PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 13:13 UK, 23rd Sept 2016, by Mike Verdin
Expansion into palm oil's 'new frontier' snags on land muddles

Expansion of palm oil producers into Latin America, the "new frontier for global expansion" is snagging on confusion over land rights which is encouraging some groups to expand into rainforest.

"Several" palm oil groups with experience of operating in Indonesia and Malaysia, the top two palm producing countries, have "already begun acquiring potential palm oil land in Peru for possible expansion", a US Department of Agriculture report said.

"The Peruvian Amazon appears to be an ideal investment" for these companies, given the constraints on land in South East Asia, and the requirement for oil palms to grow in equatorial areas.

"With the leading palm oil producers in Malaysia and Indonesia having very little remaining land for further expansion, the Amazon basin is considered the new frontier for global palm-area expansion," the USDA said.

However, hopes for ramping up output in the region have not been matched by outcomes, with Brazil's output expected for 2016-17 to come in flat at 340,000 tonnes for a fifth successive year, and that in Peru forecast at 51,000 tonnes, "less than 1% of estimate global output".

'Contradictory rulings'

The lack of progress comes despite moves by both Brazilian and Peruvian authorities to open up previously-cleared forest as oil palm plantation, and promote "sustainable" production of the vegetable oil, which is used in products from soap to biscuits, as well as in making biodiesel.

World's top palm oil producers, 2015-16, according to USDA

1: Indonesia, 32.0m tonnes

2: Malaysia, 18.25m tonnes

3: Thailand, 2.1m tonnes

4: Colombia, 1.273m tonnes

5: Nigeria, 970,000 tonnes

12: Brazil, 340,000 tonnes

23: Peru, 47,000 tonnes

"Unfortunately, already-cleared and non-forested lands present their own problems," the USDA said.

"Some of these lands are already inhabited, with contested or multiple-person land tenure."

In Peru, while the non-rainforest land available for farming is estimated at more than 1m hectares, much of it has yet to be officially classified as suitable "a difficult and complicated process".

"Decisions on land use are currently fragmented across national and regional authorities, giving rise to contradictory rulings."

'Increasing threat'

The impasse has limited to 38,000 hectares the estimated area of Peruvian land planted to oil palms, despite a government plan unveiled in 2003 to promote the vegetable oil, and other feedstocks for biofuel plants.

And of what has been seeded, some has come from rainforest, as companies seek to exploit government incentives, and despite Peru operating a "zero-deforestation" policy.

"Political support and economic incentives for palm oil production, both for food and fuel, create an increasing threat to forest conservation," the report said.

Land disputes

The briefing follows cautions earlier this year from environmental campaigners warning over the exploitation of virgin rainforest in Peru by palm oil groups.

The Roundtable on Sustainable Palm Oil, which promotes ethical methods of palm oil production, in April ordered Plantaciones Pucallpa, a member company which operates in Peru, to stop developing new plantations until it can prove it has not cleared any primary forest.

However, one of the most high profile disputes over a plantation group is actually in the cocoa sector, where Serfor, the official Peruvian wildlife and forestry service, has claimed that London-listed plantations group United Cacao does not have the required environmental approvals.

United Cacao - which owns nearly 4,000 hectares of land and has applied for a further 12,000 through a government privatisation programme - has denied the claim, and said it "operates in full compliance with all applicable Peruvian and environmental laws".

'Excellent conditions'

The group, founded by palm oil entrepreneur Dennis Melka, earlier this month appointed as a director Graeme Iain Brown, another executive with a background in palm output.

Mr Brown said on his appointment: "Peru offers excellent conditions, in particular freehold land, for plantation companies and a superb growing environment.

"I expect the general plantation industry, largely based in South East Asia, to take increased interest in this region in the years ahead."

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