Land rush in Palawan must end: calling for a moratorium on oil palm expansion

by Coalition against Land Grabbing (CALG) | 14 Oct 2014

Press release

Coalition against Land Grabbing (CALG)

Agribusiness Land Rush in Palawan Must End: Calling for a Moratorium on Oil Palm Expansion

Recent years have seen an exponential increase in land deals across the Philippines with the conversion of large expanses of land with crops mainly intended for export. Palawan, in spite of its unique recognition as a UNESCO Man & Biosphere Reserve, has not been spared from massive investments in extractive resources and industrial agriculture, especially oil palm development.

On 29 September, a farmers’ and indigenous peoples’ delegation has handed over to Palawan Vice-Governor Dennis Socrates, a petition signed by more than 4,200 people calling for a moratorium on oil palm expansion province-wide. The group belonging to the newly established Coalition against Land Grabbing (CALG) said that, in addressing rural poverty, the Government of Palawan should focus on concrete and sustainable plans to improve production on farmers’ land, rather than pushing for massive oil palm plantations. As oil palm expansion continues unabated, the household economy of small farmers and indigenous peoples is now breaking apart. “We are being strangled by huge debts with both Agumil Philippines, Inc (AGPI) (the major oil palm company on the island) and the LandBank , and our land titles are being withhold by the bank as a collateral” says Welly Mandi (CALG’s secretary).

Farmer’s indebtedness with both Agumil Philippines, Inc. (AGPI) and the LandBank (LBP) appears to have been engraved into oil palm development schemes since its very inception. The bank commits 80% financial assistance while the remaining 20% becomes the borrower’s equity. For newly formed cooperatives, having little experience and no capital, it is impossible to provide the required financial counterpart. However, AGPI has found ways to overcome this constraint by setting up the equity for the cooperatives in order for the LBP to commit the 80% equity. However, according to farmers, the Agumil did not inform them that a compounded interest rate of 14%. had been applied to the equity that AGPI had set up for them. As a result, cooperatives have now double loans, both from AGPI and from LBP. Interestingly enough, a key provision contained in such loans-contracts signed by farmers, states that loans must be fully amortized before the latter can take out profit on the sales of oil palm fruit bunches. Many farmers now fear that their debts will continue to pile up for the entire contract period (30 years) and, being unable to meet payment schedules, they may end up losing their lands whose titles are being withhold by LBP as collaterals.

Some farmers and indigenous peoples have leased their land to AGPI for very law prizes, ranging between 500PHP to 1,000 PHP/hectare/year (equivalent to about 11 to 22USD/ha/year). Other farmers, encouraged by the Philippine Coconut Authority (PCA), have formed cooperatives to engage in the out-grower scheme of AGPI. The majority of these farmers are agrarian reform beneficiaries (ARBs) who had been granted individual titles for a maximum of three hectares, namely Certificates of Land Ownership Award (CLOA).

After seven years of oil palm plantation, farmers bitterly complain about company’s financial reports not being shared with cooperatives’ members, as well as about the lack of economic benefits, and the increasing difficulty in coping with their loan obligations. As a result, there have been numerous and unheard calls on the part of cooperatives to request amendments in the terms and conditions of the so called Production, Technical and Marketing Agreements (PTMA) which they have entered with AGPI. A Management Services Agreement (MSA) sets out the terms and conditions for AGPI’s management of those oil palm plantations established on the lands being provided by farmers through their cooperatives.

Both contracts contain provisions which place the key decisions related to production and sale in the hands of AGPI, while the majority of financial and managerial risks stay with the cooperatives. For instance, AGPI is entitled to take over the management of cooperatives’ plantations if the project is not managed to its satisfaction (e.g. if production does not meet the required standard). In addition to this, AGPI is imposing a 14% interest rate on all additional expenses (e.g. loans for purchasing fertilizer) and a 10% management fee which further contribute to deepening the cooperatives’ debt. In addition to this, AGPI’s sister company, the Palawan Palm & Vegetable Oil Mills Inc (PPVOMI), rather than guaranteeing growers proceeds from the sale of fruit brunches according to the prizes set by the world market, it relies on its own 'pricing formula' which makes the proceeds contingent on the internal milling efficiency of the PPVOMI plant, prior to the deduction of 15% gross profit for PPVOMI. The so called 'pricing formula' is based on PPVOMI's own reports about the selling price for Crude Palm Oil (CPO) and kernel oil which farmers/growers have no chance to verify and audit.

PPVOMI is 60 percent Singaporean and 40 percent Filipino-owned and sells 100 percent of its production to its sister company Agumil Philippines Inc. (AGPI). Unofficial sources also reveal that CPO produced in Palawan is shipped, via Agusan del Norte in Mindanao, to refineries in Sabah, Malaysia, and 70% of the total production is exported to Singapore, China and Malaysia.

“We are witnessing in Palawan to a new aggressive land grab, driven by growing global consumption of palm oil, with agribusiness enterprises taking over with the support of complicit government officials while local communities are deprived of critical resources and virgin forest is being felled down” says John Mart Salunday, the Community Organizer of ALDAW (Ancestral Land/Domain Watch), the local organization that has been at the forefront in the struggle against oil palm expansion. On 23 January 2014, in the course of joint field visit carried by ALDAW and the Community Environment and Natural Resources Office (CENRO), in the Municipality of Bataraza, it has been ascertained that virgin forest found within 19,21 ha of Alienable and Disposable Land and within 2,69 ha of timberland has been clear cut, allegedly by Agumil, to give space to oil palm plantations. In the Municipalities of Quezon and Rizal, CENRO has also established that oil palm plantations have encroached on virgin forest found on Alienable and Disposable Land (94.2930 ha) and on Timberland (185.2398 ha). Forest conversion into oil palm plantations has also occurred in other municipalities. Agumil Philippines Inc and its sister company PPVOMI have never received ‘tree cutting permits’ from the DENR and thus their operations have flagrantly violated the DENR forestry code and, in particular Executive Order no.23 (the nationwide ban on the cutting of trees in natural and residual forest).

“All of this has allowed to happen because widespread abuse, fraud, lack of coordination between agencies of government, failure and incompetence of government officials to ensure laws compliance, lack of accountability and transparency of agribusiness enterprises” says Marivic Bero CALG’s Secretary General. It would appear that Agumil and other oil palm enterprises have also bypassed, with impunity, the Strategic Environment Plan (SEP) the very law which should ensured sustainable development and environmental protection in Palawan. This law further mandates that no development project should take place unless the proponents secure the so called SEP clearance, being issued by the Palawan Council for Sustainable Development (PCSD). Furthermore, according to the Memorandum of Agreement between PCSD and the Department of Environment and Natural Resources (DENR) signed on December 29, 1994, the latter shall not issue an Environmental Compliance Certificate (ECC) without the project promoter having secured a SEP clearance first. However, as far as concerning oil palm development, evidence indicates that DENR did in fact issue several ECCs to PPVOMI prior to SEP clearances. The latter, instead, were never secured by PPVOMI except for a SEP clearance issued for its nursery and oil mill area (about 13 hectares only). Surprisingly, there are no SEP clearances released for the remaining thousands of hectares being converted into oil palm plantations (around 6,000 ha until present time). In so doing, both PCSD and the DENR Environmental Bureau have overstepped the bounds of the law that they mandate to uphold placing Palawan’s natural and cultural heritage at great risk.

Through the presentation of a petition calling for an oil palm moratorium, over 4,000 farmers and indigenous peoples petitioners are challenging government agencies such as DENR, PCSD and the National Commission on Indigenous Peoples (NCIP) to become accountable for the environmental damage and social unrest that oil palm development is causing. But all these efforts will not be sufficient unless the key financer of oil palm development in Palawan, the LandBank, takes a step back. “Until now we see nothing more than a naked attempt by the Bank to shield itself from accountability for the destructive impacts of oil palm plantations in our province” says CALG’s Chairman, Motalib Kemil “the Bank should make plans for restoring the livelihoods of the affected communities through the project they have financed and stop committing other funds for irresponsible agribusiness”.  

The government is now asked to respond with concrete actions to the 4,215 petitioners calling for an halt on oil palm expansion. “They must tell us very frankly whether they want to continue to plunder Palawan soil for the benefit of foreign investors and their Filipino partners or whether, they want to improve communities’ agricultural production to foster local food security” says Roger Cario, CALG’s member and Cooperatives’ President. Undoubtedly, in Palawan, securing land for local communities, fostering sustainable agriculture and the recognition of indigenous peoples’ rights are priorities that can no longer be postponed.


Coalition against Land Grabbing, Palawan (CALG)
[email protected]

Author: Coalition against Land Grabbing (CALG)
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