May 19, 2011

Palm Oil Promoted as Alternative to Ranching in Northern Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Palm oil production in the Amazon Region was the topic of discussion at the first meeting of the year of the Special Section for Palm Oil Production, which is part of the Brazilian Ministry of Agriculture. Representatives of all the major states in the Amazon Region were present, but the Secretary of Agriculture from the state of Para has expressed the most interest in expanding palm oil production in his state.

Palm oil plantations could be established anywhere in the Amazon Region, but the state of Para has been the most aggressive in promoting the crop. Para is a huge state that encompasses the eastern Amazon region and the mouth of the Amazon River. State officials view palm oil production as accomplishing several important goals for the state. Currently, cattle ranching is the overwhelming agricultural activity in the state and palm oil plantations offers an alternative to cattle ranching that could increase rural employment and rural incomes.

Palm oil production is also viewed as a way to rehabilitate areas of degraded pastures that have suffered extensive soil erosion. The palm trees could help reduce soil erosion while at the same time acting as a carbon sink and a way to reduce greenhouse gas emissions. The state government has already indicated that new palm oil plantations must be in areas that have already been cleared and no new deforestation will be permitted for the establishment of palm oil plantations.

Some of the palm oil will be used by food manufactures in Brazil, but the principal use of the palm oil is expected to be the production of biodiesel. Currently 80% of the vegetable oil used in biodiesel production is soybean oil, which is the limit set by the government. The Minister of Agriculture has established numerous programs to promote alternative oils such as palm oil, cotton seed oil, peanut oil, castor bean oil, nut oil, etc. that could be substitutes for soybean oil.

Biopalma is one of the largest palm oil producers in the state operating in seven municipalities in northeastern Para. By the end of 2011, the company will have 60,000 hectares of palm oil trees planted with a projected production of 500,000 tons of palm oil per year. The company has plans to further expand production over the next few years.