Oil palm plantations: Doing more harm than good?

By Charlie Pye-Smith

BOGOR, West Java (JP): During the last dry season, the signs of land use conflict were plain to see in southern Sumatra. Armed with a box of matches and plenty of nerve, local communities were reclaiming land taken from them during the Soeharto era.

Juddering north along the potholed road near Menggala in Lampung, we came across a smoldering plantation. We drove past the abandoned gatehouse and headed for the estate office, or what was left of it.

The manager explained that villagers had just completed a task they began two years earlier, when most of the 2,000 hectare estate was burned. Since then the invaders had planted cassava, and the company -- owned by one of ex-President Soeharto's daughters -- had gone into receivership.

Before the fires, 2,000 people worked here. Now just 20 remain, twiddling their hoes and contemplating an uncertain future.

Further north, we pulled up beside a new settlement on land owned by a plantation development company.

"When I came this way a few months ago," said Grahame Applegate in surprise, "none of this was here." Applegate, a forest scientist with the Bogor-based Center for International Forestry Research (CIFOR), is investigating the causes of forest and land fires in Indonesia with researchers from the International Centre for Research in Agroforestry (ICRAF).

The main street -- still a dirt track -- was neatly marked out with white stones, and scores of thatched shacks overlooked recently planted food crops.

Fire had been used to even more spectacular effect a few miles up the road. Here, hundreds of hectare of oil palm and coconut had been torched and 700 families had squatted on land owned by a plantation company. When the invasion began, company guards killed seven people, and just before our arrival two company employees were killed when they tried to prevent another act of arson.

"In the past," explained Applegate as we walked through mature palms, their fronds sliced off as kindling for fires which would be set in a few days' time, "estate crop companies were given concessions to vast areas of land which the local people considered theirs. Often it was taken by force, and frequently they received no compensation." In this particular case local people had sold the land in the 1980s to migrants from Java. The company had ejected them in the early 1990s, and now the dispossessed were claiming 7,000 hectare of plantation.

"Prior to Soeharto's fall in 1998," says Dr. Suyanto of ICRAF, "any attempt to invade land was suppressed by the Army. Now, in the age of reformasi, the authorities are reluctant to side with the big companies."

However, despite the social unrest, which has led to the withdrawal of much foreign investment, the palm oil industry is about to undergo a wave of expansion. This could mean two things: increasing conflict between companies and local communities, and a further onslaught on Indonesia's tropical forests.

The growth of the palm oil industry has been remarkable. Between 1967 and 1997, the area under plantation expanded from around 100,000 hectare to 2.5 million hectare, and the industry swiftly became a major earner of foreign exchange and a significant employer.

But there was a high price to pay: huge areas of forest were cleared to make way for plantations, and the companies involved were partly responsible for the devastating fires of 1997/98, which affected some 10 million hectare of land and caused an estimated US$10 billion of economic damage to the region.

Expansion of oil palm estates slowed appreciably after the economic crisis of 1997, but according to a report published by CIFOR, the industry is set to grow again. Anne Casson, the author of The Hesitant Boom, attributes this to a range of factors, including lower interest rates, a reduction in export tax and a predicted increase in the global demand for palm oil, of which Indonesia is the world's second largest producer. She also believes the process of decentralization, which came into force at the beginning of the year, could have a dramatic impact.

"Previously, the regions earned very little from estate crops," she explains, "but now they are able to raise revenues through taxation." And what more obvious way than to tax oil palm production and encourage the expansion of plantations?

Bad news

All of which could be bad news for forests. In theory, oil plant plantations can only be established on land classified as conversion forest, but in areas such as Riau -- a major oil- producing province in northern Sumatra -- all conversion forest designated for plantations has already been used, and Casson believes that central and local government officials have been allocating concessions within production forest and limited production forest areas, which are supposedly reserved for timber production.

There is also the very real possibility that oil palm plantations will bite into protected areas.

Journey through Sumatra took us past Bukit Barisan Selatan National Park, famous for its elephants, tigers, rhinoceros -- and now for its strong coffee. Over the past two decades, some 30,000 hectare within the park have been illegally logged, burned and planted with coffee bushes. This is a pattern repeated throughout the country, with the authorities being either unable or unwilling to prevent encroachment by logging companies, agribusinesses and smallholders such as the coffee growers here.

In Sumatra, most of the lowland forest has already been cleared, and Applegate believes the oil palm companies will continue to push further into the island's coastal swamp forests. Here, as elsewhere, the plantation companies use fire to clear logged-over land, even though the practice is illegal. But instead of fizzling out after a few days, the peat underlying many of these swamps can burn for months. Most of the haze and smoke which shrouded the region in 1997/98 came from peat fires set by plantation companies and transmigrants.

Beset by serious economic problems, the government desperately needs to encourage activities which both stimulate growth and generate cash for the provinces, and it is committed to expanding oil palm development.

Casson believes there needs to be fundamental changes in the way land is allocated if the industry is to be prevented from causing widespread destruction of forests.

Ideally, she says, future plantations should only be established on degraded land, of which there is no shortage. But will this happen? Probably not. Most plantation companies are subsidiaries of corporations with timber interests. They will continue to apply for concessions on forest land, rather than on degraded land, as this gives them access to valuable timber and much needed revenue. The provinces, with their newly acquired powers to raise taxes, will aid and abet the process.

The writer is a consultant science writer at CIFOR.