Oil Palm Boom Research Articles

Erratum: Oil palm boom: its socioeconomic use and abuse

Erratum: Oil palm boom: its socioeconomic use and abuse

Towards a sustainable business model for rubber agroforestry in Indonesia

Agroforestry systems, particularly rubber agroforests, are crucial for Dayak communities in Indonesia, providing economic benefits and vital assets for their livelihoods. Two common types in Simpang Dua sub-district are tembawang (traditional fruit gardens) and rubber agroforests. Both have flourished for generations but they now face threats of conversion due to declining rubber prices and the oil palm boom. Tembawang is considered more resilient due to better protection of tenure rights under local customary law and its greater provision of socioeconomic benefits. In some instances, rubber agroforests are only maintained because of their deep rooted social and cultural importance, but they have potential to still be economically valuable. Rubber agroforests can provide a diversified income, offering resilience against volatile rubber markets, and although oil palm provides higher income in the short term, rubber agroforests can provide higher income over the entire system cycle. Long-term financing is essential to improve yields and product quality, to support smallholder rubber agroforests, but obtaining this type of financing is difficult. Obstacles include low rubber prices, poor-quality latex, a lack of productivity of agroforestry crops and low attention from investors, financiers, and markets. Non-commercial financial support, including technical support, could help strengthen farming practices and market-based instruments, including carbon payments, could help stabilise farmers' income. The expansion, however, of large-scale oil palm plantations has shifted the rural labour force from rubber smallholders to plantation workers. Efforts to address these challenges include the establishment of a rubber processing and collective marketing unit, UPPB, to improve market access and prices for smallholder farmers. Founded in 2022, the unit aims to arrange collective marketing and provide technical capacity for farmers to meet the specifications of Standard Indonesia Rubber. By aggregating rubber slabs, farmers can earn up to 25% higher prices than individual farmers, but irregular supplies from farmers and low prices are affecting their success. Despite facing challenges, local farmers' groups remain resilient in organising themselves to improve their systems with the support of NGOs. Commitment from government and private sector stakeholders is additionally needed to further promote sustainable and inclusive rubber agroforestry businesses.

Spillover effect of the oil palm boom on the growth of surrounding towns in the eastern Amazon

Although oil palm production has been suggested as a driver of development in some countries, this relationship has yet to be established in Brazilian territory. In Brazil, 90% of oil palm production is concentrated in the eastern Amazon, where socioenvironmental costs associated with medium and large agro industries have already been demonstrated. However, there is still a lack of understanding of the contribution of this production to the economic growth of surrounding towns and of how this activity influences nonagricultural sectors. This study investigated the spillover effects of the value of oil palm fruit bunch production in the largest Brazilian producing region, located in the northeast of the state of Pará, and analysed the impact on economic growth, demographics and the labour market from 2002 to 2017. The results of an econometric analysis of fixed effects panel including dummy variables with individual, temporal and two-way effects show a relation between the oil palm fruit bunch production value and nonagricultural sectors (e.g., service sectors). This may have contributed to the formal nonagricultural labour market, population growth and tax generation of the surrounding towns and industrial dynamization, mainly since 2010, coinciding with the period of incentive policies. However, the growth of the economy and urban demography was concentrated in one microregion (Tomé-Açu). We argue that oil palm agribusiness may play an important role in urban growth by providing economic improvement, increasing the value added to services, contributing to urbanization, and promoting intersectoral links. On the other hand, towns dependent on the production of a commodity may be susceptible to market fluctuations with an impact on their economic growth. For greater benefits, socioenvironmental externalities also need to be monitored and controlled.

Oil palm boom: its socioeconomic use and abuse

Oil palm cultivation has experienced explosive expansion in recent decades. Although the oil palm boom has serious environmental and socioeconomic consequences, only environmental issues have garnered attention in public discussion and synthesis studies. In this study, we synthesize the literature on the socioeconomic impacts of oil palm expansion across various observation units and spatial and temporal scales, which is of significant relevance to policymakers, researchers, and the wider public. Our review demonstrates that oil palm expansion is a double-edged sword. On the one hand, it has significantly helped both producing and non-producing countries’ economies by facilitating the (re)export of crude palm oil and its byproducts and by creating employment opportunities. This has stimulated rural economies, led to rural poverty reduction, and improved food security and diets for rural households in producer countries. On the other hand, it has increased conflicts and tension between local communities and agro-industrial companies, worsened workers’ conditions, and widened domestic economic inequality between producing and non-producing areas within a given producer country. Monetary quantification of the costs of oil palm’s negative environmental and social impacts indicates that the loss of ecosystem services and social services far outweighs the benefits derived from the increased production of oil palm. The direct income benefits through harvest sales and employment are more evident in the Southeast Asia production frontier, where oil palm cultivation and marketing are relatively advanced and well-integrated into global value chains. The negative outcomes are observed in all oil palm production regions, with more negative effects on food security in the African production frontiers. We propose multiple actionable research and policy recommendations that may jointly lead to inclusive and sustainable socioeconomic (and environmental) outcomes in oil palm cultivation. The socioeconomic consequences of oil palm expansion at the global level, in the African and American production frontiers, and the role of gender in oil palm production systems remain understudied. Hence, studies should be conducted.

Towards transnational agrarian conflicts? Global NGOs, transnational agrobusiness and local struggles for land on Sumatra

ABSTRACT The article explores the spatial dimension of the contested renegotiation of society-nature relations in the context of the oil palm boom in Indonesia. Drawing on qualitative research as well as on concepts of political ecology, materialist state theory and literature on the transnationalization and internationalisation of the state, it argues that conflicts in the context of the oil palm boom cannot merely be conceptualised as local negotiation processes for access to land, but are increasingly transnational in character. Particularly, transnational actors such as oil palm companies and environmental protection organisations as well as transnational regulatory systems such as private sustainability and carbon standards are increasingly relevant in structuring local conflicts. To illustrate how these transnational mechanisms of contestation and conflict resolution operate, the article's empirical focus lies on conflicts over land in the Indonesian province of Jambi on the island of Sumatra.

Smallholders in agro-industrial production: Lessons for rural development from a comparative analysis of Ghana’s and Indonesia’s oil palm sectors

By successfully including smallholders, the oil palm boom in Southeast Asia has contributed significantly to rural economic development and poverty alleviation, notwithstanding its huge environmental costs. Oil palm production in other world regions is currently picking up, including in Africa. Yet it is uncertain whether the positive socioeconomic impacts from Southeast Asia can be replicated elsewhere. Little development gain may thus accompany severe environmental harm if oil palm expansion leads to deforestation. To shed light on the (prospective) role of oil palm for rural development we perform a systematic comparison of Ghana’s and Indonesia’s oil palm sectors at the macro and micro level, focusing on smallholder inclusion and using a mixed-methods approach. We identify substantial differences in structural conditions and policy foci that have led to two very different oil palm sectors. While the Indonesian experience clearly highlights the development opportunities coming with smallholder inclusion in agro-industrial production, our analysis shows that transferability to the West African context is limited due to regional specificities.

Tropical wetlands and land use changes: The case of oil palm in neotropical riverine floodplains.

Oil palm plantations are expanding in Latin America due to the global demand for food and biofuels, and much of this expansion has occurred at expense of important tropical ecosystems. Nevertheless, there is limited knowledge about effects on aquatic ecosystems near to oil palm-dominated landscapes. In this study, we used Landsat 7 ETM+, Landsat 8 OLI imagery and high-resolution images in Google Earth to map the current extent of oil palm plantations and determined prior land use land cover (LULC) in the Usumacinta River Basin as a case-study site. In addition, we assess the proximity of the crop with aquatic ecosystems distributed in the Usumacinta floodplains and their potential effects. Based on our findings, the most significant change was characterized by the expansion of oil palm crop areas mainly at expenses of regional rainforest and previously intervened lands (e.g. secondary vegetation and agriculture). Although aquatic ecosystem class (e.g. rivers, lagoons and channels) decreased in surface around 3% during the study period (2001-2017), the change was not due to the expansion of oil palm lands. However, we find that more than 50% of oil palm cultivations are near (between 500 and 3000 m) to aquatic ecosystems and this could have significant environmental impacts on sediment and water quality. Oil palm crops tend to spatially concentrate in the Upper Usumacinta ecoregion (Guatemala), which is recognized as an area of important fish endemism. We argue that the basic information generated in this study is essential to have better land use decision-making in a region that is relative newcomer to oil palm boom.

Agricultural Productivity and Fertility Rates

Esther Gehrke⇑ and Christoph Kubitza†⇑ Esther Gehrke is an Assistant Professor at Wageningen University and Research, Agricultural Economics and Rural Policy, Hollandse Weg 1, 6706KN Wageningen, The Netherlands Christoph Kubitza is a Research Fellow at the German Institute for Global and Area Studies (GIGA), Neuer Jungfernstieg 21, 20354 Hamburg, Germany esther.gehrke{at}wur.nl christoph.kubitza{at}giga-hamburg.de

Oil palm and structural transformation of agriculture in Indonesia

AbstractStructural transformation of agriculture typically involves a gradual increase of mean farm sizes and a reallocation of labor from agriculture to other sectors. Such structural transformation is often fostered through innovations in agriculture and newly emerging opportunities in manufacturing and services. Here, we use panel data from farm households in Indonesia to test and support the hypothesis that the recent oil palm boom contributes to structural transformation. Oil palm is capital‐intensive but requires much less labor per hectare than traditional crops. Farmers who adopted oil palm increase their cropping area, meaning that some of the labor saved per hectare is used for expanding the farm. Average farm sizes increased in recent years. In addition, we observe a positive association between oil palm adoption and off‐farm income, suggesting that some of the labor saved per hectare is also reallocated to non‐agricultural activities. Oil palm adoption significantly increases the likelihood of households pursuing own non‐farm businesses. However, oil palm adoption does not increase the likelihood of being employed in manufacturing or services, which is probably due to the limited non‐farm labor demand in the local setting. Equitable and sustainable agricultural transformation requires new lucrative non‐agricultural employment opportunities in rural areas.

Environmental, Economic, and Social Consequences of the Oil Palm Boom

Rising global demand for vegetable oil during the last few decades has led to a drastic increase in the land area under oil palm. Especially in Southeast Asia, the oil palm boom has contributed to economic growth, but it has also spurred criticism about negative environmental and social effects. Here, we discuss palm oil production and consumption trends and review environmental, economic, and social consequences in different parts of the world. The oil palm expansion has contributed to tropical deforestation and associated losses in biodiversity and ecosystem functions. Simultaneously, it has increased incomes, generated employment, and reduced poverty among farm and nonfarm households. Around 50% of the worldwide oil palm land is managed by smallholders. Sustainability trade-offs between preserving global public environmental goods and private economic benefits need to be reduced. We discuss policy implications related to productivity growth, rainforest protection, mosaic landscapes, land property rights, sustainability certification, and smallholder inclusion, among others.

Response: Commentary: Oil Palm Boom and Farm Household Diets in the Tropics

Response: Commentary: Oil Palm Boom and Farm Household Diets in the Tropics

Land-use change, nutrition, and gender roles in Indonesian farm households

Many tropical countries are experiencing massive land-use change with profound environmental and socioeconomic implications. In Indonesia, oil palm cultivation is rapidly expanding at the expense of more traditional crops – such as rubber and rice – and forest land. While environmental effects of the oil palm boom were analyzed in many studies, much less is known about social effects. Here, we analyze how oil palm cultivation by smallholder farmers is associated with nutrition through changing income and gender roles. The analysis uses panel data collected in Jambi Province, Sumatra, one of the hotspots of Indonesia's recent oil palm boom. Regression models show that oil palm cultivation is positively associated with nutrition and dietary quality. These associations are related to income gains that improve smallholders' access to nutritious foods from the market. Oil palm requires less labor than traditional crops, so a switch to oil palm could potentially free family labor for off-farm economic activities. We find that oil palm cultivation is positively associated with off-farm employment of male but not female household members, which may be related to unequal opportunities and social norms. Independent of oil palm cultivation, female off-farm employment is positively associated with nutrition, even after controlling for household income.

Commentary: Oil Palm Boom and Farm Household Diets in the Tropics

Commentary: Oil Palm Boom and Farm Household Diets in the Tropics

Cultivating vulnerability: oil palm expansion and the socio-ecological food system in the Lachuá Ecoregion, Guatemala

The recent Guatemalan oil palm boom has generated concerns over possible negative social and environmental impacts, yet it continues to be embraced as an opportunity to spur rural development and improve food security. This paper uses the socio-ecological food systems framework to demonstrate ways in which oil palm expansion has contributed to increasing food system vulnerability and decreasing adaptation capacity of a community dominated by oil palm contract farming in the Lachua Ecoregion in northern Guatemala. The changing cross-scalar dynamics of self-provisioning and market provisioning of food, and the ecological effects of the spreading oil palm are considered, as they contribute to declining food and nutrition security—notably, the reduced consumption of fresh vegetables, fruits, and herbs. Uncontrolled oil palm expansion has also contributed to the disappearance of certain nutritious foods in the study communities, compromised ecological resources, and heightened the region’s exposure to external shocks, such as oil palm price drops. Lessons highlight the importance of supporting traditional agricultural systems, strengthening environmental protection, and building institutional capacity at community and beyond-community scales.

Oil Palm Boom and Farm Household Diets in the Tropics

Farm households in the tropics are rapidly expanding oil palm monocultures, mainly at the expense of rainforests, agroforests, and traditional croplands. Although monetary gains and ecological consequences of such changes in land-use have been extensively documented, little is known about nutritional and dietary impacts on farm households despite those households being the most affected by nutritional problems. Here, this research gap is addressed with a two-year panel data of farm households from Jambi province in Indonesia, a hot spot of tropical rainforest conversion into oil palm plantation. I use endogenous switching regression to better account for selection bias and obtain counterfactual outcomes. Results show high levels of undernourishment and micronutrient inadequacy in farm households in Jambi. Non-adopters are more likely to be undernourished, consume less diverse foods, and eat low quantities of fruits and vegetables and micronutrients. The counterfactual analysis shows that oil palm adoption leads to significantly greater household dietary diversity, higher calorie consumption, more fruit and vegetable consumption, and higher food expenditure in farm households. These positive dietary impacts are observed irrespective of whether households belong to transmigrant or local communities. Panel regression results further show that oil palm cultivation reduces the prevalence of undernourishment and, at the same time, increases the mean probability of adequacy of consumed fruits and vegetables and micronutrients. This impact, leading to better diets, however, is complex and not straightforward; several socioeconomic, demographic, and farm factors have different dietary impacts for adopters and non-adopters. The findings highlight important policy implications: farm households adopt and expand land-uses that provide greater dietary benefits. Thus, policy-makers interested in maintaining the tropical rainforests, regulating oil palm plantations, and tackling nutritional deficiencies in the rural tropics should not overlook these dietary benefits for farm households.

Land-use change and income inequality in rural Indonesia

Many regions in Southeast Asia are experiencing massive land-use change. While areas covered with tropical forests and traditional agricultural crops, such as rubber, are shrinking, oil palm plantations are rapidly gaining ground. Recent studies have analyzed environmental effects of this land-use change. Relatively little is known about the socioeconomic implications. A few studies have examined economic effects of oil palm cultivation for particular groups of households, such as farmers, but broader effects for different types of rural households are not yet well understood. We address this research gap with data from farm and non-farm households in rural Jambi, one of the hotspots of Indonesia's recent oil palm boom. On average, farm households have significantly higher incomes than non-farm households that often work as agricultural laborers on rubber and oil palm plantations. Both farm and non-farm households are better off in villages with a large share of the land under oil palm than in villages where relatively more rubber and other crops are grown. Oil palm does not seem to have significant effects on overall rural inequality. While oil palm cultivation contributes to increasing inequality among farmers, it tends to decrease income inequality among non-farm households through labor-market and employment effects.

Land-use change and livelihoods of non-farm households: The role of income from employment in oil palm and rubber in rural Indonesia

Many tropical regions are experiencing massive land-use change that is often characterized by an expansion of oil palm at the expense of forests and more traditional forms of agricultural cropping. While implications of such land-use change for the environment and for local farm households were examined in previous research, possible effects on the livelihoods of non-farm households are not yet well understood. This study analyzes the role of different types of agricultural and non-agricultural employment income for non-farm households in rural Jambi, one of the hotspot regions of Indonesia’s recent oil palm boom. Data from a survey show that employment in rubber and oil palm are important livelihood components for non-farm households. Employment in oil palm is more lucrative than employment in rubber, so involvement in the oil palm sector as a laborer is positively associated with total household income. Regression models show that whether or not a household works in oil palm is largely determined by factors related to migration background, ethnicity, and the size of the village area grown with this crop. These results suggest that further expansion of the oil palm area will likely benefit non-farm households through gains in employment income. As non-farm households belong to the poorest segments of the rural population, these benefits should not be ignored when designing policies towards sustainable land use. Possible negative environmental and social externalities of further oil palm expansion are also discussed.

Rob Cramb and John F. McCarthy, eds. The Oil Palm Complex: Smallholders, Agribusiness and the State in Indonesia and Malaysia. Singapore: NUS Press, 2016, xvi+470pp.

The Oil Palm Complex: Smallholders, Agribusiness and the State in Indonesia and Malaysia Rob Cramb and John F. McCarthy, eds. Singapore: NUS Press, 2016, xvi+470pp.The Oil Palm Complex: Smallholders, Agribusiness and the State in Indonesia and Malaysia consists of 14 chapters written by 16 contributors. Each chapter has its own topic and independent conclusion, especially Chapters 3 to 13. And the final chapter (Chapter 14) provides a conclusion based on the key findings of each chapter. Therefore, I will summarize each chapter and then discuss Chapter 14.Chapters 1 and 2 provide a framework for the following chapters, including a systematic overview of the ways in which land, labor, and capital have been mobilized and combined in different modes of production. In Chapter 1 Rob Cramb and John F. McCarthy explain the aim of the book: understanding the oil palm industry in Indonesia and Malaysia as a complex whole from the perspective of political economy. To provide the context for the following chapters, the authors clarify the economic differences between Indonesia and Malaysia; the different political backgrounds and characteristics of Indonesia, Peninsular Malaysia, and Malaysia's Borneo states (Sabah and Sarawak); and the regionalization that means a fusion of the Indonesian and Malaysian oil palm industries and formation of the Roundtable on Sustainable Palm Oil (RSPO) on a global scale. In Chapter 2 Cramb and McCarthy explain the agro-economic features of oil palm production. They examine the mobilization of land, labor, and capital within and across the oil palm industries in Indonesia and Malaysia, and their incorporation in different modes of production; as well as estates, managed smallholder schemes, nucleus estate and smallholder (NES) schemes, joint venture schemes, assisted smallholders, and independent smallholders. The authors clarify two contradictory trajectories in production modes. On the one hand is capitalist convergence, which means the expansion of the estate mode and pursuit of the joint venture scheme; on the other hand is the surge of independent smallholders.Chapters 3, 4, 5, 6, and 7 explore the different modes of oil palm production in practice and the circumstances that give rise to different livelihood outcomes, both within and between given modes. In Chapter 3 Zahari Zen, Colin Barlow, Ria Gondowarsito, and John F. McCarthy reveal the NES schemes that were implemented mainly during the Suharto period and contribute moderately to rural socioeconomic improvement. In addition, the authors explain new phenomena from the post-Suharto period, namely, increasing individual smallholders, new private companies' initiatives for local contributions such as a community oil palm area, and the partnership model (joint venture scheme in Chapter 2). The authors maintain that the role of the state remains critical in socioeconomic improvement. The challenge remains making initiatives even more effective. In Chapter 4 John F. McCarthy and Zahari Zen analyze the processes of inclusion/exclusion or adverse incorporation regarding the oil palm boom in Jambi, Sumatra. NES scheme projects help to create agrarian differentiation in which rural elites and entrepreneurs accumulate economic and social power (inclusion process). Successful transmigrants, in-migrants, and village and district elites bought local private/common lands. Some local farmers who lost their lands/livelihoods became wage laborers (exclusion process); others who established oil palm fields by themselves were suffering from low productivity because they did not have the techniques and capital for buying high-yielding seedlings and agrochemical inputs (adverse incorporation). In Chapter 5 Lesley M. Potter searches for alternative smallholder pathways in Indonesian oil palm production and for methods and techniques that are smallholder-friendly. Based on case studies in Costa Rica, Cameroon, and Ecuador, the author considers three alternative pathways: (1) mixed cultivation of oil palm and other crops, (2) increased numbers of small competing mills that would supply inputs and extension services or be specifically designed to serve local markets, and (3) a widening of the roles of Indonesian cooperatives to engage in alternative economic activities. …

The Oil Palm Complex: Smallholders, Agribusiness and the State in Indonesia and Malaysia

The oil palm industry has transformed rural livelihoods and landscapes across wide swathes of Indonesia and Malaysia, generating wealth along with economic, social, and environmental controversy. Who benefits and who loses from oil palm development? Can oil palm development provide a basis for inclusive and sustainable rural development? Based on detailed studies of specific communities and plantations and an analysis of the regional political economy of oil palm, this book unpicks the dominant policy narratives, business strategies, models of land acquisition, and labour-processes. It presents the oil palm industry in Malaysia and Indonesia as a complex system in which land, labour and capital are closely interconnected. Understanding the oil palm complex is a prerequisite to developing better strategies to harness the oil palm boom for a more equitable and sustainable pattern of rural development

Gender and generation in engagements with oil palm in East Kalimantan, Indonesia: insights from feminist political ecology

Across many parts of Indonesia, investment in oil palm has brought accelerated forms of land acquisition and market engagement for communities, signalling far-reaching implications for equity and well-being of current and future generations. This paper uses a conjunctural feminist political ecology approach to explore gendered and generational engagements with oil palm in Indonesia. The paper compares four communities in East Kalimantan that form part of an ongoing study of the gendered impacts of large-scale and independent smallholder investments in oil palm in the context of corporate zero deforestation commitments in West and East Kalimantan. We show how different pathways of engagement with oil palm – adverse or otherwise – reflect the interplay between modes of incorporation into oil palm systems with landscape history, gender, life stage and ethnic identity. Whilst our findings complicate singular ‘victim’ narratives, they also challenge the ‘cruel optimism’ that is accompanying the current oil palm boom.