Status and prospects of oil palm in the Brazilian

Amazon
Alberto A. Villela
a,
*, DAlembert B. Jaccoud
b
, Luiz P. Rosa
a
,
Marcos V. Freitas
a
a
Energy Planning Program, Engineering Post Graduate Center, Federal University of Rio de Janeiro, Cidade
Universita ria e Ilha do Funda o, Rio de Janeiro, RJ CEP 21949-972, Brazil
b
Federal University of Rio de Janeiro, Brazil
a r t i c l e i n f o
Article history:
Received 8 August 2013
Received in revised form
29 April 2014
Accepted 9 May 2014
Available online
Keywords:
Oil palm
Palm oil
Brazilian Amazon
Deforested areas
Biodiesel
Agro ecological zoning
a b s t r a c t
Oil palm is a widely cultivated palm tree, whose oil is ranked rst in supply and export
among all vegetable oils in the world. Despite being a minor producer and major importer
of palm oil, Embrapa, Brazils leading agricultural research agency, has identied defor-
ested land with soil and climate suitable for oil palm cultivation whose combined area is
twice that currently being employed throughout the world, most of which located in the
Brazilian Amazon. This region, characterized by low socioeconomic indicators, as well as
precarious access to energy, has recently become the focus of Brazilian Government pol-
icies whose aim is to ensure that the observed expansion of oil palm occurs in an orderly
manner, within the precepts of the regions environmental and economic zoning, currently
in deployment. With a doubling of its cultivated area between 2004 and 2010 and an even
faster projected growth in 2015, the rapid expansion of oil palm in the Brazilian Amazon
presents great potential to inuence the development of the region. This article provides
an updated picture of the palm oil sector in Brazil, its prospects, opportunities and chal-
lenges, with a particular focus on the Amazon region and the rising use of palm oil as
biodiesel.
2014 Elsevier Ltd. All rights reserved.
1. Introduction
Oil palm (Elaeis guineensis Jacq.) originates from the West Af-
rican coast [1] and has the highest yield of vegetable oil known
among cultivated plants [2]. Its extraordinary oil and overall
biomass productivity is due to its adaptability to the wet tro-
pics; thus, 95% of existing plantations in the world are located
in a latitude range of 10

North and South of the Equator [3],

restricted to some countries in Latin America, sub-Saharan
Africa and Southeast Asia. This has enabled Indonesia and
Malaysia to account for 86% of the worlds supply of palm oil,
making them, respectively, rst and third largest global pro-
ducers of vegetable oils [4].
The adaptive potential of this palm species is remarkable
under adequate production systems in different tropical
conditions. For instance, the recent expansion of oil palm
plantations in Latin America led to the development of an
inter-specic hybrid of the African species Elaeis guineensis
Jacq. with the South America palm species Elaeis oleifera
(Kunth) Cortes [5]. These commercially available hybrid vari-
eties have showed, under research and productionconditions,
* Corresponding author. Tel.: 55 21 3938 8258, 55 21 98266 4002; fax: 55 21 2562 8259.
E-mail addresses: alberto@ivig.coppe.ufrj.br, villela@ppe.ufrj.br (A.A. Villela).
Available online at www.sciencedirect.com
ScienceDirect
ht t p: / / www. el sevi er. com/ l ocat e/ bi ombi oe
b i oma s s a nd b i oe ne r g y 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8
http://dx.doi.org/10.1016/j.biombioe.2014.05.005
0961-9534/ 2014 Elsevier Ltd. All rights reserved.
resistance to important local diseases and good production
performance [6].
Palm oil is widely used in the food, hygiene and chemical
industry. Thanks to its availability and diversity of uses, de-
mand has grown to 55.3 million tons in 2012/2013, making it
the most widely produced vegetable oil in the world. In
conjunction with its seed oil (palm kernel oil), it accounts for
39% of all vegetable oils [4]. In recent years, palm oil has been
used in the production of biofuels; in 2012, 5.6 million tons
were used for fuel purposes [7].
Despite currently being a minor producer of palmoil, Brazil
is possibly the country that holds the largest area suitable for
its cultivation, particularly in the Amazon region [8], where its
cultivation has undergone a major expansion in the last
decade. This process triggers a challenging era for Brazilian
agriculture, which envisions new settlement schemes, pro-
duction technologies and product processing, as well as new
economic and ecological dynamics in the Amazon region, in
particular in the State of Para , the countrys largest (oil palm)
producer [9].
The Amazon region presents good climate conditions to
oil palm cultivation, and in fact up to 3.5% of the world palm
oil production comes from Colombia, Ecuador, Brazil and
Peru, among the world 20 biggest palm oil producers since
2008 [10].
The Amazon biome covers nine countries in South Amer-
ica and includes an estimated area of 6.4 million square kilo-
meters, of which 63% or 4 million square kilometers is located
in Brazil, the remaining 37% distributed among Peru,
Colombia, Bolivia, Venezuela, Guyana, Suriname, Ecuador and
French Guyana. The Amazon Forest is the largest tropical
forest on the planet, representing 1/3 of tropical rainforest
reserves and the worlds largest gene bank [11].
The Brazilian Amazon is a territory covering 60% of Brazil,
of which 17%, or 740,000 km
2
, has been deforested until today
[12]. From 2004 to 2013, in the states comprising the Brazilian
Amazon Region, the annual deforestation index has fallen
from 27,772 to 5843 km
2
/year, a drop of 79% in the period,
according to the Brazils National Institute for Space Research/
INPE [13]. The state of Para , Brazils main oil palm producer,
has been responsible for 40% of the deforestation observed in
the region from 2004 to 2013, leading the national deforesta-
tion index list in the Amazon Region since 2006 [13].
The Brazilian Government has launched the Brazilian
Sustainable Palm Oil Production Program, whose mission is
to promote the development of oil palm only in areas
deforested before 2007, excluding all of the ofcially recog-
nized environmental and indigenous lands, in accordance
with the national oil palm agro-climate zoning. Where it
applies to the Amazon Region, it must follow other specic
social and ecological criteria as presented in the Agro-
Ecological Zoning of Oil Palm in Deforested Areas of the
Amazon/ZAE-Palma [8].
This article portraits the expansion scenario of the still
incipient but fast growing oil palmsector in Brazil. It describes
the Brazilian Governments recent initiatives to stimulate oil
palm cultivation in degraded areas of the Amazon, pointing
out the industrys growth prospects, driven by high demand
and government stimuli; some opportunities and challenges
related to the biodiesel market are discussed.
This paper is structured as follows: Section 2 describes the
history of oil palm cultivation in Brazil, the planting and
production areas in the Amazon, the agro industry organiza-
tion, and the national trade balance of palmtree oils. Section 3
describes several public initiatives related to palm cultivation
in degraded areas in the Amazon, and discusses production
forecasts announced by key industry players. It also highlights
the opportunity to reduce the energy vulnerability of the
Amazon region and the insertion of Brazilian palm oil pros-
pects in domestic and international biodiesel markets. Section
4 presents the conclusions, considering the strategic rele-
vance of the evaluation of the oil palm agro industry expan-
sion in the Amazon as a means to ensure a sustainable path to
regional development.
2. Oil palm sector in Brazil
Brazil is widely recognized as one of the worlds leading
agricultural producers, the second largest soybean producer
[4], the dominant oilseed in the country and ranked second in
world vegetable oil demand, behind palm oil. In contrast,
Brazil was only 14th in acreage and the 10th in palm oil pro-
duction in 2011, with only 0.5% of world supply [10]. Vegetable
oils main market has been, historically, the food and chemi-
cal industry, but in recent years, the growth rate for conver-
sion into biodiesel has been greater than for other purposes
[14].
Despite its current minor status, there is a signicant
growth potential of palm oil production in Brazil. The agro-
ecological zoning of oil palm in Brazil identied 31.8 million
hectares (ha) of deforested areas (as of 2007) in the country
with good soil and climate tness for production [15], 29
million in Legal Amazon, an area encompassing the Amazon
forest plus part of the Cerrado biome. In contrast, it is esti-
mated that the worlds oil palm crops in 2011 totaled
16.3 million ha [10].
2.1. Oil palm cultivation in Brazil
Oil palm was introduced by African slaves on the coast of
Bahia in the 16th century, forming a long coastal strip of
spontaneous groves, comprising almost 50,000 ha inter-
spersed with degraded tropical forest. There, plants of the
Dura, a low-yielding variety, are dominant, leading to low
Fresh Fruit Bunches (FFB) productivity (3e4 tons/ha/yr) and
low oil extraction rate (8e9% of FFB weight) [16].
In the Amazon, the rst palm oil agro-industrial projects
were installed in the northeastern region of the State of Para
in the 1960s, with a predominance of the Tenera variety, which
led to productivity comparable to that of countries with a long
tradition, such as Malaysia. Table 1 shows the distribution of
oil palm FFB production in Brazil, currently restricted to three
states. It is striking the productivity gap in performance be-
tween the aforementioned states. The low average yield in
Amazonas State, on the other hand, reects the small pro-
ductivity of its infant plantations.
Research and production projects are also being deployed
in the States of Roraima, Amazonas, Rondo nia and Mato
Grosso, albeit at a slower pace than in Para .
b i o ma s s a nd b i o e ne r gy 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8 271
Being a perennial crop, oil palmonly starts productionafter
3 or 4 years. Table 2 highlights a 2010 survey conducted by the
Ministry of Agriculture [18], showing about 42,000 ha of new,
non-producing crops, 95.9% of which in the North region
(which encompasses the Amazon biome), 87.4% specically in
Para state.
Large monoculture plantation systems are widely adopted
in the North. Intercropping with annual crops can be accom-
modated during the oil palm infancy. However, being a more
complex system, polyculture demands from the farmer
increased investment and greater technical knowledge,
hampering its adoption [19].
2.2. The oil palm sector in the state of Para
In 2006 there were 55,000 ha of oil palm plantations in Para
state, distributed among a few major players, organized as
follows [20]:
One large company (Agropalma) e responsible for more
than 70% of the countrys palmoil production, mostly from
its owns crops. It also has 5 crushing plants and the
countrys only palm oil and palm kernel oil renery,
allowing the production of higher value-added products;
Two medium-sized companies (Marborges and Yossam) e
both have their own plantations and oil processing plants
which produce crude palm oil (CPO) and palm kernel oil
(PKO);
Associated small producers gathered around Palmasa and
Dentaua , both with oil crushers;
Producers cooperated in Codenpa, later acquired by
Denpasa;
Independent producers, which sell their FFB production to
other companies;
Beginning in 2007 new major companies came into play in
the State of Para , resulting in signicant change in the land-
scape. In light of this new context, since 2010 producers have
been organized in two ways: i) agro industries producing
feedstock from their own or leased land; ii) the establishment
of an integrated production model with small farmers and
producers of all sizes, in which contracts are signed between
them, with the latter purchasing FFB from the former, chan-
neling bank loans and supplying seeds, fertilizers and tech-
nical assistance. In the 2012/13 harvest, Agropalma, Biopalma/
Vale, Petrobras Biofuels (PBIO), Archer Daniels Midland (ADM)
and Marborges dispensed an estimated US$ 62.4 million in
loans from Banco da Amazo nia [21].
Table 3 shows the impressive growth of the oil palm sector
seen in Para state in 2012, with a target to increase the culti-
vated area a further 135%by 2015. Most of this growth is due to
the bioenergy sector, with newcomers Vale/Biopalma and
PBIO/GALP. The table shows that these two companies will
have about 47% of the total targeted cultivated area in 2015,
becoming the largest palm oil producing companies in Brazil,
followed by Agropalma and ADM, which solely target the food
market.
The Biopalma group is led by Vale, Brazils second largest
company and largest domestic consumer of diesel oil. It aims
to displace 20% of diesel demand from the mining companys
eet of locomotives, heavy equipment and machinery with
biodiesel. To meet this goal, it intends to purchase 60,000 ha
and establish partnerships with small farmers holding
20,000 ha, engaging 2000 families with plots up to 10 ha.
Company directors project production of 540,000 tons in 2019,
70% for biodiesel supply.
Petrobras Biofuels (PBIO), a subsidiary of Petrobras, has two
projects in the State of Para :
Project Belem: conducted by Bele m Bioenergia S/A, a con-
sortium of Petrobras and Portugals GALP Energia. It will
produce 300,000 tons of palm oil/year in Brazil for export to
Portugal, where GALP will convert it to green diesel, with
target sales in the European market of 250,000 tons by the
end of 2014.
Project Para : it intends to supply Brazils Northern regions
biodiesel demand. It will feature 24,000 ha of crop area,
mostly from independent producers and small farmers,
with an ultimate target production of 120,000 tons of bio-
diesel/year.
Table 2 e Survey of land with young, non-producing oil
palm in Brazil-2010.
Region/state Area of non-producing
oil palm (ha)
% Total
North 40.432 95.9
Para 36.883 87.4
Amazonas 2.949 7.0
Roraima 600 1.4
Northeast 1.75 4.1
Bahia 1.75 4.1
Brazil 42.182 100.0
Source: [18].
Table 1 e Harvested area, quantity produced, average yield and value of oil palm fresh fruit bunches in Brazil-2011.
State of the
federation
Harvested area
in 2011 (ha)
a
Total ffb
produced (t/yr)
Average ffb
yield (t/ha/yr)
Total gross
revenue (US$ 1000)
b
Land return
(US$/ha/yr)
Amazonas 450 3.06 6.8 306 680.00
Para 53.968 1,082,348 20.1 108.235 2005.54
Bahia 54.662 215.784 3.9 21.578 394.76
BRAZIL 109.08 1,301,192 11.9 130.119 1192.88
a
1 ha 1 hectare 10,000 m
2
.
b
An exchange rate of 2 R$ (reais) for 1 U$ was adopted throughout this article.
Source: Adapted from Ref. [17].
b i oma s s a nd b i oe ne r g y 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8 272
2.3. Brazilian trade balance of palm oils
The Brazilian trade balance data of palm oil and palm kernel
oil (Table 4) shows a growing negative balance, accounting for
an evasion of US$ 635 million between 2004 and 2011.
Assuming an average productivity of 4 tons of crude palm oil
(CPO) palm kernel oil (PKO) per ha/yr, an expansion of
80,000 ha would be required to end, volume wise, the decit
shown in 2011.
On the other hand [24], estimated a domestic demand of
520,000 tons of CPO and 200,000 tons of PKO in 2012, resulting
in imports of 280,000 tons and 180,000 tons, respectively. To
zero the trade balance of PKO, it would take an additional
600,000 ha of palm.
1
This would result in a surplus of about
1.5 million tons of palm oil, which could be either consumed
internally as biodiesel or exported.
3. Oil palm expansion prospects in Brazil
Due to the growing imbalance in the national trade of palm
oils, since the new millennium, the Brazilian Government
has conducted several studies to guide policies to stimulate
the sector, particularly in the Amazon region, as the pro-
ductive potential of this region and the great opportunity of
raising the well-being of its rural population became
apparent.
As observed by Ref. [11], this recent expansion process can
be seen as a phenomenon that offers potential impacts on
local, regional and national scales.
If the industry forecast for 2015 (as shown on Table 3)
comes to fruition Brazil is likely to become the worlds fth
largest palm oil producer, behind Indonesia, Malaysia,
Thailand and Nigeria, ahead of Colombia, Americas largest
producer [10]. Even so, the production envisaged for this area
will still not meet the countrys current demand, whichmeans
a big captive market to address in case the intensive produc-
tion of palm proves successful in the region.
3.1. Public guidance and policies related to the
development of palm in degraded areas of the Brazilian
Amazon
The Brazilian Government has recently promoted a series of
initiatives to guide the expansion of oil palm in the Amazon
region, with emphasis on agro-energy, which has resulted in
investments responses from the private sector, mainly in the
State of Para [25]. Some of the most relevant governmental
landmarks applicable to the sector are listed below:
Macro Ecological-Economic Zoning of the Legal Amazon (MZEE-
AL) e conceived by the Federal Government and jointly
written by Amazon Region states authorities, it was
approved by Federal Act in 2010. Its goal is to establish
strategies for the occupation and use of the territory on a
sustainable basis and to guide the development of public
Table 4 e Brazilian trade balance of palm oil and palm kernel oil, 2004 to 2011.
Year Production
(1000 t)
Consumption
(1000 t)
Export
(1000 t)
Import
(1000 t)
Export
(US$ 1000)
Import
(US$ 1000)
Trade balance
(US$ 1000)
Oil balance
(1000 t)
2004 129.3 168.2 13.8 52.7 6.778 10.637 3.859 38.9
2005 131.6 167.8 45 81.2 17.406 15.149 2.257 36.2
2006 138.7 260.8 24.9 147 10.993 37.539 26.546 122.1
2007 155.1 338.7 2.8 186.4 2.259 65.559 63.3 183.6
2008 178.4 431.2 9.4 262.2 7.257 171.939 164.683 252.8
2009 214.8 450.2 24.9 260.3 16.004 91.883 75.879 235.4
2010 266.6 580.9 17.3 332.6 14.852 124.816 109.964 314.3
2011 n.a. 317.7 52.2 369.9 53.027 246.246 S193.218 317.7
Source: [23].
Table 3 e Oil palm sector in Para in 2012 and projected expansion in 2015.
Company 2012-Planted
area (ha)
% Area
in 2012
Oil crushing
units in 2012
Installed capacity in
2012 (1000 t/year)
Direct jobs
(08/2012)
Expansion
in 2015 (ha)
%-2015
projected area
Agropalma 45,000 32.1 5 201 5.314 50,000 15.2
Biopalma 42,000 30.0 1 40 2.618 80,000 24.3
Yossan 16,000 11.4 e e e 20,000 6.1
Denpasa 6000 4.3 1 12 290 10,000 3.0
Marborges 5000 3.6 1 20 1.12 10,000 3.0
Dentaua 4000 2.9 2 39 941 6000 1.8
PBIO&GALP 4000 2.9 e e 119 75,000 22.8
ADM 3000 2.1 e e 172 50,000 15.2
Palmasa 3000 2.1 1 28 340 8000 2.4
Other 12,000 8.6 e e e 20,000 6.1
TOTAL 140,000 100.0 11 340 10.914 329,000 100.0
Source: Adapted from Ref. [22].
1
The typical extraction rate for PKO is 1.5% of FFB weight.
b i o ma s s a nd b i o e ne r gy 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8 273
policies on a more macro level. The macro Brazilian
Amazon ecological and economic zoning has been aligned
with most of the federal and state development policies,
including the Agro-Ecological Zoning of Oil Palm in Defor-
ested Areas of the Amazon [8]. The expansion of the palm
oil agroindustry should be in accordance and conformity to
the MacroZEE, but no eld monitoring information has
been published on this issue; on the other hand, the
recognition of its conformity could promote better under-
standing and condence on the sectors sustainability.
Ecological-Economic Zoning of Eastern Para e developed and
approved by the Government of the State of Para in 2010, it
establishes rules and guidelines for the occupation and use
of the territory of the State. It includes the areas conducive
to the cultivation of Palm, in accordance to a set of zoning
criteria that should organize all the economic activities and
infrastructure investments, aiming to provide a sustain-
able basis to regional development. Oil palm is concen-
trated in Northeastern Para , where most rural lands have
been shown to be consolidated, that is, continuously
occupied by farmers. Thus, these lands are qualied for
various economic activities. However, there is a strict ban
on environmental conservation areas, indigenous lands
and other areas of specic social and/or environmental
value. Progress reports containing information regarding
conformity to the established guidelines could reinforce
the stakeholders commitment to sustainable regional
development policies, but, so far, there is no public infor-
mation on its monitoring.
Agro-Ecological Zoning of Oil Palm in Deforested Areas of the
Amazon (ZAE-Palma): published in 2010, this report written
by Embrapa researchers has been the crucial technical
foundation for planning the expansion of oil palm culti-
vation in Brazil, providing a scientic base to promote a
responsible assessment of potentialities at regional level
[8]. It crosses soil, climate, ecological and protection in-
formation, indicating the most appropriate lands for
growing palm, considering only areas that were deforested
before 2007. The study indicates a total of 29.7 million ha,
or 5.87% of the Amazon Region, available within the Pref-
erential and Regular classes of aptitude, of which
12.8 million ha in Para . It recommends policy makers to
promote more detailed studies at a local level, before
dening specic planting areas and production systems,
due to the natural limitations of a macro study to conrm
predictions on a local level. Accordance to the Brazilian
ZAE-Palma criteria should represent, when nely moni-
tored, a good basis to evaluate sustainability of public and
private investments in palm oil in the region.
PalmaClass Program e co-led by Embrapa and INPE, it mon-
itors the expansion of oil palm in Northeastern Para , to
assess conformity to ZAE-Palma. It uses high-resolution
satellite imaging, together with georeferencing software,
eld inspections and modeling (to infer the areas with
highest probability of oil palm expansion). Results posted
by Ref. [26] show that, between 1985 and 2008, 20% of all oil
palm expansion occurred directly through deforestation.
However, between2004 and2008, last periodavailable, only
6.5% of the expansion came at the expense of primary for-
ests, whereas 61% came from the conversion of pastures.
Brazilian Sustainable Oil Palm Production Program: launched
in 2010 by the Federal Government, it aims to reinforce
the public initiatives to push the expansion of oil palm in
Brazil according to specic social, economic and envi-
ronmental criteria, using the ZAE-Palma as guide. Besides,
the program offers tax incentives to companies and lines
of credit to farmers, denes priorities in Federal Govern-
ment R&D budget, promotes technical assistance avail-
ability and fosters land entitlement efforts by public
(state) authorities, in order to increase domestic oil sup-
ply. These public actions seem to be carried out in a
decentralized pattern by several agencies and its perfor-
mance and effectiveness evaluation is not readily
available.
Palm Oil Supply Chain Chamber: established in 2010, it is a
consultative forum linked to the Ministry of Agriculture
and represents the ofcial interface between Government
and the palm oil agroindustry. Its charter is to coordinate
public and private stakeholders e producers, consumers,
workers, governmental organizations, business entities
and non-governmental organizations e to identify barriers
and opportunities for the development of palm oil.
Other relevant public initiatives should be considered
when discussing the sustainable development of oil palm in
degraded areas of the Brazilian Amazon. For example, the
National Plan for the Production and Use of Biodiesel (PNPB),
the Brazilian Forest Code, the Protocol for the Sustainable
Production of Oil Palm in the State of Para and the Embrapas
System for Weighed Environmental Impact Assessment in Oil
Palm Production (APOIA-Oil Palm). However, little public in-
formation is available in these landmarks when it comes to
the palm oil sector [25].
3.2. Genetics to face climate and diseases challenges in
the Amazon
Palm producers have claimed for years that Fatal Yellowing e
AF e is the most impacting disease in the Americas and the
main barrier to the expansion of oil palm in the Amazon [27].
Since 1986 Embrapa has been researching this disease, but its
causes have not yet been conclusively identied, as there have
been detected both biotic and abiotic factors related to it.
However, there is evidence that regions with higher water
decit do not have outbreaks of the disease [28]. The best spots
for planting oil palm have higher rainfall, but in these, there is
occurrence of AF. Thus, producers have historically chosen to
expand into land less suitable for this crop, according to
Embrapa, in order to be free of the disease. However, these
areas pose higher climate vulnerability, as climate models
show decreasing rainfall toward the second half of the 21st
century in Northeastern Para [26].
On the other hand, there is evidence that the disease does
not affect the native species Elaeis oleifera. In 2010, EMBRAPA
presented the hybrid BRS Manicore , a crossing between Elaeis
guineensis and Elaeis oleifera, tested during 20 years in areas
where AF typically occurs. According to [6], after that period,
the hybrid did not present any AF symptoms, making it ideal
for growing in the best suited regions as indicated by ZAE-
Palma.
b i oma s s a nd b i oe ne r g y 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8 274
Other advantages of this new hybrid [6]: i) higher unsatu-
rated fatty acid content, more suitable for the food and bio-
diesel industry; ii) higher productivity e up to 30 tons/ha/year;
iii) reduced annual stem growth rate e facilitates fruit bunch
extraction, increasing crop useful life; iv) less perishable than
Tenera, showing less oil acidity; v) less susceptibility to insect
attack. However, pollination is carried out by articial
methods, requiring greater technical capacity and labor costs
than traditional cultivars. In May 2013, there were two regis-
teredcultivars bytheMinistryof Agriculture: BRSManicore and
Marborges Inducoari 1, owned respectively by EMBRAPA and
Marborges Agribusiness. The option to adopt the new hybrid
varieties, in order to obtain the high productivity potential of
the new crop, implies adopting managerial and technical in-
novations in the cultivation system, which could be a problem
to the traditional farming management in the region.
The availability of inter-specic hybrid seeds is a limiting
factor in the expansion of oil palm to areas with higher rain-
fall. Companies from Para imported 15.6 million non-hybrid
seeds between 2009 and 2011, 80% from Costa Rica, to
enable the crops expansion, at a cost of US$ 14.6 million [29].
Nevertheless, the international seed market is capable of
addressing an expansion of more than 300,000 ha/year, which
puts pressure on Government to relax import rules, since
plant inspection procedures in the arrival of the imported
seeds have taken up to 3 years [30].
3.3. Biodiesel as an alternative to diesel oil in the
Amazon region
As observed by Ref. [11] vegetable oil production from peren-
nial plants such as oil palm, andiroba, copaiba, tucuman and
others could be a major income and job creation opportunity
for local Amazonians, especially if converted into less
polluting and higher quality (bio)diesel, a eld in which Brazil
is pioneer. Such programs could act to recover degraded areas
and provide socioeconomic inclusion for family farmers.
Within this context, agricultural research should receive in-
centives to expand on these possibilities, to provide new
meaning to the underused areas already deforested and pro-
mote recovery of areas that should never have been cleared
[11].
The deployment of palm oil plantations for biodiesel pro-
duction in places where the supply of diesel oil for electric
power generation presents logistical difculties can increase
energy security in various towns of the Amazon, while pre-
senting opportunity for entrepreneurs and farmers in the re-
gion [31].
Part of the diesel oil demand in Brazils Northern region,
which encompasses almost all of the Amazon biome, serves
to feed communities that are not connected to the National
Grid (SIN). These so-called isolated systems meet the elec-
tricity demand of 3.1% of the Brazilian population and repre-
sent 1.6% of the countrys electricity consumption [32]. The
new regulatory framework for isolated systems says . en-
ergy and economic efciency, the mitigation of environmental
impacts and the use of local energy resources in the provision
of services by distributors must be sought. Table 5 shows the
vulnerability of Northern Brazil concerning the supply of this
fuel.
In 2009, ve oil tankers left every month from Sa o Paulo
State, carrying 180 million liters of diesel, on a 15-day and
6000 km trip to Manaus, Amazonas State. From there it was
distributed to other cities of the Amazon, either by waterways
or roads. Depending on the season and nal destination, up to
2 m
3
of fuel is spent to transport 1 m
3
that feeds a power plant
[37].
The blend of 20%biodiesel and 80%diesel oil (B20) has been
widely tested successfully in diesel engines, and its consid-
ered a good compromise between economics (no need for
engine retooling) and the environment (reduction of air pol-
lutants and GHGs) [38]. Considering the current level of 5%
biodiesel in the Brazilian market, the use of B20 in the North
would have reduced the import of diesel in 2012 by 745,000 m
3
.
3.4. Market challenges for Brazilian palm oil biodiesel
The National Plan for the Production and Use of Biodiesel
(PNPB) established, beginning 1/1/2008, a mandatory blend of
biodiesel with diesel oil throughout the nation, currently set at
5% (B5). In 2011, Brazil was the third largest producer of bio-
diesel, with 2.7 million m
3
, solely to meet domestic market
demand [39]. According to [4], Brazil produced, in the 2012/
2013 harvest, 7.6 million tons of vegetable oils, of which 6.8
million from soybeans. Being co-products of Brazils most
relevant plant and animal protein production chains, soy oil
and beef tallow represented, in 2012, 75% and 17%, respec-
tively, of domestic biodiesel feedstock, with negligible
contribution from palm oil [40].
The blending mandate stems from biodiesels lack of eco-
nomic competitiveness. Since the inception of Brazils bio-
diesel program, the average price of biodiesel in the auctions
organized by the National Petroleum, Natural Gas and Biofuels
Agency (ANP) has uctuated between 50 and 100% above the
price of diesel in Brazilian reneries [40], a similar situation
found around the world. So, given its comparative advantages
(high availability of idle, non-forested land with suitable
climate), there are prospects that Brazil can, in the medium
term, become a major exporter of biodiesel.
Agropalma in Para operated the only palm oil esterication
plant in the Amazon between 2005 and 2010, but it is currently
producing value-added products, such as special esters and
other major compounds for the chemical industry [41].
Table 5 e Diesel Oil Production, Sales and Import in
Brazils Northern region (1000 m
3
).
2008 2009 2010 2011 2012
Diesel sold in
Northern region
3.951 4.075 4.861 5.242 5.691
Diesel demand by
isolated systems
776 935 1.291 1.437 1.515
% Diesel demand
by isolated systems
19.6 22.9 26.6 27.4 26.6
Regional diesel
production
a
609 698 762 717 717
Northern region
import
3.342 3.377 4.099 4.525 4.974
% Imported diesel 84.6% 82.9% 84.3% 86.3% 87.4%
a
REMAN, in Manaus, is the only renery in the Northern region.
Source: Own elaboration from Refs. [32e36].
b i o ma s s a nd b i o e ne r gy 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8 275
Despite the current dominance of soybeans and tallow,
long-term Government scenarios [42] indicate that these
should be overcome by palm oil by 2030, when biodiesel
supply will be 12%of projected domestic diesel demand and 1/
3 of world biodiesel demand as predicted by the International
Energy Agency for that year [43] (Table 6).
Recent Government projections conrm the optimism
regarding palm oil: according to [44], given the current
seedling production capacity .once all current barriers for its
production are removed, palm oil is likely to be a vigorous
player for the PNPB, possibly from 2022, with 700,000 ha of
crops, according to Embrapa estimates. Between 85% and
92% of the nal price of biodiesel lies in the cost of feedstock
[45]. Government scenarios till 2019 highlight the competitive
cost of palm oil against other oilseeds, particularly soybeans,
whose supply chain in the country features much larger scale
and degree of organization [46].
However, there are challenges to the expansion of palm oil
biodiesel: according to [40], there is an annual production
capacity of 7.2 million m
3
of biodiesel, for a domestic demand
of only 2.8 million m
3
. To boost domestic demand and the
possibilities for insertion of other oilseeds, it will be necessary
to increase the blending content, which will depend on
changes in the legislation. The biodiesel industry supports the
use of B20 in urbantransport and B7 for the other uses [47], but
ANP and fuel distributors reject the idea, alleging biodiesel
quality issues, as well as possible impacts on the price of fuel.
Exports are another option for the biodiesel sector.
Argentina and Indonesia are currently two of the worlds
largest exporters of biodiesel, using soy and palm oils,
respectively. In 2009, the EuropeanUnion (EU) hit the U.S. with
ve-year anti-dumping duties on biodiesel, paving the way to
the rise of the two countries as top exporters to the EU, the
worlds largest importing block. However, the EU announced
on May 2013 the imposition of tariffs on biodiesel from those
two countries, which have announced they will appeal to the
World Trade Organization [48]. Soybean oil exported to the EU
is partly used in biodiesel production, but Brazil may even-
tually face resistance to export biodiesel, as the EU works with
only 36.6% of its installed capacity [49]. The current European
scenario justies Petrobra s and GALPs strategy of exporting
Brazilian palm oil for biofuel production in Portugal, aiming
the European market. However, BSBIOS, who became the rst
company in Brazil to receive authorization fromANP to export
biodiesel, announced in June 2013 a shipment of 9000 m
3
of
soy oil biodiesel to Europe, taking advantage of the current
imbroglio with Argentina and Indonesia [50].
It should be noticed that Para is located much closer to
Europe and United States than Malaysia, Indonesia and
Argentina. In addition, there is evidence of increasing scarcity
of land to expand palm cultivation in Southeast Asia [51]. In
Malaysia, it is estimated that there are only 300,000 ha still
available. Indonesia has signed with the Norwegian Govern-
ment a moratorium prohibiting the deforestation of native
tropical forests, thus limiting the expansion of oil palm [51].
4. Conclusions
The optimistic scenario considered by palm oil actors in the
Amazon indicates that the expansion projected for 2015 will
likely make Brazil the worlds fth largest palm oil producer,
and the leader in South America. The recent expansion of oil
palm cultivation in Brazil is occurring mainly in the Amazon
region, where the production of perennial crops is generally
promoted by public policies focused on local social develop-
ment and enhanced environmental protection.
In Brazil, palm oil has a potentially guaranteed domestic
market over the medium and long term, mainly to replace
imports for conventional use by the food and cosmetics in-
dustries. In spite of this, the current interest in its potential for
energy purposes is expressed by recent massive investments
made in extensive oil palm plantations for agro-energy in the
Amazon state of Para . Brazilian players perceive these local
and global markets with few limitations in the short term,
which should persist in the coming decades, while agronom-
ical research institutes produce important innovations to
support oil palm production in the Amazon.
There is evidence that biodiesel produced in the Amazon
could increase energy security in various towns of the
Amazon that are fully dependent on diesel supply for electric
power generation. Increasing the mandatory 5% biodiesel
blend to 20% could decrease the Amazon regions energy
insecurity and represent a new opportunity for entrepreneurs
and farmers in the region.
The agro-ecological zoning of oil palm in deforested areas
of the Amazon is of fundamental importance in the process of
regional planning for the expansion of oil palm cultivation in
Brazils Northern region. There is a strong recommendation in
the agro-ecological zoning that companies and farmers
should consider a number of safeguards when planning new
oil palm projects, because decisions must be based on the
combination of information from the agro-ecological zoning
with local information about the social, economic and envi-
ronmental context in which each farmer operates.
Other than following the guidelines of the agro-ecological
palm oil zoning in degraded land in the Amazon, there are a
number of public regulations and other governmental initia-
tives related to promoting the expansion of oil palm planta-
tions in Brazil. They involve R&D, technical assistance to
farmers, agricultural and industrial incentives and credit
lines, sustainability monitoring and evaluation, environ-
mental protection and conservation, agrarian land regulari-
zation, traditional peoples protection and social inclusion,
Table 6 e Brazilian Government Domestic Biodiesel
Production Scenario (1000 m
3
).
Feedstock Year
2005 2010 2015 2020 2025 2030
Soybeans 122 1.848 2.394 2.641 3.737 3.394
Palm oil 5 137 408 1.062 2.571 5.695
Castor bean 11 87 150 229 328 451
Sunower 1 22 35 54 78 50
Total biodiesel
production
139 2.095 2.988 3.987 6.714 9.644
Total diesel demand 35.901 41.878 49.698 56.837 67.405 80.146
% Of biodiesel 0.4 5 6 7 10 12
Source: [44].
b i oma s s a nd b i oe ne r g y 6 7 ( 2 0 1 4 ) 2 7 0 e2 7 8 276
among other strategic issues addressed to guarantee a basis to
sustainable growth of the sector.
The full implementation of this welcomed ofcial agenda
and the periodic evaluation of its efcacy could provide a solid
governance basis for the projected expansion of palm oil in
the Amazon region. However, there is scarce information on
the unfolding of the strategic issues, indicating that strong
efforts are needed, by Brazilian stakeholders, to enforce
transparent evaluation on the sectors conformity to ofcial
policies with relevance to national society. Such is the case of
the Macro ZEE-AL, the Agro-Ecological Zoning of Oil Palm in
Deforested Areas of the Amazon, the Brazilian Sustainable Oil
Palm Production Program, the National Plan for the Produc-
tion and Use of Biodiesel, the Brazilian Forest Code, the Pro-
tocol for the Sustainable Production of Oil Palm in the State of
Para and Project PalmaClass.
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