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Observing opportunities and risks for the expansion of Palm Oil in the Brazilian Amazon
DALEMBERT B. JACCOUD Instituto Virtual Internacional de Mudanas Globais/IVIG/COPPE Universidade Federal do Rio de Janeiro/UFRJ Brazil Associate Researcher daljaccoud@gmail.com ALBERTO A. VILLELA Instituto Alberto Luiz Coimbra de Ps-Graduao e Pesquisa de Engenharia/COPPE Universidade Federal do Rio de Janeiro/UFRJ Brazil Researcher villela@ppe.ufrj.br
Abstract: - the recent expansion of the cultivation of Oil Palm in the Brazilian Amazon, verified since 2000 in the north-east region of the state of Par, is driven not only by the internal traditional demand for palm oil (food, hygiene and chemical industry), of which Brazil is an importer, but mainly by the new national and international markets for biofuels. The process of rapid expansion in the Amazon of this bioenergy frontier presents a series of opportunities and risks that are decisive, positively or negatively, to the expected social, economic and environmental benefits. Considering the controversial social perception of palm oil production in Asia, Africa and other Latin American countries, and in order to meet market demands and legal requirements imposed in its production and use as a biofuels, a consistent development of this sector in the Amazon will require a formal, permanent, transparent and strategic evaluation of its positive and negative impacts. Local palm oil companies take part in regional and international forums to further market and sustainability policy interests. Other than compliance with national laws and public policies, it is expected that quality standards and sustainability criteria should be adopted and monitored for the production and consumption of Amazon palm oil and its biofuels. This article discusses some major legal and social landmarks for the production of palm oil in the Brazilian Amazon, addressing the role of the bioenergy sector. Keywords: - Palm oil, bioenergy, biodiesel, sustainability, Amazon, Brazil

1 Introduction
Palm oil, produced in the tropics from the fruits of the widely cultivated oil palm tree, Elaeis guineensis Jacq., is the main vegetable oil in the world in terms of global production and international trade. Indonesia and Malaysia, 1st and 3rd largest global producers of vegetable oils, account for 86% of the worlds supply of palm oil (1). In recent years, the growing demand for biofuels has pressured up the vegetable oils production, and the palm oil has responded with 5.6 million tons in 2012 for the production of biofuels, from a global demand of 55.3 million tons of palm oil in 2012/13 (2).

Despite being a major producer and exporter of other vegetable oils, Brazil is a minor producer and major importer of palm oil (3) {Table 1}. Table 1 -Brazilian trade balance of palm oil and palm kernel oil, 2004 and 2010
Production Consumption Export Import (1000 t) (1000 t) (1000 t) (1000 t) 2004 129.3 168.2 13.8 52.7 2010 266.6 580.9 17.3 332.6 Year

Source: (3) The state of Par added only 15,000 ha of oil palm productive areas between 2000 and 2011, becoming responsible for 49.5% of the oil palm harvested area in Brazil (4) {table 2}.

World Bioenergy Symposium 2013, Rio de Janeiro, Brazil

Observing opportunities and risks or t!e e"pansion o #alm Oil in t!e Brazilian $mazon

Table 2 Producing oil palm area in Brazil, 2000 and 2011


Region Brazil Brazilian Amazon Par Oil palm harvested area (ha) 2000 2011 81,881 109,080 37,954 37,893 54,418 53,968 % of growth 2000-2011 33.2% 43.4% 42.4%

other hand, from 1991 to 2010, the indexs growth rates for the state of Par (183%) and for the group of municipalities with palm plantations (181%) have been markedly higher than the Brazilian (148%), Latin America and The Caribbean (118%) and the world (115%) growth rates (6). Table 3 Municipal Human Development Index (MHDI) evolution in palm oil municipalities in Par, Brazil, 1990-2010 Human Development Index HDI
Region / year 1990 2000 2010 Growth 1990-2010 0.60 0.64 0.69 115 %

Source: (4) In 2010, Brazils Government agricultural research agency, EMBRAPA, published the report Agro-Ecological Zoning of Oil Palm in Deforested Areas of the Amazon (ZAE-Palma), a scientific inventory of suitable land for oil palm production in the Brazilian Amazon. The report identified 29 million hectares of cleared land with soil and climate suitable for oil palm cultivation in the region, almost twice the area currently being employed throughout the world for its production (5). The region where the recent expansion process is occurring is generally characterized by low Human Development Indexes (HDI), according to the UNDP 2013 report Atlas of the Municipal Human Development Index in Brazil 2013 (6). Despite the Atlas highlighting Brazils accelerated human development progress in recent years, coming from a national MHDI classified as very low (0.49) human development in 1991 to high (0.73) in 2010, the specific region in the state of Par where palm oil is expanding still presents very low income, health and education indicators. Although Brazils HDI index (0.73) has almost reached the same level of Latin America and The Caribbean (0.74) in 2010, and has passed the Worlds index (0.69) after 2000, the current MHDI for the state of Par (0.65) is still below the worlds average {Table 3}. Furthermore, the 33 municipalities producing oil palm in Par 1 present an even lower average MHDI (0.58), below the worlds HDI in 1990 (0.60). On the
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World Latin America and 0.62 0.68 0.74 118 % The Caribbean Brazil 0.49 0.61 0.73 148 % Par 0.41 0.52 0.65 183 % 33 oil palm-producing 0.33 0.44 0.58 181 % municipalities * * UNDPs Brazilian Municipal Human Development Index (MHDI)

Source: (6) This new economic and ecological dynamic has changed, in a few decades, the regional palm oil sector traditionally organized for food, hygiene and chemical industry. The agro-industrial expansion pushed by bioenergy demand, requiring innovative rural development policies, settlement schemes and production and processing technologies (8), will entail new opportunities and risks from a social, economic and environmental standpoint. Priority should be given for funding palm oil research which include permanent improvement actions for, among others (8): economic analysis of viability and costs production for the different production management systems for farmers and private companies in Brazil and worldwide, evaluation of the environmental, social and economic impacts of oil palm expansion in the Amazon region, assessment of the impacts of current and new technologies appropriate for the Amazon region, research on management of natural and agroforestry sites for economic and social benefits, impacts of palm oil expansion in the Amazon in terms of GHG emissions, including land use change issues.

The 33 municipalities with known oil palm plantations in the state of Par, Brazil, in 2012, are: Abaetetuba, Acar, Baio, Benevides, Bonito, Bujaru, Capito Poo, Castanhal, Concrdia do Par, Garrafo do Norte, Igarap-Au, Igarap-Miri, Inhangapi, Ipixuna do Par, Maracan, Metropolitana de Belm, Mocajuba, Moju, Nova Esperana do Piri, Nova Timboteua, bidos, Ourm, Santa Brbara do Par, Santa Isabel do Par, Santa Luzia do Par, Santa Maria do Par, Santo Antnio do Tau, So Domingos do Capim, So Francisco do Par, Tailndia, Terra Alta, TomAu and Vigia [adapted from (4) and (7)].

World Bioenergy Symposium 2013, Rio de Janeiro, Brazil

Observing opportunities and risks or t!e e"pansion o #alm Oil in t!e Brazilian $mazon

There are a number of Brazilian governmental policies which aim to ensure that the observed expansion of oil palm plantations occur in an orderly and sustainable manner, a challenge to be met by the public and private sectors. This article describes the main policy instruments and discusses implementation steps focusing on the case of the expansion of the Brazilian Amazon frontier of palm oil production for bioenergy.

2 Trends in the oil palm expansion for bioenergy in Brazil


Table 4 shows the accelerated growth of the oil palm plantations seen in Par state in 2012, and its prospects for 2015, highlighting the participation of bioenergy and traditional markets (9). The sector expects an expansion on the total planted area in the state of Par from 140,000 ha in 2012 to 329,000 in 2015, an increase of 135% in 3 years, by which time the bioenergy sector should detain almost half of the plantations. Table 4 Oil palm plantations in Par in 2012 and projected expansion to 2015
Demand 2012 planted area ha % 2015 projected area ha %

oil palm plantations can increase rural production and energy security in various towns of the Amazon. According to official projections (11), palm oil for biofuels production could have up to 700,000 ha of plantations established by 2022. Research and production projects on oil palm are also being developed in the Amazon states of Amap, Amazon, Rondnia, Roraima and Mato Grosso, although the expansion frontier in the region has been concentrated in the Northeastern region of the state of Par. Additionally, the use of irrigation on oil palm is under research by EMBRAPA, both to reduce regional and future climate constraints in the Amazon region and to test its adaptation to other regions (12).

3 Guidelines for the expansion of palm oil production in Brazil


Since the publication of the first report on the climatic zoning for oil palm in Par state, led by EMBRAPA in 2001 (13), the Brazilian Government has been conducting studies, initiatives and policies to stimulate the oil palm sector to occupy degraded areas of the Amazon. The most relevant references to follow the implementation of public policies and the private sector response on an operational level are presented here.

Bioenergy * 46,000 32.9 155,000 47.1 Food and chemical 94,000 67.1 174,000 52.9 industry ** TOTAL 140,000 100.0 329,000 100.0 * Vale, Petrobras Biocombustvel and GALP Energia. * Agropalma, Yossan, Denpasa, Marborges, Dentaua, ADM, Palmasa, Guanfeng and others.

3.1 The National Plan for the Production and Use of Biodiesel (PNPB)
A mandatory blend of biodiesel with diesel oil throughout the nation since 2008, currently set at 5% (B5), with few up-to-date information available on its main social, economic and environmental performance and impacts. According to a government announcement in 2008 (14), given its soil and climate, Brazil has vast potential for producing biomass, and adding value to these available raw materials offers a sizable advantage. Among many possibilities, biodiesel is perhaps the most promising because energy demand tends to increase while the world s economy expands. Within this context, Brazils government glimpsed the possibilities now becoming reality of bolstering its energy security while benefiting small farmers and small rural producers in the poorer regions of the country, by bringing them into the biodiesel supply chain with environmental and other benefits as well.

Source: adapted from (9) The bioenergy sector is represented by investments led by Vale SA, Brazils second largest company and largest domestic consumer of diesel oil, and by Petrobras Biocombustvel joint venture with GALP Energia. Vale aims to provide biodiesel to displace 20% of diesel demand from its own mining and transport machinery, while Petrobras seeks the Amazon market and, together with GALP, the Iberian biofuels markets. The demand for biofuels in the Brazilian Amazon region is a strategic issue for regional economic and social development, as the region imports more than 80% of the diesel oil it consumes (10). In a region characterized by logistical difficulties for diesel oil supply, biodiesel production from

World Bioenergy Symposium 2013, Rio de Janeiro, Brazil

Observing opportunities and risks or t!e e"pansion o #alm Oil in t!e Brazilian $mazon

3.2 The Brazilian Forest Code


Issued in 1965, this old but innovative national code of forest protection laws was revised in 2012 by Congress, which defined new specificities that will demand the revision of legal instruments and the establishment of a new set of national and regional policies, in order to strengthen, especially for rural areas, environmental protection and management. The Forest Code and the regional laws derived from it make up the most important set of environmental rules to be followed by farmers and public policies in regard to the expansion of oil palm plantations in the Brazilian Amazon.

3.6 Brazilian Palm oil Supply Chain Chamber


Established in 2010 by the Ministry of Agriculture, it is a consultative forum between Government and the palm oil agro-industry. Public access to meetings is granted, in which public and private stakeholders discuss issues regarding the palm oil sector (16).

3.7 Sustainability parameters


There are no national or regional standards for the production of oil palm and its oil, regardless of the efforts of EMBRAPA, government and producers to improve the agricultural management of the plantations. 3.7.1 System for Weighted Environmental Impact Assessment in Oil Palm Production (APOIA-OilPalm) Developed and tested in Brazil by EMBRAPA2, this system has been also validated in Indonesia (17). The method showed to be a useful tool for a preliminary assessment of social and environmental impacts of oil palm cultivation in rural proprieties, and the involvement of the farmers in its application promotes clear guidance for land management and agricultural sustainability. 3.7.2 Protocol for the Sustainable Production of Oil Palm in the state of Par Proposed and signed voluntarily in 2010 between the local government and the major palm oil companies in the state3, the Protocol compels the sector to comply to 32 social, economical and environmental criteria (18). Although the Protocol includes transparency in the monitoring of these principles by government and companies, no information is publicly available at the moment. A recent study evaluated a set of socioenvironmental indicators of oil palm production in 53 small and large
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3.3. Ecological-Economic Eastern Par (ZEE-PA)

Zoning

of

A multi-stake holder process was developed by the government to establish regional guidelines for the occupation and use of the territory in the east and north regions of the state of Par, including the palm cultivation region. The official zoning was approved in 2010, containing rules over the identification of conservation areas and management of productive rural areas. Palm oil policies and private projects must comply with it (9).

3.4 Agro-Ecological Zoning of Oil Palm in Deforested Areas of the Amazon (ZAEPalma)
Published in 2010 (5), it is the most important scientific reference on public policies for oil palm when it comes to the selection of productive rural areas, to environmental licensing, infra-structure planning, rural credit operations and other public and private investments.

3.5 Brazilian Sustainable Production Program

Palm

Oil

This enforcement plan for the expansion of oil palm plantations in Brazil was launched in 2010 and - in addition to rural credit for farmers and companies, funding for R&D, improvement of agricultural technical assistance and other incentives for the sector - it imposes a series of criteria for new oil palm plantations, including the reference year of deforestation (status as of 2007), protection of conservation and indigenous areas, compliance with agricultural aptitude and zoning rules etc (15). It is yet to be evaluated in regard to its main social, economic, technological and environmental impacts.

in Portuguese it is named Avaliao Ponderada de Impacto Ambiental da Produo de Dend - APOIA-Dend 3 the 11 companies that signed the Protocol are (19): Agroindustrial Palmasa S/A, Consrcio Brasileiro de Produo de leo de Palma CBOP (today owned by Biovale), Dend do Par S/A DENPASA, Dend do Tau S/A DENTAU, Galp Energia SGPS-AS, Marborges Agroindstria S/A, Mejer Agroflorestal Ltda, Novacon Reflorestadora Indstria e Comrcio de Madeiras Ltda, Palma Tech Reflorestadora Ltda, Petrobras Biocombustvel S/A and Vigna Brasil Projetos e Participaes Ltda.

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Observing opportunities and risks or t!e e"pansion o #alm Oil in t!e Brazilian $mazon

establishments in Par (18), and verified the level of adherence to the Protocols indicators. The results demonstrated that, on average, the conformity to the Protocols principles was between 60% and 96%. The negative impacts were related to environmental aspects, such as the use of agricultural inputs, energy use and environmental restoration, while the best results for small and medium productive systems were observed through indicators of income generation, property value, income sources diversification, and training.
3.7.3 International certification schemes Additionally, there are a number of international certification schemes that could be publicly adopted to demonstrate compliance to volunteer or to market standards of quality. In the case of certification, the Agropalma Group has been a leading innovating company in Brazil: the IFOAM Organic Certification was awarded in 2000 for a total of 10% of its palm cultivation area, following standards set by the International Federation of Organic Agriculture Movements, and the RSPO Certification, following criteria defined by the Roundtable on Sustainable Palm Oil, was achieved in 2011 for all of its own private production chain of palm bunches and crude palm oil (20).

producers, consumers, governments and the civil society, in order to take advantage of the favorable opportunities and to prevent the inherent risks in the expansion of oil palm plantations in the Amazon.

4 Conclusions
The expansion of palm oil industry in the Brazilian Amazon is driven both by the need to replace imports and by the new domestic and international demands for biofuels. The current frontier for the establishment of oil palm plantations for biodiesel production is the northeast region of the state of Par, and this sector will detain almost 50% of the total 329,000 ha of cultivated area expected for 2015. The current frontier is being established in a region with some of the lowest Human Development Indexes of Brazil, showing an additional precarious access to economic and social structure, and the impacts of palm oil agroindustry development in this region are yet to be strategically evaluated in terms of social, economic and environmental sustainability. In the context of the current accelerated growth of palm oil sector in the Amazon, there are a number of themes that will require more and constant attention from academy, researchers,

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Observing opportunities and risks or t!e e"pansion o #alm Oil in t!e Brazilian $mazon

CONGRESSO DA REDE BRASILEIRA DE TECNOLOGIA DE BIODIESEL, 5: anais, trabalhos cientficos. Lavras: UFLA, 2012. v. 1, p. 245-246. (13) BASTOS, T. X.; MLLER, A. A.; PACHCO, N. A.; SAMPAIO, S. M. N.; ASSAD, E. D.; MARQUES, A. F. S. Zoneamento de risco climtico para a cultura de dendezeiro no Estado do Par. Revista Brasileira de Agrometeorologia, v.9, n.3, p.564-570, 2001 (14) Rodrigues, R. A.; Accarini, J. H. Brazils biodiesel program. In: Biofuels in Brazil realities and prospects, Braslia, Ministrio das Relaes Exteriores, p. 159-181, 2008 (15) Bertone, M.V.. A importncia do Programa de Produo Sustentvel de Palma de leo: produtividade e sustentabilidade. EMBRAPA. Revista Agroenergia. n 2, Braslia, 2011

(16) Ministrio da Agricultura, Pecuria e Abastecimento. www.agricultura.gov.br (17) Rodrigues, G. S. et all. An Assessment Tool and Integrated Index for Sustainable Oil Palm Production. In: International Conference on Oil Palm and Environment, Bali, INDONESIA, 2010 (18) Monteiro, Katia. Anlise de indicadores de sustentabilidade socioambiental em diferentes sistemas produtivos com palma de leo no estado do Par. Ph.D. Thesis, Universidade Federal Rural da Amaznia, 2013. (19) Dirio Oficial do Estado do Par, Vol. 31.672 (5/24/2010) and Vol. 31.730 (8/13/2010) http://www.ioepa.com.br (20) www.agropalma.com.br

World Bioenergy Symposium 2013, Rio de Janeiro, Brazil