Snack Giant PepsiCo Sourced Palm Oil From Razed Indigenous Land

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Peruvian palm oil linked to environmental and human rights violations ended up in the supply chain for the makers of Gatorade and Cheetos

The US food and drink giant PepsiCo has been linked through its supply chain to Amazon deforestation and the invasion of Indigenous lands in Peru, the Bureau of Investigative Journalism (TBIJ), Mongabay and Peruvian outlet Ojo Público can reveal.

For at least three years, PepsiCo’s Peruvian suppliers have been sourcing palm oil from deforested territory claimed by the Shipibo-Konibo people in Ucayali, eastern Peru.

The company, which manufactures snacks including Cheetos and Gatorade, runs a factory in Mexico that buys Peruvian palm oil after it has been processed at a Mexican refinery. That refinery buys from a Peruvian consortium, Sol de Palma, that shares storage facilities with Ocho Sur, a notorious US-funded business accused of repeated environmental and human rights violations.

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The storage facilities mix the various batches of palm oil, meaning PepsiCo products likely contain Ocho Sur oil despite no longer buying directly from the company.

Ocho Sur is linked to 170 sq km of forest loss in the past decade – both within its own property and through its direct suppliers. While some of the forest loss took place under other companies, satellite analyses by the Center for Climate Crime Analysis (CCCA) and TBIJ show clear deforestation on Ocho Sur’s land in the past three years.

Palm oil production in Peru has more than doubled in the past decade and Ucayali, a hotspot for cultivation on the border with Brazil, now has the country’s second-highest rate of forest loss. It’s estimated that about 30% of the country’s palm plantations are on illegally deforested land. Half of the oil is sent to international markets.

Today, Ocho Sur is the second-largest palm oil company in Peru. It was created in 2016 after acquiring the assets of two other controversial companies active in the region since 2012.

“Before 2012, the deforestation rates were pretty low,” said Tom Younger, an anthropologist working with the Forest Peoples’s Programme, an NGO. The arrival of palm oil plantations, he said, “set into motion some dynamics of land invasion and deforestation”.

Some of the forest loss on company-run oil palm plantations occurred on land claimed by the Santa Clara de Uchunya community of Shipibo-Konibo Indigenous people. They have endured a long and often hostile battle for recognition, and only a tiny portion of the 200 sq km of land the community claims has been formally titled.

In 2020, the Inter-American Commission on Human Rights, a regional legal body, ordered the Peruvian state to protect the Santa Clara de Uchunya community against threats and land invasions.

Luisa Mori Gonzáles, president of the community’s defence front, says the arrival of the palm oil industry has affected their food supply and sown division.

“We use that territory to feed ourselves or to hunt,” she told TBIJ and Ojo-Público. “The company put it in their [other community members’] heads that they are going to have money and wealth – but that is a lie.”

Neither Ocho Sur nor the liquidated companies whose assets it acquired had obtained the necessary environmental permit for their plantations. The Peruvian Agriculture Ministry sanctioned and fined the dissolved company Plantaciones de Ucayali in 2015 for failing to comply with an order to stop its activities. Ocho Sur eventually paid these fines in 2022, but by 2018 the companies had failed to conserve the legally required 30% of forest, the non-profit Environmental Investigation Agency (EIA) has found. It is unclear whether the majority of the deforestation took place under Plantaciones de Ucayali or Ocho Sur.

Impunity for environmental crimes such as illegal deforestation is a major problem, according to Julia Urrunaga of the EIA, which recently published a report linking Peruvian palm oil to other well-known food and cosmetics companies.

“The authorities have the responsibility of guaranteeing that what is sold has a legal origin,” said Urrunaga.“If a product is being marketed that is being grown and produced in illegally deforested areas without a production permit, that should be an illegal product.”

Experts attribute the growth of palm oil in Latin America, today the second largest producing region for the industry outside south-east Asia – and the fastest growing – in part to its weaker regulation.

Earlier this year, Peru’s Congress approved a new amendment to its forest and wildlife law, loosening requirements for deforestation in “agriculture exclusion areas” and forgiving historic offences.

Robert Heilmayr, an environmental economist teaching at the University of California Santa Barbara, told TBIJ that while private-sector commitments have brought some positive advances in transparency in countries like Indonesia, the industry’s complexity makes full traceability a challenge.

He said: “It gets a little bit hard to know exactly where the fresh fruit bunches are coming from and there’s no third-party auditing of those supply lists.”

According to CCCA’s analysis, PepsiCo manufactures at least 15 products that contain Peruvian palm oil refined in Mexico – among them Doritos, Cheetos and Gatorade. It has pledged to make 100% of its palm oil supply deforestation-free by the end of 2022 and for its operation to be net zero by 2040.

Concerns about the legal origins of palm oil have also given rise to international initiatives like the Roundtable on Sustainable Palm Oil (RSPO), the industry’s most widely used sustainability certification scheme.

Peru has ten RSPO members. Ocho Sur is not a member and only one of the companies in Sol de Palma’s consortium is.

PepsiCo said: “We take all inquiries like this seriously and have initiated an investigation through our established grievance process to assess whether any action on our part is required.” The company stressed that Ocho Sur is not a direct supplier and said it has engaged its direct suppliers to better understand their ties to Ocho Sur and ensure they take corrective actions if needed.

Ocho Sur said that it could not be held responsible for the actions of the companies whose assets it had taken over. It referred TBIJ to a document submitted to the UN in December 2023 that repeatedly states that it has no financial or legal links to one of those businesses. In the document it also strenuously denied sowing division in local communities and said that since its founding, the company had made special efforts “to forge a friendly, fruitful and mutually respectful relationship” with Indigenous and other groups. It said that it fully complies with all obligations with respect to Indigenous peoples’ rights and the environment and does not allow deforestation in its supply chain.

On the subject of environmental permits, Ocho Sur added: “The certification has been requested for a long time and [Midagri, the agriculture ministry] has failed to make a statement on the matter, granting it, as it should, or providing reasonable arguments to justify its refusal.”

Oleomex, owner of the Mexican refinery that supplies PepsiCo’s factory, said: “The oil we supply to our customer meets all sustainability standards as it is RSPO-certified oil.” However, it added that supply contracts with Ocho Sur were negotiated through a third party and that it has agreed to suspend them until the complaints raised in the investigation are resolved.

Sol de Palma did not comment.

Peruvian judges are yet to rule on whether Ocho Sur can be held responsible for past incursions into the Santa Clara de Uchunya community.

While the community awaits that ruling, Mori Gonzáles has vowed to continue protecting the territory: “We’re going to fight for as long as we can.”