ANALYZING FACTORS SURROUNDING PALM OIL PLANTATIONS AFFECTING

LIVELIHOODS IN INDONESIA

Emma Sysiuk
GEOG 2030: Environment and Development
Nov. 14, 2015

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This paper provides an overview of the factors surrounding the Indonesian Oil Palm
industry that are hindering and enhancing the lives of small holders and locals. The Indonesian
Oil Palm industry has been steadily growing over recent years (Figure 1) and has brought
economic gains as well as increased
infrastructure for some, but also the
displacement of indigenous people,
deforestation, and degradation to soil,
water, and air (Obidzinski, Andriani,
Komarudin, & Andrianto, 2012). These
factors are described through the scales
of Blaikies (1989) Chain of Explanation
(CEO) and analyzed through Bryants

Figure 1: Roth & Mongo Bay, 2015a: pg. 10

(1997) four types of power, frameworks commonly used by political ecologists. It is then
recommended whether Canadians for Sustainable Development (CSD) should support
smallholders becoming certified by Roundtable on Sustainable Palm Oil (RSPO), and what
alternative lifestyles should be promoted.
The Chain of Explanation (CEO) is a series of five scales of varying breadth used to
examine change in an area, and where the level of scale affects the discourse of what the issue is,
and its subsequent solutions (Blaikie, 1989). The first level examines the changes in Indonesian
ecology caused by the Oil Palm industry (Blaikie, 1989). This includes deforestation by
companies for expansion, leading to soil erosion that has polluted the water by increasing
siltation (Obidzinski et al., 2012). Pesticides and fertilizer used by the companies have also
polluted water, and air quality has decreased by the companies burning of Oil Palm by products

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(Obidzinski et al., 2012). The second level examines change in land manager practices (Blaikie,
1989). For example, large companies developed indigenous peoples land, often by force,
causing food insecurity by affecting their shifting cultivation techniques, and pushing them to
marginal land with decreasing yields (Obidzinski et al., 2012). Deforestation by this development
has caused soil erosion, changing the water drainage systems causing low laying plains locals
depend on to become flooded, and forcing locals to abandon timber related jobs (Obidzinski et
al., 2012). To some locals advantage, these companies have increased business for small repair
shops or restaurants, and have built roads, schools, and clinics that brought education and access
to larger cities (Obidzinski et al., 2012). The third level examines how community and regional
relations have been shaped by development (Blaikie, 1989). Indonesian land is typically owned
without legal ownership, and due to this, Papuan indigenous land owners are struggling to get
their land back from the companies who took it, especially since the Indonesian government
prioritizes the claims of transmigrants over the Papua, causing conflict between these two groups
(RRI, 2015; Obidzinski et al., 2012). The companies also ignored the customary law that a ritual
ceremony must occur to signify the exchange of land, creating conflict between the company and
locals (Obidzinski et al., 2012). The fourth level describes the impact of the state (Blaikie, 1989).
The state of Indonesia where, in requiring Palm Oil to be a part of their biodiesel production and
requiring that biodiesel be mixed into 25% if their fuel by 2025, and by pledging US $12 billion
towards the development of the Oil Palm industry have ensured a constant domestic demand as
well as support for Palm Oil (Obidzinski et al., 2012). The state has also required permits to
develop land, however these regulations are not enforced, and as such have indirectly allowed
illegal plantations to develop (Obidzinski et al., 2012). Last in the CEO is the impact of the
world economy (Blaikie, 1989). For instance, Palm Oil is in half of grocery store products and in

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10-15% of gasoline (Roth, 2015a; WWF, 2015). The international consumption of these products
continue the demand for it, and provide revenue to companies and Indonesian government, who
exported US $14.5 billion of Oil Palm products in 2008, allowing the continuation of production
(World Growth, 2011).
In contrast to the widely held belief that the poor are the sole destructors of their
environment, Bryants stages of power act as a way to analyze what dynamics of power exist
between various actors that influence environmental outcomes (WCED, 1989; Bryant, 1997).
One type of power is the ability to control access to the environment (Bryant, 1997). The
Indonesian government does this through requiring people to apply for permits before they are
able to develop land, thus limiting who has access to utilizing the forest (Obidzinski et al., 2012).
Companies take control over land, often by force, from its traditional owners to create Oil Palm
plantations, which limits the owners access to this land, and causes deforestation which limits
access to the forest for income and food and thus forcing them to find income in other ways
(Obidzinski et al., 2012). This can increase their reliance on palm oil for income and increases
their dependence on the global market, which can lead to social vulnerability (Roth, 2015b).
However, plantation development also increases the infrastructure near communities such as
roads, which provides some locals with increased access to urban areas as well as environmental
resources further from their village. Secondly are those who assert power in their pollution of the
environment (Bryant, 1997). Oil Palm companies, by placing their plantations near the 1.3
billion rural poor in Indonesia where the degradation is unlikely to be protested due to their lack
of communication with the government and lack of capital and power to challenge large
companies (RRI, 2015; Obidzinski et al., 2012; Blaikie, 1989; Bryant, 1997). A third way to
exert power is to control distribution of support (Bryant, 1997). For example, the Indonesian

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government allocated US $1.6 billion towards biofuel development, including subsidies for those
developing palm oil, controlling what kinds of agriculture received governmental financial
support (Dillon, Laan, Dillon, 2008). In contrast to small holders, those employed by large Oil
Palm companies had beneficial livelihood outcomes, primarily from their wages and job benefits
therefore the companies limit who receives this financial support by who they hire (Obidzinski et
al., 2012). Lastly, there is power over controlling the public discourse surrounding issues like
Indonesian Palm Oil (Bryant, 1997). The Roundtable on Sustainable Palm Oil, through setting
the criteria for whats defined as sustainable and who qualifies for this, control the publics idea
of what standards RSPO certified plantations abide by, when in actuality the standards and
enforcement vary (WWI, 2015; Obidzinski et al., 2012). Organizations like the European Union,
by aiming to reduce greenhouse gas emissions by requiring biofuel to be in 10% of fuel by 2020,
control the discourse that biofuel is better for the environment than fossil fuels (European
Commission, 2015). Palm Companies often only discuss their plantation plans with the village
elite and exaggerate benefits of the plantations, thus limiting who learns about the potential
development and their ideas of how the plantation will affect them (Obidzinski et al., 2012).
In light of these findings, I do not believe CSD should help smallholders become RSPO
certified as Palm Oil is not sustainable, as a sustainable livelihood can adapt to stress while
enhancing its capabilities and maintaining its environment (Scoones, 1998). Oil Palm proved its
inability to adapt to stress by dropping 60% in its productivity of biofuel as fossil fuel prices
dropped, and has decreased quality of the environment and life for many Indonesians
(Obidzinski et.al, 2012). Relying on such a heavily exported commodity while decreasing
alternate livelihoods through deforestation and land conversion to plantations also increases the
social vulnerability of the community, which can lead to the community collapsing if the market

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for the product dissipates, which it may considering recent outrage by organizations like
Greenpeace (Roth, 2015b). Therefore, alternate livelihoods should be promoted in collaboration
with the communities, progressing towards a co-management of the commons (rainforest) by the
exchange of information between the community, companies, and government emphasizing the
importance of local knowledge (Van Tuyen, Armitage, & Marschke, 2010). Success in this
approach requires a sense of community, achieved by the open discussion between all parties
involved and ensuring the just return of land, and collective choice where since everyone is
involved in the decision making they will be less likely to degrade the environment (Dolsak &
Ostrom, 2003; Roth, 2015c). Alternative livelihoods will based on collaboration and using the
capital of each person, like those with natural capital like livestock can be supported in raising
animals and selling their by-products, while also being able to keep products from themselves
(Scoones, 1998). These tactics avoid creating a reverse project cycle where bureaucracies
decide solutions and confront locals with them, and instead foster respect and collaboration
between all actors and solutions are individualized based on peoples capital (Blaikie, 1989).
This report has summarized both the positive and negative factors that have affected
small holders and locals through the development of the Oil Palm industry in Indonesia.
Alternative solutions were discussed in order to attempt to minimize these detrimental effects.

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