MAJOR palm oil buyers are looking to omit FGV Holdings and Sime Darby Plantations from their global supply chains, reports Reuters.

This is after the United States banned imports from the two Malaysian palm oil producers over forced labour allegations.

US food company General Mills, in a statement to the news portal, said it has issued “no-buy orders” for both companies.

Meanwhile, four sources said other buyers have asked suppliers to lower or exclude products by the two companies for supplies entering US, Europe, Australia and Japan.

“Customers are very afraid, and very cautious… They are questioning to what extent we are sourcing from them,” said one source whose firm supplies palm oil products to multinational consumer goods manufacturers.

“Companies are fearing the risk to their own reputation if they buy from Sime Darby and FGV,” the source added.

All spoke on condition of anonymity.

“We have instructed all of our suppliers globally to remove both Sime Darby and FGV from our supply chain; and have issued ‘no buy orders’ on both suppliers,” General Mills said in a statement emailed to the news site.

Malaysia, together with Indonesia, control nearly 85% of global production of palm oil.

The likes of chocolate maker Hershey, Nestle and Unilever said they have suspended FGV since 2018 on the back of forced labour findings by the Roundtable on Sustainable Palm Oil, an industry watchdog.

Nestle and Unilever, together with Kraft Heinz, have yet to pull the plug on its dealings with Sime Darby, the world’s biggest producer of palm oil certified as sustainable by the RSPO.

“We are in ongoing engagement with Sime Darby in terms of the human rights grievances that were alleged against them, and additional actions Kraft Heinz will take to ensure there are no violations of human rights in our supply chain, including the potential to terminate the business relationship,” Kraft said.

In a response, Sime Darby said many of its main customers have expressed continued support, adding that it has engaged with independent firms to address the US ban.

“We believe our customers recognise our honest commitment to continuous improvement, and our credibility as the world’s largest producer of RSPO-certified sustainable palm oil, accounting for about 17% of total global CSPO supply,” Sime Darby Oils managing director Mohd Haris Mohd Arshad reportedly said.

At press time, FGV has yet to respond to a request for comments by the site. – February 8, 2021.