THE CHALLENGES FOR THE SUSTAINABLE DEVELOPMENT OF OIL PALM

Speech by the Executive President of Fedepalma, Jens Mesa Dishington, at the

Inaugural Event of the 16th International Oil Palm Conference

Cartagena de Indias, Convention Center, September 23rd, 2009

1. Greetings and acknowledgements

Life has granted us the joyful opportunity of meeting once again at this sixteenth

edition of our triennial conference; this fills us with joy and commits us to

making our best efforts in fulfilling the expectations of each and every one of our

guests in the academic, technical, commercial and social activities we have

scheduled. Please receive on the part of the National Federation of Oil Palm

Growers, Fedepalma, and the Oil Palm Research Center, Cenipalma, our warm

and effusive greeting. We hope you will find your stay in this beautiful, warm
and welcoming city of Cartagena de Indias to be most productive and pleasant.

I would like to thank the honorable Ministers of Agriculture and Rural

Development and of Information Technologies and Communications for joining

us at this inaugural event. Through them we would also like to thank the

honorable President of the Republic, Mr. Álvaro Urive Vélez, for having taken

the time to be present at this event through a pre-recorded video message. Due

to previous engagements related to the Annual Meeting of the General

Assembly of the United Nations, we were not able to enjoy his honorable and
always stimulating company.

I would also like to highlight the presence of important representatives from the

public and private sectors, from abroad and from our country. The

overwhelmingly favorable response to our invitation, Mr. Minister, is sound

evidence that the initiatives and efforts that we have endeavored in jointly with

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the public and private sectors in Colombia, related to the development of the oil

palm agro-industry, have been highly productive, and in turn challenges us to

continue working with greater enthusiasm on the course we have set out.

Holding an event of this nature requires an intense deployment of energies and

efforts in terms of preparation and organization. Consequently, we would like to

take the opportunity to express our gratitude to the 54 international speakers

who, along with the 17 national speakers, have honored us by participating in

this event and generously sharing with us their knowledge, reflections and
experiences on their various specialties.

I would also like to mention our satisfaction with the broad and enthusiastic

acceptance enjoyed by the seminars that were held previously in the framework

of this Conference, which took place last Monday, September 21st, on Oil Palm

Refining, management and application, led by the American Oil Chemists’

Society (AOCS); and on Oil palm health and nutrition, organized by the

Federation team that is working on the corresponding special project. In both

cases, the content of the talks and the quality of the speakers were highly
praised by the attendees, whose numbers exceeded our expectations.

We would also like to thank the companies of the oil palm sector that were kind

enough to host the Technical Visits yesterday: Planta Extractora María La Baja

S.A. and Alianzas Productivas Estratégicas de Palma de Aceite, Planta

Refinadora de Aceite de Palma C.I. Tequendama S.A. and Planta de Biodiésel

de BioSC S.A., Hacienda La Cabaña S.A. and Unipalma de Los Llanos S.A.,

and Campo Experimental El Palmar de la Vizcaína of Cenipalma. I am sure

these were of great interest to all the visitors.

Likewise, I would like to extend my acknowledgements to the team of directors

and staff of Fedepalma and Cenipalma, who under the leadership of Alvaro

Campo, Director of the Extension Unit, with great enthusiasm and dedication

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took on the task of organizing the various aspects of this Conference; to our

sponsors and national and international exhibitors who have accepted our

invitation to participate in Expopalma 2009; to the group of persons and

companies specialized in various fields who have provided us with creative and

logistics services; and, of course, to each and every one of you, present here
today, for your interest and disposition to join us.

2. Attendees

On this occasion we are pleased to have recorded the participation of persons

from 32 countries and the five continents in their capacity of speakers, palm

growers, plantation and oil mill technicians, businessmen and investors,

manufacturers and traders, supplies and service providers, academics,

researchers, government officials, trade association directors and employees,

communicators and journalists, for a total of over 1600 attendees. The following

is the list of countries: from Oceania: Australia; from Asia: India, Indonesia,

Israel, Malaysia and Thailand; from Africa: Benin and Egypt; from Europe:

Germany, Austria, Belgium, Spain, France, Holland, Italy, United Kingdom,

Sweden and Switzerland; and from the Americas: Brazil, Colombia, Costa Rica,

Ecuador, United States of America, Guatemala, Honduras, Mexico, Nicaragua,

Panama, Peru, Dominican Republic, Uruguay and Venezuela. This impressive

international presence ratifies our Conference as the banner event of the oil

palm agro-industry in the Americas which, some believe, emulates other events

of a similar nature that are held in Indonesia and Malaysia, which are the global

leaders in palm oil production. We proudly interpret this perception as an

acknowledgement to the Colombian palm sector’s institutional development and

strength, as well as a result of the growing weight of oil palm in the universe of
fats and oils and renewable energy.

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3. The event’s program

As you will find in the publication we have made available containing the

detailed event schedule, the academic program is organized into three

modules, each containing subject matter related with the main issues that our

agro-industry is facing at the current time, as well as the challenges,

opportunities and promising outlook that lie ahead of us, namely:

- First module: Genetic improvement and integral crop management, which

includes matters related to plant health improvement, crop management and

palm health.

- Second module: Palm oil processing and use, which covers subjects related

to oil mills, biomass and energy, as well as industrial processes and uses.

- Third module: Economics, commercialization and sustainable development,

which covers matters related to costs and competitiveness, production of oil

palm and other oilseeds, and business opportunities that arise through new
applications and uses.

For starters on all the above, today at the Plenary Session we will address the
most important issues regarding the outlook of the oil palm industry and its

sustainability, its global competitiveness, best practices in crop management,

the global market for sustainable biomass sources, and the relationship
between cancer, tocotrienols and palm oil.

Other components of the event are Expopalma 2009, which brings together a

varied commercial display by 63 companies that offer products and services of

interest to the sector; as well as an exhibit of Posters providing information

about relevant programs and projects. We have scheduled long breaks to the

effect of propitiating interaction between our guests and visits to the commercial

display and the technical posters. Allow me to remind you, dear speakers and

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guests, to please comply with the scheduled programming so we may all
contribute to the good operation and the success of the event.

Regarding the social program, tonight Fedepalma and Cenipalma will host an

event for the conference speakers, and tomorrow evening we will have a Gala

Dinner. We have also made information and facilities available to our guests

and the persons who accompany them who wish to take tours of the city of
Cartagena, its splendid bay and surrounding areas.

4. The situation of the country is improving

Before addressing the matters of our specific sector, I must point out, mainly to
the benefit of the foreign visitors who honor us with their presence, the
substantial progress Colombia has made in recent years in terms of economic
performance, driven by the resounding success of the government’s frontal
attack against the scourge of narco-terrorism and a substantial improvement in
citizen safety. The administration of President Uribe has spared no efforts in
meeting the expectations and clamor of its citizens on this front. This has
translated into an improved rating of our country in the World Economic Forum’s
Competitiveness Report, which has ranked us in 69th place among 133
countries in 2009; and in the Doing Business report of the International Finance
Corporation, according to which Colombia is in 37 th place globally, and in 2nd
place in Latin America after Puerto Rico, in terms of offering the best facilities
for doing business. All of this gives us great satisfaction, but it especially
commits us to persisting in the consolidation of the achievements that have
been attained so far, complementing them with more progress in Human
Opportunities and Development indicators.

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5. What are the latest trends in our agro-industry and where are we now?

A quick look at some of the basic indicators of our agro-business at the global,
regional and local level shows some noteworthy trends that have taken place
since out last Conference.

5.1 In the world

From a global perspective, in 2008 planted areas in production increased to

12.2 million hectares, with an annual growth rate of 6.6%; yields, measured in
terms of tons of oil per hectare, dropped slightly to 4.0; palm oil production
totaled 43 million tons, equivalent to positive growth of 7.5%; and exports
reached 33.8 million tons. At least as significant is that palm oil’s share of oil
and fat production and exports increased to 27% and 55.6%, respectively.

A fact worth highlighting is the favorable price trends of oil and fat in the
international market, and in our particular case, the price of crude palm oil,
which in Rotterdam increased from an average of US$478 per ton in 2006 to
US$949 in 2008: In the first semester of this year it reached a high point of
US$1,400. More recently, in the present quarter to date, the international price
of crude palm oil in Rotterdam has been US$681 per ton.

5.2 In America

In the case of the American continent, in 2008 planted areas in production

reached 764,000 hectares, with an annual growth rate of 9.7%; average yields
in terms of tons of oil per hectare remained practically flat; and production
increased to 2.3 million tons of palm oil, with a positive growth rate of 8.7%;
exports totaled 1.0 million tons.

Given that America is the continent of the soybean, we should not ignore the
threat posed by this oilseed which has posted substantial increases in average
oil yields, with its corresponding impact in terms of improved competitiveness
against its substitutes, including palm oil. However, there are also great

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opportunities available, given the size of the region’s oil and fat market, and the
enormous potential of palm oil in view of the gap in market share compared to
other regions in the world, and the concern about health problems derived from
trans fatty acids, for which palm oil is an alternative solution.

5.3 In Colombia

Regarding our country, in 2008 planted areas totaled 337,000 hectares, with an
annual growth rate of 7.3%; average yields of producing areas dropped to a
worrying 3.5 tons of palm oil per hectare; palm oil production totaled 777,000
tons; and export volumes totaled 318,000 tons.

Allow me to dwell briefly on certain salient facts and some peculiarities of the
development of the oil palm agro-industry in our country over the past three
years. In the first place, I must highlight the launch of the National Bio-diesel
Program, which is based on an appropriate regulatory framework for fuel, a
controlled product, covering technical, economic and environmental aspects.
This program was the result of a concerted effort between the public and private
sector, which has ensured that its benefits primarily reach the oil palm sector,
which was the one that launched the initiative and made the required
investments – yet more evidence of the sector’s institutional capacity.

Thanks to this we currently have 5 bio-diesel production plants in operation, four

of which are investments that are directly related to the oil palm sector, with
installed capacity for 396,000 tons. This will increase to 554,000 tons once two
more plants begin to operate at the end of this year, plus another in 2010. Two
of these latter plants are also directly associated with the palm-growing sector.
Currently, the blend in effect throughout the national territory for all diesel motor
vehicles is 5% (B5) or 7% (B7), which will be increased to 10% (B10) starting
next year. All this already positions Colombia as a world leader in production
and use of palm bio-diesel, which has also had a highly favorable acceptance
on the part of users.

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In order to get a feel of the effort that was made and the benefits obtained, it is
worth pointing out that the development of the National Bio-Diesel Program
required new investments in the sector in an approximate amount of US$1,300
million dollars, and that it will propitiate a substantial expansion of the local palm
oil market, which will double in size once the B10 blend comes into effect.

Secondly, I must mention that the United Nations recently approved the
Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement
and Co-Generation of Renewable Energy, involving 32 oil mills located in
various locations of the Colombian territory and which account for 81% of
national palm oil production. It is the world’s largest project in the framework of
the Kyoto Protocol for the reduction in global warming focused on the treatment
of waste waters, and which will enable generation of over 750.000 Greenhouse
Effect Gas Reduction Certificates per year for a time period of 21 years. Of
course, the investment required to upgrade the oxidation pools and to install the
capture, generation and co-generation systems will be substantial, but it will be
clearly compensated by the economic, social and environmental benefits
derived from the project. Additionally, a second stage is planned for self-
generation and co-generation, with an estimated potential of 250 MW.

Of course the dynamics and achievements that have been attained, as

indicated above, have not been free of difficulties and concerns, particularly
regarding the following issues:

- The worsening of plant health problems – particularly the bud rot complex.
We are implementing all the actions possible and engaging every effort and
resource possible to address this problem, including the valuable scientific
cooperation between Cenipalma and several renowned research centers
throughout the world. Cenipalma has managed a transcendental scientific
breakthrough by identifying the causing agent of the initial bud rot injury,
known as Phytophtora palmívora. Additionally, several palm growing
companies have made progress in the production of the hybrid OxG (Elaeis
oleífera x Elaeis guineensis) Alto Oleico, a material which, like other

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 materials of the species Elaeis guineensis, has demonstrated tolerance to
the disease so far. Our conviction that we will overcome the present
emergency is evidenced in the disposition of the palm growers in the affected
areas to undertake the renewal of affected crops, as well as the decided
support the National Government has provided in face of this serious
problem. To this effect, we have developed a National Plan for the Integral
Management of the bud rot complex, which we hope will be the focus point
around which all necessary actions will be undertaken.

- Other worrying aspects are: the drop in productivity, on which we will soon
formulate an appropriate action plan to try to reverse this trend and overcome
the situation; high production costs, which are also affected by “extra-
property” factors such as the revaluation of our currency; and lastly, the
stagnation of the traditional palm oil market for human consumption. It is
worth noting that the broadening of the local market as a result of bio-diesel
undoubtedly represents an opportunity, but it only buys time to address the
above issue.

- In addition to the above, there are other situations that affect the sector’s
image, mainly induced by the often extreme positions advocated by certain
interest groups with a national and international scope, involving
environmental and human rights issues. In some cases, they severely call
into question some aspects of our palm growing development model, and in
other cases they extrapolate to our country criticisms formulated in other
latitudes, particularly regarding the environmental impact of the large-scale
expansion of oil palm planted areas and the apparent conflict between food
security and the promotion of bio-fuels.

Colleagues from other latitudes have ratified that this social and
environmental attack on palm oil, in many cases unjustified, is global is
nature and obeys interests that are often not evident. In any case, we are
concerned that these environmentalist positions against developing
countries, as they are labeled in a recent paper by written by Tan Sri Datuk

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 Dr. Yusof Basiron, General Director of the Malaysian Palm Oil Council
(MPOC), may be aimed at imposing trade barriers to palm oil in world
markets. We consequently invite all palm growers and their institutions in
different countries to join efforts to counter this global attempt to affect the
image of the oil palm industry in the collective mind.

Surely during the academic sessions many of these issues will be brought up,
with their corresponding precisions and clarifications, both at the global and
local level.

6. Motto of the Conference: Sustainability

The motto we have adopted on this occasion to structure the conference from
the academic perspective is highly relevant given the challenges we are
currently facing: “The Challenges for the Sustainable Development of Oil Palm”.
In effect, the concern about sustainable development with an integral approach
is present in all the environments and scenarios of human activity at the global,
regional and local level in these times of our lives, charged with a great deal of
uncertainty, but also with enormous possibilities.

In the specific case of our agro-industry we may highlight that in connection with
the economic dimension, the fact that we are involved in the highest yielding
oilseed crop in the world becomes ever more relevant in the face of worldwide
concerns about the availability and use of land resources, which become
scarcer every day. On the other hand, the versatility of palm oil in terms of its
uses, specifically for food, bio-fuels and oleo-chemistry, and that palm oil is the
first vegetable oil in terms of production and exports worldwide, offers a
promising outlook in view of the forecasts of world population growth and
improved income, particularly in developing countries, combined with changes
in consumption patterns and public policies that favor the development of our
agro-business.

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But we cannot overlook the fact that, as we mentioned earlier, soybean has
substantially improved its productivity and cost indicators, and for this reason
palm growers, particularly in America, are facing an important challenge in the
future in terms of improving yields and reducing costs, both in the crop and in oil
milling, in broadening of markets and uses, and in the end, in improving the
competitiveness of this agro-industry.

The widespread presence of pests and disease that has characterized the
development of oil palm in America has also become a challenge for producers
in the region, and for this reason all the growers of the continent must not spare
any effort in supporting and contributing to research and finding solutions to this
issue. To this end, the effort being made by Colombia, Ecuador and Venezuela
on this front is noteworthy: We have recently established and strengthened the
Latin American Fund for Oil Palm Innovation (FLIPA by its acronym in Spanish),
with cooperation from the International Center for Tropical Agriculture (ICTA),
which we hope will be strengthening through membership and contributions by
other countries in the region.

It is worth noting that economic sustainability does not per-se guarantee social
and environmental sustainability. In fact, given the great transformations that
the modern world is experiencing as a result of the reorganization and dynamics
of the population in the different regions, the increase in living standards,
progress made in connectivity, and in general the current trend towards
globalization, there is a growing interest in issues related to social and
environmental development.

In this context, we are renewing the commitment of the Colombian palm

growing sectors to the principles of the Roundtable on Sustainable Palm Oil
(RSPO), which assures the convergence of diverse actors around common
objectives. In fact, after having held in this same city almost a year ago the First
Latin American RSPO Meeting, we have continued performing the exercise of
the National Interpretation of the Principles and Criteria, aimed at the
certification of the palm growing companies that wish to be certified. Meanwhile,

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we are preparing to participate in the upcoming meeting of the Roundtable –
RT7 – to be held in Kuala Lumpur in November this year. Let this be the
opportunity to urge the representatives of trade associations and companies of
the Latin American palm growing sector who are present to join this RSPO
initiative. It will enable us to increase the visibility of the good environmental and
social practices of many oil palm companies in our continent, thus converting
them into marketing assets and greater competitive advantages.

Regarding social sustainability, it is of utmost importance to pay attention to the

concerns expressed by the countries that consume our raw materials and
products regarding the social conditions that prevail in producing countries,
including compliance with labor laws and respect for worker and community
organizations. In this regard, we should take note of the substantial differences
in remuneration for work in the various palm oil producing countries, which is
particularly unfavorable for the competitiveness of Colombia.

And regarding environmental sustainability, this is undoubtedly an issue that

acquires greater importance and generates growing interest every day, given
that it involves, above all, the proper use of renewable natural resources,
including the protection of bio-diversity and High Value Environmental
Conservation Areas. The environmental services derived from them benefit the
communities in palm growing areas in particular, and current and future
generations in general. In this sense, palm-growing activities must guarantee an
environmentally-friendly approach in every stage of the process. This would be
even more rewarding if the efforts made in this area, including production of
certified sustainable oil, a market that currently amounts to over one million
tons, were fully valued by the market. It is therefore essential that mechanisms
are designed and implemented to ensure an equitable return to the efforts and
achievements made by many producers in this area.

Of course, the fact that we are world leaders brings with it great responsibility
and implies many risks, including making a few enemies who constantly target

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us to warn, condemn, attack and discredit us when we make mistakes of any
type, and even when we do not.

The great number of events and situations that have taken place over the past
three years at the national, regional and global level allow us to express with
satisfaction that we have struck a chord in identifying the motto, in structuring
the corresponding academic program and in selecting the speakers for this
sixteenth edition of the International Oil Palm Conference. The future of our
agro-business and our ability to make full use of the opportunities it provides in
terms of development, wellbeing and coexistence in our countries, will depend
on the efforts and commitments we acquire and honor in terms of sustainability,
under an integrated approach.

I would also like to take the opportunity to invite you to join us in three years
from now at the 17th International Congress, which is initially scheduled to be
held from September 25th to 28th of 2012 in the city of Cali, the capital of the
department of Valle; and at the same time invite you to suggest at any time
during this week any relevant topics you believe should be discussed at that
event.

Lastly, I reiterate my feelings of appreciation and friendship, and hope once

again that the accomplishments of this event will surpass any expectations you
may have had in advance.

Thank you.

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PROTOCOL LIST OF THE INAUGURAL ACT OF THE 16TH INTERNATIONAL
OIL PALM CONFERENCE

Cartagena de Indias, September 23rd, 2009

Ladies and Gentlemen:

- Andrés Fernández, Minister of Agriculture and Rural Development

- María del Rosario Guerra, Minister of Information Technologies and

Communications

- Luis Eduardo Betancourt, Chairman of the Board of Directors of

Fedepalma

- Jorge Corredor, Chairman of the Board of Directors of Cenipalma

- Jens Mesa, Executive President of Fedepalma

- José Ignacio Sánz, Executive Director of Cenipalma

- Members of the Boards of Directors of Fedepalma and Cenipalma

- Gunther Andrade, Sub-Secretary of Agriculture of Ecuador

- Jorge Caro, Representative of IICA in Colombia

- Pedro Dupoy, President of Acupalma from Venezuela; Alejandro Figueri,

President of Ancupa from Ecuador; and Jorge Bendeck, President of

Fedebiocombustibles from Colombia

- International Speakers and Guests

- Speakers, palm growers, researchers and technicians of the Colombian

palm growing sector

- Representatives of public entities

- Special guests

- Federation staff members

- Representatives of the mass media

- Ladies and Gentlemen:

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