New Britain Oils new refineries are turning out to be a crucial tool in bringing sustainable palm oil to the UK market. In the mean time however the company must persuade the food industry why it’s so important that palm oil comes from sustainable sources.
New Britain Oils is the 100% owned refinery arm of New Britain Palm Oil. Its first refinery was announced in 2008 and came into commission in June 2010. Its ambition was clear.
We were going to invest in giving the UK a fully traceable supply chain, explains Managing Director Andy Worrall. Our first oil came out of Liverpool in June 2010. Since then our volumes have grown steadily month on month. Within six months of the refinery beginning operation New Britain Oils was announcing that it would start work on a packing plant for bakery and foodservice products. Earlier this year the company announced it would be increasing the size of its refinery, giving it a production capacity of 300,000 tons a year double its original capacity. For the sake of comparison, the total UK market for palm based fats in the UK is 550,000 tons. New Britain Oils has never been about setting its sights low.
The major selling point of New Britain Oils produce is that it comes from an entirely traceable and sustainable supply of raw materials. But why should we care if palm oil is sustainable anyway? Worrall is quick to list the reasons. In principle it comes down to the world’s ability to feed itself both now and in generations to come, he says sincerely. The reality is that population growth is what it is. You can argue whether it will be 9 or 10 billion by 2050 but population growth is here to stay and a lot of that growth is in developing countries where diets are changing quickly and consumption patterns are changing as GDP is growing.
Worrall then points out that one of the first things to change in a country’s diet as it becomes more developed is that it becomes richer in oils and proteins. So not only have we more people on the planet, but those people are consuming more oils and fats, Worrall continues. As the yield of palm oil is anything from 8 to 12 times higher than other sources of vegetable oil, palm oil is right now meeting more than half of that growing demand. However, our growing hunger for palm oil is coming at a cost. Worrall tells us, You can only cultivate palm oil in a very narrow band around the equator, so our need for palm oil is competing with the need to preserve the rainforests. One of the main purposes behind Sustainable palm oil is to produce more of it on more appropriate land.
We’re selective about where we plant and where we don’t plant and we’re also passionate about achieving the highest possible yields, Worrall says. We’re treating people that work for us fairly and, through our inclusion of smallholders and community initiatives, making sure there’s a real trickle-down benefit to people affected by the palm oil industry around them. What it’s about is striking the right balance between yield, efficiency, treating people fairly and protecting biodiversity. The big challenge today though is convincing the industry at large that there’s a demand for sustainable practices. It’s an urgent problem, but the good news is things are changing. The industry has moved immensely, Worrall reports. Right now there are six million tonnes of certified sustainable palm oil being produced out of a world production of 51m. But only half of that certified oil is actually being bought. So that’s the real challenge here and around the world. If we’re going to get the industry to adopt more sustainable practices there needs to be a greater take up of the products or else other producers won’t see the point.
Convincing Through Transparency
The problem isn’t a lack of demand from the public. Before the refinery went into production New Britain Oils did research among the British public and found that approximately 80% of consumers were in favour of sustainable palm oil, but only if it meant not paying a higher price for their food. It’s an attitude that the food industry also expected, which made many of them reluctant to use sustainable palm oil.
I think our biggest challenge was to convince the UK food industry that sustainable palm oil could be brought to them in a cost effective way,â€ Worrall admits. There was a huge amount of nervousness that sustainable means huge premiums, high prices that UK consumers couldn’t afford to pay. This would be a serious problem for New Britain Oils if sustainable palm oils were going to cost more than their less responsible counterparts. Fortunately this wasn’t the case. The reason we got excited was that we thought we could get products to market that could be tracked to a sustainable plantation at no consumer cost, Worrall tells us. Our main challenge has been convincing people it can be trusted, that it’s reliable. We needed businesses to know that going to a single source supply chain like ours could be just as reliable as a refinery ordering oil from places any old plantation all over the world. So we needed to demonstrate we could supply factories reliably and that this wasn’t a short or long term cost concern. I think we’ve proved that. When asked how they managed to prove it, Worrall is absolutely clear in his answer. Transparency, he says.
We set our stall out from day one to be very open and transparent about our supply chain and how we could make it compete. We’re using very large ships and we have an excellent deep-water facility here in Liverpool. Furthermore, there are no middlemen involved between plantation and UK refinery. What’s happened with us here in the UK is actually a reflection of a wider trend in the industry. Across Europe we can see the palm oil refining industry being increasingly dominated by more integrated supply chains. The UK was the one market that didn’t have that until we came along. Most importantly, New Britain Oils is willing to put its money where its mouth is, entering into long term pricing agreements with its customers so that they see the benefits being offered can be guaranteed for years down the line. A Deep Pool of Talent. Of course, none of this would be possible if New Britain Oils didn’t have the right people on board. Fortunately with its Liverpool based facility the company has quite the well of talent to draw from. In the North West of England we’re fortunate that there is still a substantial manufacturing hub, Worrall says. There’s a good network of skilled operators and technicians within the chemical process engineering sector. So even though we’re now employing people whose background isn’t necessarily oil and fats based, they’ve been in similar kinds of areas. We combine that good catchment area for talent with good training. It takes about six months to get an employee trained in all the ways we need. This is partly because of the unorthodox way New Britain Oils organises its teams. We have an unusual operational model in that we have multi-skilled shifts, Worrall says. Our teams are multi-skilled across a range of disciplines, so we invest a lot in training them. Meanwhile, on the commercial side of the business we’ve got a lot of people who’ve been in the industry a while. The company’s management has got a combined experience of well over 100 years. We also have a number of graduates who’ve joined us and we’re investing in training them in a number of commercial and financial roles. It sounds like the company has a wide talent pool, so it’s a little surprising to discover how lean the team actually is, with only around 50 employees throughout the whole company. So what next for New Britain OilsWe’ve invested heavily in our new bakery plant, Worrall announces. A lot of palm oil is consumed in the bakery sector. It’s a particularly great oil for things such as pastry products and cakes. Our bakery processing plant came on stream around February and so our next challenge is to get into the market. Of course, this means once again New Britain Oil is going to have to educate the industry to succeed in it. A great deal of the bakery industry isn’t even aware they’re using palm oil, Worrall says. They may buy their margarine products as a brand or it may just be labelled as a vegetable oil. Customers don’t even know palm oil is a significant ingredient. It looks like once again New Britain Oils has their work cut out for them. Fortunately they’re well up to the challenge.
By Chris Farnell. Endeavour Magazine, October 2012