Caribbean & Central America - May 2020

Given its land area, the fact that Guatemala ranks first among Latin American countries on the US Department of Agriculture (USDA) list of the world’s top palm oil exporters might come as a surprise. USDA figures released in February 2020 show that over the last three years, Guatemala shipped over 800,000 tonnes (t) of the oilseed ubiquitous in consumer goods in a trade worth over US$400m a year.

However, in Guatemala and Honduras competition for natural resources including for rich agricultural land apt for palm oil production has generated crime, corruption, and forced migration. These are unwelcome bi-products of a lucrative industry that is coming under increasing international scrutiny and were high on the agenda as the Latin American chapter of the main industry certification body the Roundtable for Sustainable Palm Oil (RSPO) met in Campeche, Mexico, from 3-5 March.

Guatemala

Bananas, coffee, and sugar still outrank palm oil as Guatemala’s top export. Yet the latter has become one of its fastest growing agricultural exports since it was first planted in the 1980s, initially replacing cotton. Expansion took on added impetus following the end of the 36-year civil war in 1996. While it currently accounts for 1.2% of national GDP, according to the national palm growers’ association, Gremial de Palmicultores de Guatemala (Grepalma), it represents as much as 20% of GDP for the northern department of Petén. Guatemala stands out among international palm producers for its land use efficiency, producing 6.3t per hectare compared to the global average of 4t, Grepalma claims. Guatemalan growers supply major international brands including Wilmar International, Nestlé, and Cargill.

The industry’s reputation has, however, been tarnished in recent years for various reasons. Palm oil companies have made headlines in relation to criminal investigations. For example in March 2018, three executives from one of the country’s biggest palm oil companies Reforestadora de Palmas del Petén (Repsa), owner Hugo Alberto Molina Botrán, Luis Alberto Paz Masek, and Carlos Enrique Arévalo García were arrested on charges of bribery and tax fraud in relation to a high profile corruption investigation although were subsequently released on bail.

Human rights groups like Ireland’s Front Line Defenders linked the 2015 murder of activist Rigoberto Lima Choc to his efforts to document alleged environmental damage which occurred due to Repsa’s activities in La Pasión river in northern Guatemala. No one has been convicted for masterminding the crime. Lima’s murder came soon after he successfully brought charges of ‘ecocide’ against Repsa following a toxic effluent spill although these were dismissed following his death. In late 2017 Cargill announced it was suspending sourcing palm oil from Repsa while Wilmar and Nestlé followed suit in early 2018.

The Guatemalan government has also attracted transparency concerns amid suspected efforts to protect powerful local companies. In September 2019, the previous Morales administration declared a state of siege in 22 municipalities in north-eastern Guatemala, restricting basic rights and placing them under military control. The move followed the deaths of three soldiers in Semuy II community, El Estor municipality, where local palm oil company Naturaceites owns considerable land. The government’s insistence the state of siege was necessary to tackle drug trafficking in the area was disputed by human rights groups such as Fundación Guillermo Torriello (FGT) and the Costa Rica-headquartered centre for justice and international law (Cejil) which note that social conflicts over natural resources - including palm oil - are rife in the area (see sidebar).

Honduras

First planted by the US firm, United Fruit Company, on the Atlantic coast in the 1950s, palm oil has long stimulated Honduras’ rural economy. Over 1,100 hectares were planted during the land reform process of the 1970s that shifted from traditional subsistence to market-orientated production. The land ‘modernisation’ drive carried out under former president, Rafael Leonardo Callejas (1990-1994), had largely faltered throughout the 1980s but with the later support of the World Bank (WB) the sector boomed following changes to the country’s agrarian law in 1992. Cooperative plots were broken up and sold. Palm oil production has risen 560% since its 1990s average, according to USDA figures cited by Mongabay, a non-profit conservation and environmental science news platform; and Honduras exported 570t of palm oil in 2019, accounting for 7.7% of the country’s exports.

One major benefactor of this boom has been Honduran firm Corporación Dinant, owned by prominent businessman Miguel Facussé, the uncle of former president Carlos Roberto Flores (1998-2002). Facussé, who died in 2015, received WB support despite conflicts with local communities at operations in the Bajo Aguán area in the north-eastern departments of Colón and Yoro, which became the centre of the palm oil industry - and of violence linked to land disputes.

Corporación Dinant made headlines in December 2013 after the WB’s internal watchdog, the Office of the Compliance Advisor/Ombudsman (CAO), published the findings of an investigation into a US$30m loan to Dinant by the WB private-sector lending arm, International Finance Corporation (IFC). This found that, among other things it “either failed to spot the serious social, political, and human rights context in which this company is operating or where it did, failed to act effectively on the information”. According to the  CAO report, “there were at least 102 killings of people affiliated with the peasant farmer movement in…Bajo Aguán between January 2010 and May 2013, with specific allegations…linking 40 of these to Dinant properties, Dinant security guards or its third party security contractor”. Dinant’s position is that the killings of peasant farmers reported were either unconnected to Dinant and its security personnel or involve acts of “legitimate self-defence on behalf of its security personnel”.

Today, Honduras has 190,000 hectares of palm oil plantations, which extend across the Atlantic coast from Colón department in the west to Cortés on the east, according to the agriculture and livestock ministry (SAG). Yet, regulation of the expansion into new areas remains weak, including in notionally protected areas (see sidebar).

Moving forward

Both Guatemala and Honduras have sought to turn a page on the darker side of this industry. Separately, both Honduran and Guatemalan palm oil producers last year (on 10 July and 3 October respectively) committed to boost the sustainability of palm oil production and zero deforestation. Grepalma has seen members’ signatures to its pledges double since then. The association told industry publication Food Navigator on 9 March that a market opting for oil produced with a “economic, environmental and social balance” is its best ally. Indeed, with consumer demands for greater transparency and sustainability growing, big producers increasingly have to demonstrate an ability to meet these demands.

• Dubious justification

In a statement dated 19 September FGT slammed the justification for the state of siege as “lies” to justify silencing local communities and restricting human rights.

• Deforestation

A report published in October 2019 by Mongabay cites satellite analysis by the University of Maryland which showed that Punta Izopo national park in the northern Caribbean department of Atlántida lost 8% of forest cover between 2001 and 2017 - linked to palm oil plantation expansion. According to the report, in the Jeanette Kawas national park, also in Atlántida and which is named after the anti-palm activist who was assassinated in 1995 – six square kilometres are destroyed per year.