Indupalma (A1) : The Initial Years, 1961 - 1977: SEPTEMBER 16, 2003

S K E0 0 6
SEPTEMBER 16, 2003
DIANA V. FERNÁNDEZ
DIANA M. TRUJILLO
ROBERTO GUTIÉRREZ
Indupalma (A1): The Initial Years, 1961 - 1977

When you got to the Crossing [an area that would later become the San Alberto County], there were
three huts on one corner, three on another, and nothin g else. [There was] a narrow path made by an oil
company, and forest on both sides. You walked among the towering trees, until you got to a clearing. It was
bustling with bulldozers felling trees and opening roads, chainsaws -thirty or forty chainsaws working at the
same time, making a deafening noise- and people working non stop. It was like going into the Old West, a
pioneering frontier, all dust and mud…
— Agustín Uribe Leyva, Indupalma plantation director and assistant manager, 1965 - 19941
In a 24,700-acre stretch of land, located in the San Alberto County, in the Southern part of the
Cesar Department, in an area known as the Colombian Magdalena Medio (see Exhibit 1), the primary
forest that existed until the late 1950s gradually disappeared to give way to an African palm
plantation and an oil extraction plant. Formally incorporated in 1961 under the name of Industrial
Agraria La Palma, Indupalma, S.A., and engaged in African palm oil production and marketing, in
1977 the company faced an unparalleled predicament.
In August 1977, after 16 years of hard work and amidst a tense social and political scenario,
Indupalma was forced to respond to two complex situations that became milestones in its corporate
history. On the one hand, the union had declared a strike because top management refused to include
subcontracted workers in the company’s payroll. These workers had carried out most of Indupalma’s
agricultural activities since its inception. On the other hand, an armed political movement operating
in the area had put top management’s back against the wall at a time when labor contracts were
being negotiated with the union.
1Ospina Bozzi, Martha L., La Palma Africana en Colombia, volume 2, p.101, Fedepalma, Bogotá, 1998.
________________________________________________________________________________________________________________
This case was prepared by Research Associates Diana V. Fernández and Diana M. Trujillo under the supervision of Professor
Roberto Gutiérrez, on the basis of previous research done by Professor Alejandro Sanz, both from the Facultad de
Administración de la Universidad de los Andes. SEKN cases are developed solely as the basis for class discussion. Cases are
not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2003 Facultad de Administración de la Universidad de los Andes. To order copies or request permission to
reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston MA 02163, or go to
http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a
spreadsheet, or transmitted in any form or by any means -electronic, mechanic, photocopying, recording or otherwise- without
the permission of the above mentioned copyright holder institution.
At the time this case was developed, SEKN membership consisted of AVINA, EGADE, Harvard Business School, INCAE,
Pontificia Universidad Católica de Chile, Universidad de Los Andes, Universidad de San Andrés - Universidad Torcuato Di
Tella - CEDES, and Universidade de São Paul o.
This document is authorized for use only in Gilmer Yovanni Castro Nieto's Proceso y Teor?a Administrativa (Gilmer Yovanni Castro Nieto) 2019-1 at Pontificia Universidad Javeriana from
Jan 2019 to Jul 2019.
SKE006 Indupalma (A1): The Initial Years, 1961 - 1977
How should Indupalma respond to the challenges posed by the union and the social and political
scenario? Which would be the most appropriate decisions to take? The answer was not clear. But
certainly, those decisions would shape the company’s future.
Conversion from Forest to Plantation

In the 1950s, the search for a way to overcome difficulties in importing raw materials for oil
production led the owners of Grasco, a Colombian company involved in oil production and
marketing, to invest in a large African palm plantation. However, project development met multiple
challenges.
From the technical point of view, the crop had to conform to certain basic criteria in order to
guarantee profitability. Miguel Fadul pointed out the following important features in African palm
production: 2
• It was a long -term crop that required permanent maintainance three years before yield. Thus,
financial reserves for the initial years were essential.
• Efficient and profitable oil extraction demanded a nearby production plant, however, a
minimum harvest area of 1,235 acres was required for plant building to be financially
feasible. 3
• Crop characteristics had a significant impact on the environment. First, the crop covered a
significant geographical expansion and was very visible. Second, it required an intensive and
permanent work force. Finally, from the technical point of view, it demanded an important
infrastructure, including electricity, and fruit loading and transport resources.
By the end of the 1950s, businessman Moris Gutt identified an adequate stretch of land to develop
the African palm plantation that Grasco’s owners had in mind. Most of the area was covered with
primary forest. Fernán Gómez, a civil engineer who joined Indupalma in 1963 as plantation assistant
general manager, reported his first impressions of the area:
When I went into that forest for the first time, I walked 150 feet and asked the guide to
stand still so that I could listen to the sounds and smell the scents. The smell [was] very
peculiar, difficult to describe, because [it was] a combination of many things: flowers, rotten
branches, fruits in blossom and dead fruits, different tree seeds, and rotting wood. And the
sound [was] a blend of the trees swaying in the wind, birds singing (there were many parrots,
cashew birds and turkey hens) and screeches everywhere. Some animals got scared when they
saw us, others didn’t. The guide ha d warned me not to jump over or to step on anything
rotten.
It was really an amazing forest. There were sloths, anteaters, and snakes… some gigantic
vipers: bush masters, pudridoras (rotting snakes) and others I don't remember. Also iguanas
and tapirs. I remember the first time I saw a tapir, with its shiny hide... There were blue lizards
2 Fadul Ortiz, Miguel, Alianzas por la paz: el modelo Indupalma , Bogotá: National Alliance Program for Peace and Poverty
Elimination, 2001
3 "The African palm produces a fruit with an external pulp and a hard shell protecting a nut. Oill may be extracted both from
the pulp and the nut, the latter producing a particularly rich oil. Although the oil may be extracted through elementary
processes, these are very costly. Extracting oil from the coconut demands a complex process to remove the nut from the shell."
Ibid., p.8.
Jan 2019 to Jul 2019.
Indupalma: The Initial Years, 1961 - 1977 SKE006
with a tortoiseshell-like skin: an extinct species! And turtles, toads, frogs and beautiful insects:
all kinds of colorful butterflies. And guayacanes in full bloom! You won’t ever see that again!
You need at least two hundred years to recreate the kind of conditions we found then. It was
like witnessing Creation’s first day. 4
Turning the forest into a plantation entailed practical and technical challenges derived from the
hard labor of “felling forest and sowing palm.” But this was not the only challenge: in order to
execute the project, the company had to deal with the settlers living on the land. José Joaquín Ortíz
Duarte, known as "the administrator," acted as the comp any’s liaison in this relationship. Ortíz
Duarte began working for Indupalma during its initial years, and lived and worked at the plantation
until 1977, when he retired. He was known as a man who stopped at nothing to do his job. He was
like a bulldozer, clearing out anything that stood on his way. He was responsible for the land
acquisition, and San Alberto's older inhabitants accused him of having violently evicted many settlers
who had refused to sell. Duarte was also the company’s industrial relations manager. His aggressive
nature had earned him the nickname of "Captain Darkness." 5
The urgent need for manpower to accomplish the different tasks involved in clearing the forest,
sowing and maintaining palms, called for a swift increase in local population. According to Fernán
Gómez,
We sent buses to nearby villages to bring people into the plantation. There were no
restrictions; everybody was admitted. And everybody worked. At day’s end, people were so
tired that most had an early meal and went to bed. Some played cards or dominoes in the late
afternoon. (...) Top management had paper-work to do during the evening, at the offices. It
began around seven thirty, after dinner, and lasted until nine thirty or ten, every day except on
Sundays, when we only worked in the morning, never in the afternoon. Workers lived in
camps that would seem very rustic today because they were merely branch structures with
hanging hammocks. Each camp had its mess hall: coastal people had one, workers from
Santander had another one, and so did the people from Antioquia. Administrative staff had its
own camp. And there were six houses for management executives. The French lived with their
families, and I lived in the guest house. Other buildings included the infirmary, the grocery
store, the workshops, and the storerooms. When I started working at the plantation (in 1963), it
employed 200 workers. Two years later, the figure had climbed to 900. The company’s growth
dynamics was overwhelming: development could be measured on a daily basis, and
management expectations were constantly rising. The French advisers demanded also high
performance. There was no time to argue, just to work. There was little time for entertainment
or rest, because many activities were carried out on Sundays . 6
Work Organization at the Plantation

From the begining, labor at the plantation was a combination of employees with indefinite term
contracts and a considerable number of subcontracted workers. The latter were piece-workers, who
carried out most of the agricultural activities, such as plot clearing or palm sowing. 7 Most full-time
4 Ospina Bozzi, op.cit., p.98.

5 Ibid., pp.97-98.
6 Ibid., pp. 103-104.
7 In 1977, Indupalma’s headcount included “200 employees of the 1,700 or 1,800 workers who toiled in the company.” Ibid.,
p.117
Jan 2019 to Jul 2019.
company employees worked at the oil-extraction plant -operational as of 1965- and in administrative
and research tasks. According to Enrique Andrade Lleras, executive board first secretary, managing
contractors was somewhat difficult. Although Indupalma set the terms for the contractors´ labor
management and had a specific office for their supervision, results were not altogether effective.
Many contractors did not comply with conditions agreed upon with the company regarding wages,
benefits and social security. 8
The following description by a Usitras representative and advisor to Indupalma union, Josafat
Tarazona, clearly depicts the living conditions of subcontracted workers:
Field workers were almost slaves, like in many agricultural estates at the time. First, the
company did not acknowledge them as employees; they depended on some guys that abused
them. And although the company had a supervision office, it was almost ineffectual.
Subcontracted workers were payed according to production volume, and since remuneration
was low, wives and children joined in the work.
Subcontracted workers slept in big open buildings with palm-leaf roofs and plank fences.
Dozens of men were packed in there, like goats or hens. Mosquitos were a curse, and there was
no electriciy, water, or sanitary services. Water was drawn from cisterns and had a greenish
color; take my word for it, because I spent many nights in those buildings. There were no mess
halls: each worker had to bring his food, or else buy it at small shops. These people had no
social security. Many worked barefooted and without gloves. Snake bites were daily
ocurrences. And malaria and venereal diseases were widespread.
Look, in general, field work in these palm companies is hard; it requires great physical
stamina, either to cut clusters, pick them up from the floor and toss them into the
wheelbarrow, or to pile leaves up. Back injuries are frequent …And you work at temperatures
over 100 degrees Farenheit, surrounded by mosquitos, bees, wasps ...And snakes ...Also, thorn
pricks can be very painful... and if you get a cut from a falling branch, it’s like being struk with
a machete (large knife). If you add the fact that workers didn’t get what was legally theirs, that
they worked without miminum security conditions, and earned very low wages, while others
lived very well, you end up having all the necessary ingredients for a revolt. That’s what
happened at Indupalma in the 1970s.9
By the 1970s, some 3,000 people lived on company grounds, including workers, relatives and
contractors, whose needs had to be satisfied by the company. If a child got sick or a light bulb burnt
out, the company was to blame and had to fix it. Money was the only revenue considered by the
workers. Health and housing services, and electricity and water provision were seen as company
obligation. According to Agustín Uribe, an Indupalma executive,
We were a close but divided human cluster. Clearly defined hierarchies and sectors shared
a relatively reduced area. There was the low class, composed of workers, the middle class (the
employees), and the high class, senior management… We lived in separates sectors; we had
different clubs and activities, but we were constantly aware of the differences, and this was the
result of our all living together in the same place. 10
8 Ibid., p.117.
9 Ibid., pp.117-118.
10 Ibid., pp.113-114.
Jan 2019 to Jul 2019.
Union origins
The first Indupalma union was created early in the company’s history, on July 23, 1963. Utrasán, a
Colombian labor union organization, was a decisive influence in its foundation. Isaías Tristancho,
Utrasán official, described the origins of the union and the social scenario at the time, both within the
company and in the region: “At the time, San Alberto's village was a big tavern. We just took three or
four drunkards, fed them the story and had them sign the papers. Next, we got four more
drunkards… until we had 27 affiliates. Thus, the union was created.”11
During the 1960s, union activity was restricted to negotiating conventional labor benefits with the
company, especially concerning wages, and always amidst extreme positions on both sides. Both
Pirard and Ortíz Duarte –the first plantation managers– mistrusted the union. In the mid 1970s,
relationships returned to normal, and the company policy was for collective wage agreements to be
negotiated several months before their expiration in order to prevent labor conflicts. In addition, the
union underwent several changes: some years after its foundation, it pulled out from Utrasán and
joined the Movimiento Obrero Independiente Revolucionario (MOIR, Revolutionary Idependent
Workers’ Movement), and later, Festra. By 1973, it had reestablished its link with Utrasán.12
In a statement quoted in Jorge Echeverry’s manuscript, Apuntes para la siemb ra de un sueño, Isaías
Tristancho, Utrasán official, referred to this topic,
I remember the initial relationship between the union and the company was very peculiar. I
would sit down to negotiate and the French plantation director, J. J. Pirard, would si t at the other
side of the table, take out two guns, place them on the table aiming toward me, and declare: ‘Now
we are ready to talk to the union’. 13
Labor -management relations and other social agents’ impact on these

relations
In 1971, Indupalma’s personnel manager, Luis Alejandro Hernández, was murdered in an attack
that seemed to have been directed against Ortíz Duarte, industrial relations manager at the time. As a
result, the 12 top union leaders, then affiliated to the MOIR, were accused and found guilty of the
crime. Union headquarters were destroyed anonymously, but everybody knew José Joaquín Ortíz
Duarte was behind this act of retaliation. However, the accusation infuriated Duarte, who took
control of the union, began to preside over its assemblies, and started a campaign of persecutions that
gradually undermined the union’s organization. 14
In his manuscript, Jorge Echeverry elaborated on this event,
All union board members were locked up. The murderer turned out to be a well-known
butcher who worked in San Alberto. After relentless investigations and procedures, our slow
criminal justice system finally pronounced a verdict of guilty for some and of not guilty for
others. The union was disbanded and lost its legal status until 1974, when it was reorganized
again through the involvement of several similar associations from Bucaramanga and activists
11 Ibid., p.115.
12 Ibid., p.116.
13 Echeverry, Jorge, Apuntes para la siembra de un sueño, unpublished document.
14 Ospina Bozzi, op.cit.
Jan 2019 to Jul 2019.
such as Isaías Cristancho and Rodrigo Córdoba. Until 1977, labor-management relations were
regulated by a collective labor agreement signed during the uni on’s interim period. 15
Between 1971 and 1977, frictions between workers and employers increased. Moreover, two social
agents took advantage of the accumulated tension within the national political context. One of them
was the promoters and organizers of labor and union protest demostrations carried out in Colombia
during the 1970s, the other were guerilla groups whose activities had grown steadily in the area.
Working class movements of the 1970s organized a national strike in September, 1977. As for the
guerillas groups, they had started operating in San Alberto and its surroundings soon after
Indulpama’s creation. Fernán Gomez described their activities by the mid 1960s:
By 1966, the Ejército de Liberación Nacional (ELN, National Liberation Army) was already in
the area. Simacota and San Rafael had already been taken over. And it got rough when Camilo
Torres, a priest turned revolutionary, 16 arrived to the region. Camilo was killed in Patio Bonito,
not far from here. The ELN operated along the San Alberto river, and Ricardo Parada Lara
operated next to San Rafael. Aguilar was also here, but not for long.
At the time, we never had any direct contact with guerrilla members; we learnt about them
through refugees and outcasts. And later, a person or a group of people, unarmed or
apparently so, would come round in some kind of intelligence mission, asking about
personnel, or where the army was, how the plantation was doing, if we would open it for
cattle, and, then, they disappeared. They collected information and then left. They never made
any demands from us, nor did we have any direct contact with them.
In time, this initially marginal presence became stronger and involved other guerilla forces, such
as the Movimiento 19 de Abril (M-19, April 19 Movement). Negotiations for the 1977 collective labor
agreement were carried out in this context. That year, the first petition involved the
acknowledgement of subcontracted workers as employees of Indupalma, on the grounds that, in
legal terms, they were Indulpama’s employees because they provided a daily service, earned a wage
and followed company orders. The company, through its manager, Hugo Ferreira, refused to
negotiate with these workers, claiming that contractors, and not Indupalma, were responsible for
their workers’ labor conditions. In addition, union leaders were fired because they were found
responsible for the gunshots that had destroyed a company power transformer.
These and other petitions involved key negotiation issues: recognition of subcontracted workers’
employment time prior to 1977 for pension purposes, periodical personnel supplies, payment of legal
and paralegal contributions, construction of camps and mess halls including bathrooms, running
water, electricity and fans, and medical care services for all workers.
Indupalma’s top management’s attitude towards the problems of subcontracted workers

produced a strong reaction among union leaders, who were organizing regional and nationnwide
workers’ demonstrations. Utrasan, the national organization to w hich Indupalma’s union was
affiliated, adopted a strong antagonist position. Its leaders thought only a strike could improve the
workers´ situation and began organizing it. In addition to outlining conditions related to internal
15 Echeverry, op.cit., p. 69.

16Camilo Torres was born in Bogotá on February 13, 1929. He was ordained priest in 1954 and studied sociology in Belgium.
Upon his return, he became aware of the complex problems besieging Colombia and decided to get involved. He created the
United Front in January 1965, while the ELN –created in July 1964- started operating in the Santander mountains. From then
on, Camilo and the ELN were part of the same history.
Jan 2019 to Jul 2019.
company and regional changes, the union started a nation -wide solidarity campaign for Indupalma
workers. They took reporters to the plantation, held assemblies at all unions affiliated to Utrasan
headed by the union leaders who had been fired from Indupalma, and distributed flyers explaining
their struggle. At the same time, central unions had organized a national strike for September 14,
1977, and several significant syndicates were already on strike. The Indupalma conflict became part
of this general domestic turmoil.
At dawn on August 13, 1977, 25 Utrasan members announced the beginning of the strike. They
had anticipated a turnout of around 1,000 workers, but the number of people tripled in a few hours,
when families and friends joined. The first 24 hours were very tense on account of the presence of the
military and the possibility of a clash with workers. The next day, three Utrasan leaders were
imprisoned when they tried to go to San Alberto to establish communication with Bucaramanga. 17
On the third day of the strike, the armed movement M-19 kidnapped the company manager,
Hugo Ferreira Neira, from his office in Bogotá to press Indupalma top management to accept one of
the union’s petitions. The M-19 “demanded that Indupalma negotiate a collective labor agreement
with subcontracted workers in the presence of Labour Ministry officials.”18 This demand was all the
more dramatic since the M-19 had recently kidnapped and executed union leader José Raquel
Mercado. Thus, in August 1977, Indupalma had to face two unprecedented developments in its
history: a workers´strike and the M-19 intervention. The following additional information provide a
more detailed description of the situation:
• In its August 24, 1977, edition, the El Tiempo newspaper published an excerpt of the bulletin
issued by subcontracted workers:
It is important for Colombians to know that the person who promotes this policy
is Dr. Hugo Ferreira Neira, Indupalma manager, whose office is located at 5-19
36 St.. His telephone number is 327338… Also, Dr. Roberto Pacheco Osorio, a
Colombian lawyer, is in charge of the company´s labor policy, which tends to
disregard and trample even the most basic rights. This individual has the
following address in Bogotá ...
• M-19 communiqués included the following statements:
August 20, 1977
These workers’ problems are the same ones that led to the 1928 massacre of
banana workers. We will execute Dr. Ferreira Neira in 36 hours if this situation is
not settled before.
August 27, 1977
As everybody knows, Indupalma exploits over 3,000 workers, subjecting them to

bloody repression, denying their right to organize their union through death
threats and other forms of terrorism (sic). Their ruthlessness has even reached
the point of disregarding current labor legislation. Years ago, the company did
not hesitate to raze the workers´ union offices with their bulldozers, shocking
international public opinion. Today, it does not hesitate to pay for armed thugs
17 Ospina Bozzi, op.cit.

18 Ibid., p. 120.
Jan 2019 to Jul 2019.
to chase and threaten workers under the orders of the infamous “Captain
Darkness,” José Joaquín Or tiz, industrial relations manager. The M-19 will
always support demonstrations and struggles of the oppressed masses in our
country. We have already struck employers´ unions –national and workers´
traitors serving imperialism- through their representative José Raquel Mercado.
Now, in the struggle between workers and employers, we are backing workers
with all of our political and military might. 19
• The Comunist Party periodical Voz Proletaria published the following news:
At Indupalma, around 2,500 workers are currently on strike, facing military

repression at plantations… (August 25, p.1.)
Apparently, there have been physical attacks against workers by uniformed

individuals. At least one worker might have been injured and surreptitiously
taken to the Ramón Gonzáles Valencia Hospital in Bucaramanga. (August 25, p.
7.)
Indupalma management faced the complicated and high stakes challenge of how to respond to
these events.
19 Echeverry, Jorge, "De la crisis a la salvación de Indupalma: apuntes para la siembra de un sueño." Unpublished document, 2000,
pp. 71-72.
Jan 2019 to Jul 2019.
Exhibit 1 Indupalma’s Location and Influence Area 20
CESAR Venezuela
NORTHERN SANTANDER
Panama
SANTANDER
INDUPALMA territory, C O L O M B I A
surrounded by the Cesar,
Santander and Northern
Santander Departments.
Ecuador
Brazil
Peru
20 Adapted from “L o social paga,” Indupalma institutional document, 2001.
Jan 2019 to Jul 2019.

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S K E0 0 6

SEPTEMBER 16, 2003

Indupalma (A1): The Initial Years, 1961 - 1977

Conversion from Forest to Plantation

Work Organization at the Plantation

4 Ospina Bozzi, op.cit., p.98.

Labor -management relations and other social agents’ impact on these

In his manuscript, Jorge Echeverry elaborated on this event,

Indupalma’s top management’s attitude towards the problems of subcontracted workers

15 Echeverry, op.cit., p. 69.

• M-19 communiqués included the following statements:

August 20, 1977

August 27, 1977

As everybody knows, Indupalma exploits over 3,000 workers, subjecting them to

17 Ospina Bozzi, op.cit.

At Indupalma, around 2,500 workers are currently on strike, facing military

Apparently, there have been physical attacks against workers by uniformed

Exhibit 1 Indupalma’s Location and Influence Area 20

20 Adapted from “L o social paga,” Indupalma institutional document, 2001.

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