Dynamics of Rural Economy: A Socio-Economic Understanding of Oil Palm Expansion and Landscape Changes in East Kalimantan, Indonesia

Arya Hadi Dharmawan,Dyah Ita Mardiyaningsih,Heru Komarudin,Pablo Pacheco,Faris Rahmadian,Jaboury Ghazoul

doi:10.3390/land9070213

Arya Hadi Dharmawan, Dyah Ita Mardiyaningsih + Show 4 more

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https://doi.org/10.3390/land9070213

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Abstract

The fast-growing palm oil economy has stimulated a significant expansion of oil palm plantations in Indonesia. The uncontrolled development of large oil palm plantations has raised complex socio-ecological issues, including changes of ecological landscapes, organization of production, and farming household livelihood systems. For two oil palm villages with different ecological settings, this article describes changes in land cover, how production is organized, and the income structure changes due to rural economic development. The research used survey approaches and analysis of earth maps, assisted by data obtained from satellite imagery. A qualitative approach was also used to support a survey via in-depth interviews. The research was carried out in two oil palm economy-based villages of Kutai Kartanegara District, of the Province of East Kalimantan of Indonesia. The first village is located very close to the center of regional administration and has evolved into a non-farming economy. In contrast, the other village is more isolated and solely relies on farming activities. The study found that changes of land cover caused by oil palm expansion could be categorized into two types, concentrated and spotted, following the influence of oil palm investment activities. It was also found that organization of the production of most smallholders existed in two types of arrangements, partial and total integration of production. From the perspective of livelihood, two different types of income structures emerged, diversified and uniform. This article concludes that responses of smallholders to palm oil spread varied depending on the ecological setting, the existence of the already established plantation economy in the region, the capacity of the smallholders to diversify economic activities based on palm oil, and the exposure to external economic activities.

Highlights

The research was conducted in Kutai Kartanegara district, East Kalimantan province, with two villages selected as case studies: Muara Kaman Ulu in Muara Kaman sub-district and Long Beleh
This article concludes that the responses of smallholders to the spread of palm oil have varied depending on the ecological setting, the existence of an already established plantation economy in the region, and the capacity of the smallholders to adjust their economic activities based on palm oil, as well as on the exposure of external economic activities
The study concludes that the rural economy is changing rapidly as the expansion of oil palm plantations continues

Summary

Introduction

The development and uncontrolled expansion of oil palm plantations have often come at the expense of forests and local communities [2,3]. In Indonesia, oil palm plantation areas were first developed during the 1970s, only during the past ten years have they expanded at a relatively faster rate, resulting in ecological and socio-economic impacts [4,5,6]. In a dynamic and gradual process, the development of this crop began when the government, during the 1970s and 1980s, issued policies to encourage investments in large-scale agriculture plantations, further boosting local development and opening up isolated areas [7]. Plantation expansion was further driven by other policies issued in 1999 and 2002 that increased the area that one company or group of companies was able to control in a single province from 1000 to 20,000 ha.

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