The US-based National Wildlife Federation (NWF) has announced a proposed agreement between the Peruvian Palm Oil Producers’ Association (JUNPALMA), the Ministry of Agriculture (MINAG) and the Peruvian Society for Eco-development (SPDE) which would promise sustainable and deforestation-free palm oil production as of 2021.

If eventually signed and implemented, Peru would be the second country in Latin America to enter into such agreement after Colombia. The agreement will not affect existing oil palm producers.

This agreement is consistent with a recent reorientation of MINAG towards promoting deforestation-free agriculture on family farms and those of small-scale producers. This, in turn, is largely the result of a national strike earlier this year led by CONVEAGRO and the national organisation of irrigation users. After lengthy negotiations, the national government committed itself to giving greater priority to family farms.

Palm oil cultivation is not a new phenomenon in Peru, with the state company EMDEPALMA having developed palm oil plantations in the San Martín region in the 1970s. During the Fujimori years in the 1990s, EMDEPALMA was privatised and has since spread to other areas of the Peruvian Amazon such as the Ucayali region. It has developed as an agribusiness that combines plantation-style cultivation with small-scale cultivation, both associated with industrial processing plants.

Since the beginning of the new century, and as palm oil cultivation reached its limits in Malaysia and Indonesia, the industry worldwide has become involved in controversy over its environmental and social impacts. Such controversy led to the creation of the Roundtable on Sustainable Palm Oil (RSPO) in 2004, an industry-NGO alliance to certify sustainable palm oil production.

Investors began to look elsewhere in the world to diversify their activities. In the case of Peru, the most prominent investor was the Melka group which rapidly became involved in controversy and conflicts as it sought to expand its land holdings and exert control over local communities. In 2016, Melka withdrew from the RSPO and announced that it would sell its holdings in Peru, a process accelerated by the successful prosecution of the group’s general manager and other functionaries, previously reported in the Newsletter.

The agreement promoted by NWF represents an attempt to shift the Peruvian palm oil industry over time from large-scale plantation agriculture to small and medium-scale family and communal farming and from a driver of deforestation (through the expansion of the agricultural frontier) to one limited to areas that have already been deforested.

This represents a significant challenge, both in managing the relations between small-scale farmers and agribusiness plants and restricting expansion to areas already deforested. It will require effective monitoring and a meaningful combination of incentives and sanctions for all involved.