Together, Colombia and Ecuador are Latin America’s top palm oil producers. Historically, most of this production has been for export to regions such as Europe but demand for palm oil in Latin America is on the rise.
Firstly, according to Jose Antonio Arellano the founder of Ecuadorian supplier Organic Crops, the demand is there. Much of Latin American’s cooking culture is based on frying and palm oil, which contains both solid stearin and liquid olein, is an “extraordinary” cooking oil, Arellano said.
“Latin America has a cooking culture based on frying. We use lots of oil in food and there is no better cooking oil than palm. It has a very high smoke point, it has great frying properties, it doesn’t stick to the food products. You can reuse it to a much greater extent than other vegetable-based frying oils.”
Producing 1.6 million tonnes annually, Colombia is Latin America’s biggest palm producing country and contributes 2% to global supplies. Its palm oil exports were worth USD$450 million in 2017 and the European Union is its biggest buyer.
Colombia is on a drive to increase its palm production and says it can do so on land that has already been degraded for agriculture, such as pasture land. In 2017, 14% of its crude palm oil (CPO) was certified by the Roundtable on Sustainable Palm Oil (RSPO), up from 2% in 2013.
Ecuador is Latin America’s second biggest producer with an annual output of 700,000 MT of CPO that is grown on around 280,000 hectares. But, with 60% of its CPO going to export, it is the continent’s largest exporter.
In 2006, the country passed a law making the clearing of primary forest illegal although enforcement has been a problem. Last month, the government passed a law committing to get 100% of the country’s palm oil production RSPO-certified.
Sources: RSPO, Fedepalma
‘A beautiful, white page’
Another benefit the oil crop has in this part of the world is its public image.
Fedepalma, Colombia’s national trade association, carried out research into the public perception of fats and oils in general and found that, unlike in markets such as Europe where they are linked to a poor diet or palm oil with deforestation, Latin Americans had few preconceptions.
FoodNavigator spoke to Fedepalma’s commercial director Mauricio Posso Vacca at its head office in Bogota.
“So what we found out is that, in the mind of the consumer, it's a beautiful, white page," Posso Vacca said. "So now we can try and construct a history and that’s what we are going to do. We’re going to go out and present to the consumer what are the benefits of palm oil.”
Fedepalma’s campaign will focus on what it sees as the benefits of palm oil from a nutritional and socio-economic perspective.
Paying the premium
But will regional demand be for certified sustainable palm oil – or are consumers still too price sensitive to pay the premium?
According to Felipe Guerrero, director of corporate sustainability at organic and RSPO Next-certified supplier Daabon, Colombian consumers are not part of “the sustainability discussion”. However, he senses a change in attitude may be coming.
“I believe that at any moment in time the Colombian consumer is going to grow and become more mature and sensitive to general agricultural issues and is going to start asking for palm oil and other crops grown in Colombia to be sustainable.”
“Companies in Latin America are going to have to step up, not only because these agricultural companies are selling to the US and Europe where there is a requirement in ethical and responsible production but because this is also going to be asked by Latin American consumers […] in the very near future.”
A growing awareness
The demand is not there yet though, and that means that some companies are not yet acting.
For instance, some of the major multinational consumer goods manufacturers operating in Latin America purchase only RSPO certified palm oil but do not pay to segregate it at the mill. This means their portfolio of products contains palm oil that is untraceable from both sustainable and unsustainable sources.
Francisco Naranjo at RSPO admits Latin America countries are very price sensitive but says there is a growing awareness from local brands in using sustainable ingredients.
“One of the goals of RSPO in Latin America is to promote the local use of sustainable palm oil and we actually have a couple of good projects in Colombia with local products. We hope to have by June this year the first branded cooking oil with the RSPO trademark and that will be an important milestone for our work here.
“I’m sure this will be a good example for other local brands to start implementing certification and good agricultural practices in their palm oil production.”
'A historic debt to pay'
NGO Conservation International is working with the Ecuadorian government on a number of projects to foster this but creating a market demand for certified palm oil is crucial, says project manager Carolina Rosero.
“Ecuador is similar to other countries in that the palm oil sector has a historic debt to the country with regards to deforestation and biodiversity loss. This is the reality that we have to face but […] we think of this moment as a turning point for the sector.
“With palm oil companies we are basically getting them to have a zero deforestation commitment, to change the practices the sector has had in the past and supporting and financing conservation efforts both at a national level or their own private efforts and improving agricultural practices, especially with smallholder producers.”
“We want the market to be more knowledgeable and be more involved in demanding these sustainable practices from the palm oil sector.”
Naranjo feels optimistic, particularly as last month the Ecuadorian government committed to supporting the country’s entire palm supply chain become RSPO-certified.
“This initiative of having jurisdictional certification in Ecuador is to overcome the hurdles of maintaining a more sustainable palm oil industry and to be able to export to these kind of markets that request sustainable products.”