Palm oil buyers cultivate Mexico's ambition to grow a sustainable industry
Food companies Oleopalma and PepsiCo lead smallholder certification drive.
Under the canopied fronds of oil palm trees, 20 farmers — young and old, men and women — listen attentively as Javier Cabrera Álvarez, a sustainable certification specialist with the Mexican palm oil producer Oleopalma, lectures them on soil health. Small yellow and white butterflies flit by continuously in this outdoor classroom on a 17-acre oil palm farm in Palenque, Mexico, that abuts cattle land and secondary tropical forests.
When Cabrera wryly remarks, "When you implement the fertilizer program, you can buy not just one Caguama beer, but the whole box," laughter erupts. Increasing their income is a clear motivator for these independent smallholder farmers embarking on the long road to sustainable certification by the Roundtable on Sustainable Palm Oil (RSPO).
With Oleopalma’s help, these farmers formed an association, Verde Industriale, in order to seek certification. Oleopalma and PepsiCo are financing their technical assistance program.
Verde Industrial’s president, Naomi Paniagua, who raises corn, beans, plantains, citrus and chickens on her 27-acre palm oil farm, says she hopes certification will get them a better price and help "our oil to compete at an international level." But she adds, "We’re a tiny little fingernail in the international market. This is pushing us to understand the wider market."
Mexico doesn’t usually come to mind when you think of palm oil, the world’s top vegetable oil that’s found in scads of everyday products from cookies and chips to soaps, cosmetics and infant formula. And no wonder, as Mexican production is just 140,000 metric tons, a sliver of global production, which now surpasses 70 million metric tons. Moreover, not a single drop is certified sustainable in Mexico, according to RSPO. Even within Latin America, Mexico falls in the bottom half of palm oil-producing countries, importing 80 percent of the palm oil it consumes.
Value chain members are eager to change that. They want to expand domestic production — but do it sustainably. Sixty stakeholders from across industry, government and non-governmental organizations recently completed nearly two years of negotiations — the so-called "national interpretation process" — to reach consensus on how to apply RSPO’s more stringent 2018 criteria to Mexico.
Half of the country’s 16 mills are in the process of becoming certified, according to Yasmina Neustadtl, Latin American outreach and engagement coordinator for RSPO. Demand for certified sustainable palm oil (CSPO) from large buyers, such as Bimbo Group, PepsiCo and Mead Johnson, is a key driver for Mexican producers seeking the sustainable route.
As fires clearing forest for palm oil plantations rage across Indonesia, the world’s top producer, can Mexico avoid the serious environmental and human rights concerns that have dogged other countries?
Although it’s early days and low world prices for palm oil pose headwinds, Mexico’s approach to sustainable intensification — increasing production on existing agricultural land — and the seeming enthusiasm for sustainable production from key value chain members could position the nation to become a larger force, and perhaps even a role model, in the palm oil market.
"Sustainability is the word of the future, it’s where the industry is heading," says Manuel Bacaro, general manager of Palmo Sur, a Mexican palm oil producer seeking RSPO certification. "The market is moving towards wanting sustainable products … from responsible, sustainable companies."
Palm oil development in Mexico
Palm oil has been cultivated in Mexico since the late 1990s. The Mexican government saw the crop as a way to alleviate poverty among smallholder farmers at a time when the cattle market had collapsed, and it provided farmers with seedlings but little technical assistance, according to Eduardo Lopez Pérez manager of ANIAME, a Mexican vegetable oil trade group.
Today, about 90 percent of Mexico’s 8,000 growers are smallholder farmers, producing on plantations smaller than 123 acres, according to Neustadtl.
Aiming to prevent further deforestation in Mexico, IUCN conducted a land assessment in 2019 to identify land that was both suitable for palm oil production and with low conservation value. It identified about 247,105 acres that were optimal for production, but there is no mechanism for ensuring that future palm plantations are established on that land.
Jose Luis Pérez Vazquez Aldana, Oleopalma’s youthful general manager, is a leading voice for sustainable palm oil development in Mexico. A third-generation vegetable oil producer, chemical engineer and self-described nature lover, Pérez Vazquez Aldana says that growing up, when he recognized that his family worked in a controversial crop, he started questioning, "What am I going to do?"
At age 22, he took decisive action. At a meeting of Mexican palm oil producers in Colombia in 2015, Pérez Vazquez Aldana stepped forward to lead the group in seeking sustainable certification from RSPO.
"For us, it was a very big challenge," he says, "but companies like PepsiCo and Mead Johnson were asking for CSPO, and we weren’t producing it anywhere in the country." The producers formed Femexpalma, an industry association that Pérez Vazquez Aldana now leads. Its members represent 76 percent of the country’s mill capacity, and cultivate more than 63,000 acres of oil palm.
Femexpalma members aim to achieve 100 percent certification by 2022, and most have begun the first step of the process, the HCV assessment.
Pérez Vazquez Aldana seeks to create both a Mexican federation of sustainable producers and a Mexican technical institute for training growers. With government funding, Femexpalma is building a Center for Innovation and Research for Sustainable Palm in Villahermosa. The center will train growers, both large and small, and collaborate with university researchers on topics including the biodiversity impact of cultivating oil palm on former cattle land.
ANIAME, which led the national interpretation process, is also eager to help its members become certified sustainable and is teaming up with a consultant from Colombia — the region’s leader for sustainable palm production — to offer training to Mexican growers.
Oleopalma, PepsiCo, RSPO, Proforest and Femexpalma have teamed up on a smallholder training program following the Responsible Sourcing for Smallholders framework, which aims to help small producers achieve sustainable certification to improve livelihoods and protect forests and biodiversity. Smallholders produce 80 percent of the country’s palm oil, so helping them achieve sustainable production is vitally important to the overall sector’s sustainability.
Launched in 2018, the three-year training program includes 337 smallholders in five associations, including Industriale Verde, according to María del Carmen López Pimentel, special projects at Oleopalma. Nestlé has since joined the collaboration.
Beyond certifying the initial group of smallholders, the project aims to raise awareness about sustainable certification among 1,000 producers and 1,200 field workers. Femexpalma is also hoping to achieve a multiplier effect by sharing the learnings from the project with the other producers in its network, Pérez Vazquez Aldana says.
Natasha Schwarzbach with the global sustainable commodities group at PepsiCo says that while smallholder inclusion is a component of the company’s Palm Oil Policy, Mexico is distinct "because it is a consolidated market (16 mills in Mexico, compared to almost a thousand in Indonesia) and … we have been able to support and guide the development and growth of the Mexican palm oil sector to ensure it is sustainable and inclusive of smallholders."
Challenges to certification
Certification is a three-step process that typically takes about three years, according to Neustadtl. But Pérez Vazquez Aldana is less worried about technical challenges than he is about flagging palm oil prices, which he says are at their lowest in 12 years. "Sustainability has three pillars: social, environmental and economic and if the economic part isn’t well, it’s very difficult to move fast with the other pillars," he says.
Weak consumer demand for CSPO within Mexico is another challenge, although some of the country’s biggest buyers of palm oil have set ambitious sustainable sourcing goals, no doubt influenced by global environmental campaigns. Bimbo Group, for example, has committed to sourcing 100 percent CSPO by 2023, according to Chief Procurement Officer David Hernandez Flores. PepsiCo, one of the largest buyers of Mexican palm oil, according to Pérez Vazquez Aldana, also aims to source 100 percent physically certified sustainable palm oil by 2020.
"First you have to gain their trust, and that takes time," Pérez Vazquez Aldana says. Then the farmers need to understand RSPO, and what do things such as HCV or traceability mean. And, he says, "It’s hard to sell RSPO to the producers because it means extra work, extra time."
Paniagua, for example, says that when she first learned about RSPO, "I was totally negative. The management and costs seemed ridiculous. I said, ‘If we can’t agree, I’ll knock down my palm trees or sell my land.’"
Eventually, she became convinced that it was the best path forward and now she works hard to bring others along. "I tell them, ‘Not everything that shines is gold. Things take effort.’"
Increased productivity is Pérez Vazquez Aldana’ biggest selling point. "Certified plantations have higher yields, and higher yields lead to more income," he says. "That’s a very easy way to sell RSPO." And sure enough, after implementing soil practices that will help her achieve certification, Paniagua said she increased her yield from nine to 14 tons per hectare.
The message that the way to increase production is through sustainable intensification rather than new plantation cultivation appears to be sinking in with both large and small growers. Asked what sustainability means to him, Verde Industrial member Jose Trindad answers, "Producing higher yields on the same land and living with the environment."
Similarly, when asked whether he planned to expand beyond his 16,000-acre palm plantation, Bacaro of Palmo Sur, a Femexpalma member, says, "No, that wouldn’t be sustainable," and points to water concerns.
León Enrique Ávila Romero, professor of sustainable development at Chiapas’ Intercultural University, agrees that the focus should be on increasing palm oil production on existing plantations. Avila Romero has documented biodiversity loss and other impacts of palm oil development in Chiapas, and says he’d rather see Mexico invest in an agroecological approach to development that focuses on making sure poor and indigenous farmers have enough to eat by growing mixed crops native to the region.
Jose Castro, director of Ithaca Environmental, agrees with Simonit and worries about pesticide drift from palm plantations on organic honey producers in Chiapas, but he acknowledges that the intense focus on palm oil has led to more sustainable production compared to commodities such as soy. "There’s a lot of potential in Mexico to develop the agricultural sector and to do it sustainably. It’s not happening without standards like this," he said.
Meanwhile, back in Palenque, Francisco Constantino Pérez, president of the Mundo Maya smallholder association, which is participating in the smallholder training program, jokes that following all of the RSPO rules is like "being married because you can’t live how you want." But, he says, RSPO-certification means "a better future" for his association and "happiness that our product will be placed internationally at a fair price."
Pérez wants to show us a large tree on his 9.8-acre plot of land where he cultivates both palm oil and food crops. As we traipse into a secondary forest area, a howler monkey screams in the distance.
The tree is massive, its girth wider than a pickup truck, its trunk zooming endlessly upward into the sky. "The tree is life. It’s my history," says Perez, explaining that when he bought the land 23 years ago, his children were small and they begged him not to cut down the big tree. Now they’ve grown up and moved on, but he still won’t cut the tree. "I want my grandchildren to know what existed before palm oil," he says.
The Roundtable on Sustainable Palm Oil hosted the author's trip to Mexico.