur with grain, brassicas and fodder beet.  From a farmer perspective, it is a great feed for dealing with feed deficits in the shoulder seasons, when animal demands exceed pasture growth. And its popularity has been driven in particular by its value as a flexible drought feed.

My estimate is that PKE has been underpinning about 200 million kg of milksolids per year. Even at present milk prices, this underpins export sales of about $NZ1.4 billion, with import costs of no more than about $300 million. At farm gate the ratios are not quite spectacular, but most farmers who have a shoulder season feed deficit can get a response of $2 for every $1 spent.  Of course if farmers use PKE when sufficient pasture is already available to meet animal needs, then that is a different story, and n those situations it will not pay.

One time when PKE becomes particularly valuable is during North Island droughts. Much of the increased resilience to drought within New Zealand’s dairy systems has been built on the flexibility and availability of PKE.  So I hope that before moving against PKE, the industry thinks carefully about the ramifications.

If New Zealand industry wants to keep its environmental nose clean while using PKE, then it is imperative that the only PKE product allowed is product that is certified by the Roundtable on Sustainable Palm Oil. There must be no slip-ups on this.  

In response to those who say this is not good enough, the industry needs to ask those anti PKE folk as to whether they are doing their own bit for the world by eliminating from their lifestyles the chocolate, instant noodles, margarine, bread, toothpaste, hair conditioner, and a myriad of other supermarket products that include palm oil therein.  Answers might also be sought as to what the developing world is to use as its major cooking oil. 

Keith Woodford is Professor of Agri-Food Systems (Honorary) at Lincoln University and a Senior Fellow (Honorary) of the NZ Contemporary China Research Centre. His archived writings are at http://keithwoodford.wordpress.com