A sector reinventing itself to achieve sustainability
Riding on a horse-drawn cart, Guadalupe Nares López transported his first oil palm plants 30 kilometers across a lonely stretch of land from Palenque, Chiapas to his rural community in Catazajá.
It was 1998, and there was no other way of moving the 280 palms with which he would begin to farm in his small two-hectare plot. None of the local farmers knew anything about this plant, or its usefulness, apart from the fact that the Mexican government had begun an initiative to give them away with monthly subsidies to encourage farmers to grow them.
Guadalupe himself knew little about palms and how to care for them. Government specialists gave him some basic instructions and assured him that if he took proper care of the crop, in a few years he would begin to see positive financial results.
For farmers from the Chol indigenous community who only grew enough to meet their own needs, oil palms held the hope not only of producing enough to live on, as was the custom in their villages, but also of improving their overall way of life.
Twenty-two years after that doubtful start, Guadalupe has expanded his palm grove to nine hectares, which has enabled him to buy two houses and put both of his daughters through college. He has even saved money, a “luxury” that few farmers who grow traditional crops can still manage nowadays.
“Thankfully, we have been able to earn a living and then some. If God takes it all away from me tomorrow or in the near future, my daughters will still have something,” he said. Seconding his sentiment is Ana María Miranda Sarao, a farmer in the same community who inherited four hectares of palm groves from her father and today farms them herself.
“The oil palm has been very generous to us. If it didn’t exist, I think most men and women unable to find work would migrate to the city. Palm growing lets farmers who used to work as day laborers now pay wages to one or two other families during the harvest season. And they don’t emigrate in the off-season because the work doesn’t dry up,” said Ana María, who together with Guadalupe and 28 other farmers is a member of the Mundo Maya palm growers’ association in Catazajá, Chiapas.
The stories of these entrepreneurs are not isolated cases. Of the approximately 7,000 oil palm producers in Mexico, 95% have plots smaller than 30 hectares; this means that 85% of the sector’s national production comes from smallholders who began to grow oil palms on land previously used to raise livestock.
PepsiCo’s Global Sustainable Commodities Lead, Natasha Schwarzbach emphasizes the integral role that smallholders play in Mexico “smallholders are at the vanguard of the development of an industry that can bring prosperity to local communities, while also enabling the protection of the natural environment”.
A good initiative, but lacked training
Thanks to the initiative of the Federal government that invested in the development of the palm oil sector in the southeast of Mexico ( Chiapas, Campeche, Tabasco and Veracruz), land previously used to raise livestock was converted into productive palm plantations in a way that did not impact the region’s tropical forests. According to the Food and Agriculture Organization of the United Nations, 98% of Mexican oil palm plantations have been planted on land converted from livestock ranches, allowing a perennial field crop with a high capacity for carbon capture.
Gustavo Priego Roche, an oil palm grower from Jalapa, Tabasco, used federal government subsidies in 1998 to convert 22 hectares of livestock land into an oil palm grove. However, the first problem he faced, as many other growers, was that he did not have the necessary training to maximize yields and become more successful.
Gustavo and a group of other farmers from Jalapa attended training courses in Central America that taught them how to implement best agronomic practices, thus giving them an advantage over most other Mexican producers who could not afford to travel.
However, prior to 2004, Mexican oil palm growers – both the self-taught and those who had received training – suffered their second big setback: as the oil palm was a new crop, there were no buyers for their product and no industries that could convert it into usable raw material. As a result, hundreds of tons of harvest were permanently lost in the fields.
As more fruit became available, the industry recognized an opportunity to invest in the development of additional palm mills in the four producing states. In 2012, approximately there were over 60,000 hectares planted, and the price per fresh fruit bunch was high. Prosperity came to every smallholder who harvested that year.
The growth of the palm sector in Mexico
Witnessing the abundance that palm growers were enjoying had a persuasive effect on other producers in the region. Luis Alberto López López and Enrique Guzmán Morales, of the Palmicultores del Sureste Palm Growers Association, got into oil palm production upon seeing the success of their friends, neighbors and relatives.
Luis and Enrique, who had previously used their 8 and 4.5 hectare plots, respectively, exclusively to raise livestock, have been growing oil palm since 2011 and, although per-ton fruit prices have not returned to the past historic heights, both have earned enough to pay their workers, finance their children’s educations and put aside money for emergencies.
“The oil palm is a real gem. If I hadn’t planted it on the 4.5 hectares that I have, my son might not be in college. I’ve invested plenty of work and savings, but I’ve earned it back three times over,” said Guzmán Morales in Nueva Esperanza, Chiapas.
Today in Mexico, oil palm is grown on approximately 100,000 hectares, with primary production occurring in the states of Chiapas, Campeche, Tabasco and Veracruz. It generates approximately USD 70 million in revenues from the sale of the fruit alone, not considering the oil and its byproducts. In addition, it is a source of direct employment for 25,000 Mexicans and an indirect source for another 77,000.
Despite the fact that the sector has already operated in the country for more than 20 years, there is still much to improve and learn. And this will lead to new opportunities for oil palm workers and those in other links in the production chain.
Oil palm production has proved profitable for those who have invested their land and labor in it. It yields 3.8 tons of oil per sown hectare, a figure seven times greater than soybeans (0.5 tons) and many times greater than canola (0.8) and sunflower oils (0.7). Based on this, oil palm is the oleaginous plant requiring the least amount of land to meet the growing demand for food needed to feed the world’s population.
Other characteristics that make it both affordable and profitable are its minimal requirements for fertilizers, pesticides and energy for oil production. In some cases, these requirements only come to one-sixth of the resources needed for oilseeds such as canola. All of these factors have enabled smallholders to make a profit even during periods of scarce rainfall.
The vision for ‘Un Mexico Palmero Sustentable’
Considering such advantages, the growth of the oil palm sector was imminent in Mexico. With this on the horizon, it was fundamental to consider how to ensure it was managed in a sustainable way, assuring a positive impact on communities, where labor rights are respected, and biodiversity is protected.
Under this vision, the Holistic Program was born in 2016, with collaborative efforts from different organizations and stakeholders. PepsiCo partnered with Oleopalma (a company specialized in the production and extraction of palm oil), Proforest (a specialist in sustainability issues), as well as Femexpalma (the Mexican Federation for Oil Palm, representing the palm oil sector) to design and begin the implementation of the program. In 2019, another important palm oil user, Nestlé, joined the Holistic Program to help further expand the reach and impact of the program.
At the very outset this was – and remains to be – an ambitious program. Inspiring an entire industry to understand what sustainability is and why it is important requires an effective engagement approach. The co-creation of the program needed a high level of trust and commitment of all stakeholders, including suppliers and smallholders, to align on the most responsible path to go on together.
The Mexico Palm Oil Holistic Program strategy is focused on three main components: the inclusion of smallholders; strengthening and providing training on sustainability issues within the sector; and promoting “No Deforestation, No Peat, No Exploitation” (NDPE) policies.
“ ‘Un Mexico palmero sustentable’ is a shared vision for thriving communities and resilient, productive supply chains. This relies on a commitment to promote sustainable intensification, to engage with and support smallholder production, and to invest in technical capacity. We hope this vision is shared across the palm oil supply chain and that each stakeholder feels empowered to take ownership in making it a reality. ” said Sarah Mercadante, PepsiCo Sustainability Manager.
The smallholder journey
The first component relating to smallholders is fundamental, as 85% of national fruit production comes from their farms. The main challenge was related to the large number and dispersion of growers who would have to become involved in implementing the strategy.
Given the magnitude of the challenge, the partners approached the Roundtable on Sustainable Palm Oil (RSPO), a non-profit organization that unites the different stakeholders of the palm oil sector to develop and implement global standards for the production of sustainable palm oil. RSPO currently has more than 4,000 members and 19% of the palm oil produced globally is certified under their sustainability standards.
A proposal was put forward to assist and guide a group of smallholders in a pilot project under the RSPO Smallholder Standard. To help make this project a reality, the Holistic Program joined forces with RSPO through the RSPO Smallholder Support Fund (RSSF).
The program was integrated into Oleopalma’s supply chain, consisting of the producers who supply fruit to its mills. At that time, Oleopalma formed a team of technical specialists who began to work with each of the entities involved, starting with the sector’s most important area: the producers in the field.
In 2017, the specialist team visited palm-growing communities and invited the producers to take part in the RSPO certification process that would benefit everyone in the supply chain. Initial reactions to the proposal were mixed.
“When you ask farmers whether they want to enter a program, they quickly answer yes because they think there’s money involved. When they see that this is not the immediate case, and that it’s about improving practices that can lead to certification, they’re not so sure. Some say yes but later end up leaving and others join as they see the benefits of the certification,” said Jaime de Jesús Barrientos Juárez, a member of the Palmeros de los Ríos Palm Growers Association in Tenosique, Tabasco, which is currently participating in a certification process.
Later, in November that year, RSPO approved the project; a milestone that set the beginning of the first component of the Holistic Program which seeks to demonstrate the business case for the inclusion of smallholders, while increasing their resiliency, strengthening livelihoods and implementing best practices to prevent deforestation and exploitation. Since the program’s inception,174 smallholders from Oleopalma’s supply base have participated in the project and the first RSPO smallholder audits are set to start in 2020.
For María del Carmen López Pimentel, Oleopalma’s Special Projects Manager, it was difficult to get the program going at first because many of the smallholders were working individually or in informal associations. New palm grower groups were officially formed and given an operational structure that included a president, secretary and treasurer, as well as other necessary positions in order to improve the association’s capacity to become certified.
“That’s what the smallholder program is all about: day-to-day on-site work with Oleopalma. Since 2017, the company has worked with producers to help them become certified. We don’t force anyone. It’s a commitment made by producers based on the benefits and other things they know they will get through certification,” she said.
“In the field, everything changes and each association works differently. So, with each one you had to include training, field work, visits and figure out how to adapt each topic to each producer because they’re all different. And having the support of all organizations in the Holistic Program makes you feel more confident,” she said regarding the synergy working with all the partners in the program.
Seeing the benefits
The project began to gather steam and the team of specialists organized by Oleopalma helped the smallholders start new farming processes such as establishing a crop productivity diagnosis, plot identification, setting up demonstration plots for certification trainings and for the benefit of nearby communities, among other activities that were soon implemented on their lands.
In addition, through theoretical and practical trainings they learned new ways to maintain and fertilize their oil palms based on the nutritional needs of both the soil and the plants.
According to Miguel Ruiz Pérez of the Verde Industrial Palm Growers Association in Palenque, Chiapas, growers used to buy commercial fertilizer packages that included a variety of nutrients and apply them uniformly. The specialist team assisted them with foliar and soil studies – which enables them to know the precise status of their crops – they now fertilize using only the inputs that the soil and plants really need.
Another activity that significantly improved the daily work of smallholders was the series of trainings on palm tree management. Growers who were in the habit of leaving palm leaves right where they fell, learned to store them neatly in the aisles or spaces between crop rows. This seemingly small change has enabled them to recover up to 15% of the fruit falling from bunches that was previously lost among untidy waste material.
Regarding such changes in practices, José Luis Pérez Vázquez Aldana, President of Femexpalma, considers them to be the basis for a “sustainable restructuring of the sector,” given that if smallholders notice the results in performance and improvement of their quality of life, the positive effect will reverberate throughout the rest of the supply chain.
“The smallholders who are part of the program are wholly convinced that oil palm can be a long-term option for them. When smallholders gain more control over their farms, we are better able to generate value that is not just financial, but that includes environmental awareness and a long-term vision,” said the President of Femexpalma.
As a result of the Holistic Program, smallholders who are in the RSPO certification process have also acquired new perspectives on their relationship with biodiversity, respect for wildlife and the conservation of natural resources. They understand that their palm groves provide a transition zone for wild animals by offering them shelter and food.
For example, small species such as mice and snakes and larger animals such as anteaters, deers, coyotes, ocelots and saraguato monkeys all visit the palm groves to eat the fruit or hunt other species attracted by it. Such events, which are part of the food chain, go undisturbed by field workers who respect and now live in harmony with the wildlife that the palm brings.
“We’re very happy to see fauna returning to a habitat that had been essentially ruined by livestock ranching. Some colleagues have already begun to regenerate forest areas. Monkeys come and eat the fruit and lots of insects too. We are committed to respect. (Growers) have been advised to conserve species and learn to coexist with them. They understand that we must take care of the environment,” said Luis Alberto López López, of the Palmicultores del Sureste Palm Growers association in Nueva Esperanza, Chiapas.
Proforest, as an expert in sustainability recognizes that these types of projects generate experience in order to replicate the knowledge in Mexico and other countries in Latin America.
Strengthening and providing training on sustainability issues
The objective of the second component of the Holistic Program is to address a previously existing need for capacity building within the palm oil industry, building on the lack of formal training when the federal government gave away plants starting back in 1998. From here, a strong impulse emerged to train the palm oil sector in sustainability issues where Femexpalma took a leading role.
To achieve this, two annual training programs were implemented. These programs included 32 courses, with the participation of 20 companies that make up 33,000 hectares of oil palm, representing more than a third of the total land area used in the country for growing oil palm. Over 600 people were trained, 90 of which were supported by scholarships provided by Fideicomisos Instituidos en Relación con la Agricultura (FIRA).
The fact that Mexico now has its own specialists means that technical knowledge is more available to Mexican producers and mills, which provides a way of resolving producers’ doubts and helping them start their RSPO certification process. Currently, the national average yield is 12.6 tons of fruit per hectare, a figure which participants in the Holistic Program can be expected to double by 2025. In other words, they should be able to produce upwards of 24 tons per hectare through the adoption of sustainable practices and specialized techniques.
In this regard, one of the decisions that marked a milestone in the advancement of sustainability was the creation of Femexpalma’s Sustainability Office, the aim of which is to guide and support sector companies seeking RSPO certification.
One of the beneficiaries of these training and support initiatives has been Palmosur, a palm oil production and milling company in Palenque, Chiapas. Its CEO Manuel Bacaro said that “(w)e have been given a lot of support in the form of guidance on studies and training which has logically given us a deeper understanding of sustainability issues and topics related to achieving our RSPO certification goal.”
However, the benefits of such knowledge-based transformations arrive not only in the productivity of the supply chain, but also at the tables of consumers who enjoy the wide range of products made with the oil.
“PepsiCo is committed to the long term transformation of the palm oil industry and acted as the catalyst to co-create this positive holistic impact program. We recognize that working collaboratively and on the ground with all stakeholders in Mexico promotes the importance of sustainable livelihoods while protecting our vital ecosystems. We’re proud of this program and hope it will be an example of how to accomplish systemic change for the broader palm oil industry. ” said Natasha Schwarzbach, PepsiCo Global Lead for Sustainable Commodities.
Promoting No Deforestation, No Peat, No Exploitation (NDPE)
Fortified by the participation of Mexican specialists, the first steps towards sustainable and strengthened oil palm growing have already been taken, and such efforts continue apace. However, the human factor and technological tools also play a necessary role in restructuring the sector.
This is where the Holistic Program’s third component comes into play. “No Deforestation, No Peat, No Exploitation” policies provide a guarantee that Mexican inputs are produced in accordance with strict environmental criteria and respect for human rights”, according to Emily Kunen, Nestlé’s Global Responsible Sourcing Leader for Palm Oil.
“Nestlé is committed to 100% use of responsible oil palm by 2020, so it matters to us where it comes from, how it’s produced, and that it’s managed in a way that respects people and the planet. That means that all the palm oil we use complies with our supply standards and NDPE principles,” she said.
One of the most significant achievements of this component was a study that, surveying 200,000 hectares in Chiapas and Tabasco, assessed the presence of High Conservation Values (HCV) in over 70,000 hectares of land, covering palm oil holdings and a wider landscape with a 1km buffer around them. This assessment includes recommendations for the management and monitoring of the HCVs identified.
Additionally, to ensure that expansion of the agricultural frontier continues to be conducted in a sustainable way and does not impact biodiversity in the producing states, a HCV probability map was developed. It will be publicly accessible and classify areas of low, medium and high conservation value and the associated risks for oil palm growing.
In addition to creating such tools, the holistic program organized the first HCV lead assessors’ course, accredited by the HCV Resource Network under its Assessor License Scheme (ALS). As part of this initiative, 15 professionals from Costa Rica, Mexico, Colombia and Guatemala were trained on the HCV approach. This course stands as an example of our continued efforts to build local capabilities in Mexico and Latin America to help see that growth in palm oil cultivation is managed sustainably.
Improving working conditions in the field
If the project excluded social factors, there would be no real benefit for those involved. To adhere to this premise, producers aspiring to earn RSPO certification are required to pay their employees decent wages above the minimum wage, avoid having them work excessive hours and register them with Social Security. They must also ensure that child labor is not used in any of their crop fields.
The implementation of best practices promoted by the Holistic Program has enabled producers to improve workers’ quality of life by increasing their wages and the frequency with which they receive them.
“I’m very happy because I know that oil palm work will provide a consistent income stream,” said Noemí de la Cruz Paniagua, President of the Verde Industrial producers’ association in Palenque, Chiapas.
In addition, to ensure that farmers will not deplete their finances buying fertilizers, the Fertiahorro program was created. In this virtuous system to which every association belongs, smallholders are encouraged to set aside an amount for each ton of fruit sold to be used exclusively for fertilizer purchases. Making use of this system helps smallholders learn to save money.
Holistic Program of the future
Given the need for reliable, up-to-date and locally adapted technical information in Mexico, Femexpalma proposed the establishment of the Research Center for Oil Palm Sustainability (CIISPALMA, its Spanish acronym) in Villahermosa, Tabasco, as the specialized scientific organization that will generate original content on new palm growing practices and technologies.
With a business plan designed to be financially self-sustaining, the CIISPALMA started with a Joint Fund amounting to approximately USD 2.2 million from the National Council of Science and Technology (CONACYT, its Spanish acronym) and the Government of Tabasco. Its first two stages consisting of civil works projects have already been completed.
After it has been reviewed and authorized, preparations to make it operational in November 2020 will begin. A continuous process of scientific research and training will be undertaken and included in the Holistic Program’s timetable and objectives, with the overall aim of increasing Mexican oil production in a sustainable manner.
Finally, the results, challenges and stories that have been a part of the Holistic Program’s push to achieve sustainability were shared with the sector’s vital actors at the Second Mexican Oil Palm Congress and the VIII Latin American RSPO Conference. These events were held in the city of Campeche from March 3-5, 2020.
During these international events, Francisco Naranjo, director of RSPO Latin America, extended a message of support to the sector, and particularly to the smallholders who are the bedrock of collective efforts to achieve RSPO certification.
“My message is for them to push forward with the knowledge that they have the support of sector leaders such as Femexpalma, RSPO and international buyers. They are on the right track, and I have no doubt that the implementation of best environmental, social and financial practices will reap them ample rewards in the medium and long term. We are all on board with this commitment to sustainability,” he said.
Looking forward
The Mexican oil palm industry now operates with a multilateral agenda capable of meeting the most urgent challenges of the 21st century: achieving economic growth without compromising the natural resources of the future. By strengthening local grower organizations, building capacities and facilitating access to resources, the Holistic Program is improving grower livelihoods and promoting thriving, resilient agricultural communities. The path to sustainable palm continues to be built and all stakeholders are on this journey together.
A sector reinventing itself to achieve sustainability
Riding on a horse-drawn cart, Guadalupe Nares López transported his first oil palm plants 30 kilometers across a lonely stretch of land from Palenque, Chiapas to his rural community in Catazajá.
It was 1998, and there was no other way of moving the 280 palms with which he would begin to farm in his small two-hectare plot. None of the local farmers knew anything about this plant, or its usefulness, apart from the fact that the Mexican government had begun an initiative to give them away with monthly subsidies to encourage farmers to grow them.
Guadalupe himself knew little about palms and how to care for them. Government specialists gave him some basic instructions and assured him that if he took proper care of the crop, in a few years he would begin to see positive financial results.
For farmers from the Chol indigenous community who only grew enough to meet their own needs, oil palms held the hope not only of producing enough to live on, as was the custom in their villages, but also of improving their overall way of life.
Twenty-two years after that doubtful start, Guadalupe has expanded his palm grove to nine hectares, which has enabled him to buy two houses and put both of his daughters through college. He has even saved money, a “luxury” that few farmers who grow traditional crops can still manage nowadays.
“Thankfully, we have been able to earn a living and then some. If God takes it all away from me tomorrow or in the near future, my daughters will still have something,” he said. Seconding his sentiment is Ana María Miranda Sarao, a farmer in the same community who inherited four hectares of palm groves from her father and today farms them herself.
“The oil palm has been very generous to us. If it didn’t exist, I think most men and women unable to find work would migrate to the city. Palm growing lets farmers who used to work as day laborers now pay wages to one or two other families during the harvest season. And they don’t emigrate in the off-season because the work doesn’t dry up,” said Ana María, who together with Guadalupe and 28 other farmers is a member of the Mundo Maya palm growers’ association in Catazajá, Chiapas.
The stories of these entrepreneurs are not isolated cases. Of the approximately 7,000 oil palm producers in Mexico, 95% have plots smaller than 30 hectares; this means that 85% of the sector’s national production comes from smallholders who began to grow oil palms on land previously used to raise livestock.
PepsiCo’s Global Sustainable Commodities Lead, Natasha Schwarzbach emphasizes the integral role that smallholders play in Mexico “smallholders are at the vanguard of the development of an industry that can bring prosperity to local communities, while also enabling the protection of the natural environment”.
A good initiative, but lacked training
Thanks to the initiative of the Federal government that invested in the development of the palm oil sector in the southeast of Mexico ( Chiapas, Campeche, Tabasco and Veracruz), land previously used to raise livestock was converted into productive palm plantations in a way that did not impact the region’s tropical forests. According to the Food and Agriculture Organization of the United Nations, 98% of Mexican oil palm plantations have been planted on land converted from livestock ranches, allowing a perennial field crop with a high capacity for carbon capture.
Gustavo Priego Roche, an oil palm grower from Jalapa, Tabasco, used federal government subsidies in 1998 to convert 22 hectares of livestock land into an oil palm grove. However, the first problem he faced, as many other growers, was that he did not have the necessary training to maximize yields and become more successful.
Gustavo and a group of other farmers from Jalapa attended training courses in Central America that taught them how to implement best agronomic practices, thus giving them an advantage over most other Mexican producers who could not afford to travel.
However, prior to 2004, Mexican oil palm growers – both the self-taught and those who had received training – suffered their second big setback: as the oil palm was a new crop, there were no buyers for their product and no industries that could convert it into usable raw material. As a result, hundreds of tons of harvest were permanently lost in the fields.
As more fruit became available, the industry recognized an opportunity to invest in the development of additional palm mills in the four producing states. In 2012, approximately there were over 60,000 hectares planted, and the price per fresh fruit bunch was high. Prosperity came to every smallholder who harvested that year.
The growth of the palm sector in Mexico
Witnessing the abundance that palm growers were enjoying had a persuasive effect on other producers in the region. Luis Alberto López López and Enrique Guzmán Morales, of the Palmicultores del Sureste Palm Growers Association, got into oil palm production upon seeing the success of their friends, neighbors and relatives.
Luis and Enrique, who had previously used their 8 and 4.5 hectare plots, respectively, exclusively to raise livestock, have been growing oil palm since 2011 and, although per-ton fruit prices have not returned to the past historic heights, both have earned enough to pay their workers, finance their children’s educations and put aside money for emergencies.
“The oil palm is a real gem. If I hadn’t planted it on the 4.5 hectares that I have, my son might not be in college. I’ve invested plenty of work and savings, but I’ve earned it back three times over,” said Guzmán Morales in Nueva Esperanza, Chiapas.
Today in Mexico, oil palm is grown on approximately 100,000 hectares, with primary production occurring in the states of Chiapas, Campeche, Tabasco and Veracruz. It generates approximately USD 70 million in revenues from the sale of the fruit alone, not considering the oil and its byproducts. In addition, it is a source of direct employment for 25,000 Mexicans and an indirect source for another 77,000.
Despite the fact that the sector has already operated in the country for more than 20 years, there is still much to improve and learn. And this will lead to new opportunities for oil palm workers and those in other links in the production chain.
Oil palm production has proved profitable for those who have invested their land and labor in it. It yields 3.8 tons of oil per sown hectare, a figure seven times greater than soybeans (0.5 tons) and many times greater than canola (0.8) and sunflower oils (0.7). Based on this, oil palm is the oleaginous plant requiring the least amount of land to meet the growing demand for food needed to feed the world’s population.
Other characteristics that make it both affordable and profitable are its minimal requirements for fertilizers, pesticides and energy for oil production. In some cases, these requirements only come to one-sixth of the resources needed for oilseeds such as canola. All of these factors have enabled smallholders to make a profit even during periods of scarce rainfall.
The vision for ‘Un Mexico Palmero Sustentable’
Considering such advantages, the growth of the oil palm sector was imminent in Mexico. With this on the horizon, it was fundamental to consider how to ensure it was managed in a sustainable way, assuring a positive impact on communities, where labor rights are respected, and biodiversity is protected.
Under this vision, the Holistic Program was born in 2016, with collaborative efforts from different organizations and stakeholders. PepsiCo partnered with Oleopalma (a company specialized in the production and extraction of palm oil), Proforest (a specialist in sustainability issues), as well as Femexpalma (the Mexican Federation for Oil Palm, representing the palm oil sector) to design and begin the implementation of the program. In 2019, another important palm oil user, Nestlé, joined the Holistic Program to help further expand the reach and impact of the program.
At the very outset this was – and remains to be – an ambitious program. Inspiring an entire industry to understand what sustainability is and why it is important requires an effective engagement approach. The co-creation of the program needed a high level of trust and commitment of all stakeholders, including suppliers and smallholders, to align on the most responsible path to go on together.
The Mexico Palm Oil Holistic Program strategy is focused on three main components: the inclusion of smallholders; strengthening and providing training on sustainability issues within the sector; and promoting “No Deforestation, No Peat, No Exploitation” (NDPE) policies.
“ ‘Un Mexico palmero sustentable’ is a shared vision for thriving communities and resilient, productive supply chains. This relies on a commitment to promote sustainable intensification, to engage with and support smallholder production, and to invest in technical capacity. We hope this vision is shared across the palm oil supply chain and that each stakeholder feels empowered to take ownership in making it a reality. ” said Sarah Mercadante, PepsiCo Sustainability Manager.
The smallholder journey
The first component relating to smallholders is fundamental, as 85% of national fruit production comes from their farms. The main challenge was related to the large number and dispersion of growers who would have to become involved in implementing the strategy.
Given the magnitude of the challenge, the partners approached the Roundtable on Sustainable Palm Oil (RSPO), a non-profit organization that unites the different stakeholders of the palm oil sector to develop and implement global standards for the production of sustainable palm oil. RSPO currently has more than 4,000 members and 19% of the palm oil produced globally is certified under their sustainability standards.
A proposal was put forward to assist and guide a group of smallholders in a pilot project under the RSPO Smallholder Standard. To help make this project a reality, the Holistic Program joined forces with RSPO through the RSPO Smallholder Support Fund (RSSF).
The program was integrated into Oleopalma’s supply chain, consisting of the producers who supply fruit to its mills. At that time, Oleopalma formed a team of technical specialists who began to work with each of the entities involved, starting with the sector’s most important area: the producers in the field.
In 2017, the specialist team visited palm-growing communities and invited the producers to take part in the RSPO certification process that would benefit everyone in the supply chain. Initial reactions to the proposal were mixed.
“When you ask farmers whether they want to enter a program, they quickly answer yes because they think there’s money involved. When they see that this is not the immediate case, and that it’s about improving practices that can lead to certification, they’re not so sure. Some say yes but later end up leaving and others join as they see the benefits of the certification,” said Jaime de Jesús Barrientos Juárez, a member of the Palmeros de los Ríos Palm Growers Association in Tenosique, Tabasco, which is currently participating in a certification process.
Later, in November that year, RSPO approved the project; a milestone that set the beginning of the first component of the Holistic Program which seeks to demonstrate the business case for the inclusion of smallholders, while increasing their resiliency, strengthening livelihoods and implementing best practices to prevent deforestation and exploitation. Since the program’s inception,174 smallholders from Oleopalma’s supply base have participated in the project and the first RSPO smallholder audits are set to start in 2020.
For María del Carmen López Pimentel, Oleopalma’s Special Projects Manager, it was difficult to get the program going at first because many of the smallholders were working individually or in informal associations. New palm grower groups were officially formed and given an operational structure that included a president, secretary and treasurer, as well as other necessary positions in order to improve the association’s capacity to become certified.
“That’s what the smallholder program is all about: day-to-day on-site work with Oleopalma. Since 2017, the company has worked with producers to help them become certified. We don’t force anyone. It’s a commitment made by producers based on the benefits and other things they know they will get through certification,” she said.
“In the field, everything changes and each association works differently. So, with each one you had to include training, field work, visits and figure out how to adapt each topic to each producer because they’re all different. And having the support of all organizations in the Holistic Program makes you feel more confident,” she said regarding the synergy working with all the partners in the program.
Seeing the benefits
The project began to gather steam and the team of specialists organized by Oleopalma helped the smallholders start new farming processes such as establishing a crop productivity diagnosis, plot identification, setting up demonstration plots for certification trainings and for the benefit of nearby communities, among other activities that were soon implemented on their lands.
In addition, through theoretical and practical trainings they learned new ways to maintain and fertilize their oil palms based on the nutritional needs of both the soil and the plants.
According to Miguel Ruiz Pérez of the Verde Industrial Palm Growers Association in Palenque, Chiapas, growers used to buy commercial fertilizer packages that included a variety of nutrients and apply them uniformly. The specialist team assisted them with foliar and soil studies – which enables them to know the precise status of their crops – they now fertilize using only the inputs that the soil and plants really need.
Another activity that significantly improved the daily work of smallholders was the series of trainings on palm tree management. Growers who were in the habit of leaving palm leaves right where they fell, learned to store them neatly in the aisles or spaces between crop rows. This seemingly small change has enabled them to recover up to 15% of the fruit falling from bunches that was previously lost among untidy waste material.
Regarding such changes in practices, José Luis Pérez Vázquez Aldana, President of Femexpalma, considers them to be the basis for a “sustainable restructuring of the sector,” given that if smallholders notice the results in performance and improvement of their quality of life, the positive effect will reverberate throughout the rest of the supply chain.
“The smallholders who are part of the program are wholly convinced that oil palm can be a long-term option for them. When smallholders gain more control over their farms, we are better able to generate value that is not just financial, but that includes environmental awareness and a long-term vision,” said the President of Femexpalma.
As a result of the Holistic Program, smallholders who are in the RSPO certification process have also acquired new perspectives on their relationship with biodiversity, respect for wildlife and the conservation of natural resources. They understand that their palm groves provide a transition zone for wild animals by offering them shelter and food.
For example, small species such as mice and snakes and larger animals such as anteaters, deers, coyotes, ocelots and saraguato monkeys all visit the palm groves to eat the fruit or hunt other species attracted by it. Such events, which are part of the food chain, go undisturbed by field workers who respect and now live in harmony with the wildlife that the palm brings.
“We’re very happy to see fauna returning to a habitat that had been essentially ruined by livestock ranching. Some colleagues have already begun to regenerate forest areas. Monkeys come and eat the fruit and lots of insects too. We are committed to respect. (Growers) have been advised to conserve species and learn to coexist with them. They understand that we must take care of the environment,” said Luis Alberto López López, of the Palmicultores del Sureste Palm Growers association in Nueva Esperanza, Chiapas.
Proforest, as an expert in sustainability recognizes that these types of projects generate experience in order to replicate the knowledge in Mexico and other countries in Latin America.
Strengthening and providing training on sustainability issues
The objective of the second component of the Holistic Program is to address a previously existing need for capacity building within the palm oil industry, building on the lack of formal training when the federal government gave away plants starting back in 1998. From here, a strong impulse emerged to train the palm oil sector in sustainability issues where Femexpalma took a leading role.
To achieve this, two annual training programs were implemented. These programs included 32 courses, with the participation of 20 companies that make up 33,000 hectares of oil palm, representing more than a third of the total land area used in the country for growing oil palm. Over 600 people were trained, 90 of which were supported by scholarships provided by Fideicomisos Instituidos en Relación con la Agricultura (FIRA).
The fact that Mexico now has its own specialists means that technical knowledge is more available to Mexican producers and mills, which provides a way of resolving producers’ doubts and helping them start their RSPO certification process. Currently, the national average yield is 12.6 tons of fruit per hectare, a figure which participants in the Holistic Program can be expected to double by 2025. In other words, they should be able to produce upwards of 24 tons per hectare through the adoption of sustainable practices and specialized techniques.
In this regard, one of the decisions that marked a milestone in the advancement of sustainability was the creation of Femexpalma’s Sustainability Office, the aim of which is to guide and support sector companies seeking RSPO certification.
One of the beneficiaries of these training and support initiatives has been Palmosur, a palm oil production and milling company in Palenque, Chiapas. Its CEO Manuel Bacaro said that “(w)e have been given a lot of support in the form of guidance on studies and training which has logically given us a deeper understanding of sustainability issues and topics related to achieving our RSPO certification goal.”
However, the benefits of such knowledge-based transformations arrive not only in the productivity of the supply chain, but also at the tables of consumers who enjoy the wide range of products made with the oil.
“PepsiCo is committed to the long term transformation of the palm oil industry and acted as the catalyst to co-create this positive holistic impact program. We recognize that working collaboratively and on the ground with all stakeholders in Mexico promotes the importance of sustainable livelihoods while protecting our vital ecosystems. We’re proud of this program and hope it will be an example of how to accomplish systemic change for the broader palm oil industry. ” said Natasha Schwarzbach, PepsiCo Global Lead for Sustainable Commodities.
Promoting No Deforestation, No Peat, No Exploitation (NDPE)
Fortified by the participation of Mexican specialists, the first steps towards sustainable and strengthened oil palm growing have already been taken, and such efforts continue apace. However, the human factor and technological tools also play a necessary role in restructuring the sector.
This is where the Holistic Program’s third component comes into play. “No Deforestation, No Peat, No Exploitation” policies provide a guarantee that Mexican inputs are produced in accordance with strict environmental criteria and respect for human rights”, according to Emily Kunen, Nestlé’s Global Responsible Sourcing Leader for Palm Oil.
“Nestlé is committed to 100% use of responsible oil palm by 2020, so it matters to us where it comes from, how it’s produced, and that it’s managed in a way that respects people and the planet. That means that all the palm oil we use complies with our supply standards and NDPE principles,” she said.
One of the most significant achievements of this component was a study that, surveying 200,000 hectares in Chiapas and Tabasco, assessed the presence of High Conservation Values (HCV) in over 70,000 hectares of land, covering palm oil holdings and a wider landscape with a 1km buffer around them. This assessment includes recommendations for the management and monitoring of the HCVs identified.
Additionally, to ensure that expansion of the agricultural frontier continues to be conducted in a sustainable way and does not impact biodiversity in the producing states, a HCV probability map was developed. It will be publicly accessible and classify areas of low, medium and high conservation value and the associated risks for oil palm growing.
In addition to creating such tools, the holistic program organized the first HCV lead assessors’ course, accredited by the HCV Resource Network under its Assessor License Scheme (ALS). As part of this initiative, 15 professionals from Costa Rica, Mexico, Colombia and Guatemala were trained on the HCV approach. This course stands as an example of our continued efforts to build local capabilities in Mexico and Latin America to help see that growth in palm oil cultivation is managed sustainably.
Improving working conditions in the field
If the project excluded social factors, there would be no real benefit for those involved. To adhere to this premise, producers aspiring to earn RSPO certification are required to pay their employees decent wages above the minimum wage, avoid having them work excessive hours and register them with Social Security. They must also ensure that child labor is not used in any of their crop fields.
The implementation of best practices promoted by the Holistic Program has enabled producers to improve workers’ quality of life by increasing their wages and the frequency with which they receive them.
“I’m very happy because I know that oil palm work will provide a consistent income stream,” said Noemí de la Cruz Paniagua, President of the Verde Industrial producers’ association in Palenque, Chiapas.
In addition, to ensure that farmers will not deplete their finances buying fertilizers, the Fertiahorro program was created. In this virtuous system to which every association belongs, smallholders are encouraged to set aside an amount for each ton of fruit sold to be used exclusively for fertilizer purchases. Making use of this system helps smallholders learn to save money.
Holistic Program of the future
Given the need for reliable, up-to-date and locally adapted technical information in Mexico, Femexpalma proposed the establishment of the Research Center for Oil Palm Sustainability (CIISPALMA, its Spanish acronym) in Villahermosa, Tabasco, as the specialized scientific organization that will generate original content on new palm growing practices and technologies.
With a business plan designed to be financially self-sustaining, the CIISPALMA started with a Joint Fund amounting to approximately USD 2.2 million from the National Council of Science and Technology (CONACYT, its Spanish acronym) and the Government of Tabasco. Its first two stages consisting of civil works projects have already been completed.
After it has been reviewed and authorized, preparations to make it operational in November 2020 will begin. A continuous process of scientific research and training will be undertaken and included in the Holistic Program’s timetable and objectives, with the overall aim of increasing Mexican oil production in a sustainable manner.
Finally, the results, challenges and stories that have been a part of the Holistic Program’s push to achieve sustainability were shared with the sector’s vital actors at the Second Mexican Oil Palm Congress and the VIII Latin American RSPO Conference. These events were held in the city of Campeche from March 3-5, 2020.
During these international events, Francisco Naranjo, director of RSPO Latin America, extended a message of support to the sector, and particularly to the smallholders who are the bedrock of collective efforts to achieve RSPO certification.
“My message is for them to push forward with the knowledge that they have the support of sector leaders such as Femexpalma, RSPO and international buyers. They are on the right track, and I have no doubt that the implementation of best environmental, social and financial practices will reap them ample rewards in the medium and long term. We are all on board with this commitment to sustainability,” he said.
Looking forward
The Mexican oil palm industry now operates with a multilateral agenda capable of meeting the most urgent challenges of the 21st century: achieving economic growth without compromising the natural resources of the future. By strengthening local grower organizations, building capacities and facilitating access to resources, the Holistic Program is improving grower livelihoods and promoting thriving, resilient agricultural communities. The path to sustainable palm continues to be built and all stakeholders are on this journey together.
