Dispersed among Indonesia's massive oil palm
plantations, small farmers are contributing increasingly to the country's
booming palm oil industry.
The government has provided substantial subsidies for these
farmers - known as smallholders - while mandating that large commercial operations
work alongside the small producers. This policy has helped some 1.5 million
Indonesians develop nearly half of the country's oil palm farmland.
A farm in Borneo grows oil palm trees. Roughly 1.5 million
smallholders, with an average farm size of 2.0 hectares, developed 44
percent of Indonesia’s total oil palm area in 2008.
But surveys of smallholder communities have found that the
farmers often struggle to repay the loans issued regularly by large commercial
operations. Buried under debt, the smallholders have essentially worked as
indentured servants,
according to reports.
In addition, local governments have been accused of dishonestly
obtaining the land from indigenous peoples. Lacking official land titles,
local communities are frequently left with no option but to embrace oil palm
farming.
As the value of palm oil increases with growing global
demand, the situation for smallholders is likely to undergo significant change.
The global palm oil market creates an opportunity to bring many communities out
of poverty. But human rights activists are concerned that the spread of
plantations into Indonesia's
few remaining untouched forests will leave more populations displaced.
"The government has a policy, by hook or by crook, to
manufacture a major expansion of indigenous subsistence farmers into the oil
palm production industry," said Michael Shean,
a global crop analyst with the U.S.
Department of Agriculture (USDA).
The rise in oil palm smallholders is largely a result of Indonesia's
controversial "transmigration
program." This effort, started by Dutch colonists and expanded during
General Suharto's three-decade presidency, paid millions of landless farmers to
move to the country's less populated islands, such as Sumatra.
When they arrived, bloodshed
frequently erupted between migrant and indigenous communities. Yet the oil
palm farmers remained.
Beginning in the 1980s, land reforms required local
residents to surrender roughly half of their land to commercial oil palm
developers. In return, smallholders received about 40 percent of the land in formal
2-3 hectare (5-8 acre) allotments.
The plantations generally provide government-subsidized
loans to smallholders to cover seedlings, fertilizer, and other supplies. Oil
palm trees take about seven years to bear fruit, so in the meantime smallholders
are often employed as day laborers.
Environmental historian Lesley Potter has studied
smallholder communities in West Kalimantan
since the mid-1990s. During her early visits, she noticed that many small
farmers were presented with "propaganda" to influence them to make deals with
the oil palm plantations.
"They don't get the full story of the amount they will have
to pay out to repay their credit," said Potter, currently a visiting fellow at
the Australian
National University in Canberra.
"They were more or less forced to give up their land."
But high prices for oil palm products in a growing global
market may finally allow landholders to escape from their debt. The price of
palm oil, used in everything from processed foods to lipsticks, rose above
$1,000 a ton last spring and has since settled at around $555 a ton as of last
month. "The villages I visited in 2007, they seemed to be quite prosperous,"
Potter said.
The USDA's Shean surveyed oil palm production sites in Sumatra last year. "The government tells us that 95-98
percent of smallholders who participated in the last 10 years have paid off all
of their loans," Shean said. "If I take the government at their word... the
government is actually investing in the long-term viability of the
smallholder."
Yet greater income may not necessarily result in greater
wealth. Potter observed oil palm estates with gambling operations on the
plantations, which were "tempting smallholders to start gambling their money
right away." In addition, more communities are noticing an increase in alcohol
consumption with the rise in palm oil profits, she said.
"This is not good for the social situation," Potter said.
"People start losing their land quite quickly."
Fueled by the growing demand for palm oil for cooking,
cosmetics, and biofuel, especially in China,
India, and the Middle East, government
and industry leaders are seeking to expand production to an additional 1.4
million hectares of new plantations by 2010.
Human
rights groups are concerned that the increase in palm oil demand will lead
to the accelerated seizure of indigenous peoples' land, further dismantling
local communities and cultures.
Potter said government-arranged committees have appointed
prominent village leaders to work with the palm oil industry to divide the
land. In past land-acquisition deals, local leaders have been accused of
accepting industry bribes and turning their back on the community.
"There is a lot of pressure on village heads to make sure
everybody gets on board to give up the land. The district authority puts
pressure on people, too," Potter said. "There were a lot of handouts given to
people like village heads. That apparently is still going on."
Norman Jiwan, a researcher with the Indonesian human rights
group Sawit Watch, said that as
government committees carve out the oil palm deals, many communities are
descending into conflict. "By doing this, they install a divide-and-rule tactic
within the communities," Jiwan said. "Divide and conquer: it's just colonial
practice.... There is no informed consent. There is no informed participation.
There is no informed consultation."
In response to the land disputes, ongoing pollution
concerns, and a history of "broken promises," Jiwan said the number of
communities across Indonesia
involved in conflicts with oil palm estates has risen from nearly 200 in 2004
to 514 in 2007.
"It has recently been brought to the attention of the
Committee that oil palm plantations continue to be developed on indigenous
peoples' lands," the
committee wrote [PDF]. The letter recommended that Indonesia "secure the possession and ownership
rights of local communities before proceeding further," specifically
referencing oil palm developments in Kalimantan.
The committee noted that Indonesia has not responded to
previous concerns raised by the United Nations. Yet the government has
recognized that indigenous people are in fact losing their land. Agus Purnomo,
an official in the environment ministry, told the BBC in
2007 that the responsibility rests with the palm oil industry to settle such
disputes.
"Solving the conflicts requires money, such as hiring
lawyers," said Purnomo, who now directs Indonesia's National Council on
Climate Change. "So we have to tell the companies they can make money
but they also have to pay to settle the conflicts."
Rather than cooperating with local communities, Jiwan said
some companies are attempting to silence those individuals who raise
discontent. "There are so many cases of tortured people," he said. "They are
being intimidated."
Ben Block is a staff writer with the Worldwatch Institute. He can be reached at bblock@worldwatch.org.
This article is a product of Eye on Earth, Worldwatch Institute's online news
service. For permission to reprint Eye on Earth content, please contact Juli
Diamond at jdiamond@worldwatch.org.
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