Cargill has suspended business with a major Guatemalan palm oil supplier that has been accused of human rights violations and environmental degradation, an uncommon move by the agribusiness giant.
Minnetonka-based Cargill is one of the world's largest traders of palm oil, which is used in all sorts of food from cookies to cakes and ice cream, as well as in cosmetics.
Some palm oil plantations have long been dogged by complaints of deforestation and at times, human rights abuses. So Cargill and other companies in the palm oil industry — prodded by environmental and human rights activists — have set up "sustainability" codes for their suppliers.
In late November, Cargill suspended business with Reforestadora de Palmas del Petén S.A. (REPSA), saying it would not enter any new purchase contracts until the Guatemalan company can meet the "requirements of our sustainable palm oil policy," said a Cargill review laying out the decision.
Within the past two weeks, another palm oil industry giant, Singapore-based Wilmar International, says it has "put on hold" purchases from REPSA.
Cargill's suspension of business with REPSA sends an important signal to the palm oil industry, said Jeff Conant, senior international forests program director for Friends of the Earth, one of several environmental and human rights groups that have pushed Cargill and other palm oil manufacturers to pressure their suppliers.
"Cargill is among the global agribusiness companies that have tried to dissociate themselves from human rights exploitation, and by making this definitive break with REPSA, they are showing they are serious," Conant said. "Instead of just working with a company to come up with what are often cosmetic improvements, this shows a willingness to suspend business."
Cargill has been working with REPSA since December 2015 to get the palm oil supplier to comply with its sustainability policies. REPSA made "encouraging progress" but "fell short on several key expectations," Cargill's review said.