Cablegate: Sustainable Palm Oil Production in Colombia

VZCZCXYZ0001
RR RUEHWEB

DE RUEHBO #2331/01 1782130
ZNR UUUUU ZZH
R 262130Z JUN 08 ZDK
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 3362
INFO RUEHBR/AMEMBASSY BRASILIA 8265
RUEHCV/AMEMBASSY CARACAS 0625
RUEHGT/AMEMBASSY GUATEMALA 2618
RUEHLP/AMEMBASSY LA PAZ JUN LIMA 6309
RUEHMU/AMEMBASSY MANAGUA 2279
RUEHME/AMEMBASSY MEXICO 8908
RUEHZP/AMEMBASSY PANAMA 1924
RUEHQT/AMEMBASSY QUITO 6973
RUEHSJ/AMEMBASSY SAN JOSE 4931
RUEHSN/AMEMBASSY SAN SALVADOR 2039
RUEHDG/AMEMBASSY SANTO DOMINGO 2122
RUEHTG/AMEMBASSY TEGUCIGALPA 1699
RUEHRC/DEPT OF AGRICULTURE WASHDC

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

© Scoop Media