In an ideal world, palm oil production would cause no deforestation, and have a transparent and fair supply chain. In reality, the impacts of the sector have been the cause of ethical concerns worldwide.
Palm oil is Indonesia’s most important commodity. In 2017 it produced 37.8 million tonnes of crude palm oil (CPO) and exported over 80 percent of it, with a value of $31.8 billion. Not only is Indonesia the world’s biggest palm oil producer, it is its biggest exporter too.
The strong market demand of palm oil has led to a vast expansion of plantations. Currently smallholders make up around forty percent of the production market, and around a third of these don’t have the right land tenure permits. In some cases, the smallholders have moved into state owned forest areas. In many cases, the occupancy creates conflict.
In 2017, the Directorate General of Plantation of the Ministry of Agriculture found that of the 2.5 million hectares of oil palm plantations on state owned forests, 70 percent of these were controlled by smallholders.
To get to the bottom of why palm oil plantations continue to encroach into state forest areas, Center for International Forestry Research (CIFOR) organized a workshop in collaboration with Center for Research and Development on Social, Economics, Policy and Climate Change (P3SEPKI): ‘Linking science to policy: the role of research in the effort to accelerate solution of tenurial problems in oil palm plantation in forest areas.’
Solving conflicts by understanding the underlying cause
Ismatul Hakim, senior researcher at P3SEPKI indicated that resolving complex tenurial conflicts should start by understanding why oil palm plantations overlap with state forest areas and how different actors take control of lands, looking at what strategies they use and their motivations.
According to Hakim’s , this can be segregated into four categories:
The first is maladministration, where a lack of coordination leads to disputes as it is unclear who legally manages the forest areas – is it the Ministry of Environment and Forestry or the local government?
Second, incomplete forest area gazettements coupled with lack of socialization of gazetted boundaries caused local people, in need for income, to expand their plantations into unmarked forest areas.
Third, inequality of power and land ownership has caused people to encroach into state owned forests. Local people have watched big investors and corporations take control of and transform their ancestral land, and store land for the future (known as ‘landbanking’).
The last cause is the ineffective implementation of policies for state forest area release and land swap. On top of that, the slow pace of conflict resolution contribute to the reasons why encroachment of oil palm plantations into state forest areas continue to happen.
Fourth, ineffective implementation of policies for forest area release and land swap- where the government gives areas of new land to plantations in exchange for restoring degraded land- and the slow pace of conflict resolution.
Drawing from his research, Bayu Eka Yulian from Bogor Agricultural University (IPB) added “Oil palm plantations have expanded rapidly in East Kalimantan, particularly those smallholders in a silence mode.” He argued while corporations might generally adhere to tighter regulations, small holder farmers, including those with access to more capital and information, appear to expand their plantations at a scale from 0.5 to 3 hectares of land or even more, without restraint.
Rapid expansion causes damaging changes to the landscape, but it also traps farmers into a single source of income, making them highly dependent on this monoculture crop.
Solving tenure issues through better governance
In September 2018, the Indonesian government issued a three-year moratorium on new oil palm plantation permits and devised attempts to increase productivity, expressed in Presidential Instruction (Inpres) No. 8/2018. Along with other prevailing policies, this moratorium offers an excellent opportunity to resolve tenure issues.
However, the temporary halt mightn’t be enough considering previous policy successes. To address this, participants came up with recommendations for tenure conflicts around oil palm plantation on state forest land.
“It was generally agreed by the workshop participants that regulations should be clear and not create legal uncertainties,” said CIFOR scientist Heru Komarudin, adding that plantations that are currently operating on state forests should be given enough time to either relocate or have their land status legally changed to non-forest areas.
Similarly, smallholder plantations illegally on state forest lands should be given the chance to confirm their land status through agrarian reform or social forestry schemes that are already in place.
“Priority should be given to those committed to practising ethical agriculture – by preventing further deforestation and promoting fair trade working rights,” said Komarudin. To create policies that work, the “heterogeneous typology” of smallholders, and the impact of plantations on local people need to be taken into account when addressing tenure issues, he says.
In addition, the introduction of new legislation governing the usage and rental of state forest areas would generate state income, further propped up by compensation payments by companies who have illegally encroached into state forest areas. While strict law enforcement could be used to police the tenure issues, granting land amnesty to those that depend heavily on encroached lands may be a breakthrough.
Internationally, the European Union Renewable Energy Directive to phase out the use of palm oil for biofuel by 2030, has put pressure on the Indonesian palm producers. In responding to this development, workshop attendees agreed that foreign diplomacy should be strengthened by consolidating the national position, which in turn would make the Indonesian Sustainable Palm Oil (ISPO) certification credible.
“Building solidarity with other producing countries to promote best practices and a sustainable and legal palm oil industry is essential,” says Maharani Hapsari, PhD student and lecturer of international relations at Gadjah Mada University. “Indonesia should focus its diplomacy on palm oil global trade not only to strengthen authority, but also to enhance legitimacy of forest and oil palm governance by the broadest possible range of stakeholders.”