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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 
includingFedepalma 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, theDominicanRepublic, 
Panama, Ecuador, Peru and Brazil.  Post will pass OES any 
additional information on the conference as received. 
BROWNFIELD 

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