Oil palm plantations in Indonesia: The implications for migration, settlement/resettlement and local economic development

Abstract

5. Concluding remarks It is not difficult for policy makers to show that oil palms are an economically rentable crop with a huge potential for further economic growth. In addition to national demands, the growing worldwide interest in biofuels as an alternative to fossil fuels will increase demand for its feedstock and lead to the expansion of oil palm plantations in climatically suitable regions.

On the basis of a cost–benefit analysis of various crops, oil palm will probably continue to be seen as a highly profitable crop with interesting possibilities for being promoted as a source of ‘green’ development. The Indonesian population has increasingly been attracted by this crop, as it provides them with opportunities to benefit and multiply their incomes, which will in itself provide capital for improving consumption and having a good life.

At the same time, however, Riau shows us that there are environmental costs (deforestation, invasion into peat land areas etc.) and that oil palm expansion is accompanied by rapid immigration and urbanization. Even though policy attempts are made to control land conversion or to stop deforestation, much of what is happening today cannot easily be regulated. It is not the direct effects (i.e. the expansion of plantations and production) but the indirect effects and multipliers that bring into question the long-term sustainability of the development model. The establishment of new settlements, rapid urbanization and continuing immigration will require additional employment opportunities. And along with the growing population and the conversion of rice lands into oil palm fields, food security issues will increasingly become a problem. Rather than making quick money from oil palm production, the Indonesian government should make efforts to better control the indirect effects and especially to investigate the problem how to make oil palm-based economies more sustainable and equitable in the longer term. Without interventions – and with today’s laissez-faire approach – further oil palm expansion will soon lead to the depletion of natural resources and an increase in social tensions as a result of unemployment and food insecurity.