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7 Bioeconomy in the Oil Palm Republic of Indonesia
In the case of smallholders incorporated into nucleus-plasma systems with private
companies, most interviewed analysts regard the price paid for the 70% of land
acquired as too low. Smallholders frequently agree it is, but they usually see it as a
price to pay for the development opportunity that oil palm brings (McCarthy 2010;
Feintrenie et al. 2010a). Nonetheless, they frequently misunderstand the contract
terms. Once the leasing license expires (after 25 or 35 years), the land normally goes
to the state, but farmers often believe that it comes back to them (Personal interviews).
As such, further conflicts seem poised to erupt when current contracts end.
Oil palm expansion is also problematic from the perspective of access to water.
Over 21 million Indonesians still lack improved access to safe drinking water
(WHO/UNICEF 2019). Pesticide contamination of water bodies, aquatic biota and
humans has been increasingly an issue (Sudaryanto et al. 2006; Koh et al. 2009;
Nooteboom and De Jong 2010). Such environmental contamination also comes from
palm oil mill effluents discharged without treatment (Marti 2008; McCarthy and Zen
2010; Stichnothe and Schuchardt 2011). Besides, there is increasing depletion due
to extensive freshwater use for palm oil processing (McCarthy and Zen 2010) and
peatland conversion into plantations (Sumarga et al. 2016). Such land-use change
is highly problematic because peat absorbs water during rainy seasons and retains
it during dry ones; therefore, peat conversion has led to increased flooding when it
rains and reduced water availability during dry seasons (Koh et al. 2011; Yule 2010).
In terms of access to food, there have been mixed impacts. On the one hand, forest
conversion has negatively impacted forest-dependent peoples losing traditional food
sources (Colbran 2011; Colchester 2011; Abram et al. 2017). Fishing communities,
too, have suffered disproportionately from water contamination (Nooteboom and
De Jong 2010). On the other hand, many smallholders have welcomed the higher
incomes obtained from oil palm cultivation, which have increased their purchasing
power and access to food (Rist et al. 2010; Feintrenie et al. 2010a; b). However,
they have become vulnerable to palm oil price fluctuations, over which they have no
control.
There is a longstanding food security concern, shared both by parts of the Indonesian government and particularly female smallholders, about rice paddies’ replacement by oil palm plantations ( Personal interviews; see also Marti 2008). Indonesia
remains an importer of rice, its key staple, though the level of import dependency has
been decreasing (Slette and Meylinah 2013; Meylinah 2020b). As 8.3% of the Indonesian population (approximately 22 million people) is undernourished (FAO 2019),
there is a fear that cash-crop and particularly oil palm expansion may aggravate the
problem. Government officials at various levels seem divided, with some expressing
concern while others deny that such a replacement takes place, and claiming they
succeed in avoiding it. Many rural women, in turn, are categorical that it has happened
and have resented the loss of local food self-reliance despite the income brought by
oil palm (Personal interviews).
As for access to energy, Indonesia’s rate of electrification improved substantially
in the past decades. From only 59% in 2006—with significant regional disparities,
such as 71% in Bali against only 28% in Papua—it reached over 98% before 2020
(IEA 2008, 2019). However, this near-total coverage does not mean that the quality,
7 Bioeconomy in the Oil Palm Republic of Indonesia
In the case of smallholders incorporated into nucleus-plasma systems with private
companies, most interviewed analysts regard the price paid for the 70% of land
acquired as too low. Smallholders frequently agree it is, but they usually see it as a
price to pay for the development opportunity that oil palm brings (McCarthy 2010;
Feintrenie et al. 2010a). Nonetheless, they frequently misunderstand the contract
terms. Once the leasing license expires (after 25 or 35 years), the land normally goes
to the state, but farmers often believe that it comes back to them (Personal interviews).
As such, further conflicts seem poised to erupt when current contracts end.
Oil palm expansion is also problematic from the perspective of access to water.
Over 21 million Indonesians still lack improved access to safe drinking water
(WHO/UNICEF 2019). Pesticide contamination of water bodies, aquatic biota and
humans has been increasingly an issue (Sudaryanto et al. 2006; Koh et al. 2009;
Nooteboom and De Jong 2010). Such environmental contamination also comes from
palm oil mill effluents discharged without treatment (Marti 2008; McCarthy and Zen
2010; Stichnothe and Schuchardt 2011). Besides, there is increasing depletion due
to extensive freshwater use for palm oil processing (McCarthy and Zen 2010) and
peatland conversion into plantations (Sumarga et al. 2016). Such land-use change
is highly problematic because peat absorbs water during rainy seasons and retains
it during dry ones; therefore, peat conversion has led to increased flooding when it
rains and reduced water availability during dry seasons (Koh et al. 2011; Yule 2010).
In terms of access to food, there have been mixed impacts. On the one hand, forest
conversion has negatively impacted forest-dependent peoples losing traditional food
sources (Colbran 2011; Colchester 2011; Abram et al. 2017). Fishing communities,
too, have suffered disproportionately from water contamination (Nooteboom and
De Jong 2010). On the other hand, many smallholders have welcomed the higher
incomes obtained from oil palm cultivation, which have increased their purchasing
power and access to food (Rist et al. 2010; Feintrenie et al. 2010a; b). However,
they have become vulnerable to palm oil price fluctuations, over which they have no
control.
There is a longstanding food security concern, shared both by parts of the Indonesian government and particularly female smallholders, about rice paddies’ replacement by oil palm plantations ( Personal interviews; see also Marti 2008). Indonesia
remains an importer of rice, its key staple, though the level of import dependency has
been decreasing (Slette and Meylinah 2013; Meylinah 2020b). As 8.3% of the Indonesian population (approximately 22 million people) is undernourished (FAO 2019),
there is a fear that cash-crop and particularly oil palm expansion may aggravate the
problem. Government officials at various levels seem divided, with some expressing
concern while others deny that such a replacement takes place, and claiming they
succeed in avoiding it. Many rural women, in turn, are categorical that it has happened
and have resented the loss of local food self-reliance despite the income brought by
oil palm (Personal interviews).
As for access to energy, Indonesia’s rate of electrification improved substantially
in the past decades. From only 59% in 2006—with significant regional disparities,
such as 71% in Bali against only 28% in Papua—it reached over 98% before 2020
(IEA 2008, 2019). However, this near-total coverage does not mean that the quality,