Palm Oil Production in Indonesia

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Palm Oil Production in Indonesia describes the impacts the production of palm oil is having on Indonesia, the world's largest producer. There are two separate oils derived from the African oil palm, each with unique properties and uses, palm oil (made from the fruit) and palm kernel oil (made from the seed). This article covers both oils. According to Rainforest Action Network:[1]

"Palm oil is a globally traded agricultural commodity that is used in 50 percent of all consumer goods, from soaps and detergents to breakfast cereals and biofuels. Grown on massive plantations in tropical nations, mainly Malaysia and Indonesia, palm oil has been associated with rainforest destruction; threatened extinctions of animals, including orangutans; huge increases in greenhouse gas emissions; and gross human rights and labor violations."

Approximately 25 percent of the world's palm oil is estimated to be grown on peat, in Indoneia's peat swamps.[2]

Deforestation Due to Palm Oil in Indonesia

In Indonesia, deforestation is especially severe in Borneo and Sumatra.[3] The two main drivers of deforestation between 2000 and 2009 were the palm oil industry and the pulp and paper industry. Since 1950, Indonesia lost more than 46 percent of its forests, and it has recently experienced deforestation at a rate of 1.5 million ha (hectares) per year.

Indonesia's Forest Cover:

  • 1950: 162 million ha[4]
  • 2000: 103.32 million ha[3]
  • 2009: 88.17 million ha

Thus, the rate of deforestation has increased in the last decade, compared to the previous 50 years. The deforestation is concentrated in Kalimantan - the Indonesian part of the island Borneo - "where the palm oil industry is expanding rapidly." More than one third of Indonesia's deforestation between 2000 and 2009 occurred there, over 5.5 million ha. Sumatra experienced the next greatest area of deforestation with a loss of 3.7 million ha.[3]

Also being lost are Indonesia's peat swamps, which "store large amounts of carbon in their soil."[3] Between 2000 and 2009, 2 million ha of peatlands were destroyed, nearly half of which were in Sumatra, home to both the pulp and paper and palm oil industry expansion. "Forests cover roughly half or 10.77 million hectares of Indonesia's remaining peatland area."[3]

As of 2007-2008, 80 percent of Indonesian palm oil came from Sumatra and another 17 percent came from Borneo.[5] In 2009, the USDA estimated:

"Commercial palm oil production in Indonesia originated with Dutch colonial plantations on the island of Sumatra, where the rich volcanic soils and tropical climate were best suited for the crop. Today Sumatra is still home to the majority of the national palm crop, with 75 percent of total mature palm area and 80 percent of total palm oil production. In recent years Indonesia has successfully encouraged expansion of the crop in more remote locations on the islands of Kalimantan (Borneo), Sulawesi and Papua. Kalimantan and Sulawesi in particular have experienced strong development, averaging 13 percent and 8 percent annual growth rates in palm area respectively over the past ten years. Meanwhile expansion is still occurring on Sumatra, with an additional 600,000 hectares being planted between 2000 and 2009, or a 6 percent annual rate of growth over the last decade. In total, mature palm area in Indonesia has doubled from the levels recorded in 2000, and currently is estimated by the Indonesian Palm Oil Commission (IPOC) at 5.06 million hectares. Recently planted immature palm area is also estimated by IPOC at approximately 2.2 million hectares, indicating a huge pool of new crop area is nearing productive age."[5]

Deforestation on Borneo

Deforestation on Borneo 2005-2020

Forest ecosystems on Borneo include:

  • Borneo lowland rain forests[6]
  • Borneo peat swamp forests[7]
  • Southwest Borneo freshwater swamp forests[8]
  • Sunda Shelf mangroves[9]
  • Sundaland heath forests[10]
  • Borneo montane rain forests[11]

Borneo peat swamp forests, Borneo lowland rain forests, Southwest Borneo freshwater swamp forests, and Sunda Shelf mangroves are all quite threatened. Only half of Sundaland heath forests remain, but the land has little agricultural value, making it less attractive for clearing.[10]

Borneo lowland rain forests have been decimated by logging and clearing for palm oil plantations.[6] Although they have been called "the richest rain forests in the world," they are in danger of disappearing from the earth entirely.[6] This ecosystem is home to wildlife including the world's smallest squirrel, the 11-cm pygmy squirrel, the orangutan, the Asian elephant, the Sumatran rhinoceros, and the plant that produces world's largest flower, Rafflesia arnoldii. More than 380 birds and an estimated 10,000 plant species are found in this ecosystem. Deforestation has significantly increased here in the last decade or so. "Borneo has more than 3,000 tree species and 2,000 orchid species and is the center of distribution of dipterocarps, with 267 species, 60 percent of them endemic (Ashton 1982; Whitmore and Tantra 1987)."[6] Also found in Borneo's lowland rainforests are the clouded leopard, the sun bear, Sunda otter-civet, the flying-fox bat, and thirteen primate species: "three apes (the orangutan and two gibbon species), five langurs, two macaques, the tarsier (Tarsius bancanus), the slow loris (Nycticebus coucang), and the endangered proboscis monkey (Nasalis larvatus)."[6]

"This area has been heavily logged, with most logging occurring in the last thirty years. Commercial logging destroyed the forests while providing access to them. Massive agricultural projects, such as oil palm, rubber, and industrial timber for pulp and plywood, soon followed. Smaller agricultural shareholders also filled in these areas by cutting and burning patches of forests. By the late 1980s Indonesia was the world's largest plywood producer. Private and state-owned forestry companies have stripped the land clear for pulp and palm oil plantations, destroying vast tracts of forest. They are replanting with a limited number of fast-growing exotic species (Galdikas and Briggs 1999; Barber and Schweithelm 2000).[6]

Deforestation on Sumatra

Deforestation on Sumatra 1985-2009

Forest ecosystems found on Sumatra include:

  • Sumatran peat swamp forests[12]
  • Sumatran freshwater swamp forests[13]
  • Sumatran lowland rain forests[14]
  • Sumatran montane rain forests[15]
  • Sumatran tropical pine forests[16]
  • Mentawai Islands rain forests[17]
  • Sundaland heath forests[18]
  • Sunda Shelf mangroves[19]

Sumatra's lowland rainforests and peat swamp forests are both threatened by deforestation from palm oil plantations.

Sumatran peat swamp forests, which occur along the eastern coast of the island:

"are formed when rivers drain into the inland edge of a mangrove and the sediments are trapped behind the tangle of mangrove roots. These areas begin to build up and flood less often as the coastline extends outward. The peat deposits usually are at least 50 cm thick but can extend up to 20 m."[12] The soil in peat swamp forests is composed of more than 65 percent organic matter (an astoundingly high percent!).[12]

Sumatran tropical pine forests are under less threat than other forest ecosystems on the island. The lowland forests are facing deforestation at a faster rate than forests at higher altitudes.

Wildlife threatened by deforestation include the Sumatran rhinoceros, Malayan tapir, tiger, Asian elephant, and orangutan in the Sumatran lowland rain forests and the Asian elephant, Malayan tapir, Sumatran tiger, long-tailed macaque, pig-tailed macaque, siamang, monitor lizard, estuarine crocodile, false gharial, and the clouded leopard in the Sumatran freshwater swamp forests.[14][13]

Case Studies

Human rights abuses abound in Indonesian palm oil plantations. Because indigenous peoples often do not hold legal titles to their ancestral lands, the government sells their land to corporations right out from under them. When corporations show up to clear the forest for palm oil plantations, sometimes the military accompanies them to suppress any resistance from the indigenous people who make their homes and their livings in the forest. The palm oil plantations do not provide meaningful employment to replace what they have destroyed. One woman says they are paid $2.50 (U.S. dollars) per day to work at the palm oil plantation, and that is not enough to buy fish, which costs $3.50/kilo.[20]

Suku Anak Dalam Village Bulldozed

The entire 5,1000 hectares of ancestral land of the Anak Dalam Sungai Beruang group of indigenous peoples has been given to palm oil companies.[21] Among the palm oil companies with rights to their land is Asiatic Persada, a subsidiary of the Wilmar Group. The U.S. agribusiness giant Archer Daniels Midland (ADM), in turn, holds a majority stake in the Wilmar Group.[22]

On October 10, 2011, agents of Asiatic Persada came to the village of Suku Anak Dalam in Jambi Province, Sumatra, Indonesia and began "forcibly evicting" residents, according to accounts of villagers reported in the Jakarta Globe.[21] A total of 82 families in three hamlets were evicted. The villagers report that they have lived there since 1920.

"“We don’t know why they did that,” he said. “But some time before it happened, there were reports that outsiders had been camping on the periphery of the existing plantation and stealing the oil palm fruit. We explained to the company that none of us were involved in that, but they didn’t respond.”"

The Wilmar Group responded, saying the villagers were "laying claim to land to which it had no right."[21]

The Semunying Jaya Community on Borneo

The Dayak people in the community of Semunying Jaya (on the Indonesian side of Borneo) are one group that has displaced by palm oil plantations. They do not hold legal titles to their ancestral land, and the regional government gave the company Duta Palma Nusantara "a 20,000 hectare land concession directly on top of all 18,000 hectares of Semunying Jaya’s sacred forest."[23] Duta Palma Nusantara is one of Indonesia's top ten palm oil producers, owning at least 200,000 hectares of land in Indonesia. The name of the palm oil plantation now located on Semunying Jaya's ancestral land is PT Ledo Lestari.

The destruction of Semunying Jaya began in 2005, when Duta Palma Nusantara "unloaded bulldozers and excavators on the banks of the Kumba River next to Semunying Jaya." One villager recalls that they told them they were there to build a road, but then they began clearing the forest. As of 2005, all but 8,000 of the 20,000 hectares in PT Ledo Lestari are deforested, and the clearing continues:

"After the chainsaws and bulldozers, Duta Palma laborers pour diesel fuel over the felled forest and set it ablaze, lighting fires that smolder for days. It is illegal to set fires in palm plantations in Indonesia, and the practice is strictly banned by the Round Table on Sustainable Palm Oil (RSPO), of which Duta Palma is a member.
"Incredibly, Duta Palma began operations at PT Ledo Lestari without all four of Indonesia’s key land use and land use change permits: the IPK (for land clearing), the PHK (for forest use), the AMDAL (an environmental impact statement), and an HGU (the palm plantation operation license).5 Many locals in Semunying Jaya believe it is the Indonesian Military’s thirty percent ownership of Duta Palma that allows them to operate with such impunity."[23]

Cargill's PT Harapan Sawit Lestari Plantation on Borneo

One of the older oil palm plantations on the Indonesian side of Borneo is a Cargill owned plantation called PT Harapan Sawit Lestari, or HSL for short. Established in 1993 by clearing primary rainforest, it displaced 16 villages of Dayak indigenous people in the Ketapang district of West Kalimantan.[24]

The plantation interferes with the villagers' access to clean water:

"Behind Pak Gladu’s wood-slat home, he points to a muddy trickle of water that he says was once clear and fast-flowing. “Our river is destroyed. The oil palm trees drink a lot. And the palm oil factory drinks even more,” Pak Gladu explained. With no other water source, Pak Gladu and his 12 sons, daughters, and grandchildren had no choice but to continue using the water. “One time after bathing I broke out in a horrible rash. I went to the hospital for many days. It was HSL’s palm oil mill, it is only 500 meters away, that caused this. I went to HSL’s office to demand they pay for my treatment. But they just sat silent.”"[24]

Very few villagers gained employment from the Cargill plantation. "The vast majority of Cargill’s 4,300 plantation workers at HSL are outsiders; of the about 400 residents of Desun Keladi, just four have regular work in the plantation."[24] On the other hand, with the clearing of the forest they once called home, the villagers have lost their livelihoods. And they were not compensated for their land.

"After years of meetings with no clear results, villagers increased the intensity of their protests. They blocked plantation roads and attempted to reclaim 2000 hectares of HSL’s plantation that once belonged to them. Villagers formed a farmer’s group to protect their remaining farmland and a worker’s union to demand regular work from HSL.5 Government and HSL managers responded by sending in the military, calling the community maps “illegal and seditious,” and labeling the villagers “anti- government” and “communist.”"[24]

As HSL expanded to another 16,000 ha, Cargill offered the villagers in a community called Bagan Kajang a total of $25 U.S. dollars per hectare of the primary rainforest they intended to destroy. Faced with fears of receiving no compensation at all, the villagers felt they had no choice but to agree, signing away their rights to their ancestral land.[24]

"In July 2009, as part of this most recent expansion, Cargill bulldozed 800 fruit and natural rubber trees belonging to Pak Rusni of Bagan Kajang. A small man with wispy hair graying at the edges, Pak Rusni says he was not told of the clearing before it took place, did not receive any compensation, and Cargill managers refuse to speak with him. “This is the hardest. My way of life is gone, taken away by Cargill. My rubber trees were the way I survived day to day.”"[24]

Production and Trade

Indonesia is the largest producer and exporter of both palm oil and palm kernel oil. In 2009, Indonesia produced 20,550,000 metric tons of palm oil and exported 16,829,200 tonnes of it, or 82% of the amount produced.[25] In 2009, Indonesia produced 5,160,000 tonnes of palm kernels, processed 2,282,900 tonnes of palm kernel oil, and exported 1,703,260 tonnes of palm kernel oil.[26]

Resources and Articles

Related SourceWatch articles


  1. Palm Oil, Rainforest Action Network, Accessed September 26, 2011.
  2. Klaus Deininger and Derek Byerlee with Jonathan Lindsay, Andrew Norton, Harris Selod, and Mercedes Stickler, "Rising Global Interest in Farmland: Can It Yield Sustainable and Equitable Benefits?," World Bank, September 7, 2010, p. 20.
  3. 3.0 3.1 3.2 3.3 3.4 Palm oil, paper drive large-scale destruction of Indonesia's forests, but account for diminishing role in economy, says report, Mongabay, July 27, 2011, Accessed October 18, 2011.
  4. Indonesia's Forests in Brief, Global Forest Watch, Accessed October 18, 2011.
  5. 5.0 5.1 INDONESIA: Palm Oil Production Growth To Continue, USDA, Commodity Intelligence Report, March 19, 2009.
  6. 6.0 6.1 6.2 6.3 6.4 6.5 Colby Loucks, Borneo lowland rain forests (IM0102), World Wildlife Fund, Accessed October 18, 2011.
  7. Borneo peat swamp forests (IM0104), World Wildlife Fund, Accessed October 18, 2011.
  8. Southwest Borneo freshwater swamp forests (IM0153), World Wildlife Fund, Accessed October 18, 2011.
  9. Sunda Shelf mangroves (IM1405), World Wildlife Fund, Accessed October 18, 2011.
  10. 10.0 10.1 Sundaland heath forests (IM0161), World Wildlife Fund, Accessed October 18, 2011.
  11. Borneo montane rain forests (IM0103), World Wildlife Fund, Accessed October 18, 2011.
  12. 12.0 12.1 12.2 Colby Loucks and Tony Whitten, Sumatran peat swamp forests (IM0160), World Wildlife Fund, Accessed October 18, 2011.
  13. 13.0 13.1 Sumatran freshwater swamp forests (IM0157), World Wildlife Fund, Accessed October 18, 2011.
  14. 14.0 14.1 Sumatran lowland rain forests (IM0158), World Wildlife Fund, Accessed October 18, 2011.
  15. Sumatran montane rain forests (IM0159), World Wildlife Fund, Accessed October 18, 2011.
  16. Colby Loucks and Tony Whitten, Sumatran tropical pine forests (IM0304), World Wildlife Fund, Accessed October 18, 2011.
  17. Colby Loucks and Tony Whitten, Mentawai Islands rain forests (IM0127), World Wildlife Fund, Accessed October 18, 2011.
  18. Sundaland heath forests (IM0161), World Wildlife Fund, Accessed October 18, 2011.
  19. Sunda Shelf mangroves (IM1405), World Wildlife Fund, Accessed October 18, 2011.
  20. Cargill Case Studies and Videos, Accessed October 18, 2011.
  21. 21.0 21.1 21.2 Fidelis E. Satriastanti & Camelia Pasandaran, "Sumatran Tribe Say Lands Stolen for Palm Oil, The Jakarta Globe, September 19, 2011, Accessed October 19, 2011.
  22. Cargill & ADM Support Community Conflict in Indonesia," Rainforest Action Network, September 26, 2011, Accessed October 19, 2011.
  23. 23.0 23.1 David Gilbert, "Duta Palma: Case Study of a Palm Oil Supplier in Indonesia," Rainforest Action Network, October 2009, Accessed October 18, 2011.
  24. 24.0 24.1 24.2 24.3 24.4 24.5 David Gilbert, "Cargill's Legacy of Destruction: A Case Study of a Cargill Owned Plantation in Indonesia," Rainforest Action Network, October 2009.
  25. FAOSTAT, FAO, Accessed September 26, 2011.
  26. FAOSTAT, FAO, Accessed October 12, 2011.

External resources

External articles