GIANT. One of the most representative companies of the Romero Group, Alicorp, is at the same time the second exporter in the palm oil sector
Alicorp together with Industrias del Espino - also part of the Romero Group - represent 69% of palm oil exports since 2013. They have just published the list of nine processing plants that sell them oil palm. The company kept the information in reserve, even though they were obliged to publish it by their commitment to the Roundtable Sustainable Palm Oil (RSPO), an international entity that monitors the use of sustainable palm.
Identifying processing plants is a key step in making the traceability of the palm production chain transparent, and determining whether the product comes from destroyed forests. However, disaggregated information is yet to be known about the palm farmers who start the supply chain for this crop. Neither Alicorp nor Industrias del Espino is required to make this information public even if they had it.
In a report published on 8 June on palm oil export, OjoPúblico reported that this sector has not guaranteed deforestation-free inputs. The palm industry has grown by 94% since 2013 and its rise has not been unconnected with social conflicts in cultivation areas, complaints of deforestation and land trafficking. The main destinations have been Colombia, Chile and Ecuador.
The two mentioned companies in Romero Group represent more than two-thirds of exports of refined oil and crude oil (69%) since 2013. According to data from the National Superintendency of Customs and Tax Administration (SUNAT) analyzed by OjoPúblico, in seven years (2013-2019), the Romero Group exported palm oil through four companies. The main ones are Industrias del Espino (the largest exporter in the country with 39.5%, which amounts to US$100.2 million); and Alicorp SA (25.7% or US$66.2 million).
Both are members of RSPO, a non-profit organization that provides worldwide certifications for sustainable oil palm production to all their members. The annual reports these companies submit annually to the agency show that none can guarantee the sustainable use of palm in 100% of their supply chain yet.
Insist on Transparency
During the investigation, the first time that OjoPúblico requested information from Alicorp about the identity of their palm suppliers, they did not give us that data. However, we reiterated the requests after theat the beginning of last June with the RSPO Director for Latin America, Francisco Naranjo, who indicated that Alicorp has an obligation to inform the identity of their suppliers, This is a commitment made by the company when it joined the RSPO. Among the RSPO standards for organizations seeking or already having their supply chain certified, the chapter concerning purchases and goods indicate that it is necessary to: “keep a list of all supplying (certified and non-certified) factories”. The information must also be public and updated every six months.
OjoPúblico asked Alicorp for details of their suppliers according to the RSPO guidelines. In the first written reply of 26 May, the company - through Llorente y Cuenca consulting firm - indicated that to the time of writing nine processing plants supplied them with palm oil. These plants had “formally declared that they do not supply us from deforested land.” But they did not give the names of such plants.
On June 19, this news medium insisted on the list of the nine plants, this time with a copy to RSPO Latin American director. Finally, after several days of waiting, the company responded to the request and sent us an electronic link with the list of extraction plants located in the San Martín and Ucayali regions: Olpesa, Olamsa, Indepal, Oleaginosas Pucallpa, Rossel, Palm Oleo, Olpasa, Indupalsa and Indomalsa.
Alicorp further indicated that their suppliers had confirmed “through an affidavit, that they do not provide us with raw material from deforested areas”.
However, one of the listed plants, Oleaginosas Pucallpa., had a counter-response. The financial manager, Josué Gutiérrez, indicated that he had no knowledge of any kind of affidavit signed with Alicorp, but assured that the Ucayali Directorate of Agriculture, through its cadaster area, was following the production of the region's palm growers. He also reported that Alicorp represented 80% of their crude oil sales.
OjoPúblico asked Alicorp for the affidavits of their suppliers, but on 25 June, they rejected the request, considering that the information was not public as it was “internal documentation”.
At the end of 2019, in the first audit carried out by the RSPO to Alicorp, which was in charge of IBD Certificações Ltda, it was determined that the company did not declare purchases or sales of RSPO-certified products. “They probably bought non-certified oils, but in those cases we do not record the purchases,” indicated Leonardo Gomes, author of the company’s report, in communication with OjoPúblico.
Gomes also explained that during the audit, the name of the suppliers were only known if they were RSPO-certified. “We do not audit conventional suppliers; [however], for the next audit, due to an update of the standard, we will as they will have to provide this information publicly”, he replied via email.
In the case of Industrias del Espino, as we informed in our previous report, the company has been an RSPO-member since 2016, as part of the Palmas del Espino group. In the last annual report submitted to the RSPO, they indicated that by 2025 its entire supply chain will be certified by 100%.
However, in a letter that the Palmas Group sent to OjoPúblico in response to the report we published, they expressed that the did not need to certify their oil supply chain, which - according to the group - include no inputs that promote deforestation in the Amazon. The company buys from small independent producers in the country a total of 91,438 tons of fresh fruit bunches [according to the Palmas Group webpage]. This amount represents 13% of their total supply. The remaining 87% comes from their own plantations.
In this regard, RSPO director Latin America, Francisco Naranjo, in a new interview with OjoPúblico on 24 June, informed that they were working to make the origin of the palm public a requirement, as is the information regarding the processing plants. However, it considers that traceability at source is still complicated due to the many palm growers working these crops.
Again the Absent State
There is no specific public institution or office monitoring traceability in the oil palm sector as there is for other sectors such as wood (although still with difficulty). However, in April 2019, the Directorate for Agricultural Environmental Affairs of the Ministry of Agriculture finished the transfer of all their responsibilities to the Environmental Assessment and Control Body (OEFA). This measure opens up the possibility for monitoring oil palm crops, according to inspections scheduled or complaints received.
For Lesly Vera, head of the NGO Solidaridad's palm program in Peru, traceability and publication of the suppliers of companies in the sector do not “solve by themselves” the problem of deforestation, but “information management and transparency are good practices that correspond to the implementation of an effective sustainability policy and programs, which is a gradual process involving interaction and cooperation between actors in the chain.”
The specialist also agreed that in the Peruvian State there is no legal or regulatory framework for compliance with traceability. There are also no rules for monitoring deforestation linked to the agro-industry in particular. In this sense, Vera said, the Peruvian government has three strategic roles in this direction: “manage and regulate aspects of formalizing land tenure and land use change, develop and manage official and periodic information on forest cover, and to promote and be part of public private partnerships generating incentives for actors who commit to and comply with commitments and policies for sustainability and for deforestation-free agriculture free.”
PRODUCTION. In the country there are 19 processing plants for the oil palm fruit. These are located in the Huánuco, Loreto, San Martín and Ucayali regions.
According to estimations by the Ministry of the Environment in 2017, agricultural crops on deforested lands in the Amazon are led by the industrial or export sectors. In this group, the main one is coffee (25.4%), followed by cocoa (8.7%) and then others with a lower percentage, among them oil palm (1.8%).
Between 2000 and 2020, according to information provided by the Ministry of Agriculture to OjoPúblico, the palm area harvested increased by 629%. It went from 9,990 hectares to 72,861 cultivated hectares in Huánuco, Loreto, San Martín and Ucayali regions. The last two accounted for 83% of the total harvested in 2019.
One of the points in the first RSPO audit to Alicorp in 2019 stated that the company had implemented all the requirements and is all in compliance with the Supply Chain Certification Standard (SCC). But it was only needed to review what the company published about oil palm to see that some information was reserved. However, as we insisted, it is now public.