Oil palm plantation expansion in Indonesia

1. Oil palm plantation expansion in Indonesia Agrofuels meeting, July 2007 Down to Earth

2. Indonesia’s 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).

3. Logging Concessions Coastline Forest Cover Primary Forest Secondary Forest Forest Concession Permits Logging Concession (HPH)

4. 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 fromplantations is still only 3.8 million cubic metres/year.

5. Plantation Concessions Coastline Forest Cover Primary Forest Secondary Forest Forest Concession Permits Plantation (HGU)

6. 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

7. 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 world’s palm oil production. • The Indonesian government wants to overtake Malaysia and become the world’s 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.

8. 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).

9. Area under oil palm plantations in Indonesia 1967 – 2005Source: Directorate of Plantations in BisInfocus, 2006

10. 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 • Can’t 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.

11. Demand • More than 70% of Indonesia’s 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.

12. CPO (Crude Palm Oil) exports 2000 – 2006Source: Central Statistics Agency

13. 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 US$564/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.

14. 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

15. PRICE OF INDONESIAN CRUDE PALM OIL

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

18. Forest destruction • Indonesian’s 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)

20. Forest Fires Hotspots in Sumatra 2006 Forest Fire

21. Forest Fires Hotspots in Kalimantan2006 Forest Fire

22. Climate Change • New information about the carbon costs of production of CPO is emerging. • Indonesia is the world’s 3rd largest contributor to carbon emissions. • Indonesia’s 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.

23. 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)

24. 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)

25. 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)

26. 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

27. What are communities saying? • “It all stems from the land: if we don’t 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)

28. 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. • Indonesia’s system of large-scale plantations, including oil palm, violates local people’s rights – particularly those of indigenous peoples and ignores their rights to a better standard of living.

29. Recomendations Each drop of palm oil used in European Union countriesrepresents 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 people’s incomes.

30. 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.

31. Thank youTerima Kasih dtecampaign@gn.apc.org