FEDEPALMA

Background

Fedepalma is a trade group that endorses strong interests, needs and projections of Colombian palm sector, and building the future from the defense and promotion of an activity that pursues the country progress and welfare in regions and communities.

The entity was created in 1962 and since then its actions have been instrumental in consolidating agricultural business palm oil in our environment. It is made up of small, medium and large oil palm growers who operate at the enterprise level, including strategic alliances, or individuals, as well as for palm oil extractors.

Fedepalma applied "benchmarking" the model of union organization. With a business focus towards exports, the union adopted a scheme of organization with a flat structure and specialized composed by Fedepalma as an operating unit; Cenipalma Research Centre for Oil Palm in charge of the investigation, and Trading International, Cl Acepalma SA as an operating unit of marketing.

When the area planted was approaching the 110,000 hectares, in September 1990 the National Congress of Fedepalma, decided to create their own research center (CENIPALMA) because of the scourge of the fruits of the palm, which, at that time, affected the cultivation and for which there has been no management technology, inside the country or abroad.

In the eighties, the production of palm oil in Colombia achieved a growth, exceeding the needs of the domestic market. In this context the sector opened to the world with the purpose of developing export markets and regulates domestic supply.

In the year 1991, within Fedepalma, was born Acepalma Inc. as an entity specialized in the marketing of palm oil worldwide.

Corporate structure

Subsystem interrelationships are summarized as follows: the companies bring, retain and consign to Fedepalma the membership fees; they participate in the orientation and evaluation of research programs and benefit from their share results. Fedepalma collects and manages the development fund palm and receives economic resources in return. The palm development fund is a special account for the collection and management of resources from the palm promotion fee, which is a compulsory contribution of parafiscal nature and is intended to implement programs to benefit the sector. Cenipalma is responsible for research programs, training, dissemination and promotion of technologies and resources from the fund received.

For the sale of the palm fruit production, the companies establish contacts with the extraction plants located in its area of influence. The relationships between supplier and extraction occur in a context of vertical cooperation, through contractual relationships with a high degree of informality, which generally are agreed quantities of fruit, quality and delivery dates. Vertical cooperation offers benefits to suppliers, such as:

a) Ensure the sale of the product by a prior commitment and reduction of market risks,

b) have clearer signals to the negotiation of the product,

c) receive bonuses quality and

d) to receive advance payments in cash or in kind (inputs).

Finally, the access to the international market is coordinated by Acepalma, which is a trading company, Fedepalma is also in charge of buying and distributing agricultural inputs and other elements related to this activity where Acepalma acts as a broker. Thanks to Acepalma, Fedepalma avoided to continue trading with distributors that offered high margin cost. Acepalma is an important control measure of the exports because the quotations reflect the conditions that rule the market

At the end; Fedepalma, Acepalma and Cenipalma are 3 different entities, but are part from a same association, with different board of directors and specific responsibilities, but share the same corporate values and philosophy. (See Exhibit 2).

Benefits of the Model of Exportation

Acepalma has been very important in developing the export sector in Colombia. It has been able to obtain the following advantages:

1. Add volumes that allow obtaining more clients and performing the first shipments: none

...