Western food manufacturers are buying so little sustainable palm oil that the system set up to limit damage to tropical forests caused by the world's cheapest vegetable oil is in danger of collapse. Palm-oil producers say the industry may quit the Roundtable on Sustainable Palm Oil (RSPO) because so few firms are financially backing the scheme.

Houshold products giant Unilever and the World Wildlife Fund (WWF) founded the RSPO seven years ago, to encourage producers of the oil, used in products such as biscuits and margarine, to minimise forest destruction, greenhouse gas emissions and loss of endangered wildlife, such as tigers and orangutans. Palm oil is in hundreds of branded foods such as Kit Kat and Hovis and household products such as Dove soap and Persil washing powder.

The first certified RSPO supplies arrived in Europe in November 2008, yet only 27 per cent of present supply has so been sold, leading to claims of hypocrisy among Western buyers. Tesco, Asda, Morrisons, Procter & Gamble, Nestle, Allied Bakeries and even Unilever did not buy any separate certified RSPO oil last year, though Tesco and Asda "offset" small quantities by buying GreenPalm certificates for Rspo production elsewhere.

Only Sainsbury has bought significant quantities of RSPO oil separated from other sources, for 10 per cent of its range. United Biscuits, Unilever, Waitrose aim to switch to a sustainable supply within two years. Most companies have set a date of 2015 for converting their ranges, complaining that they cannot easily source certified sustainable supplies.

Dato' Azhar Abdul Hamid, plantations managing director of the world's biggest palm-oil producer, Sime Darby, said: "The rate of take up is very, very slow. The industry is producing more supply of certified palm oil than the market is buying. It's disappointing to see that. We were always hoping demand would always be ahead of supply, because that is what the world wanted. More specifically, it was what Europe wanted."

He rejected the suggestion, often made by UK manufacturers, that too little certificated oil was available. "They claim to be interested, but they're not doing it. If the UK consumer insists on it, then whether the producers like it or not, they will have to make RSPO work."

According to WWF, manufacturers bought 343,857 tonnes of RSPO oil last year, 27 per cent of the 1.27 million tonnes available. A segregated supply costs about 10 per cent more but that is expected to fall a few per cent this year when New Britain Palm Oil opens an £18m refinery in Liverpool capable of handling 150,000 tonnes of certified oil. United Biscuits, which makes Jammie Dodgers and Jaffa Cakes, and the Italian chocolate company Ferrero have signed long-term contracts for the plant. Others have not done so, yet.

New Britain estimates certifying the UK's entire annual supply would cost 12p per person. Its, executive director, Alan Chaytor said: "We were the second company to be certified and we have only sold a few thousand tonnes but, in the end, you have to to have the infrastructure where you can deliver that [certified oil] to the customers who want it. It's going to take money, and commitment."

Asda said: "Over the next 12 to 24 months, our own-label supply base will begin sourcing physically segregated RSPO palm oil. As a result, our new stated target is to source all of our palm oil from RSPO sustainable sources by 2015. But clearly we hope to meet this target early." Tesco said: "To ensure we achieve our target of using 100 per cent certified sustainable palm oil by 2015, we have issued all of our suppliers with a timeline and code of practice to achieve that target."

Food Manufacture magazine quoted one supplier as saying: "We have had a chat about it but we haven't been told to do anything yet by Asda or Tesco."

Palm-oil production has exploded in the past 10 years on the South-east Asian islands of Borneo and Sumatra, providing work for one million people, but the expansion has a high environmental and human cost, destroying hundreds of square miles of virgin rainforest and displacing native people. Now producers, having started to exhaust legally allowed concessions in Asia, want to plant oil palm in the tropical forests of West Africa and the Amazon.

Britain has become increasingly concerned about palm oil's role in deforestation which causes 20 per of global emissions. Planting of palm oil on cleared lowland peat forests in Indonesia released especially strong methane gas.

Hilary Benn, Secretary of State for the Environment, is tracking the quantity and use of palm oil in the UK. "Even though solutions are often local, this is everyone's business, because what happens in Indonesia, the Democratic Republic of Congo or Brazil doesn't stay there," he said. "It affects us all."

Palm oil: The good firms – and the bad

*VERY GOOD

United Biscuits: Committed to converting to RSPO by end of 2011

Unilever: Committed to converting by 2012

Waitrose: Committed to converting by 2012

Sainsbury's: Has bought RSPO for 10 per cent of supply. Committed to converting entire range by 2014

*GOOD

Cadbury: Offsetting all current supply with cheaper GreenPalm certificates. Committed to coverting by 2014

Marks & Spencer: Offsetting all current supply with GreenPalm certificates. Committed to converting by 2015

*AVERAGE

Mars: Aims to convert 25 per cent of range to Rspo this year. Committed to converting entire range by 2015

Co-op: Has bought some sustainable oil and converting 32 biscuit lines to Rspo by June. Committed to converting entire range to Rspo by 2015

*POOR

Tesco: Bought unspecified quantity of GreenPalm certificates for in-store bakery and a few other products. Committed to converting by 2015

Asda: Bought GreenPalm certificates for 712 tonnes used in in-store cafés. Committed to converting by 2015. To buy RSPO in "next 12 to 24 months"

Nestlé: Committed to converting by 2015

Procter & Gamble: Committed to converting by 2015

Allied Bakeries: Committed to converting by 2015