Abstract
Indonesia is now the world’s leading producer of palm oil. Expansion of palm oil production in the country is driving significant socio-economic change in many of the Indonesia’s rural areas, bringing employment and income, while transforming rural communities and triggering social tensions. While palm oil is predominantly in demand for traditional food and some non-food uses, it is also used as a feedstock for biofuel, both domestically and for export. Debate about whether, and under what conditions, palm oil should be used as a feedstock for biodiesel has prompted renewed scrutiny of its impacts. While much discussion has centered on the environmental dimensions of palm oil production, particularly its role in forest and peat land conversion, the social and economic impacts must also be accounted for. This chapter presents some of the key findings from research conducted in Sumatra in 2011 by Greenlight Biofuels, Indonesia, in the framework of the Global-Bio-Pact project. The study focused on four local and one regional scale case studies, identifying and analyzing the socio-economic impacts of palm oil production and conversion. This chapter discusses a selection of these impacts, highlighting some of the complexities and variations in impacts found in the study.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
National data on smallholders does not distinguish between different categories of producers, and includes both independent growers and smallholders involved in NES schemes. Differences in growth rates and yields between different types of smallholders are therefore difficult to establish.
- 2.
Data on yields is for comparison only and should be treated with caution. Yields are very dependent on the age of the plantation, and year on year variations also affected by weather conditions.
- 3.
In cases where smallholders are from the local community, they have typically turned over to the company considerably more land than they receive as their allocation. Although models vary, this can mean communities hand over 10 ha of land for every 1 ha they are allocated (Marti 2008).
- 4.
The fruit of the oil palm tree are known as fresh fruit bunches, which are processed into CPO.
- 5.
Based on the projected figures for the development of biofuels by 2010. See Indonesia’s road map for biofuel development. http://www.indobiofuel.com/Timnas%20BBM%204.php and http://www.indobiofuel.com/Timnas%20BBM%206.php.
- 6.
2008 preliminary figures.
- 7.
Incomes were calculated using average mid-point FFB selling prices reported by farmers over the previous year (May 2010–May 2011). FFB prices fluctuate; the most significant, but not only, determinant being CPO prices. Prices during the year preceding the study were higher than in previous years.
- 8.
All yields in the production case study are quoted in t/FFB/ha. To convert these figures into CPO yields requires that the oil extraction rate (OER) be factored in. Oil extraction rates also vary between groups of producers due to quality of FFBs, ranging from 18 % for low yielding smallholders to 24 % for the most productive and well managed estates (Abdullah and Wahid 2008).
- 9.
Details of the dispute over mill effluent were not obtained from mill management as the issue was raised by the community subsequent to the mill visit. A full analysis of the plantation’s development was not conducted. This would be necessary in order to confirm the situation with regard to the plantation’s land use and land acquisitions.
- 10.
The Gender-related Development Index (GDI) measures achievement in the same basic capabilities as the Human Development Index (HDI) (life expectancy, literacy, education and standards of living), but takes note of inequality in achievement between women and men.
References
Abdullah, R., & Wahid, M. B. (2008). World palm oil supply, demand, price and prospects: Focus on the Malaysian and Indonesian palm oil industry. MPOB. http://s3.amazonaws.com/zanran_storage/www.mpoc.org.my/ContentPages/113526547.pdf. Accessed 23 July 2012.
Andriani, R., Andrianto, A., Komarudin, H., & Obidzinski, K. (2010). Environmental and social impacts from palm based biofuel development in Indonesia. Bogor: CIFOR.
BAPPENAS. (2007). Indonesia country national resource environment analysis. Jakarta: BAPPENAS.
Barichello, R., & Patunro, A. (2009). Agriculture in Indonesia: Lagging performance and difficult choices. Choices 24: 2. http://www.choicesmagazine.org/magazine/article.php?article=76. Accessed 15 July 2010.
BisInfocus. (2006). Prospek Perkebunan & Industri Minyak Sawit Di Indonesia 2006–2020, PT Bisinfocus Data Pratama.
BPS SUMUT. (2011). Statistik sektoral. http://sumut.bps.go.id/. Accessed 1 Aug 2011.
Butler, R. A. (2008). Indonesia seeks to cut fuel subsidies via biofuels. Mongabay News, Jan. 15 2008. http://news.mongabay.com/2008/0115-indo.html. Accessed 17 July 2010.
Dep. NAKERTRANS. (2011). Data dan informasi ketenagakerjaan. http://pusdatinaker.balitfo.depnakertrans.go.id/katalog/download.php?g=5&c=33. Accessed 12 July 2011.
DG Estate Crops. (2011). Data luas dan produksi. http://ditjenbun.deptan.go.id/cigraph/viewstat/komoditiutama.html. Accessed 15 July 2011.
DG Estate Crops. (2011). Road map kelapa sawit. Jakarta: Departemen Pertanaian.
Dillon, H. S., & Laan, T. (2008). Biofuels at what cost? Government support for ethanol and biodiesel in Indonesia. Geneva: Global Subsidies Initiative.
FAO. (2008). Biofuels: Prospects, risks and opportunities. The state of food and agriculture. Rome: FAO.
GAPKI. (2012). Refleksi Industri Kelapa Sawit 2011 Dan Prospek 2012. http://www.gapki.or.id/news/detail/335. Accessed 14 July 2012.
Indonesia Palm Oil Commission. (2006). Statistik kelapa sawit Indonesia 2005. Jakarta: Departemen Pertanaian.
Kompas. (2011). Konflik di Perkebunan Sawit Meningkat. Kompas 5 Jan 2011. http://regional.kompas.com/read/2011/01/05/03582943/Konflik.di.Perkebunan.Sawit.Meningkat. Accessed 15 July 2011.
Marti, S. (2008). Losing ground: The human rights impacts of oil palm plantation expansion in Indonesia. London: Friends of the Earth, Lifemosaic and Sawit Watch.
Orth, M. (2007). Subsistence foods to export goods: The impact of an oil palm plantation on local food sovereignty North Barito, Central Kalimantan, Indonesia. Bogor: Sawit Watch.
Papenfus, M. (2000). Investing in oil palm: An analysis of independent smallholder oil palm adoption in Sumatra, Indonesia. Southeast Asian Policy Research Working Paper 15. ICRAF.
PT SMART. (2011). Annual report.
PWC. (2012). Palm oil plantation industry landscape, regulatory and financial overview: 2012 update. http://www.pwc.com/id/en/publications/assets/Palm-Oil-Plantation-2012.pdf. Accessed 14 July 2012.
Sasistiya, R. (2010). Local biofuel output dives in 2009 as CPO price rises. Jakarta Globe 3 Jan 2010. http://www.thejakartaglobe.com/business/local-biofuel-output-dives-in-2009-as-cpo-price-rises/350599. Accessed 20 July 2010.
Sheil, D., Casson, A., Meijaard, E., van Noordwijk, M., Gaskell, J., Sunderland-Groves, J., Wertz, K., & Kanninen, M. (2009). The impacts and opportunities of oil palm in South East Asia: What do we know and what do we need to know? (CIFOR Occasional Paper No. 51). Bogor: CIFOR.
Situmorang, M. (2010). Strengthening peasant and plantation workers’ movement in North Sumatra. KPS. http://www.kpsmedan.org/index.php?option=com_content&view=article&id=224&showall=1&lang=en. Accessed 1 July 2011.
Timnas, B. B. N. (2007). Bahan Bakar Nabati: Bahan Bakar Alternatif dari Tumbuhan Sebagai Pengganti Minyak Bumi dan Gas. Penebar Swadaya. Jakarta.
US Embassy. (undated). Indonesia: Palm oil production a mainstay of North Sumatra economy. http://jakarta.usembassy.gov/econ/Sumatera_palm_oil_dec05.html. Accessed 13 Aug 2010.
USDA—FAS. (2009a). Indonesia: Palm oil production growth to continue. Commodity intelligence report, 19 March 2009. USDA, Jakarta
USDA—FAS. (2009b). Indonesia: Biofuels annual report. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/General%20Report_Jakarta_Indonesia_6-1-2009.pdf. Accessed 6 May 2011.
USDA—FAS. (2011). Indonesia: Biofuels annual report 2011. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Biofuels%20Annual_Jakarta_Indonesia_8-19-2011.pdf. Accessed 14 July 2012.
van Gelder, J. (2004). Greasy palms: European buyers of Indonesian palm oil. London: Friends of the Earth.
Wakker, E. (2005). Greasy palms: The social and ecological impacts of large-scale oil palm plantation development in Southeast Asia. London: Friends of the Earth.
Winrock. (2009). Implications of biofuel sustainability standards for Indonesia. Winrock: White Paper 4.
Wirasaputra, K., Rofiq, R., Kurniawam, R., Kadariah, L., & Sadat, A. (2009). Biofuel: A trap. Jambi: Setera Foundation.
World Bank. (2010). Environmental, economic and social impacts of palm oil in Indonesia: A synthesis of opportunities and challenges. Jakarta: World Bank.
World Food Programme. (2007). Executive brief: Indonesia food security assessment and classification. http://www.ipcinfo.org/attachments/Ex_Brief_Indonesia_IPC_March_2007.pdf. Accessed 18 Aug 2011.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Wright, A. (2014). Socio-Economic Impacts of Palm Oil and Biodiesel: The Case of Indonesia. In: Rutz, D., Janssen, R. (eds) Socio-Economic Impacts of Bioenergy Production. Springer, Cham. https://doi.org/10.1007/978-3-319-03829-2_9
Download citation
DOI: https://doi.org/10.1007/978-3-319-03829-2_9
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-03828-5
Online ISBN: 978-3-319-03829-2
eBook Packages: Earth and Environmental ScienceEarth and Environmental Science (R0)