Erpan Faryadi Aliansi Gerakan Reforma Agraria (AGRA)

1. Forest Exploitations and Expansion of Agrofuel Plantations as the Forms of Land Grabbing in Southeast Asia Erpan Faryadi Aliansi Gerakan Reforma Agraria (AGRA) Presented at International Land Coalition Asia Regional Meeting in Jakarta, 12 October 2009

2. Outline • Forest Conditions and Deforestation • Expansion of Agrofuel Plantations • Responses from the People’s Movement • Conclusion

3. Forest Conditions and Deforestation • The FAO (Food and Agricultural Organization of UN) have stated that the rate of deforestation in Indonesia for the period 2000-2005 is the fastest in the world. Each year, around 1.871 million hectares of forests are lost. Earlier data from FAO notes that between 1976 and 1980, at least 550,000 hectares of Indonesian forest vanished annually. • This deforestation is making a significant contribution to global warming. At the global level, deforestation (land use change) contributes around 18.3% of global greenhouse gas emissions (CO2). (Climate in Peril, UNEP, 2009). • This amount has steadly increased along with the desire for exploiting forest resources by a Forest Consession Rights (HPH or Hak Pengusahaan Hutan), especially in the islands of Kalimantan, Sumatra and West Papua (Irian Jaya).

4. As a result, it is estimated that half of Indonesia’s 143 million hectares of tropical forest area have been lost or degraded. The large-scale of investments being made in the forestry sector after the promulgation of the Basic Forestry Law (Law No.5 of 1967). Through this law, a new system for benefitting from forest resources was put in place, via the HPH. • Through June 1988, 651 HPHs were allocated, covering 69.4 million hectares. By 1994, one timber company, Barito Pacific Group, close to President Suharto family, was able to possess more than 6 million hectares of land through forest concession rights (HPH). • Three main causes of forest degradation during the New Order rule (1966-1998) were timber exploitation by companies with HPH concessions, opening lands by shifting cultivators, and forest fires. However, the largest contribution to this was from HPH holders as the forms of big-scale land grabbings for forest exploitations.

5. The rate of forest degradation over the 35-year period 1950 to 1985 is estimated to be 914,000 hectares per year, or 33 million hectares in all, equivalent to the land area of Vietnam country. • From 1984 to 1997, the conversion forest that had been used for development initiatives such as plantations, transmigration and others has decreased in area from 30 million hectares to 8.4 million hectares. • In the area of production forests, until June 1998 the area of forests which had been degraded within HPH concessions was around 16.57 million hectares. • Sumatra and Kalimantan are the regions which have experienced the greatest forest degradation, as being the largest timber producers and fast development of plantation sector over the last 20 years. • There is speculation that HPH holders burnt forests for their own interests in clearing new lands or for their conversion to large-scale plantation use, such as palm oil.

6. Deforestation rate in different regions in Indonesia, 1982-1990

7. In April 1997, the Indonesian environment suffered a tragedy with forest fires in Kalimantan and Sumatra. An estimated 55 million hectares of forests were lost, at a price of IDR 9 trillion (USD 1 billion). Other than forest fires which occured in HPH concessions, the growth of palm oil plantations was a new factor in the fires of 1997-1998. • In the 1990s, palm oil overtook other crops as the main plantation products in Indonesia. In January 1995 alone, the East Kalimantan Forestry Department prepared 1.4 million hectares of land for plantation, with 990,000 hectares of this planned for palm oil. • In providing access to land, PT Inhutani – a state-owned company in the timber sector – took about 20% of lands (60,000 hectares out of 200,000) from HTI (Industrial Timber Plantations or Hutan Tanaman Industri) areas which it managed. This also occured precisely at the time of the forest fires in 1997-1998. This clearly shows a connection with the ambition of Indonesia to become the largest producer and exporter of palm oil in the world.

8. Land Conversion from Production Forests to State-Owned Plantations, 1997

9. Expansion of Agrofuel Plantations • Thirld World countries would be the primary suppliers of biofuels while First World countries would be the primary consumers. • The UN Energy and Overseas Development Institute projects that by 2011, 20% of Brazil’s bioethanol production will be exported to the US market while the greatest increases in biodiesel trade will come the exports from Malaysia and Indonesia to the EU market. • The limited agricultural land in the US, Europe, Japan, and other industrial countries would not be enough for large-scale biofuels production. • It has been noted that the most energy-efficient biofuel feedstock are sugar cane and palm oil, and the most suitable places where these ‘energy crops’ may be grown are in poor countries where the tropical and sub-tropical climates are perfect for production. • Among countries that have recently passed pro-biofuels laws are Argentina, China, Colombia, Ecuador, India, Indonesia, Malawi, Malaysia, Mexico, Mozambique, Senegal, South Africa, Thailand, Zambia, and the Philippines (A.Padilla, 2007, p. 3-4).

10. Since 2000, cereal use for industrial uses, which include biofuels, rose by 25% compared to 4% and 7% respectively for food and animal feed. • More than half the food produced in the world is now used for animal feed and industrial raw materials; including biofuels. By all accounts, the increasing conversion of food crops such as corn to biofuels for use in vehicles seems to have had a substantial impact on food prices. The US and Brazil are the leaders in biofuel (bioethanol) production. The US uses corn while Brazil uses sugar cane. The EU uses wheat and oil seeds to produce biodiesel. • Biofuels now offer big trading opportunities in the international market, which has drawn corporations such as Monsanto, Sygenta, DuPont, Bayer, BASF and Dow to invest in crops specially designed for biofuels as also grain traders such as Cargill, ADM and Bunge. • Bioethanol from corn poses environmental and food problems. The process by which corn is currently converted to biofuel (ethanol) demands heavy use of water (1,900 litres of water per minute, typically), mainly for heating and cooling, putting a tremendous strain on local water resources (Prabhakar Nair, The Politics of Hunger, 2008, p.15-16); while “The grain required to fill the tank of a sports utiliy vehicle with ethanol could feed one person for a year” (The World Development Report, 2008).

11. Agrofuel Plantations in Southeast Asia • Southeast Asia is home base of the world largest palm oil producers. • Indonesia and Malaysia known as the largest palm oil producers. • Two countries shared almost 87% of total global production and more than 90% share in the world market. • Both the Malaysian and Indonesian governments are supporting the expansion of the industry with tax holidays, subsidies, state company investment and domestic agrofuel targets, and both have allocated 40% of crude palm oil for biodiesel. • In Indonesia, the largest investment deal was clinched at the beginning of 2005, when PT Smart (Sinar Mas Group) finalized a USD 5.5 billion investment deal with China National Offshore Oil Corporation (CNOOC) and Hong Kong Energy (Ika Krismantari, The Jakarta Post, March 09, 2007).

12. Another large Indonesian business group, Raja Garuda Mas, announced a USD 4 billion investment deal in May 2007, which includes palm oil plantations and a new biodiesel refinery in Sumatra. • Other important investors in palm oil biodiesel are the older Indonesian Bakrie Groups and large Malaysian and Singaporean companies, such as Wilmar International. • This investment will be boosted by international financial organizations: both the World Bank and Asian Development Bank have said that they will prioritize funding for agrofuel production in developing nations. • In 2008, Indonesia had overtaken Malaysia with 46% production and 47% share in the world market. • Over the next 20 years, Indonesia plans to increase palm oil production, with the area under cultivation expanding from 6.4 million hectares in 2006 to 26 million hectares in 2025 (conversion of forest lands into palm oil plantations).

13. Some 12 million more hectares have already deforested, originally for palm oil plantations, but have not been planted. Experts believed that some of companies are primarily interested not in agrofuels but in quick profit from timber sales. • Rising palm oil prices are accelerating expansion in mainland Malaysia, West Papua and Sulawesi in Indonesia. • Cargill, for example, is increasing its investment in palm oil plantation and mills in Papua New Guinea and the PNG government is drawing up strategy for turning the country into a major agrofuel producer. However, Indonesia’s expansion plans are by far the most ambitious in Southeast Asia. • Indonesia is already planting its 6 million hectares for palmoil and it will be more to 20 million in the upcoming years. So is Malaysia, palm oil become the most valuable commodities for its income. Driven by the same trends, India is planting jatropha on their “culturable wasteland” and China has already converted their maize into fuel.

14. Global Palm Oil Production and Share in the World Market in 2008

15. Responses from the People’s Movement • These land grabbings in the forms of forest exploitations and the expansion of agrofuel plantations arise from the long-prevailing crisis in agriculture in developing countries: marked by landlessness and increasing displacement of small-scale farmers, lack of resources, exploitative land tenure systems and relations of production, unremunerative pricing of farm products, rural unemployment, etc. • This crisis has even further accentuated in recent times by another “crisis”, that of overproduction of subsidised food in the developed world, especially in the US and EU that have been dumping “cheap” food in developing countries driving down local prices, hurting the livelihood of small-scale farmers and workers. • Policies such as the Structural Adjustment Programmes (SAPs) imposed by the World Bank and IMF in collusion with the US shifted developing countries’ priorities in agriculture from food self-suffiency and local production to export crops, making them import-dependent for food and stunting their agricultural and economic growth.

16. A long sequence of developments – the transformation of agriculture by the Green Revolution and the structural changes brought about by SAPs followed by the inequitable agricultural trading system under the WTO, etc –over the past several decades have affected food production, farmers’ and rural workers’ livelihood and their capacity to produce food. • The International Rice Research Institute (IRRI) along with the ADB (Asian Development Bank) has been peddling the results of its experiments on hybrid seeds as the solution to the global food crisis. • In short, Third World governments at best have only made token efforts to address the food crisis, and worse, have remained within the ambit of imperialist globalization and resorted to policies that continue to push farmers to deeper poverty and hunger, push their national economies to untold bankruptcies, and endanger food security. • This situation leaves no doubt that as before the solution only lies in the hands of the farmers, peasants and toiling poor majority (R.Guzman,The Global Food Crisis: Hype and Reality, 2008, p.18).

17. The people must demand governments to take control and reverse the privatization of food agencies and strengthen them in order to protect the people from monopolistic activities by traders and TNCs. • The broadest alliances of peasants, fisherfolk, workers, the urban poor, the rural poor, consumers, women, professionals, local and small entrepreneurs, the youth, and the broad citizenry must be organized to raise the level of debate and action on the global food crisis. • They should urge governments to urgently stop land use conversions and crop conversions that are happening in favour of foreign investors’ interests in corporate farms, large-scale mining, water privatization, natural resources extraction and the like, instead of marginalizing food production.

18. Responses from the People’s Movement • Farmers and people’s organizations should assert the attainment of genuine agrarian reform that is based on free distribution of land to the tillers and eradication of rent and usury. • This entails national programs that would promote self-suffiency in food, agriculture and economy. This inevitably entails governments that would turn back from globalization policies and assert the people’s food sovereignty.

19. Peasants Clamor for Land Reform, Jakarta, 21 December 2006

20. Conclusion • For several decades, the imperialist globalization and their oppressive allies have launched aggresive land grabbing all over Asian countries and destroyed or weakened the people’s livelihood and movements. • Corporate farming systems such as plantations, intensive aquaculture and livestock systems, contract farming and now, agrofuel production, perpetuate the over-exploitation and pollution of lands, forests, seeds, waters, marine resources and other natural resources that have been the sources of livelihood for small food producers. • Moreover, climate change adversely impacts food production, deepens the food crisis and exacerbates rural poverty, joblessness and misery, as people face crop losses through droughts, floods and climatic disasters.

21. Conclusion • But now the gravity and long duration of the current financial and economic crisis opens excellent opportunities for the progressive movements of the people for land rights and food sovereignty and jobs to grow in strength and advance. • In the developing countries, Asian in particular, where the remnants of feudalism are still existing, addressing substantively the demand for national industrial development, the peasant clamor for land reform and engaging the peasant masses in the democratic movements are very important. • In the face of the greater challenges posed by the food crisis and climate change, the people now have to struggle even more to confront oppressive structures and institutions.