Is oil palm agribusiness a sustainable development option for Indonesia? A review of issues and options

ABSTRACT

This article reviews proposals to improve the environmental and socioeconomic sustainability of Indonesia’s oil palm agribusiness. After considering the socioecological and economic systems in which the business is embedded, the study explores challenges to improving the governance and regulatory framework for smallholders, wage labourers in plantations and the biophysical environment. Specific initiatives regarding plantation labour and environment show the emergence of government and non-government regulatory frameworks, both voluntary and compulsory. However, the effectiveness of these forms of governance is constrained by the extent to which notions of sustainability are acceptable to a variety of civil society actors.

RÉSUMÉ

Cet article examine des propositions concernant l’amélioration de la durabilité environnementale et socio-économique du secteur agroindustriel de l’huile de palme en Indonésie. Après un examen des systèmes socio-écologiques et économiques dans lesquels le secteur est enchâssé, l’étude explore les défis qui persistent dans l’amélioration de la gouvernance et des cadres règlementaires pour les petits exploitants, les travailleurs des plantations et l’environnement biophysique. Des initiatives spécifiques relatives aux travailleurs et à l’environnement démontrent l’émergence de cadres réglementaires issus d’instances gouvernementales et privées, tant volontaires qu’obligatoires. Toutefois, l’efficacité de ces formes de gouvernance est tributaire de la mesure dans laquelle les notions de durabilité sont acceptables pour divers acteurs de la société civile.

KEYWORDS:

• Oil palm agribusiness
• sustainable development
• plantations
• smallholders
• Indonesia

Acknowledgements

I wish to express my gratitude to Dominique Caouette and Bonnie Campbell, with whom I discussed this manuscript and who provided many occasions to present it through the Réseau d’études internationales sur la valorisation et l’exploitation de la nature, des terres et des ressources en Afrique, Asie et Amérique latine (REINVENTERRA) network. I want to thank the two reviewers for the journal for their generous comments. All shortcomings remaining are my own. Thank you to Centre d’études d’Asie de l’Est (CETASE) at Université de Montréal and Centre interdisciplinaire de recherche sur le développement international et société (CIRDIS) at Université du Québec à Montréal (UQÀM) for inviting me to present this work in Montreal in October 2013.

Notes on contributor

Jean-François Bissonnette holds a PhD in Geography from the University of Toronto. He has been teaching and undertaking research on the political ecology of agriculture and the environment in Southeast Asia and Canada for the past decade. His contributions to the fields of political ecology and environmental ethics include research on social and political representations of the environment, agrarian issues and emerging private and non-governmental environmental regulations.

ORCiD

Jean-François Bissonnette http://orcid.org/0000-0003-3613-6121

Notes

1 See Bachriadi and Suryana (2016) in relation to the oil and gas industry in Indonesia.

2 Methods of assessment vary greatly from one study to another. Barlow, Zen, and Gondowarsito (2003) state a number of over 1.2 million workers in the early 2000s; Zen, Barlow and Gondowarsito (2006) state 1.7 million jobs; Rist, Lee, and Koh (2009) state 4.5 million jobs for the oil palm industry and downstream activities at the scale of Indonesia.

3 See Holt-Giménez and Shattuck (2010) for a comprehensive critique of biodiesel production in the world.

4 “The law is also permissive in land acquisition matters with lease for an initial 60 years with an option to extend for another 35 years”. Indonesia's Investment Law, Undang-undang Penanaman Modal, 25 April 2007, iNusantara Networks, Socio-Economic and Political Analysis. Available at http://www.doc88.com/p-690165665732.html (accessed 24 April 2016).

5 According to 2004 figures, Malaysian companies cultivated over 700,000 hectares of oil palm in Indonesia, over 10 per cent of the total area (Walhi, Sawitch Watch, and Celcor 2009; cited by Varkkey 2013).

6 See also Bernard, Roche, and Sarrasin (2016) for a critique of the progression of palm oil cultivation in Malaysia.

7 Based on a study realised in the district of Meliau, West Kalimantan: seven hours per day; two days to spray pesticides; two days to harvest; two days to weed; two–three days to apply fertilizer (Bissonnette 2012).

8 According to a report on the question of labour in plantation agribusiness throughout the world, the “essential characteristic is the absence of a direct employment relationship between the principal employer and the workers, who remain employees of the labour-supplying intermediary” (ILO 1994). This situation has remained largely unchanged according to accounts by Li (2011).

9 The modification brought to the law (UU Ketenagakerjaan no.13/2003) has been discussed by a large number of organisations, among which are Friends of the Earth, Life Mosaic and Sawit Watch (2008, 82), for its major implications.

10 Badan Kerja Sama Perusahan Perkebunan Sumatra 1985 (Cooperation Agency for plantation companies).

11 Malaysian Palm Oil Association (MPOA), Migros Genossenschafts Bund (Switzerland), Unilever NV (Netherlands), Golden Hope Plantations Berhad (Malaysia), Loders Croklaan (Netherlands), Pacific Rim Palm Oil Ltd (Singapore) and The Body Shop (UK).

12 Commitment to transparency; compliance with applicable laws and regulations; commitment to long-term economic and financial viability; use of appropriated best practices by growers and millers; environmental responsibility and conservation of natural resources and biodiversity; responsible consideration of employees and of individuals and communities affected by growers and mills; responsible development of new plantings; commitment to continuous improvement in key areas of activity (RSPO 2014).

13 The English presence is at http://www.ispo-org.or.id/index.php?lang=en

14 Interview with the director of Sawit Watch, Bogor, 2010.

Additional information

Funding

This work was supported by a postdoctoral scholarship from the Social Science Research Council of Canada/Conseil de recherche en sciences humaines, under Grant 756–012–0883.