INTERVIEW: Prioritize smallholder cultivation of oil palm in Indonesia, urges researcher Tania Li

Oil palm harvester in Indonesia. CIFOR/Lucy McHugh
Koen Kusters
4 May 2018

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TORONTO (Landscape News) — Where large-scale agricultural production occurs, conflicts may arise over land rights, the distribution of benefits and environmental protection, leading to heated discussions among scholars about the merits of this type of development.

While some people emphasize the positive economic benefits, others point toward cases of social and environmental abuse.

Tania Li, who will speak on a Global Landscapes Forum digital panel about landscape transformation on May 11, is one of the more outspoken critical voices. She is a professor in the Department of Anthropology at Canada’s University of Toronto and has extensive research experience in Indonesia, where the rapid expansion of large-scale oil palm plantations has changed landscapes and influenced the lives of millions of people.

Rather than establishing more large-scale plantations, support should go to smallholder cultivation of oil palm, she says.

Indonesia is the world’s largest producer of palm oil. Most of it is exported to other Asian countries and Europe, where it is used as cooking oil and biofuel, and in processed foods and cosmetics. Domestic use is increasing due to a growing population, and government support for biodiesel.

According to Indonesia’s Statistics Agency, oil palm tree plantations cover 12 million hectares of land—an area roughly the size of North Korea—mostly on the islands of Sumatra and Borneo. In other parts of the Indonesian archipelago, oil palm plantations are growing rapidly as well, especially on the island of Sulawesi and in the province of Papua.

Smallholders manage 40 percent of this land area, many tied to plantation companies through contracts, according to the Indonesian Directorate General of Estate Crops. The remaining 60 percent of oil palm production grows in large-scale plantations, managed by companies who employ hired labor for maintenance and harvesting.

Oil palm plantations often replace small-scale farms that produce rice, vegetables, fruits and rubber, for both subsistence and commercial purposes. Local people often expect the establishment of plantations will improve their livelihood options.

But did this happen? How do the plantations effect the lives of the local people?

This query was the central focus of a large research project on the social impacts of oil palm plantations, led by Tania Li and her colleague Pujo Semedi of Indonesia’s Gadjah Mada University.

Li published an article featuring the results of the investigation in Geoforum in 2017. She compares living in an area dominated by palm oil plantations to living in what she refers to as a “Mafia System.”

She explains that this term does not refer to certain corrupt individuals or rogue companies that fail to obey the law. Instead, it refers to a system in which a plantation is so dominant that it determines the livelihood possibilities for everyone, and where corruption is present at all levels.

In the same year, she published an article in the Journal of Peasant Studies, describing how local farmers lost their lands to oil palm companies, while employment opportunities on the plantations remained limited and labor conditions deteriorated.

Li says she has become increasingly concerned about the negative social effects of the “monopolization of the landscape.” In the following interview, Landscape News asked her how her views have developed over the years, and what she thinks are the alternatives.

Q: Were you initially more optimistic about the impacts of oil palm plantations?

A: Around 2009, I did a study on the social effects of oil palm plantations in Sulawesi, and the outcomes were mixed. While conflicts over land were common, there were also clear development impacts: farmers who participated in smallholder schemes attached to the plantations were doing well. (Results of the study have been reported in an article in the Journal of Peasant Studies.) They were earning decent incomes, and there was a sense of prosperity. I saw that the oil palm plantations helped kick-start a secondary economy. People’s disposable income increased, which created new types of jobs. People started selling motorbikes, fixing houses, opening hair salons, etc. Then, in 2010, I started a new and larger research project on the effects of oil palm on people’s lives in West Kalimantan. And, the more we looked into it, the more troubling the picture became.

Q: What did you find?

A: First, there is the issue of labor. The proponents of oil palm plantations argue that plantations bring good jobs, but we found no proof of this—quite the opposite. The labor conditions have been worsening. Second, there is the issue of land. Companies made land deals with the communities surrounding their plantations, and as part of these deals, communities released their land to the company. In return, each household received a plot of 2 hectares to cultivate oil palms, and the company provided them with oil palm seedlings and other inputs. These land deals were a nightmare and resulted in many conflicts. Moreover, we found that a plot of 2 hectares with oil palms is simply not enough to make a decent living. A household needs at least 6 hectares. Farmers ended up in a frustrated and angry relationship with the company.

Q: Why did communities agree with these deals?

A: The conditions of land release were highly problematic. There was a lot of pressure. Sometimes in the form of direct force, with bulldozers destroying people’s rubber plantations. [Semedi and Bakker provide more information about land release and the use of force in West Kalimantan.] Moreover, the companies made a lot of promises. The most important one was the construction of roads. People hoped that roads, in combination with the cultivation of oil palm, would bring prosperity.

Q: In the journal Geoforum you write about infrastructural violence, what do you mean by that?

A: Imagine an area of 10,000 hectares that is dedicated to one purpose: oil palm. The rice fields and rubber and fruit trees that were there before have all been eradicated from the landscape. That’s a form of violence. It is not the gun in your face; it’s the palms in the landscape. Once the palms are there, they direct the possibilities of your life. Local people cannot do anything, they cannot make it go away. And if they have a grievance, they cannot get redress through the law because government officials are connected to the plantations. In this way, you can compare it to the mafia.

Q: The plantation companies are equivalent to the mafia?

A: It is not so much that the companies are the criminals. It is more that there is a system in place, that operates according to its own rules. In Naples, the word for the mafia is “O’sistema”—the system. It is a system, because you cannot do anything—rent an apartment, get a job, open a restaurant—outside of it. That is similar to life within the plantation zone, where there is systematic distortion at all levels. I met someone working for a plantation company who called himself the “envelope guy.” His job was to put money in envelopes, with the sole purpose to pay people off. Government officials, local community leaders, journalists—everyone is stuck in the system. At the core of the system is a monopoly; a monopoly over land, over livelihood options, and over space.

Q: What is the role of nongovernmental organizations (NGOs) in this arena?

A: Some NGOs take a human rights perspective and highlight the worst cases, such as the plantations with child labor. Although important, it misses the fact that the labor situation should be improved across the board. Likewise, environmental NGOs tend to focus on those cases where primary forest is illegally converted into oil palm plantations, while the environmental problems go beyond such cases. Just think about the ecological implications of the transformation of entire landscapes into seas of oil palm. I argue that we need to look beyond the worst cases. We need to look at the bigger picture—at the entire system of plantation-based development.

Q: Would stricter standards for sustainability and social responsibility lead to change?

A: In the current situation, effective application of standards is extremely complicated, because the problem is structural. At its core, it is a problem of massively unequal powers. Local people and authorities are not able to change the system, so their only option is to try and get a share of the wealth. Even the most benign company will find itself stuck in an existing system that is characterized by corruption and conflicts of interests.

Q: The picture you sketch is grim. In your view, what is the way out?

A: Several NGOs are advocating for a moratorium on the expansion of oil palm plantations, and I support this. Every year, more and more plantation licenses are being granted, especially in Kalimantan, Papua and Sulawesi. There is a need to stop that train.

Q: Wouldn’t this deprive people of opportunities to earn money?

A: Stopping the expansion of plantations would provide more opportunities for smallholder-based development, where people can make their own land-use choices. For farmers, it is much more attractive to cultivate oil palm independently. Oil palm is a very lucrative crop, and smallholders are eager to plant it. With proper infrastructure and good quality seedlings, they can achieve yields per hectare equal to or better than plantations. However, in many places in Indonesia smallholders cannot cultivate oil palm independently, because they rely on companies to provide roads and transport to the mill. Government funds would need to be used to invest in infrastructure and agricultural support programs for smallholders, enabling them to establish oil palm, and making sure that the poor and landless are not excluded. Also, agricultural support programs are needed for customary landholders, strengthening their capacity to develop independent smallholdings, while making sure that they are not displaced by elites who have the means to acquire large tracts of land to develop oil palm farms that are classified as independent smallholdings, but essentially operate like small plantations.

Q: If all smallholders plant oil palm, the homogenization of the landscape will continue. Some are worried about lack of diversity in terms of ecology and livelihood options. Do you share this concern?

A: It is the large-scale plantations in the frontier areas that are the main threat to diversity, so those need to be brought to a stop. Then you can start focusing on smallholder-based development. When certain conditions are in place, smallholders are likely to turn to oil palm, but I expect that many farmers will keep patches of rice fields, and rubber- and fruit trees, alongside their oil palm, resulting in a landscape that provides a variety of food and non-food products.

Q: What are lessons for other countries that are also seeing rapid expansion of oil palm plantations?

A: In Indonesia, companies have been able to take advantage of the availability of cheap land and cheap labor. Obviously, governments should not give away large-scale concessions to companies when it causes local farmers to lose their lands. And the organisation of workers is important. When workers are organized, their bargaining power increases, and the cost of labour goes up. That is a good thing for workers, and it forces companies to think hard about whether plantations really are going to be profitable. They could do better buying palm fruit from independent smallholders. Most important, the Indonesian experience shows clearly the inherent risks of large-scale plantations: is that really the form of development you want?

Q: Do you think there are any financial incentives that could lead to change?

If Indonesia stopped granting large plantation concessions, oil palm investors would adapt in two ways. First, by supporting smallholders, who would grow the palms on their own land. And second, by focusing their own direct investment in building mills and managing the supply chain, where economies of scale are in their favor. Right now, companies are not permitted to build a mill unless they have an adjoining plantation, so they are forced to get into the palm-growing business, even if it is conflict-ridden and hard to manage. A change in that law would be a great place to start.

Read related Infobrief: Evidence-based options for advancing social equity in Indonesian palm oil sector