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Cablegate: Colombian Palm: Rural Savior or Human Rights


DE RUEHBO #4353/01 3441821
R 091821Z DEC 08




E.O. 12958: N/A


1. (SBU) SUMMARY: Driven by strong international demand for
palm oil, improving security in rural areas, government
support for viable alternatives to coca, and domestic demand
for palm oil-derived biodiesel, Colombia's palm industry has
expanded 70 percent since 2003. As a result, it now ranks as
the largest in the Americas and the fifth largest in the
world. President Uribe frequently points to palm as
Colombia's future motor of rural development and employment
as conflict recedes. However, the sector has come under
repeated allegations of profiting from forced displacements
of Afro-Colombian and indigenous populations, destroying
biodiversity, failing to benefit small farmers, and creating
an unsustainable industry unable to compete globally. A more
detailed analysis reveals that many of the allegations appear
exaggerated or unsubstantiated. Nevertheless, the Colombian
palm sector, and the licit employment it creates, risk
permanent denigration unless producers and the GOC are more
successful at combatting this negative image. END SUMMARY.

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Misconception #1: Conflict Palm Widespread

2. (SBU) Colombia's Pacific Coast region suffers from
numerous long-standing land tenure conflicts fueled by
displacements of local Afro-Colombian and indigenous
populations by illegal paramilitary forces, as well as by
individual legal disputes related to Colombia's collective
titling law (Law 70). Approximately 32,000 hectares of land
in Choco Department alone are in dispute under Law 70. Of
that total, 4,000 hectares were the subject of two
high-profile forced displacements in the Uraba region
(Curvarado and Jiguamiando) which were then planted with
palm. While none of the firms responsible for the subsequent
palm cultivation are members of Colombia's National
Federation of Palm Grower's (Fedepalma) or mainstream
producers, various human rights NGOs to have attempted to
link palm production generally to Colombia's armed conflict
and land rights issues as a result of these incidents.

3. (SBU) Civil society representatives such as Zoraida
Castillo of Lutheran World Relief and Aida Pesquera of Oxfam
tell us that slow progress by the GOC in securing justice in
the Uraba incidents has obscured the fact that such
documented cases represent less than two percent of
Colombia's palm cultivation. While the vast majority of the
industry has not been subject to such conflict, Fedepalma
President Jens Mesa Dishington told Econoff that he considers
the prospect of industry-wide stigmatization resulting from
isolated abuses as the most significant risk to the brand of
Colombian palm. In an effort to address the situation,
Fedepalma has supported pending legislation in Colombia's
Congress to require clear registration of all agricultural
land as a means to impede profiting from displacements. The
human rights group Association for Alternative Social
Promotion (MINGA), which blames pro-agribusiness GOC policies
for driving indigenous and peasant farmers off the land,
recognizes that Colombian land problems extend well beyond
palm, and recommends that instead of new laws the GOC should
allocate more resources to the existing institutions
responsible for land titling.

Misconception #2: Palm Destroying Biodiversity
--------------------------------------------- -

4. (U) Critics of the palm industry frequently assert that
growers are razing biodiverse lands, particularly on the
Pacific Coast, in order to introduce new cultivation. While
palm cultivation grew from 206,000 planted hectares in 2003
to an estimated 340,000 hectares in 2008, the growth has
occurred predominately in the traditional agricultural areas
of Meta, Cesar, Santander and Magdalena. Only ten percent
(34,000 hectares) of Colombia's palm sector is located in the
Pacific Coast, and its participation is declining, down from
13 percent in 2003. The GOC and Fedepalma are aware of the
global association of palm production with deforestation, and
have a stated policy of developing Colombia's palm oil and
biodiesel industry utilizing only degraded lands or lands
already in agricultural production. To that end, the GOC has
identified 3.5 million hectares of such land, of which only

66,000 hectares are located in the Pacific Coast Departments.

5. (SBU) Likewise, producers have engaged NGOs directly and
through the Kuala Lampur-based Roundtable for Sustainable
Palm Oil (RSPO), which has established eight principles and
related criteria for sustainable palm oil development. One
Colombian palm producer, Daabon, has already begun the
certification process. Fedepalma Sustainable Development
Director Andres Castro told us that Fedepalma, which
represents approximately 80 percent of Colombian palm oil
production, is also working with the GOC on a "national
interpretation" of the RSPO criteria to inform Colombian
growers how the criteria fits with existing GOC regulations.
Finally, Fedepalma, with support from the World Wildlife
Fund, held the first-ever Latin American Roundtable Meeting
on Sustainable Palm Development in October. Reflective of
these efforts, the Journal of Environmental Science and
Technology identified Colombia as one of the top five
countries for capacity to sustainably develop its palm

Misconception #3: Small Farmers Left Out

6. (U) While critics often portray Colombia's palm sector as
large-scale agroindustry, Fedepalma estimates over 5,300 of
Colombia's 7,000 palm growers are small producers cultivating
plots of 50 hectares or less, producing 20 percent of
national palm oil output. According to Fedepalma statistics,
Colombia's palm sector supports 40,000 direct jobs, including
many on small farms, and 55,000 indirect jobs in 93
municipalities and 16 departments. As the pruning of palm
trees and the harvesting of palm fruit are both labor
intensive and do not have viable mechanization alternatives,
the sector employs on average one worker per ten hectares of
palm cultivation. In addition to the new jobs that palm
production has created, palm oil mills and producers have
formed 109 production alliances across the country to ensure
existing small producers have access to credit and markets
and mills have a steady supply of palm fruit.

7. (U) USAID, through its Alternative Development Program,
supports an additional 2,400 small landowners through 24
palm projects totaling nearly 36,000 hectares. USAID has
promoted a system of alliances between large and small
producers to share the technical knowledge, access to credit,
risk-bearing capability of large producers with small
producers that provide much of the sector's 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.

Misconception #4: Colombian Palm Cannot Compete
--------------------------------------------- --

8. (U) Despite Colombia's recent boom in palm oil production,
many critics assert that the industry remains uncompetitive
over the long term. Due largely to high labor costs,
Colombia's average production cost (USD 450 per metric ton)
is as much as double that of Asian producers. Nevertheless,
Colombia ranks fourth worldwide in palm oil yield per
hectare, possesses strong domestic demand for dietary
consumption of palm oil, and enjoys lower transportation
costs to the U.S. and European markets. Currently 46 percent
of Colombian production is directed to exports, with the
Netherlands, Germany, United Kingdom, and Mexico representing
Colombia's largest markets.

9. (SBU) In addition, palm oil has become a principal
feedstock for biodiesel in Colombia, for which the GOC has
mandated five percent biodiesel blending into local diesel
fuel. The GOC forecasts Colombia's overall diesel
consumption will grow nine times faster than gasoline
consumption over the next 15 years. This growing diesel
demand combined with the biodiesel blending mandates, which
are set to increase to ten percent in 2010 and 20 percent in
2020, create a guaranteed domestic demand for Colombian palm
oil. Four biodiesel plants have come on-line in the last 18
months and two more will enter operation by mid-2009 to
process biodiesel for the impending ten percent blend.

According to Maria Emma Nuez, President of Colombia's Palm
Oil Marketing Association (Acepalma), crude palm oil
production will reach 806.000 tons in 2008 and 872,000 tons
in 2009 in response to domestic demand for palm oil-derived
biodiesel. Over the longer term, the Ministry of Agriculture
forecasts that Colombia will need to increase palm
cultivation by 700,000 hectares to produce the estimated 3.3
million liters of biodiesel Colombia will require by 2020.

Why Controversy Persists

10. (SBU) Independent observers such as Jonathan Glennie,
Country Director for Christian Aid Colombia, say much of the
controversy surrounding palm has little to do with the
industry itself and more do with booming sector becoming a
cause celebre for local communities and activists frustrated
with Colombia's broader land tenure issues, skeptical of the
country's history of boom/bust cash crops, and distrustful of
agroindustry. Zoraida Castillo and other civil society
representatives also cite the lack of GOC progress in
resolving the few, but egregious, cases of documented forced
displacement and subsequent palm cultivation in Uraba. The
pace, they say, fosters a perception among marginalized
communities that government authorities and large-scale palm
producers have colluded to advance their economic interests
at the expense of human rights and environmental protection.

Comment: Clarifying the Record Before Its Too Late
--------------------------------------------- ------

11. (SBU) The GOC recognizes that for a post-conflict
scenario to be sustainable, rural employment opportunities
must be generated. Palm has the potential to be one of the
principal motors of such employment. But whereas Colombian
palm should enjoy an image boost -- particularly compared
with Asian palm -- because of lack of rainforest destruction,
it is instead on the defensive due to human rights
allegations. Signs are that the palm industry and the GOC,
after merely dismissing the allegations as baseless, are now
beginning to grasp the potential long-term damage to the
Colombian palm brand. Senior Agriculture Ministry Advisor
Andres Espinosa told EconCouns that Agriculture Minister
Arias is seized with the issue and is coordinating a GOC
working group with producers and civil society to clarify the
public record. For its part, Fedepalma Sustainable
Development Director Castro Mesa says his association will
continue to push the GOC in private to resolve the
outstanding land and human rights cases in Uraba while
encouraging its members to pursue sustainability
certifications and deepen alliances with small producers.

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