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A truck drives through a palm oil plantation in Indonesia’s Central Kalimantan province. Over the past decade, the area planted with oil palm in Indonesia has almost tripled. / REUTERS
A New York venture capital firm, which has leased some 180,000 acres of land in Western Africa to create one of the world’s largest palm oil plantations, has abruptly ceased efforts to obtain an independent certification that its operation is socially and environmentally responsible.
The firm, Herakles Capital, withdrew on August 24 from an internationally-recognized protocol for certifying that its $350 million palm oil project in Cameroon met minimum standards set by the Roundtable on Sustainable Palm Oil, or RSPO. Instead, the company says, it will start clearing the land and establish its own environmental and social standards later.
“We’re going to develop our own standard, and we think it will meet or exceed what RSPO has in place,” Bruce Wrobel, chief executive of Herakles, told 100Reporters. He said the company would ask academics to help it draft standards that would apply only to Cameroon.
It’s unclear which companies or organizations, if any, would recognize such a standard – or what it could mean if individual companies start breaking away from the roundtable to create their own rules.
The dispute is unfolding amid a sharp increase in large-scale land acquisitions in Africa and elsewhere over the last four years. Such deals are rising along with the global demand for food, fuel and mineral resources — leading foreign companies and governments to buy up rights to vast tracts of land, often without citizen oversight. These long-term leases are quietly redrawing the maps of Africa and much of the developing world. The projects can pit companies promising jobs and economic development against those who question the impact for local populations and the environment. Research by the World Bank and others suggests that the promised benefits seldom materialize.
Environmentalists and indigenous groups attacked the company’s decision to abandon its bid, and have long been critical of Herakles Farms, the firm’s subsidiary involved in the Cameroon project. They claim the company is riding roughshod over the rights of villagers and disregarding the environmental consequences of its plans.
In a scathing report released this week, the California-based Oakland Institute and Greenpeace accused Herakles of operating outside of the law, intimidating opponents and obscuring the project’s true effect on the environment.
Anuradha Mittal, the Oakland Institute’s executive director, said that Herakles, like some other corporations rushing to develop large tracts of African land in recent years, is more talk than walk in working with the affected communities.
“The so-called benefits to local communities that have been promised, they’re just not there,” Mittal said.
A Ruinous History
Large-scale development in underprivileged corners of the globe has a less-than-stellar track record of doing right by the environment and indigenous populations. And certain agricultural endeavors, like palm oil, have a particular sordid history.
Palm oil — obtained from the fruit of oil palm trees — is the most widely used vegetable oil in the world. It makes its way into countless food items, and even products like toothpaste and soap. Its role as a biofuel has further sparked a surge in demand for palm oil, as countries in Europe and elsewhere thirst for alternative energy sources.
The RSPO’s creation followed reports of reckless palm oil development in Indonesia, now the world’s largest source of palm oil, that devastated vast swaths of rainforest. The roundtable brings together everyone from growers, manufacturers and buyers to environmentalists and investors, with the goal of setting and enforcing global standards for responsible palm oil production.
Debbie Hammel, a land specialist with the Natural Resources Defense Council – which is not involved in the Herakles dispute – said RSPO and similar industry-wide groups serve an important function in policing the marketplace.
“One of the good things about RSPO is there is a mechanism for complaints and a formal review. You also have independent auditing to determine whether a company is actually doing what it says it wants to do,” Hammel said.
The company’s decision to withdraw from RSPO comes amidst a long-simmering battle over the project. Herakles obtained a 99-year lease in 2009 from the government of Cameroon for more than 180,000 acres to develop the palm oil plantation.
Herakles, which operates in the country as SG Sustainable Oils Cameroon Ltd., says its goal is to bring employment and a stable food supply to an impoverished area. The company contends its land holdings consist of existing farmland or previously logged forests designated for development by the government.
Earlier this year, when Herakles applied to get its Cameroon project certified, opponents – including five environmental groups and several academics from James Madison University, Duke University and Germany’s University of Goettingen – filed a formal complaint with RSPO, citing alleged violations of the group’s standards.
The watchdog group began investigating the charges, and also made attempts to mediate the dispute between both sides.
But on August 24, Herakles sent the RSPO a letter: It was withdrawing its application, and resigning its membership. Doing so meant the investigation – not yet complete – was over. The move drew a fury of criticism from environmental groups claiming the company was abandoning the certification bid because it knew it could not meet the guidelines. Herakles countered that it had waited long enough for a decision that might never come.
Money on the Line
Wrobel said Herakles felt the RSPO process was needlessly long.
“We pulled out because we had been pushing them for an answer, and when we learned that the answer was going to be doing still more studies with no logical end, we were at risk of losing our agreements,” Wrobel said. He said the government of Cameroon was growing impatient that development has not moved more quickly, in accordance with their lease agreement.
Local opponents of the project – including village officials and even certain members of parliament representing the area – are up against powerful interests in the Cameroon government itself, a number of whom support the project. A spokesman for Cameroon’s U.S. embassy did not respond to questions from 100Reporters.
But beyond government impatience, Herakles also had money on the line: in the form of three nurseries that were busting at the seams with baby oil palm trees waiting to be planted. While the overall project has been stalled, the company did build the nurseries, which covered about 75 acres.
There are currently 70,000 trees that are overdue to be planted, Wrobel said, which would require just over 1,200 acres. Another 1.5 million trees are in earlier stages of growth, and would eventually need about 15,000 acres of land to be transferred to the field.
Frederic Mousseau, policy director at the Oakland Institute and author of the group’s report on Herakles, said he doubted the company’s claims that pressure from the government of Cameroon or “dire humanitarian needs”—as the company stated in its withdrawal letter to the RSPO—led it to pull its certification application. Rather, he said it was “the economic reason.”
“Claiming that this project will address ‘dire humanitarian needs in Cameroon’ demonstrates a company’s complete lack of touch with the actual situation on the ground and the livelihoods of the people,” Mousseau said.
Wrobel said before the company pulled out of RSPO, it offered a number of concessions. He said Herakles offered to reduce the amount of land it was initially seeking certification for – initially from about 150,000 acres down to just over 22,000 acres. Then later, this summer, to about 5,000 acres. He claims both those suggestions were rejected.
“If you have someone who’s determined to stop a project, it’s like you can use the RSPO process to make sure the project might be stopped,” Wrobel said.
“Consequences for Decades”
Samuel Nguiffo, director of the Center for Environment and Development in Cameroon, which participated in the report, said demand for land in his country has skyrocketed in recent years. He said old plantations throughout the country generally totaled about 1.2 million acres – producing a range of different crops. But now more than 5 million acres were being eyed for large-scale commercial development of agriculture products, including rice, sugar and palm oil.
Nguiffo said the Herakles plantation isn’t the largest project in the works in Cameroon or West Africa, but how it’s proceeded has caused alarm over what standards will govern future developments in his country.
“Those precedents will have consequences for decades,” Nguiffo said. “There’s no way back if we fail.”
He called the Herakles project the “best example of what should not happen,” and said that opponents feel they have to make their stand.
Abandoning the RSPO certification isn’t without its consequences for Herakles.
Hammel, the land specialist with the NRDC, said global buyers of products like palm oil rely on independently verified certifications like RSPO.
“We’re seeing buyers increasingly incorporate these standards into their purchasing decisions,” Hammel said. “It can be complicated for a large buyer to make that assessment for themselves, so to the extent that there’s an audited mechanism that they can turn to, they find that increasingly attractive.”
But Herakles hopes it can get around that: Wrobel said the company plans to sell most if not all of its palm oil within Africa itself, and African buyers aren’t as active in RSPO.
Herakles now appears ready to get rolling on developing its plantation.
Wrobel told 100Reporters that the company intends to move the project forward to find places to put those 1.5 million trees growing in the nursery.
“We’re going to identify 6,000 hectares [about 15,000 acres],” he said.
Opponents have no intention of giving up the fight, however, and are seeking to raise public pressure for the government to intervene.
The report contends that a project as large as Herakles’ plantation cannot move forward in Cameroon without a Presidential decree granting permission, which it does not have – and also that a local court injunction from earlier this year prevents it from proceeding. (The company disputes those assertions, claiming it does not need a Presidential decree and that the local court injunction was subsequently lifted.)
Accompanying its report, the Oakland Institute also released a 20-minute documentary it produced – in which dozens of villagers and local leaders criticize the company’s behavior. Some of them accuse Herakles of using pressure tactics and say company officials appeared unwilling to sign written contracts. Villagers said the company also made promises to provide them with working water wells and schools in return for their cooperation, but didn’t follow through.
Herakles officials disagree with nearly every assertion made in the report. The company contends its plantation will provide steady jobs and economic growth to communities that have been largely isolated from the marketplace. It says opponents represent a minority opinion in the villages.
“It’s poverty that’s the real environmental issue,” Wrobel said. “That’s what we’re focused on.”
With large-scale land acquisitions on the rise in Africa, any large commercial development is a sensitive issue for local communities who have seen too many foreign-funded projects go wrong. (Even Wrobel called Indonesia’s palm oil development an “environmental disaster.”)
A Philosophical Divide
The Herakles dispute in Cameroon reveals a fundamental philosophical divide about development in Africa – one that is long-standing when it comes to aiding the continent: should outside organizations be trying to industrialize impoverished communities and bring “modern” jobs that come with a plant or agri-business operation? Or should they be working to accommodate those communities’ traditions and connecting them to the global marketplace? Add environmental effects to the equation, and you’ve got a tinderbox of passions to navigate.
Wrobel contends that planting millions of oil palm trees and building the refinery are a better use of the land than forests or cocoa fields to raise the standard of living.
“We’re not planting those trees for environmental reasons. We’re planting them for poverty eradication reasons,” Wrobel said.
But advocates for more sustainability and self-determination say the company is imposing its will on local villages – and that local farmers who have lived independently for years in Cameroon are at risk of being converted into low-paid hourly employees of large multinational companies.
“Sustainable production of palm oil by small farms is possible and is already happening on the continent. Half of the palm oil in Cameroon is produced by small farms, which employ comparatively more people and in a sustainable way, respecting natural resources,” said Mousseau, the report’s author. “Effective alternatives are there and must be considered.”
Cameroon currently produces more than 230,000 tons of palm oil per year, he said.
“We need to help African farmers invest in the resources that are there, instead of erasing them from the map,” Mousseau said.
Wrobel himself is just as unyielding, saying that poor villagers should have a chance at a steady income.
“They have a right to live,” he said.
Those words, taken on their own, may be the only thing the two sides agree on.