Oil palm expansion in Indonesia: serving people, planet and profit?

Abstract

This study aimed to provide a more holistic understanding of how drivers at various levels interplay and continue to feed the expansion of oil palm plantations with its associated land use/cover change (LUCC) particularly deforestation, local economic development and people’s livelihoods. Recent studies suggested that the underlying causes and drivers of deforestation lie beyond the forest and forestry sector. The expansion of oil palm plantations in Indonesia has severely influenced the LUCC especially deforestation process. The expansion of oil palm plantations in Indonesia was driven by multiple factors which have been working simultaneously at multiple levels. Initially it was stimulated by the growing global population and affluent, recently palm oil has been increasingly valued as a low-carbon biofuel that can be produced at affordable prices. The crisis in a declining forestry sector has opened up an opportunity for oil palm to become the new green gold for the national economy. The absence of strong institutional frameworks made coherent discussions and negotiations difficult for all stakeholders and created a supporting climate for oil palm expansion. The lucrative financial benefits from oil palm production, improved access to Riau province, and relatively affordable land prices in Riau province have attracted more smallholders to adopt oil palm production into their farming system. The diversity of smallholders has led different position of oil palm in household income structure and land allocation. Trans-migrant and independent migrant groups tended to specialize in oil palm production, generally have better incomes and created a monoculture oil palm landscape on their farms. This is in contrast to the non-migrant households group whose main source of income was the production of rubber latex and practiced crop diversification. However, seeing that oil palm producing households seem much better-off, the non-migrant/native group has also begun to integrate oil palm production into their farming system. This oil palm adoption by smallholders has led to a rather invisible and complex process of indirect LUCC which involves forest lands, peat lands and existing agricultural lands. As the number of smallholders is continuously increasing in the region, the accumulation of household decisions on land in favour of oil palm plantations become an increasingly important factor in shaping the landscape of the forest frontiers. The example of oil palm expansion in Indonesia, clearly shows that the role of the state and its policies of supporting the developments have been crucial in creating space for the expansion of oil palm plantations. However, the rapid expansion of oil palm plantations would have not been occurred without other factors that work simultaneously at all levels. This also implies that the efforts to manage the future oil palm production and all the environmental and social consequences embedded in it should be done simultaneously at all levels. It is clear that oil palm production has the potential to play a prominent role in the resource-led development process of Indonesia. However, its effect on the planet (its environmental sustainability) remains questionable.