(Productive Strategic Alliance Program)

PLANTACIONES DE UCAYALI S.A.C. PLANTACIONES DE PUCALLPA S.A.C.

P.A.P.E.SEEDING THE FUTURE

INDUSTRIAS DE PALMA ACEITERA S.A.C.

PRODUCTIVE STRATEGIC ALLIANCE PROGRAM (P.A.P.E.)

Palmas del Perú, in the guidelines of it´s policy to promote the integral development of the in-habitants of the neighboring rural communities, has the objective of including small producers in the oil palm industry in order to strengthen their capacity to generate income and improve their standard of living. With that goal, it is developing a Program called the Productive Strategic Alliance (PAPE).PAPE is a social and economic model that en-ables the association of small producers with the private company that has experience in oil

palm production, with the aim of conducting a productive, profitable and sustainable project.This model promotes the comparative and com-petitive advantages of each of the members of the Alliance and will realize the following:• Integrate the rural economy through agro-industrial chains• Generate sources of employment for farmers and their families.• Strengthen rural areas, generating new de-velopment zones and incorporate these areas for domestic production.

INTRODUCTION

The development of the cultivation of oil palm with the inhabitants of neighboring communities of the companies Plantaciones de Pucallpa SAC and Plantaciones de Ucayali SAC, making them par-ticipants in the agro-industrial business of oil palm cultivation with the goal of strengthening their ca-pacity to generate a stable income and improve the level and quality of their family life. The com-munities will develop the cultivation of oil palm with the most current technology, seeking to elevate the production and productivity. Business plans will be generated in all stages of the production chain thus assuring the market for the commercialization of the product. The culmination of this process will result in the well being of the families involved and the betterment of the community at large.

OBJECTIVE

MEMBERS OF THE KOKAMA NATIVE COMMU-NITY IN THE SYMBOLIC PLANTING OF THE FIRST SEEDLING OF 120 HECTARES OF OIL PALMS IN THE DISTRICT OF CURIMANA, IN THE NATIVE COMMUNITY KOKAMA ECOLOGICA

GEOGRAPHIC LOCATION

•REGION: Ucayali•PROVINCE: Coronel Portillo•DISTRICTS: Nueva Requena y Curimaná

PRINCIPAL VILLAGES

• VILLAGES OF THE DISTRICT OF NUEVA REQUENA:Unión Progreso, Esperanza, Naranjal, Miraflores, Caribe, San Pablo de Juantía, the Native Community of Shambo Porvenir, the Na-tive Community of Santa Clara de Uchuya, Zanja Seca, Bajo Rayal, Los Ángeles.

• VILLAGES OF THE DISTRICT OF CURIMANÁ: San Juan de Tahuapoa, the Native Community of Kokama Unida, Avelino Cáceres, Roca Fuerte, Malvinas, Vista Alegre, Nuevo Porvenir

STAGES HAS FAMILIES HECTARES / YEAR 2013- 2014 2015 2016 2017FIRST 550 100 550 SECOND 500 100 500 THIRD 3500 500 1500 2000TOTAL 4550 700 550 500 1500 2000

GOAL CHART

• The FIRST STAGE of the PROGRAM, currently being carried out, consists of the establishment of a community plant nursery. Following technical standards for obtaining high-quality seed-lings, 550 hectares of plantations are being established by 100 families from 4 community groups: the village of la Perla de Zanja Seca, the village of San Juan de Tahuapoa, the vil-lage of Bajo Rayal and the Native Community Kokama Unida.

• In 2015, the SECOND STAGE of the Program will install a (1)

nursery in the zone of influence of the company Plantaciones de Pucallpa SAC, for the production of 90,000 seedlings for the planting of 500 hectares of oil palms, involving qualified inhabitants from the villages of Caribe, Esperanza, Naranjal, San Pablo de Juantía, Shambo Porvenir , and Unión Progreso.

• The Program includes a THIRD STAGE to be developed dur-ing the course of 2016 and 2017, directed towards a group of communities at a greater distance from both the com-panies in a secondary population ring of both Zanja Seca as well as Tibecocha. This stage will involve communities such as the villages of Nueva Piura, Juventud, Vista Alegre, the Native Community of San José de Tunuya, Nuevo Por-venir, Malvinas and San Pablo de Juantía- 2nd stage, etc. The goal in this STAGE is to establish 3,500 hectares of plantation with approximately 500 participating families.

GOALS OF THE P.A.P.E. PROGRAM

1. INFORMATIONAL MEETINGS WITH THE AUTHORITIES AND PEOPLE OF THE NEIGHBORING VILLAGES.The following photos show the different training talks and meetings held in the villages and neighboring communities to outline the objec-tives, scope and goals of the P.A.P.E. pro-gram in order to achieve satisfac-tory results.

DEVELOPMENT OF ACTIVITIES

MEETINGS WITH THE LOCAL AUTHORI-TIES AND RESIDENTS OF THE NATIVE COMMUNITY SANTA CLARA DE UCHU-NYA AND THE VILLAGE OF ZANJA SECA

2. SURVEY OF SOIL QUALITY Soil testing pits have been made in various sectors to de-termine the suitability of different areas for planting palm. This will ensure the producers a high quality yield from the fields of properly attended plantations.

QUALIFICATION MEETINGS WITH THE BENIFICIARIES IN THE VILLAGES OF SAN JUAN DE TAHUAPOA AND BAJO RAYAL

3. QUALIFICATION OF THE PRODUCERS PARTICIPATING IN THE PROGRAM Sessions were conducted with the participation of local authorities and interested residents in various meetings in the villages in order to select beneficiaries of the program based on the rating criteria proposed by the Company. The most important requisites being:• Being an inhabitant of the village• Having ownership of the plot (Title/Deed)• Being the head of the household• Certification from the court and police records• Having a favorable attitude for the development of oil palm• Willingness to sign loan contracts

HIGH QUALITY SOIL FOR THE PLANTING OF OIL PALMS FOUND IN THE NATIVE COMMU-NITY OF SHAMBO-PORVENIR

EVALUATION AND PLANT PROTECTION TREATMENT: The plant protection evaluations are a permanent process in order to appropriately detect attacks from pests such as the “cogollero” worm (Spodopthera sp) and the presence of pathogenic agents in order effect immediate sanitary control, applying recommended chemical products.

SANITARY TREATMENT: Sanitary control measures are being carried out with curative and preventative applications in order to maintain the pest population at a manageable level.

4. ESTABLISHMENT OF THE NURSERYCLEARING OF THE AREA: An area of 5.5 has. has been allocated for the preparation of the PAPE community nursery located to the south-east of the company lands near the communities of San Juan de Tahuapoa and the Native Community Kokama Unida. The nursery is located close to the Zanja Seca creek, which allows reliable access to the water required for irrigation.

PLANTING OF GERMINATED SEEDLINGS: 103,793 germinated seedlings were planted, discarding only 306 seedlings showing plumule and radicle malformed or detached.CONTROL OF HARMFUL PLANTS IN THE NURSERY: Appropriate weed control is exercised combining both manual as well as chemical methods to avoid the over use of chemicals.

FILLING OF THE NURSERY BAGS: Nursery bags were filled with the participation of farmers and their families qualified as ben-eficiaries of the program.

top right- PERMANENT PLANT PROTECTION EVALUATION below right- PLANT PROTECTION CONTROL - WORKERS WEARING PROTECTIVE CLOTHING FOR THE APPLICATION OF CHEMICALS

SUPERVISION BY SENASA IN THE ACTIVI-TIES OF RECEIVING AND PLANTING OF GERMINATED SEEDLINGS, COMPLYING WITH THE STANDARDS ESTABLISHED BY THE NATIONAL BRANCH AUTHORITY (AUTORI-DAD NACIONAL DEL RAMO), below right-MANUAL CONTROL OF WEEDS IN THE BAGS AND HOEING OF THE CORRIDORS

above L and R-INITIAL LABOR FOR PREPARATION OF THE NURSERY AND DRAINAGE-below- FILLING OF THE NURSERY BAGS

right-6 MONTH OLD PLANTSSHOWING OPTIMAL DEVELOPMENT

IRRIGATION: Performed using modern irriga-tion equipment for supplying water required by the plants.

FERTILIZATION: Carried out based on theFertilization Table employed by the companyin order to apply proper doses of fertilizer.

right-USE OF THE ¨CANON¨FOR CON-TINUOUS IRRIGATION-below- PERIOD-IC FERTILIZATION OF THE PLANTS

PLANT SELECTION: Three sessions have been scheduled for the selection of poorly formed seed-lings, two of which have been carried out on the scheduled dates. In the first, the following mal-formations were observed: grass-like plants, pest infested plants, chimera plants, curled plants and dwarf plants. In the second selection the follow-ing plants were considered for disposal: flat plants and chimera plants.

The training of the beneficiary producers of the P.A.P.E. program in the management of the culti-vation constitutes an objective to be developed by the P.A.P.E. Program. These training sessions will be carried out according to the cycle of cul-tivation in its most important phases such as the planting stage, maintenance of the plantation, fertilization and the harvesting parameters of the FFB (Fresh Fruit Bunches).

The final field is being prepared for the planting of 550 hectares, which is the goal of the FIRST STAGE.Land has been prepared in the following locations:- Zanja Seca : 180 hectares- Kokama Unida Community : 120 hectares- Bajo Rayal : 100 hectares- San Juan de Tahuapoa : 150 hectares

FRAMEWORK AGREEMENT: A public act with the presence of the principal authori-ties of the Region of Ucayali. The signing of the framework agreements were thus con-ducted between the Director of Palmas del Perú, Mr. Dennis Melka and the local village authorities representing the inhabitants who are beneficiaries of the P.A.P.E. Program.The agreement provides technical and financial support from the Company to the pro-ducers who are beneficiaries of the program, as-suring a future market for the commercializa-tion of all raw materials pro-duced by them.

SIGNING OF THE AGREEMENT WITH THE SURROUNDING COMMUNITIES

LAND PREPARATION-OPENING OF THE ACCESS ROAD

TRAINING

THE SIGNING OF THE FRAMEWORK AGREEMENT BETWEEN MR. DENNIS MELKA AND THE VILLAGE AUTHORITIES

MEMBERS OF THE KOKAMA NATIVE COMMUNITY IN THE CELEBRATION OF THE PLANTING OF 120 HECTARES OF OIL PALM THROUGH P.A.P.E.

P.A.M.A. (Environmental Compliance and Management Program) PARTICIPATORY WORKSHOP

The residents of the communities involved in the P.A.P.E. Program participated in the P.A.M.A. Training Cycle. The workshop, scheduled by the consulting firm VERSALMAT, was developed with the aim of informing the authorities and neighboring communities of both companies about the environmental conservation policies adopted by the Company and the development of its business activities.

Crop management, in its various stages of production must be developed following a program of responsible and sustainable palm cultivation that is in keeping with environmental conservation standards.

left- OFFICIALS OF PALMAS DEL PERU AND LEADERS OF THE NEIGBORING COMMUNITIES VISITING THE P.A.P.E. NURSERY

below-PARTICIPANTS IN THE ENVIRONMEN-TAL EDUCATION AND MANAGEMENT WORK-SHOPS IN THE NEIGHBORING VILLAGES

right-VERSALMAT ENVIRONMENTAL MANAGEMENT WORK-SHOPS HELD IN THE NEIGHBORING COMMUNITIES

MEMBERS OF THE KOKAMA NATIVE COMMUNITY IN THE CELEBRATION OF THE PLANTING OF 120 HECTARES OF OIL PALM THROUGH P.A.P.E.

ENVIRONMENTAL AND SOCIAL SUSTAINABILITY

The cultivation of oil palm is sustainable since soil recovery techniques will be implemented in areas that were previously the sites of illegal coca and other harmful migratory cultivations, which through the de-mands of crop management, lead to the progressive deterioration of soil, water and the environment. Conversely, the main fieldwork in the production of oil palm allows for the employment of conservational methods for the soil, water and environment in the crop management process. The cultivation of oil palms has a very important ally found in the creeping plant species “kudzu”. Utilized as ground cover that from the initial planting in the final field throughout a considerable period of the productive phase will remain as a covering in the interline, protect-ing the surface from the main factors of soil erosion in the Amazon re-gion such as high temperatures and heavy precipitation. Furthermore, “kudzu” continuously provides organic matter and chemical elements to the soil produced by its decomposition and mineralization that are used by the palm in its growth and production. Another natural source of organic matter beneficial to the plantation are the fibers (rachis and peduncle) of the palm fruit which are leftover from the plant pro-

cessor, and are later applied around each palm plant for their benefit as organic material for decomposition. Sustainable palm cultivation also involves proper management of small watersheds such as natural streams and creeks, where at the time of the planting of the crop, both sides of the watercourses are protected by leaving a strip of shrub-like plants, which prevent the erosion of the banks.

THE CREEPING PLANT SPECIES KUDZU, USED AS GROUND COVER FOR EROSION PREVENTION AND AS A SOURCE OF ORGANIC MATERIAL

A NATURAL STREAM UTILIZED AS A WATER SOURCE

Finally, in the production phase, palm plantations contribute to the envi-ronmental balance by absorbing carbon dioxide, used by plants for the production of the biomass necessary for growth and fruition. According to research studies carried out, a single hectare of oil palms capture approxi-mately 180-200 tons of CO2 compared with natural forests, which are observed to capture 220 tons per hectare. In the social aspects, oil palm cultivation will establish families in their re-spective plots, eliminating migratory agriculture and illegal cultivation of coca as well as generating important social and economic development.

Palmas del Perú, acting as financial intermediary, will confer the necessary credit to the participating producers for the installa-tion and maintenance of the oil palm crop, whose cost will be between US$3,000 and US$3,500 per hectare. Credit contracts will be signed along with a repayment plan that will be inserted in the form of an annex to the mentioned contracts.

FINANCING

below-WORKER INSTALLING IRRIGATION SYSTEM

PLANTACIONES DE PUCALLPA PLANTACIONES DE UCAYALI INDUSTRIAS DE PALMA ACEITERA AV. SAN MARTIN No. 200, 5to Piso Oficina 501 Pucallpa, Region de Ucayali (061) 571713