SUSTAINABLE PALM OIL PRODUCTION IN COLOMBIA

UNCLAS BOGOTA 002331 SENSITIVE SIPDIS OES/ENV FOR JBENFORADO AND HLEE; WHA/EPSC FOR FCORNEILLE; EEB FOR MMCMANUS AND BHAENDLER E.O. 12958: N/A TAGS: ENRG SENV ECON CO SUBJECT: SUSTAINABLE PALM OIL PRODUCTION IN COLOMBIA REF: A. (A) STATE 65271 ¶B. (B) 07 BOGOTA 7171 ¶1. (SBU) SUMMARY: Despite challenges, Colombia's palm industry continues to expand as a result of high palm oil prices, increasing security and biofuels demand. The GOC and private industry have publicly committed to developing the sector in a sustainable manner and initiated efforts to do so, including USAID support for small palm producers. Palm growers identify industry stigmatization, development of uncoordinated certification processes, and land issues as primary challenges. Local environmental experts have called for a comprehensive environmental impact survey to identify areas off-limits to palm production, while industry representatives cite adoption of a uniform certification standard, transparency in land ownership, and clearer land management policies as key to ensuring commercial, social, and environmental sustainability of the palm industry. Colombia's leading palm association, in conjunction with the International Roundtable on Sustainable Palm Oil and the World Wildlife Fund, has proposed holding the first Latin American Roundtable on Sustainable Palm in Cartagena in October 2008 to discuss these issues and would like to invite USG attendance. END SUMMARY. High Prices, Security, & Biodiesel Drive Expansion -------------- -------------- ¶2. (U) Colombia ranks as the world's fifth largest palm oil producer and was identified in 2007 by the journal Environmental Science and Technology as one of the top five countries for capacity to sustainably develop its palm industry, based on a strong agroindustrial sector, investment climate, and agricultural characteristics. Colombia currently has 405,000 hectares of palm planted--40,000 more than in 2007 and double the amount in 2002. National Federation of Palm Growers (Fedepalma) President Jens Mesa Dishington told Econoff that the prime drivers behind the steady expansion were strong international demand for palm oil, improving security in rural areas, and domestic demand for biodiesel produced from palm oil. ¶3. (U) Although traditionally utilized in food and cosmetics, palm oil has become a principal feedstock for biodiesel due to its cost-effectiveness (seeds harvested year-round for 25 years),productivity (produces 3.7 tons of oil per hectare--nine times the oil produced by soybeans) and energy efficiency (twice as much energy per unit as soy). The GOC forecasts Colombia's diesel consumption will grow nine times faster than gasoline consumption over the next 15 years. In this context, the GOC seeks to develop a robust biodiesel industry based on Colombia's growing palm oil industry. To foster the palm-biodiesel sector, the GOC approved the creation of Colombia's first biodiesel free trade zone in Magdalena Department in 2007. Five other biodiesel projects are coming on-line in 2008 to fully supply the GOC's January 2008 mandate to blend biodiesel into five percent of domestic diesel supplies as well as the planned increase to a ten percent blend in 2010. Commitment to Sustainability -------------- ¶4. (U) At the same time, the GOC has publicly committed to developing Colombia's biofuels industry utilizing only degraded lands or lands already in agricultural production. Likewise, Fedepalma, which represents over 80 percent of Colombia's palm growers, has implemented several measures with its producer members to protect biodiversity, reduce negative impacts of monoculture agriculture and implement sustainable soil and water management practices. Fedepalma's research institute, Cenipalma, has also coordinated with Ministry of Agriculture officials in developing natural pest management and hybrid breeding strategies that have significantly reduced pesticide and fertilizer requirements. ¶5. (U) Through USAID's Alternative Development Program, the USG supports 2,400 small landowners through 23 palm projects totaling nearly 36,000 hectares. USAID has promoted a system of alliances between large and small producers to improve efficiency, accountability, and social responsibility of production by sharing the technical knowledge, access to credit, risk-bearing capability of large producers with small producers that have land and labor. USAID has also developed a protocol for strengthening due diligence processes in place to ensure protection of communal and individual land tenure rights. Challenges: Social and Commercial -------------- ¶6. (SBU) Despite government and industry efforts to ensure sustainability in Colombia's palm sector, environmental and land issues, if not managed properly, could limit development. Environmental NGOs are concerned the GOC cannot fulfill its commitment to expand biodiesel production without harming the environment. In particular, differences remain between the GOC, industry, and environmentalists regarding precisely which areas of the country to cultivate without causing deforestation or biodiversity destruction. Environmental experts, including Conservation International biologist Tim Killeen who surveyed the Colombian biofuels sector as part of an EEB-funded visit in 2007 (ref B),have urged the GOC to commission an independent environmental impact assessment as well as press biofuels producers to pursue international certifications for their products. ¶7. (SBU) Separately, human rights NGOs have linked palm production in the Choco and Tumaco Departments to Colombia's armed conflict and the land rights of Afro-Colombians. NGOs have accused the palm growers of illegally occupying lands in which Afro-Colombians were displaced by the conflict and preventing the populations from recovering their land. While less than 10 percent of Colombia's palm cultivation lies within disputed areas and the vast majority of the industry has not been subject to such land issues, slow progress in resolving the disputes risk tarnishing the broader industry. FedepaQPresident Mesa told Econoff, however, he considers the prospect of industry-wide stigmatization resulting from isolated cases of environmental, labor or land abuses as the most significant risk to Colombian palm producers in general. How to Promote Sustainable Growth -------------- ¶8. (SBU) To address concerns about palm production, Fedepalma has engaged NGOs directly and through the Kuala Lampur-based Roundtable for Sustainable Palm Oil (RSPO),which has established a set of eight principles and related criteria for sustainable palm oil development. One Colombian palm producer, Daabon, has already begun the certification process. Fedepalma Secretary General Andres Castro told Econoff, however, that adopting a single and transparent international certification system is important to promoting sustainable environmental and labor practices. Castro emphasized that the proliferation of certification schemes or inconsistent application of standards to only some producers or segments of the supply chain could cause palm growers commercial damage and promote non-compliance. Fedepalma has launched discussions with the GOC on drafting a "national interpretation" of the RSPO criteria in order to give Colombian growers specific information on how the criteria fits with existing GOC regulations. ¶9. (SBU) Finally, in addition establishing and implementing a uniform international certification standard, Mesa suggested that palm growers, as well as other agricultural producers in Colombia, need transparency in land ownership and planning. Mesa noted that sizable amounts of agricultural land in Colombia had unclear ownership or ties to individuals involved in illicit activities. Fedepalma has supported pending legislation in Colombia's Congress to require clear registration of all agricultural land as a means to impede illicit activities as well as to formalize available agricultural land. With such land brought into the formal economy, most Colombian agricultural producer associations including Fedepalma argue that pressure to develop environmentally pristine or sensitive lands will ease. First Americas Conference on Sustainable Palm Oil -------------- -------------- ¶10. (U) Fedepalma, with support from World Wildlife Fund, has proposed RSPO hold a first-ever Latin American Roundtable meeting on sustainable palm development in Cartagena October 16-17. Castro said he expects international certifications to feature as a primary topic of the conference and encouraged the USG to send participants to the event as a follow up to the OES-sponsored workshop with palm industry stakeholders on May 2 in Washington. Castro and Mesa both suggested that USG embassies could play a constructive role in encouraging strong government and private sector participation in the conference from Mexico, Guatemala, Honduras, Nicaragua, Costa Rica, the Dominican Republic, Panama, Ecuador, Peru and Brazil. Post will pass OES any additional information on the conference as received. BROWNFIELD