144
It should be also noted that shifting to biofuel feedstock production can be a risky
endeavor particularly for independent smallholders (Feintrenie et al. 2010). High
market and production chain uncertainty as well as difficulty in complying with
certain types of production standards can expose smallholders to the financial risk
of not getting adequate returns on their investment or even being excluded altogether by the oil palm value chains (Jelsma et al. 2017; Cahyadi 2013). Price volatility in food commodities has been very prevalent since the 2000s, while adding the
generally high volatile nature of energy markets in the equation, it can make decision regarding a shift toward biofuel feedstock production more difficult to handle
particularly for smallholders (Woods 2006; Robles et al. 2009; DTE 2005).
10.2.4.2 Energy Security and Access to Energy Resources
Several life cycle analyses (LCAs) have concluded that palm oil biodiesel production in Indonesia and Malaysia are net-energy providers, resulting in fossil energy
savings of up to 80% (Zah, et al. 2008; Harsono et al. 2014; de Vries et al. 2010). A
comparative LCA study ranked different biodiesel production chains according to
their decreasing energy consumption, as follows: soybean (Argentina), soybean
(Brazil), rapeseed (EU), rapeseed (Switzerland), palm oil (Malaysia), and soybeans
(the USA) (Panichelli et al. 2009). Such findings suggest that palm oil biodiesel can
be a feasible energy options in Malaysia and Indonesia, possibly enhancing national
energy security.
Box 10.1: Local Income from Oil Palm Cultivation
Mulyoutami et al. (2010) studied oil palm adoption in Tripa (Aceh, Indonesia)
as part of the 2004 tsunami rebuilding programs. They tracked government
incentives, particularly smallholders, to switch from their previous economic
activities to cultivate oil palm. They reported that smallholder plots in the
Nagan Raya district had 120–150 oil palms per hectare and generated a gross
production value of IDR 600,000–1,500,000 (approximately USD 67–168)
per month per hectare. In 2010, the price of a fresh fruit bunch ranged between
IDR 700,000 and 1,050,000 (approximately USD 80–110) per ton. A local
survey in the Ladang Baru area showed that income for oil palm smallholders
was higher than income from other local economic activities (e.g., 160,000–
5,500,000 IDR/month compared with IDR 120,000–2,800,000 for oil palm
plantation workers and IDR 115,000–750,000 for fishing). As mentioned
above, wages for permanent plantation workers are regulated and should be at
least the provincial minimum labor payments. In the case of Aceh province,
this was IDR 1,000,000 per person per month in 2008. While such laborers
tend to be immigrants, locals often take on sporadic day work to complement
their farm income, earning a wage of IDR 25,000–40,000 (±USD 2.80–4.45)
per day (Mulyoutami et al. 2010).
R. Moreno-Peñaranda et al.
It should be also noted that shifting to biofuel feedstock production can be a risky
endeavor particularly for independent smallholders (Feintrenie et al. 2010). High
market and production chain uncertainty as well as difficulty in complying with
certain types of production standards can expose smallholders to the financial risk
of not getting adequate returns on their investment or even being excluded altogether by the oil palm value chains (Jelsma et al. 2017; Cahyadi 2013). Price volatility in food commodities has been very prevalent since the 2000s, while adding the
generally high volatile nature of energy markets in the equation, it can make decision regarding a shift toward biofuel feedstock production more difficult to handle
particularly for smallholders (Woods 2006; Robles et al. 2009; DTE 2005).
10.2.4.2 Energy Security and Access to Energy Resources
Several life cycle analyses (LCAs) have concluded that palm oil biodiesel production in Indonesia and Malaysia are net-energy providers, resulting in fossil energy
savings of up to 80% (Zah, et al. 2008; Harsono et al. 2014; de Vries et al. 2010). A
comparative LCA study ranked different biodiesel production chains according to
their decreasing energy consumption, as follows: soybean (Argentina), soybean
(Brazil), rapeseed (EU), rapeseed (Switzerland), palm oil (Malaysia), and soybeans
(the USA) (Panichelli et al. 2009). Such findings suggest that palm oil biodiesel can
be a feasible energy options in Malaysia and Indonesia, possibly enhancing national
energy security.
Box 10.1: Local Income from Oil Palm Cultivation
Mulyoutami et al. (2010) studied oil palm adoption in Tripa (Aceh, Indonesia)
as part of the 2004 tsunami rebuilding programs. They tracked government
incentives, particularly smallholders, to switch from their previous economic
activities to cultivate oil palm. They reported that smallholder plots in the
Nagan Raya district had 120–150 oil palms per hectare and generated a gross
production value of IDR 600,000–1,500,000 (approximately USD 67–168)
per month per hectare. In 2010, the price of a fresh fruit bunch ranged between
IDR 700,000 and 1,050,000 (approximately USD 80–110) per ton. A local
survey in the Ladang Baru area showed that income for oil palm smallholders
was higher than income from other local economic activities (e.g., 160,000–
5,500,000 IDR/month compared with IDR 120,000–2,800,000 for oil palm
plantation workers and IDR 115,000–750,000 for fishing). As mentioned
above, wages for permanent plantation workers are regulated and should be at
least the provincial minimum labor payments. In the case of Aceh province,
this was IDR 1,000,000 per person per month in 2008. While such laborers
tend to be immigrants, locals often take on sporadic day work to complement
their farm income, earning a wage of IDR 25,000–40,000 (±USD 2.80–4.45)
per day (Mulyoutami et al. 2010).
R. Moreno-Peñaranda et al.