Desecrated Forest Part 1: Palm oil routes and conflicts

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An investigation by Enrique Vera for La Encerrona

This article was first published by La Encerrona on 5 May 2023.

The tanker with number plate AMN-982 passes the gate of the Tibecocha estate and begins a first 20-kilometre journey. Three days of rain in the Ucayali region, in the Peruvian rainforest, have left the dirt road on which the truck is travelling at a cautious speed waterlogged. It is the fifth truck this November afternoon to leave the palm oil processing plant operated by Servicios Agrarios de Pucallpa SAC, a company that is part of the US-owned Ocho Sur group. Before 5 p.m., the same tanker truck arrives at the Tres Islas village and parks at the end of a line of similar vehicles. They all wait their turn to cross the Aguaytía river. Each is carrying at least 30 tonnes of crude palm oil produced at the Ocho Sur plant. The first to cross the Aguaytía in the business group's huge boats will be the D3U-977 tanker. Later, as part of another convoy that will also leave from the processing plant, one with plate number ASB-972 will arrive here.

This is the first leg of the very long pre-export journey of the crude oil from Ocho Sur, a company linked to a criminal investigation into the destruction of almost 12,000 hectares of forest for the planting of oil palm. Seven thousand of these 12,000 hectares are located in a sector of the Peruvian Amazon that the Indigenous community Santa Clara de Uchunya claims as their ancestral territory. It is what is now known as the Tibecocha estate in the district of Nueva Requena (Ucayali), despite the rejection of Santa Clara community members. This is also the location of the processing plant run by Servicios Agrarios de Pucallpa, which has been processing up to 45 tons of the fruit harvested in the vast palm plantation every hour since March 2020.

In other words, the crude palm oil that goes into the tanker trucks originates in an area of razed forest, which Santa Clara de Uchunya has claimed as part of its legal space since 1996.

The Monitoring of the Andean Amazon Project estimated that 77% of the territory deforested for palm cultivation that is now managed by the Ocho Sur group was primary forest, that is, extensive forest cover that had not been disturbed or exploited by humans. That devastation dates back to 2011, when two of the companies founded in Peru by the Czech-American Dennis Melka began operating: Plantaciones de Pucallpa, in Tibecocha, and Plantaciones de Ucayali, in Zanja Seca. In 2015, Santa Clara de Uchunya denounced Plantaciones de Pucallpa for the depredation of its forest and, the following year, Melka's two companies went into liquidation and public auction. The Ocho Sur group won the bidding and went on to control the palm estates of Plantaciones de Pucallpa and Plantaciones de Ucayali through its two companies: Ocho Sur P and Ocho Sur U, respectively. However, the same financiers of the Melka network (Anholt Services and Amerra Capital) became shareholders of the Ocho Sur group. The prosecutor's thesis holds that Plantaciones de Pucallpa and Ocho Sur P are exactly the same, that with the use of a trust they tried to dissociate them, but the executives of one ended up working in the other. Ocho Sur operates without having forestry authorisation from the Peruvian State; in fact, Plantaciones de Pucallpa also failed to obtain this while it was operating.

After crossing the Aguaytía river, the tanker trucks proceed along a trail identical to the one that leaves the Tibecocha estate, and then along the road that leads to Km 34 of the Federico Basadre road, in the district of Campoverde. A journalistic team followed the route of three of the vehicles loaded with crude oil from Ocho Sur (AMN-982, D3U77 and ASB 972). For more than two days, the trucks travelled through various locations in the rainforest, highlands and coast of Peru to their final destination: the company Blue Pacific Oils (BPO) in the city of Chancay, Lima. Less than 100 metres from the sea, the huge BPO containers receive the crude palm oil that arrives in the trucks bearing the logo of Servicios Agrarios de Pucallpa. In addition, tanker trucks carrying the brand of other industries, and some with no other markings, also arrive at BPO loaded with crude oil. According to its company website, Blue Pacific Oils is dedicated to the storage and commercialisation of palm oil, fish oil and agricultural products. From here, ascertained for this report, crude palm oil has been shipped to nine countries in the last three years.

Blue Pacific Oils is one of the six companies that make up the Sol de Palma consortium. In fact, it is the only company within this consortium whose business includes foreign trade. The other five - OLAMSA, OLPESA, INDUPALSA, INDOLMASA and OLPASA - are palm oil mills, that is, dedicated to harvesting and converting palm fruits to obtain crude oil and palm kernel oil, a derivative made from palm kernels. Sol de Palma emphasises on its website that it also has its own plants for the processing of both products, and that it works directly with 3,500 small and medium-sized producers.

Neither the Ocho Sur group nor Servicios Agrarios de Pucallpa are listed as members of the Sol de Palma consortium. However, La Encerrona has documented that Servicios Agrarios de Pucallpa sells it the crude oil taken by tanker trucks from the processing plant at the Tibecocha estate to Blue Pacific Oils in Chancay.

Confluence of oils

One of the most important organisations in the Peruvian palm oil sector is the Junta Nacional de Palma Aceitera del Perú (JUNPALMA). Five agricultural associations from the rainforest and the five industries that make up the Sol de Palma consortium are members of Junpalma. In addition, Sol de Palma itself is also part of the organisation as an export partner.

 

"At some point we had a very difficult price situation in Peru. And one of the options was that this product (crude oil) could also be exported. So the consortium was formed," Junpalma's general manager, Javier Coz Rodríguez, told La Encerrona.

 

Sol de Palma has registered exports of crude palm oil and palm kernel oil with the National Superintendency of Tax Administration (SUNAT) since 2015, and a sharp increase in foreign shipments of these products since 2020, when the processing plant of the Ocho Sur group, run by Servicios Agrarios de Pucallpa, began operating.

Javier Coz maintained that most of the crude oil produced by the mills linked to JUNPALMA goes to the domestic market, and that a smaller percentage is destined for export via Sol de Palma. Indeed, this investigation corroborated in the field that, in addition to the trucks that had left the processing plant of the Ocho Sur group, others with the logos of OLAMSA and OLPESA, mills that are members of JUNPALMA, were also entering Blue Pacific Oils.

 

"There is no contract, only a commitment to sell and that depends on prices. If it is very low, we prefer to wait to sell it on the domestic market," Coz said.

 

After a general collection of the crude oil that arrives at Sol de Palma, he added, the product is sent abroad in the name of the consortium. The manager is unaware that oil from the Ocho Sur group is also sold to Sol de Palma, and that it is accumulated with that of JUNPALMA mills for export as a single commodity.

The process of storage and external sale of oil by Sol de Palma was also described to La Encerrona by Juan Vega, vice-president of the Central Committee of Palm Growers of Ucayali (COCEPU), a union of members who own the OLAMSA company. He reiterated that Sol de Palma exports as a single product the crude oil collected from the mills that are its clients, and that the consortium is responsible for the export charges.

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"As a company dealing in an environmentally sensitive commodity, Sol de Palma must have control over the supply sources of the palm oil it sells. This is called due diligence. It doesn't matter if there are legally and illegally sourced inputs in the mix of oils. If they offer a single product to their buyers, what they are doing is violating due diligence and validating human and environmental rights violations," said Alvaro Másquez, a specialist in Constitutional Litigation and Indigenous Peoples at the Instituto de Defensa Legal.

 

Although the Ocho Sur group and Sol de Palma both claim a commitment to the sustainable production and marketing of palm oil and its derivatives, neither has yet applied for membership in the Roundtable on Sustainable Palm Oil (RSPO), which certifies companies whose raw materials are produced without harming the environment or society. "To date we have not received any applications from these companies," RSPO Latin America director Francisco Naranjo told La Encerrona. Of the nearly 5,400 RSPO members in the world, 180 are from Latin America. And nine belong to Peru, including OLPESA, one of the industries that unloads its crude oil in the same place where Ocho Sur's oil arrives. So, among the oils that are stored in Blue Pacific Oils are those processed by a company with palm fruit planted in depredated forests and those of an industry that, due to its admission to the RSPO, is working to certify its plantations and report on them periodically.

Naranjo pointed out that two requirements for any palm producer to be accepted into the RSPO are the submission of maps of their plantations and the disclosure of their corporate structure related to the palm oil chain: processors, refineries, manufacturers of any consumer goods, etc. Other requests are satellite images from different years, which would allow the RSPO to know whether and to what extent plantations have replaced forests or crops. The director of the organisation in Latin America explained that after a company is accepted, a period of public consultation begins so that any civil society actor can make a comment: "For example, if the company admitted has a track record or any issue in which it is involved," he explained. As a member, Naranjo said, the company must submit a plan for certification of its plantations and, annually, a report on its progress. Seven of the eight Peruvian companies that are part of the RSPO are at this stage.

 

"Under these RSPO guidelines, companies like Ocho Sur would not be able to obtain environmental certification. It has been proven that Ocho Sur P’s palm was that of Plantaciones de Pucallpa, and the illegalities around the plantation are transferred from the original owner to the new owner. The Tibecocha estate was developed without a change of land use and in violation of Peruvian environmental and forestry legislation," said Másquez. For Francisco Naranjo, an eventual membership application by Ocho Sur would not be a normal case due to all the precedents. "We would have to be very careful in the evaluation process," he said.

 

Even in the face of serious questions about the business group, the US Ambassador to Peru, Lisa Kenna, said on her Twitter account that Ocho Sur is leading the way in offering jobs in Ucayali "with sustainable agricultural practices and without deforestation". Kenna made her praise public on 29 March, after visiting the palm oil company's facilities alone, after absenting herself from activities she was carrying out with her Norwegian, British and German counterparts in the city of Pucallpa.

The Ambassador's statements were immediately rejected by Indigenous organisations as well as Peruvian and foreign environmental organisations. In a joint statement, they stressed that Ocho Sur operates over illegally deforested forest in Ucayali, that the company lacks environmental permits, that it is linked to campaigns against Indigenous leaders, and that it promotes divisions in Santa Clara de Uchunya. "Ambassador Kenna has had direct knowledge of these allegations (...) However, once again, she has shown no commitment to the human rights of Indigenous peoples", they point out in the statement. At the end of the text, the signatories demand that the Ambassador delete the tweet and, together with the US government, offer a public apology to the Indigenous organisations affected. None of this has happened so far.

Recipients worldwide

According to Peruvian Customs records, there are no exports in the name of Ocho Sur or Servicios Agrarios de Pucallpa. As for Blue Pacific Oils, it has no overseas shipments of palm oil or palm kernel oil. The director of Operations and Environment of the National Port Authority (APN), Carlos Molina, confirmed to La Encerrona that the palm oil that is exported from Blue Pacific Oils, in Chancay, is the property of the Sol de Palma consortium. For this purpose, BPO is authorised to operate a multi-bay port, which allows direct shipment from the storage tank to the vessel via underwater pipelines. The National Port Authority stated for this report that BPO's permit to operate the multi-bay port is valid until 17 April 2025. Once the licence expires, the APN stressed, Blue Pacific Oils will have to apply for its adaptation of port technical feasibilities and a new authorisation. 

 

"This terminal has an area of 60,237.40 m2. There is a vessel operations area (loading and unloading) comprised of four first class mooring buoys, two submarine pipelines for transport and unloading, a signalling buoy and four buoys," the National Port Authority remarked.

 

To identify how many and which are the overseas consignees of the crude oil that is exported by Sol de Palma, La Encerrona analysed two databases constructed with information from Customs. From 1 January 2020 to 14 November 2022, as assessed, the product arrived to more than 20 companies in nine countries located in Europe, Africa, South America, North America and the Caribbean.

The National Port Authority also informed this investigation that between January 2021 and August 2022 alone, the Blue Pacific Oils multi-bay terminal handled 21 vessels, moving 100,933.00 metric tons (100,933,000 kilograms) of palm oil. Some of the destinations of the product, consigned by the National Port Authority, were Colombia, Mexico, Dominican Republic, Netherlands, Spain and Ecuador. Other countries to which the palm oil shipped by Sol de Palma arrived were Brazil, Morocco and Kenya.

The National Superintendence of Tax Administration contains the dates of exports, weights and also the countries to which Sol de Palma shipped the goods. However, in the analysis of the databases, La Encerrona found that in some cases the palm oil was not received directly by the recipient companies, but in the name of a broker. One of them is Pasternak, Baum & Co, an independent broker between importers and exporters of agricultural commodities worldwide. Oscar Quiñones, head of the Foreign Trade Research and Development Institute of the Lima Chamber of Commerce (IDEXCAM), explained that a broker intervenes as a buying or selling agent. In other words, it can buy the product on behalf of the importer and then deliver it to the importer's country, or, at the exporter's request, it can sell the merchandise and place it with the end customer. In both cases the broker will appear as the shipper.

 

"The reasons why an exporter does not end up being the declared supplier are multiple: lack of liquidity of the importer to pay the exporter or that the exporter does not engage in direct distribution, for example. This is the way foreign trade is, there can be direct trade between buyer and seller, and also the presence of a broker. This does not alter the transaction itself," Quiñones said.

 

Mexico, Colombia and the Dominican Republic are the countries to which Sol de Palma has shipped the most crude palm oil in the last three years, according to SUNAT and Customs records. Among the companies listed as consignees there are Industrial Aceitera S.A., Industrializadora Oleofinos and Team Foods Mexico (Mexico); Cesar Iglesias, La Fabril, Sanut Dominicana and Mercasid S.A. (Dominican Republic); Grasco Ltda., Biocosta Green Energy S.A.S. and Team Foods Colombia S.A. (Colombia). These industries are involved in the processing of edible oils and fats, household  products and other consumer goods.

In addition, the corporate reports of other manufacturing and trading companies such as Bunge Loders Croklaan and Louis Dreyfus Company (The Netherlands), Lasenor Emul and Lípidos Santiga S.A. (Spain), Meiji Group and Nisshin Oillio (Japan), and Vandemoortele NV (Belgium) include Servicios Agrarios de Pucallpa SAC in their lists of suppliers (as an indirect supplier) of crude palm oil. All seven foreign companies are members of the RSPO and are therefore committed to using palm oil that is sustainable or the result of operations which respect the environment and human rights. For this reason, around June 2022, the Interethnic Association for the Development of the Peruvian Rainforest (AIDESEP), the most representative Indigenous organisation in Peru, issued a statement condemning the alleged predatory practices and reported divisiveness promoted by the Ocho Sur group in Santa Clara de Uchunya. AIDESEP called on the seven companies to respect the rights of  Indigenous communities and to step up to protect forests.

 

What are you doing to ensure that your actions or omissions do not undermine the rights of our communities and peoples?" the Peruvian indigenous organisation questioned in its letter.

 

To date, only three of the companies AIDESEP addressed in its letter have replied. One of them is Lípidos Santiga (LIPSA), a Spanish vegetable oil processor and refiner. In its response, published by the Business and Human Rights Information Centre, Lípidos Santiga indicated that the connection it has had with Ocho Sur since 2020 is through Louis Dreyfus Company, one of its direct suppliers. Indeed, some Peruvian Customs records show that exports of the Sol de Palma consortium to Spain are destined for Louis Dreyfus Company. This is how this commercial giant in agricultural raw materials then supplies Lípidos Santiga with palm oil from Ocho Sur, which is supplied by Servicios Agrarios de Pucallpa. The Spanish firm said it has asked Louis Dreyfus Company to initiate an investigation into the allegations against Ocho Sur and to "have the necessary information to make decisions".

Complaint, investigation and blockage

The case of Louis Dreyfus Company is symbolic. In its latest reports called Traceability to Mill, Servicios Agrarios de Pucallpa SAC appears as an indirect supplier of palm oil to the refineries that Louis Dreyfus has in Indonesia and to its commercial operations in Singapore. In other words, the oil from Ocho Sur reaches Louis Dreyfus Company through an intermediary firm that exports it from Peru. Today we know that this is the Sol de Palma consortium, which also appears as a business partner in the corporate reports of the agribusiness firm. Due to this situation, which has persisted since 2020, Peruvian Indigenous leaders together with national and international organisations filed a complaint against Louis Dreyfus in early December 2022 with the National Contact Point (NCP) of the Guidelines for Multinational Enterprises of the Organisation for Economic Cooperation and Development (OECD) in the Netherlands.

The document states that the company failed to identify and prevent adverse impacts caused by its relationship with the Ocho Sur group. It also holds that the agribusiness company contributed to environmental harm, and that it breached OECD disclosure and communication standards through "misleading claims on its website and other official publications relating to the sustainability of palm oil, its 'green' credentials and the compatibility of its operations with human rights and the environment". The complainants asked the National Contact Point to address the issue as a matter of urgency. The complaint is the first about non-compliance with the Organisation for Economic Cooperation and Development Guidelines by a leading palm oil trading company.

But prior to this new action by Peruvian Indigenous representatives and their allied organisations, Louis Dreyfus Company had already remarked that it took AIDESEP's June statement on Ocho Sur's alleged environmental and human rights violations "very seriously". And that, despite not having a direct relationship with Ocho Sur, it had held meetings with the company through its direct business partner (Sol de Palma) to receive information on the allegations and to carry out its own investigation. This seems to be the same path that Bunge Loders Croklaan, a global producer of vegetable oils and fats, has been following since last October. Bunge decided to block Ocho Sur and Servicios Agrarios de Pucallpa in its supply chain, in response to the allegations made by AIDESEP in June 2022. As part of the resolution uploaded to the Complaints section of its website, Bunge Loders Croklaan highlighted that through an internal monitoring system it discovered recent deforestation in and around the company's concessions in the Peruvian rainforest.

 

"The company in question [Ocho Sur] and its associates will remain blocked in Bunge's supply chain until a credible and robust Recovery Plan is developed," the Netherlands-based company said.

 

As with all shipments of palm oil from Ocho Sur, neither Ocho Sur nor Servicios Agrarios de Pucallpa are listed as direct suppliers to Bunge Loders Croklaan. In an email, Bunge informed La Encerrona that Ocho Sur was connected to its supply chain through a first-tier supplier that buys crude oil from Servicios Agrarios de Pucallpa (in charge of processing Ocho Sur's plantations). That is, through the Sol de Palma consortium. The world producer of vegetable oils and fats noted that it contacted this supplier to ask for clarification of the allegations against Ocho Sur. In its communication with La Encerrona, Bunge did not indicate whether it obtained explanations from Sol de Palma. Bunge Loders Croklaan is one of the supply chains where Pasternak, Baum & Co. also stands out as an intermediary.

 

"We have almost 20% of the world's palm oil production certified (...) We need the market to exert pressure and demand sustainable palm products. That is the only way to mobilise producers to incorporate sustainability practices in their operations. There is still a long way to go," said Francisco Naranjo, RSPO's Latin America director.

 

 

Upturn in exports

Although Sol de Palma started exporting crude and palm kernel oil in 2015, figures from SUNAT and Customs in Peru show that the consortium's shipments abroad have increased considerably since 2020. La Encerrona requested an interview with the manager of Sol de Palma, María Velarde, but by the time this report went to press we had not received a response. However, in a statement given for a university thesis in July 2020, Velarde pointed out that palm cultivation areas had expanded as a result of improved production. She stressed that the price of palm oil for export will always be lower than the local cost. And that, generally, what is exported is what has not been consumed by the domestic market. "Only the surpluses are placed and as they are getting bigger and bigger, then there is more volume for export," she explained.

At the time of the manager's statement, Sol de Palma was working with several Peruvian mills and producers, but the Ocho Sur processing plant, run by Servicios Agrarios de Pucallpa, was only in its first months of operation. One of the objectives of the interview with María Velarde was to find out whether the Sol de Palma consortium also receives only the surplus oil from Ocho Sur. This is unlikely, as this media outlet corroborated during six days of coverage that almost all the tanker trucks leaving the plant located in Tibecocha arrived at Blue Pacific Oils, where the crude oil from various industries is stored before being exported as a whole in the name of Sol de Palma. The latter is precisely one of the points Velarde described in the 2020 interview: "Everything comes out of our warehouses at Blue Pacific Oils. Sol de Palma has brought all the mills together and is the exporter of palm oil from all of them". For this report, the general manager of the Junta Nacional de Palma, Javier Coz, and the vice-president of COCEPU, Juan Vega, confirmed this.

Like Sol de Palma, La Encerrona also requested an interview with the Ocho Sur group, but the company did not respond to the request. However, in an interview granted to the Peruvian media outlet El Comercio at the beginning of 2022, the CEO of the business group, Michael Spoor, stated that most of Ocho Sur's production is exported to the international market. And that, locally, they were only selling "to a few clients". In the investigation for this report, La Encerrona found that of all the tanker trucks that left the processing plant - some 20 in six days - only two moved crude oil to Industria Palm Oleo, located at kilometre 12 of the Federico Basadre highway, Ucayali. Industria Palm Oleo, according to SUNAT, produces vegetable oils and fats, and manufactures soaps, detergents, perfumes and toiletries. It is not a member of the Roundtable on Sustainable Palm Oil.

The great strength of the Ocho Sur group therefore lies in the sale of its crude oil for export. Since 2020, when Servicios Agrarios de Pucallpa started operating the Tibecocha mill, the Sol de Palma consortium has diversified its markets. It moved from Colombia, its main destination in South America, to export for the first time to Brazil, the Netherlands and Kenya, for example. That year, Sol de Palma reported 35,519,979 kilograms of crude oil (US$23,489,221) exported, and since then it has positioned itself as the leading company in sales of the product abroad. The trend continued in the following two years: in 2021 it exported 56,679,704 kg (US$61,204,157), and between 1 January and 14 November 2022 it exported 52,733,720 kg (US$72,331,849). During the period analysed (2020-2022), Sol de Palma beat the companies that had the best figures for crude palm oil exports, such as Exportadora Romex, and even refined palm oil, such as Industrias del Espino (of the Grupo Palmas).

Javier Coz, manager of JUNPALMA, calculated that almost 350,000 tonnes of crude palm oil are produced in Peru every year. After a quick mental equation, Coz told La Encerrona that Grupo Palmas should reach 160,000 tonnes; that JUNPALMA, with all its mills, produces 130,000 tonnes; and the Ocho Sur group, 50,000. In the interview with El Comercio, Michael Spoor stated that in order to reach 50,000 tonnes of oil production by 2021, 200,000 tonnes of palm fruit had to be processed. "Our plantations are still young and are producing more and more every year," he said. For this reason, Spoor said, Ocho Sur was going to invest between US$7 and US$8 million in 2022 and 2023 to double the plant's production capacity, i.e. to process not 45 but 90 tonnes of fruit per hour.

The community members and leaders fighting for the titling of the ancestral territory of Santa Clara de Uchunya live with the uncertainty as to whether Ocho Sur's attempts to double its production will lead to another large-scale deforestation. A former community leader, who asked not to reveal his identity, is convinced that the business group's plan aims to cover the forested land still protected by the Indigenous people of Santa Clara with oil palm. A process that, he says, goes hand in hand with the growing deforestation and the division in the community between those who are siding with the company and those who are fighting for their livelihoods. "We are facing an economic monster that is pitting us against each other," said the Indigenous leader with evident anguish. It is within this critical and disputed scenario that one of the supply chains that has boosted crude palm oil exports in the last three years begins. This business treads on a retreating community.