The pros and cons of PKE

In recent weeks, PKE has been in the spotlight.  The key reason for this has been the decision by Landcorp to phase out its use on the Landcorp 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 in 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, ice cream, 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.


About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
This entry was posted in Agribusiness, Dairy, Fonterra, Synlait, Uncategorized. Bookmark the permalink.

26 Responses to The pros and cons of PKE

  1. Graham Brown says:

    But… it possible that foot and mouth could be imported into NZ along with the PKE?

    • Keith Woodford says:

      It is probably feasible but also highly unlikely.
      It would be highly unusual for any cloven footed animals to be in a plantation.
      And PKE itself cannot harbour the disease.
      Much more likely is that foot and mouth would be brought in on a travellers shoes, or in some animal food products.

  2. Tom Walker says:

    Very well researched and logical arguments you make Keith but somehow I think it will fall on ”deaf ears” as we are dealing with emotions and not reason when it comes to PKE use in NZ.

    That is what made myself and other Fonterra suppliers so angry last spring with their disingenuous letter to us regarding the PKE ”guidelines”..implying that it was to do with a ”nebulous”grass feed premium they wanted to protect in the market but offering no evidence and also just singling out PKE as a supplement and ignoring all of the other options available like maize silage that can be used instead of grass.

    Purveying such blatant spin like that and treating the shareholders like idiots was another example of how out of touch the Fonterra management is with their owner/shareholders..just imagine what the anger levels would be like with farmers if Fonterra tried to ”enforce” the 3kg/day limit in the middle of a drought where you quite rightly point out is when PKE is so useful.

  3. Honora Renwick says:

    I will endeavour to track down the research that asserts that feeding PKE to stock quote “rips up their guts” unquote i.e. causes intestinal permeability. I try to buy products that don’t have palm oil, use coconut oil as my go-to sauteing oil, monosaturated oils for salad dressings and organic grass-fed butter for the spreads. The quote above comes from a rumen nutrition specialist I frequently encounter.

    “ignoring all of the other options available like maize silage that can be used instead of grass” Yes, Greenpeace raise this as an alternative to PKE and maize of course is a grass. The silage process would give enhanced nutrition to the cows I imagine.

    • Keith Woodford says:

      I think those effects are unlikely with PKE and I can find no evidence for it in the science literature. But if you can find something, I would be interested in reading it. In general, PKE is a very safe feed for cattle. The cattle self regulate – usually to no more than 5kg per day – and there are no risks of acidosis such as occurs with fodder beet and grain, nor the brassica toxicities which can occur with swedes and kale.

      Maize silage is definitely an option, and is used widely in the North Island and to a lesser extent in parts of the South Island. However, it is a more expensive feed than other alternatives, with silage making and transport being expensive. Grass silage is another option, and that is used a lot in the South Island, particularly in Southland.

      In terms of quality, there can be considerable variation both in PKE and in silage, with the key issue being metabolisable energy (ME). But on average, the feed quality of PKE will be at least as high as silage,and, when fed in the paddock, there is also considerably less wastage.
      Keith W

  4. John In US says:

    I guess as a consumer I would ask what does PKE contribute to the milk? Does it change the fatty acid profile ? We seem to be on the verge of a possible resurgence in traditional food consumption in the US. Fat is making a comeback – of course the medical community cannot say this, but instead doctors are starting to advocate a “low carb, low protein diet” for things like diabetes and autoimmune diseases. Vegetable oils are out and suddenly saturated fat is considered okay. Relative to dairy the interest is in grass fed milk and beef. For things like thyroid disorders we are starting to hear things like use beef lard in cooking ! Even the US military now is looking at omegaa 3 to omega 6 fat ratios. This is being done to combat mental illness. Real food like our grandparents ate is seen as a possible medicine.

    • Keith Woodford says:

      Yes, there is potential for a change in the fatty acid profile. But it is a complicated story. There is anecdotal evidence from within Fonterra – but nothing in the public record – that PKE lead to butter being less firm. That would be indicative of a higher ratio of unsaturated to saturated fats, which would normally be regarded as a ‘health good’. All Fontrra has said publicly is that it can affect composition but they have given no details.

      And there is scientific logic as to why this ratio could change.

      I am aware of just one study, with 180 people in NZ, which attempted to demonstrate a link between intake of particular fatty acids, including those from PKE, and adverse blood serum profiles in consumers. They found no effect.

      Vegetable oils should be OK in processed foods as long as they don’t contain trans fats. There could still be issues with cooking oils which may convert to trans fats at high temperatures.

      Ironically, the main source of trans fats in many developed countries is actually from dairy products – the cow manufactures these herself! But the levels are unlikely to be a major health issues.

      The omega 3 and omega 6 story is also complicated. The stories we read are often driven by propaganda and falsehoods. Grass fed milk and beef is likely to be a little higher in Omega 3 than many other feeds, but the difference is too small to be of health significance.

      Also, the health evidence is not that saturated fats are good, but that they are less bad than highly refined carbohydrates (if consumption levels of these are too high).

      The course that I steer is to avoid milk unless it is A2 – that is important – although I do consume modest quantities on non A2 yoghurt. I try and eat reasonable quantities of ocean fish (excellent for Omega 3) and I consume a glass of red wine each evening (mainly for pleasure). I eat lots of nuts (which I love) given that I am intolerant to gluten and so nuts are a good (but expensive) alternative to wheat-based snacks.. And with other grains, in our family we try and eat non-refined versions thereof. I eat modest amounts of saturated fats and I consider unsaturated fats to be an important part of my diet. I eat red meat but tend to avoid processed meats ( although I do sometimes stray a little). I am addicted to kiwifuit, especially the new ‘SunGold’ variety. And I try and stay physically active – that is important. Oh, and I do drink two cups of coffee each morning, and justify that on the basis that coffee seems to be highly protective against Parkinsons disease amongst other things (and also gets me going in the morning). And I don’t eat anything unless I like it! So I don’t eat brussel sprouts or ripe bananas. And beyond that I work on the principle that ‘Que sera sera’ – it is in the lap of the gods and the genes my parents gave me.
      Keith W

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  6. trlahh says:

    I’ve been based in Malaysia since 1996, closely involved in biomass industries and related carbon and energy production. I’ve visited oil palm plantations, palm oil mills, seen the devastation from poor natural forest management, unsustainable plantation soil management practices, suffered the annual haze from open burning in forest clearing and plantation management… there is a lot to be critical of. But I also work with a new academic grouping called ARPOS, who are trying to help bring sustainability to the industry. RSPO are supporting this and RSPO are a vital component to moving the industry in the right direction. NZ should support RSPO by only purchasing PKE from RSPO certified plantations. Fonterra should engage with RSPO on this issue.

    @Keith… there are plenty of cattle roaming palm oil plantations… some of it managed and some unmanaged. I walked through a palm oil mill composting facility and could smell the cattle dung…

    • Keith Woodford says:

      Fonterra only imports PKE that is RSPO certified. However, I cannot confirm that is the case with other importers. Some Fonterra farmers buy their PKE from these other importers.

      In regard to cattle in plantations, I am happy to be corrected. I had not seen them – although I did once see elephants that had broken through into a plantation and they did create mahyem.

  7. Honora Renwick says:

    I had a read of Dr Jocelyne Benatar’s paper linked to below which was published in 2014: there seemed to be no particular issues from consuming dairy products with the naturally occurring transfats. Interestingly, the vegan folks had quite a bit of palm oil derived transfats in their plasma as well which supports Keiths’ comment that palm oil is found in many non-dairy sources of food.

    Benatar, J. R. (2014). The effects of ruminant trans fatty acids and dairy food on cardiovascular disease and cardiometabolic risk. The University of Auckland. ResearchSpace@Auckland.

  8. Paul says:

    Why would you conclude the 3kg per day voluntary limit Fonterra put out there is about market perception? Taken literally the 3kg limit could see PKE imports of up to around 2x the current 2m tonnes. Marketing wise I guess you could claim the sound bite it generated in NZ media. The limit from Fonterra is around the manufacturing of certain products experienced when high amounts of PKE are being feed not market orientated.

    Fonterra has yet to demonstrate that they can get a premium from ‘GrassFed’ cows as it doesn’t produce any WMP or any other product solely from ‘GrassFed’ cows. There seems to be a demand and market positioning when you see ‘GrassFed’ labelling in places like the USA for those that can meet the USDA Grassfed standard.

    RSPO is logical for certification of any supply of PKE to NZ. However holes in this have already happened.

    With recent biosecurity incursions into NZ like; PSA, CRW, Velvet Leaf, Black Grass, Pea Weevil this 2m tonne of imported feed stuff is a risk. The question is the level of the risk, and the potential cost of the risk to NZ.

    It has also been shown that the GHG footprint of this feed from a LCA basis is not of benefit to NZ obligations.

    NZ have quickly got to a position where we now import a tonne of PKE for every tonne of milk solid produced.

    The analysis above of PKE underpinning 200m kgMS I’d say is overstated. Would the conversion efficiency average 10:1 with this feed stuff? It also produces a higher component of milk fat verse milk solid, which is of lower value. There are NZ alternatives to PKE to substitute this feed if that is desired to maintain the value of this production.

    Yes alternatives take more planning, farmer relationships, opportunity cost of having this feed on hand rather than the ease of ordering of PKE.

    Choosing to exclude it as a feed option would not be easy. Grass Fed is not easy, but that provides an opportunity and a position that is then not that easy to copy either..

    • Keith Woodford says:

      1) 3kg per day is about 20% of the cow diet, and this level of use falls within most definitions of grass-fed.
      2) A conversion of 10:1 or better is generally readily achievable with a quality supplementary feed unless there is major substitution occurring. The PKE has about 11MJ of metabolisable energy and each kg of milksolids requires 75-80 MJ . It is a different story if the PKE is substituting for non utilised grass, but that does not happen on well-managed farms.
      3) It is always open to NZ to restrict imports of PKE for biosecurity reasons. However, the decisions have to be evidence-based and not as a form of non-tariff barrier.
      Keith W

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  10. George Kuru says:

    I am a NZer working in the field of land suitability assessment and land use planning for forest and palm oil plantation companies in South East Asia. These industries are under tremendous pressures to cease conversion from natural forest lands to plantations and to convert plantations located on peat land soils back to natural ecosystems.

    In order to pressure the plantation companies, the conservation groups have campaigns that specifically target the end users of plantation products such as industrial food processing firms and pulp and paper consumers in North America and Europe. These campaigns have been very successful, for example Asia Pulp and Paper lost its entire sales of pulp and paper to the North American market in 2003. Similarly, the palm oil producers are being forced into accepting environmental programs that limit the availability of land for expansion on the threat of severely restricted access to many international markets. These campaigns are similarly being conducted in mining, fisheries, manufacturing and services sectors.

    Until quite recently, the dairy sector in New Zealand has been seemingly blissfully unaware of these momentous struggles. As a result the New Zealand dairy industry is now highly exposed and key markets are threatened by their indiscriminate use of PKE. This article seems to consider that the only with regards to PKE is the cost of its substitution.

    If PKE is to remain an important feedstock within NZ dairy sector, then the industry has to develop systems for determining the compliance of the PKE used with internationally accepted environmental and social standards. The true cost of the PKE needs to include the cost of implementation of proper compliance verification and the market risk premium.

    • Keith Woodford says:

      So are you arguing for RSPO certification for all imports or are you arguing for something more?
      Can you advise of specific importers who are currently importing non-certified product?
      Presumably the underlying problem is a level of gonvernment corruption in the producing countries such that legalities and acceptable standards are not enforced?

  11. All of the Paiients in the Auckland Coronary Unit had blood samples all contained Palmic transfats . This is a NEW development.This is from Palm Kernel.How much longer can we allow this to be in the New Zealand food chain and indeed our “grass Fed” milk supply?It is notable that the A2 suppliers arent allowed to us PKE.

  12. Keith Woodford says:

    Palmtic acid comes from many products other than palm oil, and is synthesised by cows from carbohydrate without any need for PKE in the diet. It is a very common fatty acid. Back in 2010 Dr Joclyene Benatar from Auckland University hypothesised that this and associated trans-fats formed by ruminant nutrition) were caused by cows eating PKE. However, her subsequent trial with 180 patients found no such relationship.Whereas the original hypothesis received considerable attention, the subsequent failure to establish a causal relationship was published in the scientific literature but not the popular press. I am not aware of any new developments thereafter relating to this issue. In summary there is no scientific evidence linking PKE to human coronary conditions,

    As a point of further clarification, palmitic acid is the most common fatty acid in butter, and this is the case even for cows which eat no PKE.. So hindsight would seem to be telling us that Dr Benatar;s hypothesis was intriguing but fundamentally flawed as a consequence of an inadequate understanding of ruminant nutrition.

    As for A2 suppliers and PKE, I think you have got confused. It is only for Synlait’s Munchkin grass-fed contract that PKE and grains are not permitted.
    Keith Woodford

  13. Jt4 better dairying says:

    HI, There seems to be a lot of BS being published about the advantages of PKE so lets look at facts.
    1, PKE does change the fat profile of the milk as CONFIRMED by Fonterra effecting not only butter production.
    2, PKE doe have high copper levels causing animal health issues.
    3, PKE also has high micotoxin levels in it which are tested for when going in to the EU but not in NZ unfortunately as these are transfered in to the milk.
    4 DNZ feed calculator shows that grain is better value than PKE.
    5, When the 2 mil tons of PKE are feed to our cows this contributes around another 50,000t of nitrates to be excreted from the cows as it is a high protein feed.
    6, If PKE was removed and replaced with either Maize or Cereal silages and or grain at the correct ratio, we could reduce the current nitrate excretions by 70+%.
    7 If we removed it from NZ , NZ inc would benefit by around and extra $2b/yr.
    8. The ME of PKE as stated by Prof Woodford is grossly over stated, actual ME available to the cow is more like 7 as it is so indigestable.
    9. Grain at a 13.5me only drops to around 13me after digestion.
    10. The dust from it can cause diseases similar to farmers lung due to the molds in it, which as stated earlier are not tested for which is why is goes on fire when stored as has happened in Timaru at least 3 times now.

    • Keith Woodford says:

      I think you have drawn a ‘long bow’ in many of your statements above and are making claims that go well beyond the evidence.
      Keith Woodford

      • Jt4 better dairying says:

        Keith you need to look beyond the grounds of Lincoln, Re the nitrates losses, the tables used to calculate this are now accepted as part of Overseer and is now in the One plan.
        ECAN are now also looking at this.
        The aflo and Mico toxins are also proven to be there.
        The copper issue is also in NZ vetinary news.
        Dust health issues have been recognised and now all port and truckerrs are required to wear masks after illness confirmed from it.
        I wouold have thought that in one of your recent blogs on the sustainability of the various dairy systems that you would have been aware of these issues.
        Fonterra at a recent meeting confirmed the manufacturing issues and this has been also accepted by Synlait.

  14. Keith Woodford says:

    The debate will not progress unless it is based on evidence rather than generalised assertions. Nor are concerns as to how and where I spend my time of relevance to the debate. (Actually I am just back from Uruguay where I was working last week, and in general I spend only about one day per week on campus at Lincoln.)
    As regards Overseer, all sources of protein are included in the assessments, and PKE is just one of these.
    Aflotoxins are a specific group of mycotoxins (i.e produced by fungi) and they can be present in many feeds, including grain and hay (and many other feed types) as well as PKE. Quality assurance schemes are important regardless of the specific feed source.
    NZ feed sources tend to be deficient in both copper and selenium and it is therefore common to dose with these minerals in NZ. However, PKE is not deficient in these minerals. Accordingly, if animals are on a high PKE diet, then they do not normally need supplementation with either copper or selenium. And continued drenching in those situations is not appropriate. On well-managed farms that take appropriate veterinary advice these issues do not become a problem.
    As for the manufacturing issues at Fonterra, they have placed nothing specific in the public arena. It is rumoured that they ‘think’ that some issues of butter texture (being less firm) may be related to PKE but to the best of my knowledge they have no evidence. In any case, it is important to recognise that palmitic and other fatty acids (both saturated and non saturated) can be produced by the cow from grass (and other feeds) and there s no unique fatty acid produced by PKE. Similarly, humans can metabolise palmitic acid from carbohydrates and protein without needing palmitic acid in the diet for that to occur. Palmitic acid is also a major source of the fat in human breast milk. To the extent that the butter may be less firm, that would be indicative of higher unsaturated acid levels (generally regarded as a ‘health good’)
    One of my former colleagues in Australia (where I worked for many years) had a prominent sign on his door: “In God we trust; everyone else has to produce evidence”.
    And that is the way I try and work in relation to science. It is all about evidence and how that evidence is used.
    Also, I think it was a Charles Dickens character who first said that statistics should not be used as a drunk man uses a lamp-post: for support rather than illumination. I try and also live by that philosophy, and go wherever the evidence takes me.
    It was Lord Keynes, who once said, when criticised for changing his position on a specific issue: “When the evidence changes, I also change my position. What do you do, Sir’
    So if new evidence emerges, then my position will also change accordingly.
    Keith Woodford.

  15. Agrilover says:

    I am currently doing an assignment on Ryegrass staggers and the potential of increasing supplement in order to reduce the outbreaks during summer seasons. I am also talking about the social acceptability of solutions (Smyth and Dumanski, 1995), and the controversy around PKE use in New Zealand. I was wondering whether you would be able to point me in the direction of some additional research?

    • Keith Woodford says:

      There is a lack of published research.
      However, if I were to write further on the topic – and at some time I may do so – I would have more to say about the various fatty acids, including lauric acid, and I would make a clear distinction between palm oil and palm kernel oil in terms of chemcial and fatty acid composition.
      In terms of social responsibility, I would have more to say about the positive moves that the industry is making, in some cases no doubt under duress, but a good thing nevertheless.

      • Honora Renwick says:

        Wow, that is interesting about the lauric acid content in palm kernal oil. At 48% it’s comparable to the popular coconut oil which has a lauric acid content of 50%. Also interesting is that palm oil was one of the main ingredients of napalm, along with napthalene.

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