Oil palm plantation expansion in Indonesia

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Oil palm plantation expansion in Indonesia

• Agrofuels meeting, July 2007
• Down to Earth

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Indonesias remaining forests

Coast line
Forest Cover
Primary Forest Secondary Forest
Forests in Indonesia are being destroyed at a
rate of 6 football fields a second (300ha/s).
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Logging Concessions

Coastline
Forest Cover
Primary Forest Secondary Forest
Forest Concession Permits
Logging Concession (HPH)
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Pulpwood Plantations

Coast Line
Forest Cover
Primary Forest Secondary Forest
Forest Concession Permits
Pulpwood plantation (HTI)
Paper pulp production consumes 23-25 million
cubic metres of timber/year, while production of
pulpwood from plantations is still only 3.8
million cubic metres/year.
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Plantation Concessions

Coastline
Forest Cover
Primary Forest Secondary Forest
Forest Concession Permits
Plantation (HGU)
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Forest Concessions and Over-exploitation
Coastline
Forest Cover
Primary Forest Secondary Forest
Forest Concession Permits
Of the 673 natural disasters that occurred in
Indonesia between 1998 2004, over 65 were due
to environmental mismanagement floods, land
slides and forest fires.
Logging Concession (HPH) Plantation
(HGU) Pulpwood plantation (HTI)
Primary Forest
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Palm Oil Production in SE Asia

• Area of oil palm plantation concessions in
  Indonesia is now 6.4 million hectares - second
  largest global producer of crude palm oil (CPO)
  after Malaysia.
• Indonesia Malaysia control some 80 of the
  worlds palm oil production.
• The Indonesian government wants to overtake
  Malaysia and become the worlds biggest palm oil
  producer, so it has been promoting plantation
  expansion since the 1990s.
• Only 3 million ha of oil palm plantations in
  Indonesia in 2000 with production of just over 6
  million tonnes of CPO.
• Indonesia produced 16 million tonnes in 2006
  (nearly as much as Malaysia).
• Volume expected to increase as plantations
  planted within the last 10 years reach full
  production and as the area of oil palm
  plantations is expanded.

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Palm oil plantations in Indonesia

• Plantations are state-owned and privately-owned
  (large companies and smallholders) much is
  under nucleus estate outgrowers schemes.
• Size of plantations rights for one company is
  limited, so parent companies set up new
  subsidiaries which collectively control huge
  areas.
• Example Singapore-based palm oil trader Wilmar
  now controls around 500,000 ha of plantations.
• Many palm oil plantation companies are owned by
  big groups which also have interests in logging
  (HPH) and pulpwood (HTI) concessions e.g. Sinar
  Mas.
• Indonesian government has export-led growth model
  which is encouraged by World Bank Group (IMF,
  IFC) and some European banks (Rabobank).

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Area under oil palm plantations in Indonesia 1967
2005Source Directorate of Plantations in
BisInfocus, 2006
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Indonesia Malaysia connection

• Over 50 of Indonesian oil palm plantations are
  controlled by Malaysian companies
• Some 50 Malaysian companies are operating in
  Indonesian oil palm sector
• Land availability, lower costs, loser controls on
  env social impacts
• Cant distinguish between Indonesian and
  Malaysian palm oil even if labelled
• Agreement to co-operate on prices
• MPOA very active in trying to weaken RSPO
  standards openly (at RT meetings) and behind the
  scenes.

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Demand

• More than 70 of Indonesias palm oil is
  exported.
• China India are major markets, apart from
  Europe and N America
• Palm oil has largely replaced other vegetable
  oils, such as coconut, for cooking in Indonesia
• High demand from food processing (margarine,
  biscuits, cakes, confectionary) soaps
  detergents, and cosmetics.

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CPO (Crude Palm Oil) exports 2000 2006Source
Central Statistics Agency
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Expansion

• Indonesia is experiencing a second palm oil boom,
  largely driven by talk of the demand for
  biofuels.
• Global price of CPO increased 27 in 2006 to
  US564/tonne and is rising month on month
• European Union 10 of vehicle fuel from
  biodiesel by 2020. SE Asia also developing
  biodiesel for its own use.
• Indonesia is expecting to more than triple the
  area under oil palm cultivation to meet this
  demand.
• Sawit Watch estimates that a further 20 million
  hectares has been zoned for oil palm plantation.
  Plans to expand into Papua recently announced.
• 40 will be reserved for domestic biofuel needs.

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Biofuels

• Malaysia and Indonesia are gearing to supply 20
  percent of the market in Europe and have just
  announced that they will set aside 40 percent of
  their palm oil output for biodiesel.
• Indonesian finance ministry is preparing a
  package of incentives to support biofuel
  development.
• Target is 200,000 barrels/day by 2010
• Malaysian and Chinese investment
• 6.5 million ha of uncultivated land has been
  designated for biofuel production (March 2007 -
  Is this in addition to the 6 20 million ha or
  not?)
• Not just oil palm but Jatropha, sugar and cassava

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PRICE OF INDONESIAN CRUDE PALM OIL
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Problems

• Forest destruction
• Forest fires
• Climate change
• Impacts on wildlife
• Destruction of livelihoods
• Land rights
• Indigenous peoples
• Debt
• Poverty
• Smallholders
• Women
• GM varieties

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Forest destruction

• Indonesians forest destruction rate is the
  highest in the world at 2.7 million ha /year
  (WALHI)
• Estimated 87 of deforestation in Malaysia
  between 1985 and 2000 was caused by new oil palm
  plantations (FoE EWNI)
• Oil palm plantations have probably been directly
  responsible for the destruction of 10 million ha
  of Indonesian rainforest (FoE EWNI)
• Heart of Borneo vs border mega-plantation project
  (1.8 million ha)
• Developments are still going ahead along the 850
  km Kalimantan Sarawak border. (CERD submission
  led by AMAN June 2007)

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Forest Fires
Hotspots in Sumatra 2006
Forest Fire
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Forest Fires
Hotspots in Kalimantan2006
Forest Fire
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Climate Change

• New information about the carbon costs of
  production of CPO is emerging.
• Indonesia is the worlds 3rd largest contributor
  to carbon emissions.
• Indonesias 1997-8 forest and peatland fires were
  equivalent to 40 of all global emissions from
  burning fossil fuels that year (Nature 7/Nov/02).
  
• Drainage destruction of peat swamps releases up
  to 2 billion tonnes of carbon/yr.
• Forest fires contribute 1,400 million tonnes of C
  per year.
• Most Indonesian CPO has net emissions through
• forest clearance
• peat decomposition
• both (where swamp forest is cleared for new oil
  palm plantations, as in areas of Riau and Jambi)
• Biodiesel from from south-east Asian palm oil may
  cause 2-8 times more CO2 emissions than the
  mineral oil it replaces.
• More research needs to be done on the length of
  time and conditions needed for net carbon
  sequestration, including cradle-to-grave studies
  which cover transport, mill construction etc as
  well as the establishment of the plantations.

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Land rights

• Indonesian law basically allows (or even
  promotes) land grabbing by companies without FPIC
  or due compensation.
• Sawitwatch states that large-scale oil palm
  plantations had caused over 500 conflicts in the
  country by 2006
• If Indonesia is to meet RSPO standards there must
  be a change in the laws on land acquisition
• Promised Land Palm Oil Land Acquisition in
  Indonesia Implications for Local Communities
  and Indigenous Peoples (Forest Peoples Programme,
  Sawit Watch, HuMA ICRAF, Nov 2006)

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Debt

• Oil palm plantations drive local people
  (including indigenous communities) into debt
  slavery through co-operative schemes KKPA.
• Local people have to pay for the cost of clearing
  their land and planting with oil palm, plus the
  costs of fertilisers and pesticides for 4-6 years
  until the trees are productive. During this
  period, they have no income. All these expenses
  must be repaid from the price of fresh palm
  fruits processed at the factory.
• People suffer from land insecurity adverse
  prices in their dealings with companies
• Ghosts on our own land oil palm smallholders in
  Indonesia (Forest Peoples Programme and Sawit
  Watch, Nov 2006)

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Smallholders

• Complex issue as many different types
• Some may be producing sustainably (e.g. in Deli
  Serdang, North Sumatra) but only small amounts
  and no way of identifying this
• Under-represented in RSPO
• RSPO Principles and Criteria must not
  disadvantage them
• Vulnerable to calls for boycott due to debt
• More studies needed
• New smallholders associations established SPKS
  in Sanggau, West Kalimantan(2006) Jambi, Riau,
  E Kalimantan (2007)

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Women

• Lowest pay/casual labour
• Exposure to pesticides as often work as sprayers
• Men go to Malaysia to work on plantations
• Wives are illegal immigrants or husbands take 2nd
  wives
• Vulnerable to sexual harassment
• Invisible in surveys
• Not involved in decision-making or consultations
  as not considered head of households

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What are communities saying?

• It all stems from the land if we dont have
  land, how can the community prosper? (Talang
  Nangka, S Sumatra)
• We are not against oil palm plantations or
  development. We just want a fair deal (Sanggau,
  W Kalimantan)
• Indigenous people can no longer grow their own
  rice, vegetables and other crops we must buy
  food. So the introduction of oil palm plantations
  has made local communities poorer. (Cion, W
  Kalimantan)
• In the old days, if anyone wanted access to our
  land they had to ask our permission first. Now
  all sorts of people just come and take our
  timber cut down the forest. Like the logging and
  oil palm companies. (Batin IX, Jambi)
• I only realise now how big the demand for palm
  oil is from RSPO members. And the meeting ( RSPO
  RT4 Singapore Nov 2006) also made me realise how
  little they all know about the impacts of oil
  palm plantations on communities and the
  environment. (Djelani, W Kalimantan)

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What are Indonesian CSOs saying?

• Biofuels is one of the new driving forces of
  large-scale, monoculture oil palm plantation
  expansion that contributes to global warming,
  social conflict and rights abuses in producing
  countries, particularly in Indonesia (Sawitwatch
  letter to EU 29/Jan/07)
• Large-scale plantation expansion could be at a
  high cost to the Indonesian people because the
  forests that provide livelihoods for hundreds of
  thousands of local communities especially
  indigenous peoples will be converted to oil
  palm plantations.
• Indonesias system of large-scale plantations,
  including oil palm, violates local peoples
  rights particularly those of indigenous peoples
  and ignores their rights to a better standard of
  living.

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Recomendations

• Each drop of palm oil used in European Union
  countries represents the blood, sweat and tears
  of ordinary Indonesian people.
• For that reason, we call on all buyers of
  Indonesia palm oil, investors and plantation
  companies to
• Stop expansion of large-scale plantations
• Increase productivity on existing plantations
• Settle conflicts with communities
• Apply standards agreed by the RSPO
• Support the shift from large-scale plantations
  which currently prevails in Indonesia towards one
  that is more favourable to local livelihoods
  instead of just providing profits for big
  companies
• Facilitate the transfer of technology from
  companies to communities on quality standards for
  palm fruits in order to improve local peoples
  incomes.

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Conclusions

• Biofuelwatch is doing great work debunking the
  myth of oil palm as a green fuel.
• More information is needed on the link between
  producer and consumers e.g. biofuel imports,
  biofuel processing and biofuel distributors in
  UK.
• Should not have any confidence in RSPO as
  solution to all the problems at best it is a
  tool.
• Listen to the voices of and support Indonesian
  CSOs Sawit Watch, AMAN, SPKS, YKR, WALHI.
•  Most not lose sight of the livelihoods, human
  rights, food security aspects in current concerns
  with climate change.

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Thank youTerima Kasih
dtecampaign_at_gn.apc.org