One company in northern Honduras shows how palm oil cooperatives can empower communities while turning a profit

25/07/2023 (China Dialogue) - The palm oil cooperative Hondupalma stands as a beacon of hope against a backdrop of violence in Honduras, according to several people involved with the company. By bringing together over 600 small landowners, all of whom are partners in the company, Hondupalma defies the prevalent model of large family-owned palm oil companies, they explain, adding that it also empowers communities.

However, amid the country’s troubling landscape marked by targeted attacks on farmers, the cooperative faces its own set of trials. It has struggled to devise a comprehensive strategy to tackle pressing climate-related challenges. And it has no real plan for who will take over from its leaders. As they age, the possibility of Hondupalma losing the values that have sustained it becomes ever more real.

The Honduran government started promoting oil palm cultivation during the 1960s, as part of wider agrarian reforms aimed at addressing land inequality and rural poverty. But it was really in the late 1990s that production skyrocketed. Now, more than two decades later, the country has roughly 200,000 hectares of oil palm yielding close to 600,000 metric tonnes of oil a year, making it one of the top producers in Latin America.

While the commodity has brought economic development and prosperity, it has not been free of environmental and social controversies. In particular, the industry has been plagued by land-ownership disputes. These disputes pit campesinos (peasant farmers) and small cooperatives against powerful landowners, and often lead to violence.

Of the total national production, 61% comes from just three companies – Corporación Dinant, Grupo Jaremar and Aceydesa – and their plantations are located where the highest levels of violence have been recorded. Hondupalma, for comparison, produced about 8% of national production in 2021, according to calculations based on its report to the RSPO (Roundtable on Sustainable Palm Oil).

For Elvin Hernández, sociologist and researcher at ERIC-SJ, a Honduran centre for research and communication, the socio-political crisis being experienced by the palm oil industry repeats the pattern of the banana elites of the last century: “Grab land, exploit it with monoculture and collude with the state.”

In one area of northern Honduras – the Bajo Aguán Valley in the department of Colón – 160 campesinos have been killed in the last decade. Conflicts between landowners in the area and campesinos dispossessed of their lands have a long history – and it does not look like they will be resolved any time soon. More than a year ago, a new attempt was made at resolution. Agricultural workers and the administration of President Xiomara Castro signed an agreement to reduce violence in the area. The ambitious document sought to end the crisis in a comprehensive way with a focus on human rights, reparation for victims and access to justice through investigations of the crimes committed against them.

Since that date, however, five more agricultural workers have been killed. What happened to the initiative of the Castro government? The situation is complex, but Jhony Rivas, spokesman for the Aguán Valley Agrarian Platform, is clear on one thing: “The landowners have a lot of power in the country.”

An alternative approach

Hondupalma, one of the most recognised palm oil companies in the country, was founded in 1982 in Guaymas, a small town in the Sula Valley, northern Honduras, known by organisations and communities as the cradle of the campesino movements that fought for the agrarian reforms.

Ramón Cruz, or “Monchito”, one of its founders, tells us that Hondupalma is the fruit of the ideals that have motivated campesino struggles for land and dignity since the 1950s.

Over 75 years old, but with an exceptional memory, Monchito smiles and gives names, years, data and events surrounding the demand for land in the last four decades in Honduras.

Sitting on the bench in his large patio under the shade of a leafy mango tree, he explains that today, “Hondupalma is among the 50 largest companies in Honduras”. It has more than 10,644 hectares of oil palm across 30 plantations certified to leading standards set by the RSPO and by ISCC Plus (International Sustainability and Carbon Certification).

Annually, these plantations produce around 178,000 metric tonnes of palm fruit bunches, which they process themselves to manufacture edible oil, soap, detergent and other products under their three brands: Clavel, Jansur and El Portal. “We export to El Salvador, Nicaragua and Guatemala, even to Europe; we are in the Netherlands and Germany,” he says.

For Monchito, what sets Hondulpalma apart is the fact it has managed to achieve this commercial success without losing its identity as a socially responsible cooperative founded by campesino groups.  

Its organisation is broadly democratic. The 603 partners, who were all granted land by the state as part of the agrarian reforms, are organised into 30 associative companies. They “elect three representatives each to form the board of directors, a body that then selects the general manager and the key and trusted positions in the company, all partners or children of partners,” explains Monchito. Profits are distributed among the partners, reinvested into the company or used to support projects that benefit the partners and their communities, such as technical training, a community hospital and affordable finance: “This is a virtuous circle: if the communities and the land are good, production and benefits are good too.”

Eduardo Hernández, president of the board of directors, says another element that makes Hondupalma different is that it has a subsidiary company – Energéticos Renovables Hondupalma – that generates renewable electricity exclusively for the parent company, using biogas produced from the oily wastewater leftover from the palm oil extraction process. The power plant has a production capacity of 2000 kilowatt hours, and supplies 45% of Hondupalma’s total electricity consumption.

Elvin Hernández recognises the importance of the Hondupalma cooperative model, not only as an alternative in regards to land tenure, but also to mitigate the environmental impacts of palm oil production – and the key lies in the company’s vision. “What is happening is not the same as in the Aguán Valley, where three families accumulate profits for themselves,” he says. “In contrast, Hondupalma is a company with a sense of community and respect for the land, created in order to improve the quality of life of the communities.”

Socio-environmental challenges

For meeting demand, oil palm offers a far greater yield than other vegetable oils. But the challenges that have plagued the industry in Southeast Asia, including deforestation, biodiversity loss and social conflict, are also present in Honduras. For example, in the case of the Punta Izopo and Jeanette Kawas national parks located on the eastern end of the bay of Tela in the north of Honduras, oil palm cultivation has taken over between 20% and 30% of the protected areas respectively. What does Hondupalma propose in the face of this reality? Due to its campesino and cooperative origin, it shows that an oil palm company that overcomes the historical conflicts of land tenure is possible in Honduras. But is it possible to mitigate the environmental impact attributed to the palm oil industry?

Eduardo Hernández says that the company constantly reflects on the environmental impact of monoculture and assumes the responsibility of minimising the collateral effects of oil palm cultivation. However, oil palm is the only crop that can withstand the constant flooding of the Sula Valley, he says.

In recent year, Honduras has increasingly been experiencing periods of drought followed by heavy rain. The drought is a problem for oil palms because they need a lot of water. Honduras lies within the “dry corridor”, a large stretch of land in Central America that also covers Guatemala, El Salvador and Nicaragua. The region and its agriculture are particularly vulnerable to risks associated with climate change, and this in turn has had significant economic impact and threatened food security.

Although Honduras has an abundance of water sources, access to them, especially safe drinking water, is becoming increasingly scarce. The privatisation of wells and drinking water reserves, contamination by sewage or animal waste, plus consumption by extractive industries all serve to deplete, deteriorate and reduce water sources.

Honduran environmentalist Juan Mejía warns of the threat posed by the expansion of oil palm cultivation. “Each African palm, from the age of 12, consumes an average of 40 to 50 litres of water per day. That amount of water that is extracted from the palm cannot be replaced,” he said.

The drought and the lack of supply infrastructure have caused a true water crisis that affects a large part of the Honduran population.

However, Hondupalma claims to submit to international certification standards such as those of the RSPO, which require compliance with social and environmental commitments, including ethical and transparent management, respect for human and labour rights, and ecosystem conservation. And this is the constitutive commitment of the company, says Eduardo Hernández, because “the company’s bet is the community; no one here works to become a millionaire or accumulate profits for a small group. The mission is to improve the lives of the partners of the company and this happens through the care of the land.”

When it comes to protected areas, Hondupalma ratifies its commitment to respect and preserve them through visits to its plantations and the assignment of codes that guarantee that national reserves are not affected. “Hondupalma teaches that a harmonious relationship between farmers, companies, palm production and the environment is possible,” Elvin Hernández concludes. “But for this it has to renounce land grabbing, money as an end and violence as a means.”

Hondupalma’s shortcomings

Environmentalist Juan Mejía is clear about some of the challenges with Hondupalma: “I can talk about the wonders of Hondupalma, and then the debts that it still carries.”

One of those debts – or problems – is the serious lack of turnover in leadership: “The partners who recovered land in the 70s and 80s and created the base of Hondupalma, today are advanced in age, and their children do not necessarily want to take over.” Mejía refers not only to a lack of young people joining as partners, but also a change in the values and principles of those that do. Another issue is environmental: it is true that the cooperative is respectful of international standards related to social and environmental responsibility, but it does not do more than is necessary.

In an enormously challenging political and business landscape, Hondupalma has seen great success in its first few decades. As it looks forward, these challenges – notably, surviving in a competitive market with small margins, dominated by companies backed by powerful families – are likely to endure. Finding leadership that preserves the company’s collective principles, which have so far offered a compelling alternative model, could be vital to ensuring its success into the future.

https://chinadialogue.net/en/food/honduras-democratic-approach-to-palm-oil-defies-status-quo/