The palm sector, which due to the El Niño phenomenon had a drop in its production in the first four months of the year, is now finishing fine-tuning the plans and implementations they have for the European Green Deal regulations which begins to take effect from next year.
(See: Malaysia announces ‘orangutan diplomacy’ with its palm oil importers)
Nicolás Pérez Marulanda, executive president of Fedepalmaspoke with Portafolio about how georeferencing, monitoring and certifications on deforestation-free properties are going, as well as the key points of the Palmero congress that will take place from June 12 to 14.
The year started with low production, how did it go in this first quarter?
At the end of April we have produced more or less 670,000 tons of palm oil compared to 727,000 last year. This represents a drop of about 8%. It occurred fundamentally because the El Niño Niño phenomenon was acute and was very marked, precisely, in those first months that are very important for total palm production.
We believe that this year production will be lower than last year because these months were key. We estimate a decrease of between 100,000 and 130,000 tons for the entire year, which is close to -7%, compared to last year.
(See more: Palm oil production started 2024 with 155,000 tons)
How are you preparing for the rains?
The probability of there being a La Niña phenomenon in the second half of the year is still 50%. The impact of the weather in this sector is seen in production many months ahead, therefore, in the short term it should not have a significant effect on production.
If it is confirmed that there is Niña, we will have to see how it is presented thinking about the productions of subsequent years, which is how we really see climate issues.
The only impact that could materialize in the short term, but due to the rainy season, is in logistics, roads and landslides. In fact, two weeks ago we had the first closure of the Vía al Llano, which for us is crucial.
(Also read: ‘Dollar will be key for palm oil in 2024’: Oleoflores)
At the end of April, palm production had a drop of 8%.
iStock
The European Union has been implementing some regulations, how are you preparing?
The first regulation is the deforestation directive that starts on January 1 of next year. We had been preparing for this for some time with the Colombian Sustainable Palm Oil (APS) strategy, which had the objective of achieving certification for the smallest palm growers in sustainability standards.
When the directive came out, it was clear that the certifications were welcome, but that they were not going to be enough to comply with what is called due diligence. We had to complement it with two additional initiatives; a georeference of 100% of the properties where there is palm in the country, which are close to 600,000 hectares. At this moment we are finishing that georeferencing and Fedepalma is doing it
(Read: Minister of Agriculture presents plan to confront the La Niña phenomenon)
And the other is voluntary satellite monitoring of deforestation, which we have been doing since last year with a Dutch firm. At this time we have already done a historical analysis of deforestation, from 2008 to 2021, which confirmed that in the Colombian case, deforestation is not linked to palm cultivation.
This may have to be done batch by batch and when we have the polygons, because now they are monitoring 18 million hectares, we will have the basic information that the importer in Europe will require.
Did you have to invest more?
The sector had to make a very significant investment in preparation. Unlike 20 years ago, today it is a less expensive process, but it is costly in the field. We have been doing it for more than a year and we have these months until August, but it has meant that this sector has made very important investments.
(See also: ABC of the reasons why the price of fertilizers continues to fall)
The national government has agreed that parafiscal resources be used to prepare for this. But the investments have been with resources basically from the palm trees. We do not believe that the European market is going to pay us better prices for oil if all regulations are applied.
The country has nearly 600,000 hectares of palm.
iStock
How are the funds?
The funds are going very well. As production has been very good in recent years, they have had a very important collection. Of these resources, 3 out of every 4 pesos of the Development Fund have been used for research through Cenipalma, and for technical assistance between Cenipalma and the La Palma nuclei. That is the focus of our investment, science and technology.
(Read: Coffee growers advance in compliance with European Union export standards)
How are exports?
Exports this year have been different from last year, due to changes in the Mexican and Brazilian markets. Central America, which was Mexico’s natural supplier, had a sharper drop in production than in Colombia. We are talking about decreases between 20% and 40%, which is why much of the Mexican demand has been supplied with Colombian palm, which has changed the position of exports a little.
Today Mexico is Colombia’s main export destination, somewhat at the expense of the European market, but that may be temporary while Central American production recovers.
(See more: More than 40% of rural lands in Colombia are large estates)
Today Mexico is Colombia’s main export destination.
iStock
And the developments regarding biodiesel?
In traditional biodiesel we continue to participate in the 10% mixture made from palm oil. This market is growing a little in line with the normal demand of the transportation sector. The Government is building a general fuel roadmap, and there has been talk of the possibility of increasing mixtures. We are waiting for that.
And we are very focused now on advanced biodiesel, which are those aimed at airplanes, which are known as SAF by their acronym in English, and on biofuels that are completely substitutes for diesel, which are called renewable diesel.
(See also: The National University presented its innovation for the agricultural sector)
In the case of airplanes, we are doing the entire process so that the International Civil Aviation Organization, which is in charge of regulating these issues, enables Colombian palm as eligible raw material to produce SAF.
Are you close to your congress? What expectations do you have?
A substantial issue is European regulation, how the sector is preparing to comply with it. In addition, Ecopetrol will be talking about its commitment to aviation biofuels.
We are going to have a key topic which is the advancement in automation and mechanization of field activities in Palma, with the largest Malaysian palm company in the world. The vice president of technology from that company is coming.
(Read: Education and agriculture, key sectors that will feel the decline in resources hard in 2025)
And we are also going to analyze market issues, with analysts from both the Colombian economy and the international oil and fat market.
Add Comment