The Latin American Palm Oil Sector

New Alliances, Creative Campaigns


A FOREST HEROES BRIEF


Increasingly the global palm industry is training its sights on a new frontier: Latin America.

Southeast Asia is the world’s biggest supplier of palm oil, a commodity that has found it way into everything from consumer foods to biofuels. This business boom has been accompanied by massive deforestation and human rights abuses, making palm an intense focus for environmental campaigners worldwide and resulting in corporate zero deforestation policies and commitments by major global traders and buyers in the palm oil supply chain.

But the Latin American palm oil sector is a different story, with different challenges and different opportunities. Palm oil has been a minor commodity in the region for years, often promoted by development agencies and governments as a “replacement crop” to stem coca cultivation as part of the “War on Drugs.” However, since 2001, palm oil production has doubled. The Roundtable on Sustainable Palm Oil (RSPO) has set up a regional office and more and more Latin American-owned and operated businesses are seeking to enter the global market through RSPO membership and/or certification.

Despite this expansion, the Latin America palm sector remains largely a black box. What is clear is that it is well behind the global curve in terms of deforestation and human rights policies and practices with very few Latin American companies boasting No Deforestation, No Peat Burning and No Exploitation (NDPE) policies and even fewer actually implementing them.

Unique Factors: Market, Corporate Structures & Context

The overall lack of acceptable corporate policies, transparency and implementation accountability mechanisms is likely due at least in part to three unique characteristics of the Latin American market, corporate structures and overall context that have kept the sector relatively insulated from demands by campaigners and international buyers.

Where companies have been the focus of international campaigns, as in the case of Reforestadora de Palmas del Petén, S.A – Repsa (a subsidiary of Grupo Olmeca) in Guatemala and Grupo Palmas (a subsidiary of Grupo Romero) in Peru, policies have often followed — albeit not necessarily accompanied by implementation or an end to environmental or human rights abuses. But traditionally effective targeting and pressure campaigns against bad actors in the region can be an uphill battle for three primary reasons:

  1. The Latin American palm oil market is largely domestic or regional in nature. A 2015 U.S. Agency for International Development (USAID) repot notes that at that time all Peruvian crude palm oil is produced for domestic consumption. With some notable exceptions, exports tend to be regional as well. For example, palm oil is Central America’s biggest export to Mexico, comprising 24 percent or exports overall. Almost half (44 percent) of all Central American palm oil went to the Mexican market in the first three quarters of 2016. Major international consumer brands – the ones most vulnerable to global campaigns and most likely to have strong environmental and human rights corporate policies on the books – are simply less active in these supply chains and therefore less able to exert the type of pressure to improve conditions.
  2. Palm production companies are mostly privately-held, often family-owned and in many cases subsidiaries of powerful and politically connected national conglomerates. A majority of Latin American palm producers are privately held companies, many family-owned. This means that their level of transparency and the ability for civil society to understand their operations is much lower than is the case with companies that are publicly traded on national or international stock exchanges. Palm production businesses are also frequently part of larger, vertically integrated parent conglomerate groups. In some cases, the parent group is buying and selling to itself through various subsidiaries. In the most extreme cases, as in Peru, these larger conglomerates essentially control large portions of the national palm supply chains from input to export, creating monopolies. When the seller and the buyer are the same company, it renders many traditional supply chain pressure tactics moot.
  3. State corruption and violence against environmental, land and human rights defenders is endemic. Of the top ten palm producing countries in the region, only one (Costa Rica) is not ranked as “highy corrupt” by Transparency International. Most of them have long-histories of land rights conflicts, civil wars and impunity for violence committed against communities and human rights activists. Local, regional and national governments often collude with companies in abuses. In Colombia, violent government-affiliated paramilitary outfits worked to forcibly evict people to clear land for palm growers such as in the case of Poligrow. In Honduras, the world Bank’s International Finance Cooperation has investigated Dinant Corporation for allegations of murders of at least forty individuals linked to its palm oil plantations, security personnel and sub-contractors. These are, unfortunately, not extreme outliers, but instead examples of “business as usual” in the region. The frequency and consistency of violence has earned Latin America the dubious distinction of being the most dangerous region for environmental defenders. Key palm-producing countries Brazil, Colombia, Guatemala and Honduras all rank in the top ten for murders of defenders. Simply put, campaigning often carries an unacceptably high risk of violence against local communities and their leaders.

What Can Global Civil Society Do?

Given the uniqueness of the Latin America palm sector, global campaigners and allies will need to find new and creative ways to work on this issue. It is also essential for global environmental campaigners to deepen alliances with the local and international human rights groups that have a longstanding presence in the region. Three immediate responses to the challenge of achieving zero deforestation and no exploitation in the palm sector in Latin America include:

  • Investing in Getting More, Better Information. The global community should be shining a bright light on the sector in Latin America, doing more research to understand how it works, who the players are and how they are connected to political and financial systems both in-country and at the regional and international level.
  • Designing Creative, Non-Traditional Advocacy Campaigns. Campaigners must be talking to and learning from human rights colleagues who have decades of experience with winning campaigns in the region and on-the-ground. This also means a potential focus away from traditional corporate campaign pressure points such as globally known brands and toward a focus on regional and national household names as well as hitherto relatively unexplored financial sector connections.
  • Supporting Human Rights Defenders. Human rights violations go hand and hand with environmental devastation and in Latin America are often the necessary precondition for environmental destruction. Given the dangers faced by communities who oppose corporations seeking to grab land through unlawful and unethical means, more human and financial resources must go directly to protecting human rights and environmental activists on-the-ground.

On December 31, 2017
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