Identifier
Created
Classification
Origin
08QUITO610
2008-07-07 22:08:00
CONFIDENTIAL
Embassy Quito
Cable title:  

SUSTAINABLE PALM OIL PRODUCTION IN ECUADOR

Tags:  SENV EINV ENRG EPET EAGR EAID PGOV EC 
pdf how-to read a cable
VZCZCXYZ0002
RR RUEHWEB

DE RUEHQT #0610/01 1892208
ZNY CCCCC ZZH
R 072208Z JUL 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 9098
INFO RUEHBO/AMEMBASSY BOGOTA 7640
RUEHCV/AMEMBASSY CARACAS 3098
RUEHLP/AMEMBASSY LA PAZ JUL LIMA 2688
RUEHGL/AMCONSUL GUAYAQUIL 3668
C O N F I D E N T I A L QUITO 000610 

SIPDIS

FOR JAY BENFORADO/HARVEY LEE, OES/ENV

E.O. 12958: DECL: 07/07/2018
TAGS: SENV EINV ENRG EPET EAGR EAID PGOV EC
SUBJECT: SUSTAINABLE PALM OIL PRODUCTION IN ECUADOR
DIFFICULT, DEFORESTATION SEVERE

REF: STATE 65271

Classified By: Classified by DCM Jefferson Brown. Reason: 1.4 B and D
.

C O N F I D E N T I A L QUITO 000610

SIPDIS

FOR JAY BENFORADO/HARVEY LEE, OES/ENV

E.O. 12958: DECL: 07/07/2018
TAGS: SENV EINV ENRG EPET EAGR EAID PGOV EC
SUBJECT: SUSTAINABLE PALM OIL PRODUCTION IN ECUADOR
DIFFICULT, DEFORESTATION SEVERE

REF: STATE 65271

Classified By: Classified by DCM Jefferson Brown. Reason: 1.4 B and D
.


1. (SBU) Summary: The expansion of oil palm plantations
into Ecuador's primary forests is having severe environmental
impacts. Esmeraldas province, where a majority of African
oil palm is grown, has a deforestation rate of 4.5%, higher
than that of any other province or neighboring country. The
potential to develop sustainable oil palm in Ecuador is
great, but to do so only on unproductive pasture or fallow
agricultural land will require strong advocacy. So far, the
government of Ecuador is supporting limited efforts led by
the private sector to develop sustainable production, but
inherent weaknesses in environmental law enforcement continue
to make this task difficult. End summary.

"GOOD OIL PALM"
--------------


2. (U) Ecuador currently has 240,000 hectares of African oil
palm in development, producing in turn approximately 400,000
tons per year of palm oil. Next year, FEDAPAL, Ecuador's Oil
Palm Growers Association expects this to rise to
415,000-420,000 tons. This represents around 1% of world
production, and in South America, Ecuador's production is
second only to that of Colombia. Around 200,000 tons are
used for domestic food production, and the rest is exported.
FEDAPAL says the industry provides 160,000 direct and
indirect jobs in Ecuador. They characterize the country,s
6,000 oil palm producers as mostly "small" farmers, with 98%
of plantations measuring 40 hectares or less (comment:
FEDEPAL may be overstating the role of small producers, since
one percent of the producers is made up of 68 large
companies). The Association believes the industry represents
some $1.3 billion in agricultural investment.


3. (U) USAID Ecuador has identified biofuels, notably sugar
cane and palm oil, as one of the country,s ten most

promising investment sectors. On this basis, the Presidency
and the Coordinating Minister of Production (overseeing six
other ministries) are developing a program to attract
investment and spur growth in the sector. Ecuador's Ministry
of Agriculture announced on June 26 that the country could
save up to $350 million a year by placing greater emphasis on
biofuel production and importing less gasoline. The
Ecuadorian National Council on Biofuels was created in 2004
and is composed of representatives from five ministries. So
far the council has authorized a tentative pilot project in
the city of Guayaquil to mix ethanol with gasoline, and
another to use biodiesel in buses in Cuenca, but it has
implemented no initiatives to make biofuels mandatory.


4. (U) FEDAPAL points out that the oil palm plant is
uniquely suited to Ecuador's coastal climate; while most is
produced in this region, plantations are also located in the
central/sierra provinces of Los Rios and Bolivar, as well as
portions of previously-deforested Amazon in Orellana
province, to the east. The Association says that it has
worked with the Ministry of Environment to establish
environmental impact studies; in 2007 it also produced a
publication entitled "Practical Environmental Guide for the
Palm Industry," which explains the process of obtaining an
environmental license, and details potentially negative
environmental impacts that should be avoided. FEDAPAL says
that the geographical areas where oil palm production may be
carried out have been carefully delineated by the Ministry of
Environment. The association firmly asserts that these zones
are located only in previously deforested areas, or on
non-productive agricultural lands.

"BAD OIL PALM"
--------------


5. (U) Many people outside the industry, on the other hand,
and not just environmentalists, criticize the environmental
damage that oil palm production has caused. While
regulations exist to define areas of production, they are
often flagrantly disregarded. For example, large sections of
the Choco area along the Colombian border in Esmeraldas
province have been converted to oil palm as a result of
Afro-Ecuadorians (who make up much of province's population
and are largely poor) selling their lands to palm producers.
When these communities later found themselves broke and
landless, they tried to seize land from the Awa (an

indigenous community),creating serious social strife.
FEDAPAL says it has lobbied the government to encourage
locals to sign production agreements with oil palm producers
while retaining ownership of their lands; so far neither the
government nor the locals have been responsive.


6. (U) Quito's Union of Forestry Engineers estimates (based
on statistics from CLIRSEN, Ecuador's Satellite agency) that
Ecuador's overall deforestation rate between 1990 and 2000
was 1.5% (notably higher than rates in Colombia, Peru, and
Brazil, which are in the range of 0.3% to 0.5%). Since then,
national deforestation data have not been updated. From
1990-2000 in Esmeraldas province, the deforestation rate was
4.5%. While oil palm has the capacity to sequester carbon,
it cannot compete with primary tropical forests, and as a
monoculture crop it hosts minimal biodiversity. This is a
serious problem in one of the world's most biodiverse
countries. In addition, the amount of energy used to refine
the oil from the plant, refinery emissions, and accompanying
water use and pollution are persistent problems.

LIMITED COOPERATION
--------------


7. (SBU) The oil palm industry has been the leader in
pursuing initiatives to develop sustainable production.
Palmeras de los Andes, the country's largest oil palm grower,
together with the Ministry of Agriculture, is lobbying the
government development bank National Financial Corporation
(CFN) to provide lines of credit of $30-40,000 for small oil
palm producers (15-20 hectares) in the areas of San Lorenzo
(on the Pacific coast) and Shushufindi (in the Amazon
region); both are historically violent towns, due to in large
measure to the drug traffic along the border with Colombia.
Jorje Roman, the head of Palmeras, says that these farmers
are most vulnerable to raising illicit crops or engaging in
deforestation. Roman hopes to also interest the
Inter-American Development Bank (IDB) and the Andean
Development Corporation (CAF) in the project, and he says he
is consulting with American petroleum technology company UOP
of Chicago (a division of Honeywell) on their latest clean
technologies, which he hopes to replicate on plantations
throughout Ecuador.

COMMENT
--------------


8. (C) Given the financial motivation for impoverished
Ecuadorian communities to clear land in order to plant oil
palm, particularly along the northern border, encouraging
sustainable production in Ecuador will require intense
advocacy efforts with both the GOE and the industry. Because
Ecuador,s deforestation rate is a problem in itself, and
because environmental law enforcement is so weak, the
development of oil palm without significant environmental and
social impacts will indeed continue to be difficult. While
some in the government appear to be interested in promoting
biofuels, others (particularly those in the environmental
camp) seem determined to ignore or ban oil palm production
all together, rather than taking steps to enforce
environmental compliance. End comment.
Jewell