How Colombia became Latin America’s palm oil powerhouse

PUERTO CONCORDIA, Colombia — Councilman Ricardo Vargas* sits at the bus depot in the riverside hamlet of Puerto Concordia where narco-inspired corridos play on the radio and a sea of oil palm expands outside town in all directions. Vargas explained that the palm oil companies came to his municipality roughly 15 years ago in the midst of an apparently endless armed conflict between the state authorities, paramilitary groups and Marxist guerrilla rebels, the FARC.

Currently, Vargas estimates the palm growers employ 150 people from the municipality — the majority of the workers arrive from elsewhere — on a limited income that allows them “to live poorly.”

“The palm growers don’t pay local taxes, or do anything to help the municipality,” Vargas said. “We need help… our schools are deteriorating, the roads are poorly maintained, we can’t adequately support our grandparents or children, but the palm growers don’t lift a finger.”

Vargas said the original oil palm cultivation goal for his municipality was 40,000 hectares, but it’s closer to 15,000 hectares at this point. “Upon initiation, the palm growers made a 10-year agreement with the municipality, but it’s over now, and the conditions necessary for a renewal no longer exist.”

However, Colombia’s National Planning Department released a map in February 2018 that indicated the land laws in Puerto Concordia may soon change dramatically. The legislative framework, which has yet to be enacted, could streamline development of the remaining 25,000 hectares of projected oil palm development in the municipality. But critics worry it could cause conflicts with environmental regulatory frameworks and infringe on the land rights of small farmers called campesinos.

Palm oil and Colombia’s perpetual land conflicts

With the disarming and demobilization of Colombia’s oldest, largest guerrilla group the FARC in 2016, the government talked about writing a new chapter in the country’s long-troubled history. One of the government’s central goals for peace was to expand economic and social investment in the countryside by encouraging agricultural development — especially in areas that were previously off-limits due to conflict.

The peace deal attempted to address and remedy the root societal problems that had caused a half-century of struggle. The first agreement, out of six negotiated between the government and the FARC, recognized that unequal land distribution and underdevelopment in the country’s rural areas were major causes of the armed conflict, and aimed to implement comprehensive rural reform.

A year and a half after the agreement was formalized into law, however, observers say the government has failed to make any concerted progress toward integrated rural reform. In February, the International Verification Commission on Human Rights Chief Joaquin Sanchez told European lawmakers that “only 5% of integrated rural reform plans have been completed.” 

Since the colonization of Colombia by the Spanish, the country has always grappled with its relationship to land distribution. For the first centuries of its existence, the colonial state expropriated territories from indigenous groups, defining them as vacant lands, or baldìos in Spanish. The state then handed over these “vacant” territories parcel-by-parcel to large- and small-scale land colonizers who would provide the Spanish crown with wealth generation through agricultural development and other economic projects.

It is in this colonial period when the first large landholders, known as latifundios, have their origins. However, the tendency toward land concentrations has increased over the past 30 years.

Today, Colombia has the dubious distinction of holding the most unequal distribution of landownership in Latin America. The top 1 percent of large farms account for 81 percent of the country’s productive land while the other 19 percent of land is split among the remaining 99 percent of small landholders, according to an analysis by Oxfam Colombia of publicly released statistics.

Although land distribution is highly unequal in Colombia, the government passed a Agrarian Law 160 of 1994 that ruled State-granted baldìos cannot be larger than the so-called Family Agricultural Unit (UAF), whose area, which depends on the region and the type of soil, must provide enough land to meet a campesino family’s nutritional requirements.

However, the UAF law is not supported by all. In a 2009 report, the US Department of Agriculture (USDA) said “the UAF is the largest barrier to development of commercial, large-scale agriculture in Colombia.”

During the ongoing conflict and bloodshed, tens of thousand of campesinos have lost land rights and their lives. The United Nations High Commissioner for Refugees (UNHCR) counts 7.4 million have been internally displaced due to conflict.

In 2011, President Juan Manuel Santos passed the historic Victims Law that recognized land restitution rights for displaced campesinos. By April 2018, Land Restitution Unit (URT) reported more than 291,000 hectares of state lands had been returned to nearly 37,000 displaced individual farmers, as well as to indigenous and afro-Colombian groups.

The URT had registered more than 100,000 land restitution petitions by May 2017, but Colombia is still far away from recognizing the land rights of 7.4 million displaced campesinos.

The National Center of Historical Memory, in its 2016 report Land and Rural Conflict, said that one of the effects of the armed conflict was that “transient crops planted by the campesinos are replaced by agro-industrial crops such as oil palm, sugar cane and teak.”

In an interview with Verdad Abierta, URT Legal Director Ruben Revelo explained that when looking at regions of the country where displacement was most widespread, agricultural regions with “very high productivity” such as Uraba Antioquia — where heavy rainfall creates highly favorable growing conditions — were “directly proportional to land dispossession.”

“One of the assumptions for armed conflict is that the armed groups have territorial control, but that control is linked to economic interests,” Revelo said.

A spatial relationship study between palm oil and forced displacement conducted by Cartagena University Professor Camilo Sabogal in 2008 found a “direct relationship between palm and displacement in areas where crops were promoted.” According to Sabogal, palm-oil producing municipalities reported double the rate of displacement between 2002 and 2009 compared to municipalities without a palm oil presence.

The study notes that more research was necessary to prove a “causal link” between palm oil and forced displacement. However, there is evidence of such a relationship in certain areas based on court testimony by demobilized paramilitary members as reported by a consortium of organizations that includes the National Center of Historical Memory.

According to the informants, umbrella paramilitary organization AUC leader Vicente Castaño explicitly aimed to remove campesinos from large extensions of land through massacres and forced displacement to develop palm oil projects in remote zones of the country such as Bajo Atrato, Choco, in the northwest near the Darien Gap and Mapiripan, Meta in the southeast near the Amazon rainforest.

Fedepalma dismissed accusations that the palm oil industry played a significant role in the country’s displacement of over 7 million campesinos.

“Displacement occurs mainly due to informal or illegal actors, not those who develop their business activity,” said Fedepalma President Jen Mesa in an email to Mongabay. “The oil palm industry is mainly a formal business activity.”

Palm oil: rebirth of the countryside?

 The Ministry of Agriculture Juan Guillermo Zuluaga has signaled that the palm oil industry will play a critical role in the “rebirth of the countryside” led by the central government.

Colombia produces more palm oil than any other country in Latin America and, as of 2016, is considered the fourth-largest producer worldwide. Palm oil producer organization Fedepalma reported a record 1.6 million metric tons of crude palm oil was produced in Colombia in 2017 — a substantial 42 percent increase over the previous year. According to the National Administrative Department of Statistics (DANE), palm oil-related exports generated $414 million in export revenue for Colombia in 2017, up 48 percent from the year before and most of it heading to the EU.

Palm oil, together with ethanol, also forms the backbone to Colombia’s biodiesel industry, which by law must account for 10 percent of automobile fuel sold nationwide.

Commercial oil palm cultivation in Colombia began in 1945 when the U.S.-based United Fruit Company established a plantation in the banana zone of the Magdalena department. For the next three decades, cultivation grew moderately as the palm oil produced was largely destined for local markets.

However, following the economic liberalization of Colombia’s economy in the 1990s and then the 2002 election of former President Alvaro Uribe — who is described by Bloomberg as a “market-darling” and whose campaign was supported by at least 45 of Colombia’s most influential agricultural families — the palm oil industry began a trajectory of rapid growth over the next 16 years.

According to Fedepalma, the amount land under cultivation grew 200 percent in less than two decades, from 157,000 hectares in 2000 to 516,000 hectares in 2017.

To promote palm oil expansion, Uribe provided the industry with a lower tax rate and credit finance options. Sociologist researcher Victoria Marin-Burgos’ studies on palm oil expansion between 2000 and 2010 showed that Uribe’s special treatment helped to expand palm oil projects into municipalities that had experienced high and medium levels of displacement.

Marin-Burgos said that Carlos Murgas, who served as Agricultural Minister during the presidency of Uribe’s predecessor Andres Pastrana, was responsible for developing the “palm oil model” where palm oil companies associate small landholders into “productive alliance” contract agreements.

“Under the palm oil model introduced by Murgas, the palm oil business doesn’t own the land, but has a contract that delivers production privileges,” Marin-Burgos said. “This way they can make profits with much lower risk.”

In the conflict-torn Catatumbo region near the border with Venezuela, Murgas’ palm oil business Oleoflores S.A. received support from the U.S. Agency for International Development (USAID) as part of an effort to encourage campesinos engaged in illicit crop cultivation to switch to oil palm. The campesinos were part of the productive alliance scheme where Murgas’ agribusiness would provide seeds, fertilizer and technical assistance, and the palm oil produced by these small-scale growers was sold into Oleoflores’ biodiesel projects. (Oleoflores did not respond to Mongabay’s requests for comment.)

By the end of 2009, USAID had supported 24 oil palm projects that covered about 52,000 hectares that involved small-scale grower schemes operated by fifteen anchor organizations, according to research by Marin-Burgos. This represented about 25 percent of the hectares planted between 2000 and 2009.

The USAID program was funded through Plan Colombia, which began in 1999 and ultimately funneled $10 billion to the Latin American country in an attempt to curb drug trafficking. However, an investigative report published in the Nation in 2009 showed that a portion of the USAID funds meant to discourage illicit crop cultivations were given to palm producing companies linked to alleged drug traffickers and paramilitary groups.

New law spearheads agribusiness, palm oil expansion 

On January 28, 2016, President Juan Manuel Santos passed a law — ruled constitutional by the Constitutional Court this month after a legal challenge initially delayed its implementation — that will allow for the formation of Rural, Social, and Economic Development Zones (ZIDRES). The would modify the UAF

In the words of the Colombian government’s exports and tourism promotion agency Procolombia explained the ZIDRES territories are “isolated from urban areas, demand elevated costs for their agricultural and climate characteristics, have low population density, present high rates of poverty, or lack the minimal infrastructure necessary for the transport and commercialization of products.”

Procolombia explained the law as a new model for “entrepreneurs and agricultural workers…to generate large-scale production activities that will maximize the productivity of the labor and reducing the costs of the agricultural production.”

However, critics such as Comisión Colombiana de Juristas (CCJ) lawyer Jhenifer Mojica said that the ZIDRES law would “spearhead the expansion of the multinational agroindustrial groups in Colombia.”

Mojica said the ZIDRES land use changes will effectively “legalize the accumulation of land” that agribusiness interests “illegitimately obtained during the armed conflict” at the cost of the country’s campesinos and autonomous ethnic groups who still have individual and collective land restitution cases pending injunctions.

“The ZIDRES law was created for the benefit of multinational agribusiness interests such as palm oil,” Mojica said. “It doesn’t work for campesinos because it will make the land concentration conflict worse.”

OXFAM Colombia Director Aida Pesquera brought a lawsuit against the ZIDRES law before the Constitutional Court arguing that the law creates an unequal development model and it puts the campesinos’ political and human rights at risk.

In addition to the ZIDRES law, OXFAM Colombia and other campesino rights groups are opposing a new law in congress, “Ley de Tierras,” that would extend the ZIDRES legislation into rest of the country by granting large landowners and multinational companies legal access to baldios where they could develop mining extraction and agro-industrial projects on large tracts of land.

“The worrying thing is that this model already exists. The palm sector uses it a lot and we know that it is very disadvantageous for the farmers because they end up bearing the risks of the harvest, assuming microcredits that later they cannot pay, and delivering the land for periods of 20 or 30 years, during which time they cannot use it for any other activity,” said Pesquera to Mongabay Latin America.

The National Council of Economic and Social Policy proposed ZIDRES areas accounting for 7.2 million hectares, or roughly 6.4 percent of the national territory.

At the same time, the Ministry of Agriculture’s Rural Land Planning Department (UPRA) and Fedepalma released a report in 2017 that studied the country’s soils, signaling that 16 million hectares — 14 percent of the country’s total land area — are suitable for oil palm cultivation.

Human Rights Everywhere (HREV) produced a study that overlayed the palm oil suitability map released by UPRA over the ZIDRES reference areas. The study showed that the ZIDRES correspond 75.5 percent with areas of the country deemed apt for oil palm cultivation.

Fedepalma told Mongabay it worked alongside the agro-industrial association Agricultural Society of Colombia (SAC) to “analyze the legislative proposals” presented by ZIDRES.

In an interview with Fedepalma trade magazine Palmicultor, Jorge Enrique Velez, who played a critical role in crafting the ZIDRES legislation, said the land ownership model in the baldios would change to “surface rights that would allow for land exploitation.”

Enrique Velez explained that the surface rights would not be affected by Colombia’s laws against land accumulation because a single business owner, entity or multinational corporation could “buy various surface rights” without being required to own the title to the land.

Eberto Díaz, representative of the Agrarian Summit, said to local media El Espectador that the Zidres law would represent a counter-agrarian reform by eliminating the UAF, and with it the state’s legal stance against land accumulation.

“This the second stage in counter-agrarian reform,” Díaz said. “The first was because of paramilitary violence. This time it’s through the law. ”

International concerns for Colombia’s palm oil

Earlier this year, Colombia’s palm oil industry and central government expressed concern that the European Parliament’s vote to ban the use of palm oil in all European biofuels by 2020 – due largely to concerns over environmental impacts – would negatively affect the industry in Colombia.

Minister of Agriculture Zuluaga traveled to Europe alongside Fedepalma President Mesa to defend the Colombian palm industry before the European Union’s parliament, telling the EU parliament that Colombian palm oil is “unique and differentiated.”

Attempting to distance themselves from the environmental degradation caused by palm oil in Southeast Asia, Mesa told Mongabay in an email that Colombia had 40 million hectares of land available to cultivation of which only 7 million is under cultivation. The organization said the rest is underdeveloped, degraded land currently used for inefficient cattle ranching operations that could be developed with palm oil without causing further deforestation or damaging the country’s rich biodiversity.

Fedepalma told Mongabay that the trade association as well as 21 palm oil companies had signed a Zero Deforestation Agreement with the Ministry of Environment as part of Colombia’s commitment to reduce greenhouse gas emissions.

“This initiative seeks to ensure that the signatory companies can demonstrate that their palm oil production and supply chains are free of deforestation,” Fedepalma president Mesa said.

Mojica argued that the palm oil-supportive ZIDRES carry serious environmental “oversights” as the ZIDRES are planned for forest reserve zones, which she argued would conflict with environmental regulations meant to ensure the integrity of ecosystems and biodiversity.

Critics like Mojica claim that ZIDRES legislative framework conflicts with the regulations surrounding the Macarena Environmental Management Area, which is located in the highly biodiverse transition zone between the Colombian Amazon, Eastern Plains and Andes.

This protected area emcompasses a wide territory around Serrania de la Macarena National Park, most famously known for Caño Cristales, where algae blooms create a vibrant underwater explosion of color at certain times of year.

“The zones where the ZIDRES are planned are biodiverse regions where the land has been more or less conserved with small-scale agriculture,” Mojica said. “Oil palm cultivation, on the other hand, reroutes water tables, changes soil compositions and introduces agrochemicals such as glisophate [sic] into sensitive, remote ecological areas.

“The impacts with large-scale industrial agricultural projects in these ecologically sensitive areas will not be restrained.”

 

*Names changed to protect the privacy of those interviewed.

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