United Cacao-linked Companies Ordered to Stop Operations by Peruvian Authorities

February 25, 2016

PHOTO: Deforestation at Cacao del Peru Norte's plantation in Tamshiyacu, Loreto, Peru. (EIA)

Three massive agri-business projects in the Peruvian Amazon, all related to the same group of companies identified in EIA’s 2015 report Deforestation by Definition, have been ordered to halt operations by government authorities in the country. Together, the projects being developed collectively by Cacao del Perú Norte S.A.C. (operating a cacao plantation in Loreto), Plantaciones de Ucayali S.A.C., and Plantaciones de Pucallpa S.A.C. (both operating oil palm plantations in Ucayali), are responsible for over 11,000 hectares of illegal deforestation, mainly of primary tropical rainforest.

In contrast with recent statements by CEO Dennis Melka of United Cacao Ltd., the company's Cacao del Peru Norte subsidiary project in Peru still lacks environmental approval, confirmed to EIA by Peruvian authorities as of February 23, 2016. The three active projects touted by Melka as models for the businesses expansion plans in Peru have all been ordered to stop operations.

These projects, as part of a 25-company group identified by EIA, have been financed through a Cayman Islands-registered company, United Cacao Limited SEZC (United Cacao, ticker symbol: CHOC), which is actively trading on London’s Alternative Investment Market (AIM) and in Lima’s stock exchange, the Bolsa de Valores de Lima (BVL).

EIA obtained official copies of these orders to cease operations in response to a series of information requests. All three discuss vast environmental damage to the trees, soil, and water vital to the forest ecosystem and the communities that depend on it; and each refers clearly to the laws broken by the companies in their swift and complete deforestation of large swaths of the biodiverse Peruvian jungle. Published here in original Spanish, with accompanying English translation, these records refer to the significant greenhouse gas emissions resulting from the over 11,000 hectares deforestation caused by these companies. The companies lacked the authorization to deforest these areas, as required by law, which states that a scientific soil study must prove that the land proposed for deforestation is suitable for agriculture prior to its clearing.

The letters describe not only how the actions of the companies violated Peruvian law, but more broadly, how in the regions where these plantations are located, Ucayali and Loreto, most of the soil is better suited to hosting forest than agriculture. According to official figures cited in the cease orders to each company, only 8.2% of Ucayali’s land is suitable for agriculture, whereas 1.53% of Loreto’s land area is suitable for agriculture. The letters conclude by citing the high likelihood (85% in Ucayali and over 97% in Loreto) that the land destroyed by the company should have been kept in its natural, forested state, and require the companies to cease operations unless and until they can prove otherwise.

Cacao del Perú Norte S.A.C. – ordered to cease operations December 9, 2014 EIA Deforestation Estimate, from 2013 to November 2014: 2,093 hectares DGAAA Deforestation Estimate between August 2011 and August 2014: 1,945 hectares

Document: Resolución de Dirección General N° 462-2014-MINAGRI-DVDIAR-DGAAA

Issuer of document: Director General, General Directorate of Environmental and Agricultural Affairs, Ministry of Agriculture and Irrigation (Directora General, Dirección General de Asuntos Ambientales Agrarios del Ministerio de Agricultura y Riego)

Photo: Deforestation (red) and regrowth of vegetation (light green) over natural forest (dark green) on Cacao del Peru Norte SAC's plantation in Tamshiyacu, Loreto, Peru.

Original Spanish: “Ordenar, como medida preventiva, a la empresa CACAO DEL PERÚ NORTE S.A.C. la paralización de sus actividades agrícolas, que se vienen desarrollando en el predio denominado Fundo Tamshiyacu, (…), en tanto no presente a esta Dirección General la Clasificación de Tierras por su Capacidad de Uso Mayor, correspondiente a la zona del citado fundo.”

Translation: “[It is] ordered, as a preventative measure, that the company CACAO DE PERÚ NORTE S.A.C. cease its agricultural activities, which are being developed in the farm called Tamshiyacu Farm….until it presents to this General Directorate [of Environmental and Agricultural Affairs] its Land Classification for the Best Land Use Capacity, corresponding to the area of the above-mentioned farm.”

Plantaciones de Ucayali S.A.C. – ordered to cease operations December 9, 2014 EIA Deforestation Estimate, from 2012 – 2014: 4870 hectares

DGAAA Deforestation Estimate between August 2011 and August 2014: 4,050 hectares

Document Title: Resolución de Dirección General N° 463-2014-MINAGRI-DVDIAR-DGAAA

Issuer of Document: Director General, General Directorate of Environmental and Agricultural Affairs, Ministry of Agriculture and Irrigation (Directora General, Dirección General de Asuntos Ambientales Agrarios del Ministerio de Agricultura y Riego)

Deforestation of natural forest in Nueva Requena, Ucayali, Peru. The northern plantation is Plantaciones de Pucallpa, and the southern plantation is Plantaciones de Ucayali.

Original Spanish: “Ordenar, como medida preventiva, a la empresa PLANTACIONES DE UCAYALI S.A.C. la paralización de sus actividades agrícolas, que se vienen desarrollando en el predio denominado Fundo Zanja Seca, (…), en tanto no presente a esta Dirección General la Clasificación de Tierras por su Capacidad de Uso Mayor, correspondiente a la zona del citado fundo."

Translation: “[It is] ordered, as a preventative measure, that the company PLANTACIONES DE UCAYALI S.A.C. cease its agricultural activities, which are being developed in the farm called Zanja Seca Farm….until it presents to this General Directorate [of Environmental and Agricultural Affairs] its Land Classification for the Best Land Use Capacity, corresponding to the area of the above-mentioned farm.”

Plantaciones de Pucallpa S.A.C. – ordered to cease operations September 2, 2015 EIA Deforestation Estimate from 2012-2014: 4,710 hectares

DGAAA Deforestation Estimate from August 2011 and August 2015: 5,270 hectares

Document Title: Resolución de Dirección General N° 270-2015-MINAGRI-DVDIAR-DGAAA

Original Spanish: “Ordenar como medida preventiva a la empresa PLANTACIONES DE PUCALLPA S.A.C. la paralización de sus actividades agrícolas intensivas que viene desarrollando en los predios que se encuentran (…), ubicados en el distrito de Nueva Requena, provincia de Coronel Portillo, departamento de Ucayali, en tanto no presente la clasificación de tierras por su capacidad de uso mayor aprobado por la autoridad competente, correspondiente a dicha área” y “ordenar como mandato de carácter particular que la empresa PLANTACIONES DE PUCALLPA, en el plazo de hasta 90 días hábiles, computados a partir de la notificación de la presente resolución, remita a la DGAAA, la clasificación de tierras por su capacidad de uso mayor.”

Translation: “[It is] ordered, as a preventative measure, that the company PLANTACIONES DE PUCALLPA S.A.C. cease its intensive agricultural activities, which are being developed in the farms locate….in the district of Nueva Requena, province of Coronel Portillo, region of Ucayali, until it presents its Land Classification for the Best Land Use Capacity, authorized by the competent authority, corresponding to said area,” and “[it is] ordered in particular that PLANTACIONES DE PUCALLPA, within up to 90 working days from the date of notification of this resolution, sends to the DGAAA the Land Classification for its Best Land Use Capacity.”