By TBY | Colombia | Sep 06, 2017
The government and private sector investors are betting heavily not just on palm oil's economic potential, but also as a strategic product in the rural development and reintegration of areas looking to rebuild in the post-conflict era.
Colombia’s peace accord with FARC in late 2016 was undoubtedly a historic achievement years in the making, but ask many Colombians and they will tell you that the work has just begun. With the decades-long conflict disproportionately affecting certain rural departments, it is no secret that the success of the peace deal and the reintegration of large parts of Colombian society rests on rural and agricultural development. One agribusiness in particular, palm oil and its related biofuel, stands to be a key driver of socioeconomic development in the regions most affected by conflict. In fact, even before the signing of the peace accord, the palm oil industry in Colombia was in the midst of a boom in investment and production and already accounts for roughly 6% of the country’s GDP.
The recognition of palm oil’s role and opportunities in the post-conflict era has not been lost on the government, foreign institutions, or the private sector. The US Agency for International Development (USAID), for example, has been an involved player in the growth and promotion of the palm oil industry as a viable alternative. USAID helped to establish pilot programs for disarming and reintegrating ex-paramilitary members on palm oil plantations, as well as generally assisting the Colombian government’s goal of expanding the total land use of palm oil production. In 2016, the Ministry of Agriculture announced a COP1.6 billion investment plan to add an additional 150,000ha to the roughly 500,000ha industry over the next three years.
As it stands, Colombia is already the fourth largest producer of palm oil in the world, behind Indonesia, Malaysia, and Thailand. Its 1.2 million tons of palm oil produced in 2015 makes it the largest in Latin America. Roughly a third of the palm oil produced in Colombia is then used to create palm-based biofuel as part of the country’s battle against CO2 emissions and pollution. As of now, all petroleum in the country is a blend of 8% sugarcane or palm biofuel. According to Dr. Jorge Bendeck, the Executive President of the National Biofuels Federation of Colombia, the biofuels industry (sugarcane and palm) has reduced annual greenhouse gas emissions by 2.3 million tons per year. As of 2016, Dr. Bendeck estimates that biofuels are responsible for directly employing 32,000 people, as well as 64,000 additional jobs indirectly.
Commenting on the social and political advantages of the industry, Dr. Bendeck added, “One of the three main goals when we founded the biofuel federation was to help the country achieve peace. By creating stable jobs, we are removing the incentive for conflict and war. When people are employed, they are less likely to resort to conflict. We are producing peace by cultivating raw materials necessary for the creation of biofuel. In locations where we have established plantations, we have secured peace.”
While Colombia lags far behind the palm oil production of its Asian competitors—33.4 million tons in Indonesia and 19.9 million tons in Malaysia in 2015, according to GreenPalm—it does have a distinct environmental advantage: much of Colombia’s palm expansion can be grown on previously arable land, whereas Malaysia and Indonesia have come under intense international pressure because their palm oil industries come at the expense of biodiverse rain forests. According to a government report from the Unit of Rural Agro-economic Planning (UPRA) in 2016, at least 65% of Colombia’s arable land is currently unused or underused, making Colombia one of the world leaders in terms of agricultural potential. As international consumers become increasingly aware of the environmental costs of palm oil, Colombia’s markedly less destructive industry—which allows plantations to more easily receive internationally recognized sustainability certifications—should prove even more competitive on the global stage in the coming years.