The human cost of palm oil boom

Mata Jeli: A perspective on Indonesian Affairs
Bruce Gale, Business Times 29 Feb 08;

LAST July, about 1,500 angry villagers attacked the grounds of an oil palm plantation company in South Sumatra. Overwhelming police, they burned several buildings and at least 30 machinery units, including tractors and dump trucks, as well as a number of cars. According to police, some threw Molotov cocktails while others stole computer units, cash boxes and car accessories.

The incident, which took place in the Ogan Komering Ulu regency, was the culmination of a lengthy land ownership dispute with Laju Perdana Indah, a subsidiary of the Salim Group. It was also typical of the unrest being reported throughout the archipelago in recent years as plantation companies seek to increase their acreage in response to high international commodity prices.

Agriculture Ministry data show that oil palm plantations have grown by more than 200 per cent during the last decade - from 2.7 million ha in 1998 to 6.1 million ha in 2006. And with the price of crude palm oil in Rotterdam hitting a record high of US$1,000 (S$1,400) per tonne last month, the demand for more plantation acreage is likely to grow.

A joint report issued earlier this month by a group of nongovernment organisations, including Friends of the Earth and local NGO Sawit Watch, assessed the human cost of this oil palm boom. Entitled Losing Ground, the 108-page study argues that while talk of climate change has created a growing market for biofuels that can be produced from crops such as oil palm and sugar cane, it is not just virgin forests that are under threat. Local communities in Indonesia's outer islands are also paying a heavy price.

Although many indigenous communities have lived on the same land for generations, their rights are not clear under Indonesian law. Land alienation for plantations has also been made easier by recent legislation that allows companies working with local governments to take over traditional lands if they show that their business is in accordance with official development plans.

The Losing Ground report alleges that while Indonesian law requires plantation companies to consult local communities and carry out an environmental impact assessment before obtaining a land use permit, this rarely happens. And when such consultation does take place, it is often tainted by allegations of intimidation and corruption.

One community liaison officer employed by an oil palm developer allegedly told researchers he was given a fund for bribing village chiefs. Demonstrations against plantation companies by local residents are also common, says the report, often triggering a heavy crackdown by local police and the company's own security forces.

Then there are the broken promises. According to one unnamed West Kalimantan villager quoted in the report: 'They promised to set up irrigated rice fields, a school, (provide) electricity, build a road, fish ponds. As it turns out, none of that was true. Now they do not even want to build our school or repair the track leading to the longhouse - so we are beginning to have second thoughts about them and not trust them any more.'

Sawit Watch said that in January it was monitoring 513 such conflicts between plantation companies and local communities around the archipelago.

Independent assessments appear to back up at least some of the report's findings. The November 2006 issue of the Asia Food Journal (a trade publication), for example, warned potential investors about the problem of land ownership, adding that 'local opposition to the establishment and expansion of plantations may lead to heightened social tension, causing unrest, security issues, and the disruption of operations'.

And in 2007, Ms Victoria Tauli-Corpuz, chairman of the UN Permanent Forum on Indigenous Issues, predicted that millions of people in West Kalimantan alone were likely to become 'biofuel refugees' over the next few years.

Supporters of the oil palm plantation expansion argue that the industry has provided employment to large numbers of poverty-stricken Indonesians. Official plans call for the biofuel industry to provide job opportunities for 3.5 million people by 2010.

Opponents counter that plantation labourers are often brought in from other parts of the archipelago, a move which raises the prospect of ethnic tensions while doing nothing to benefit local communities. Moreover, many such workers only receive daily wages, and usually have no access to insurance or social security schemes.

There is, however, another way of looking at the problem.

Dr H. S. Dillon, a former member of the National Human Rights Commission and an independent commissioner of Astra Agro Lestari (one of Indonesia's largest government-run plantations companies), points out that many NGO criticisms lack historical perspective.

'The current situation,' Dr Dillon told me last week, 'is not as bad as it was during the Suharto era.' In president Suharto's time, the oil palm sector was dominated by state-run companies that could act with impunity, calling on the support of the police and military whenever they faced local opposition.

Dr Dillon does not deny that such abuses still occur. But he argues that, as a result of democratisation, they are now more likely to be reported in the national and international media.

'The big players are far more vulnerable now,' he says. 'Most are private companies, many of which are run by local ethnic Chinese conglomerates.'

Historically, such groups have not been known for their corporate social responsibility. But the situation is changing.

Last year, at least 10 Indonesian plantation companies joined the Roundtable on Sustainable Palm Oil (RSPO). Established in April 2004, the RSPO is a joint initiative of companies and global NGOs which support the production and trade in palm oil while minimising its negative social and environmental effects.

But last month's Losing Ground report was a reminder that Indonesia still has a long way to go.