Name ID student number Lecturer

: Martiwi Diah Setiawati : 11 8710 602 3 : Prof.Masato Shinji

Palm Oil Plantation and Its Problem in Indonesia Palm oil is one of the most important export commodity for Indonesia beside gas and petroleum. Over the last 14 years, increasing oil palm plantation area until 2.35 million ha was occurred in 1999. It can be shown in the figure 1.

Smallholder

Government

Private company

Figure 1. Area of Oil Palm Plantation, 1985-1999 (Directorate General of Plantations in Manurung, 2001)

Increasing oil palm plantation area was followed with increasing total production of Indonesian palm oil. The development of sub-sectors of oil palm plantations in Indonesia are not separated from the government policies that provide incentives. It was started in 1996, when Suharto as president of Indonesia want to defeat Malaysia as the biggest exporter of palm oil in the world. So that, the development of palm oil plantations was done in some island in Indonesia like Kalimantan, Sumatra, Papua, and Sulawesi. It can be shown in the figure 2.

Total Production (ton)

Export value (US$)

millon US$

Figure 2. Palm oil production and export value, 1990- 1998 (BPS and Ministry of Forestry and Estate Crops in Casson, 2000)

Increasing palm oil area will threat the existence of tropical forest of Indonesia. Because the development of oil palm plantation was occurred at forest conversion area. The investors prefer to establish palm oil plantations in forest areas conversion because of potentially benefit in the form of wood of converted natural forest. Another cases is the development of oil palm plantation occurred at Bukit Tigapuluh National Park with the area of plantation almost 12000 ha. As a result, forest conversion activities has become a source of destruction of Indonesia's natural forests, and even a threat to the loss of wealth biodiversity of tropical rain forest ecosystem in Indonesia. Furthermore, the practice of conversion of natural forests for oil palm plantation development is often a major cause of forest fire and land fires in Indonesia. It is happened because in the land clearing activity to develop oil palm plantation was done by burning in order to quickly and low cost. Results of field research states that most of the forest and land fires are in (from) the location of oil palm plantation development.

Forest

fire

near

the

rubber plantation

Figure 3. The data was taken from Modis AIT at 25 September 2009 in Kapuas District, Central Kalimantan. ( the picture shows that hotspot near the plantation area).

Figure 4. Oil palm plantation with hotspot in the Central Kalimantan,2010

Figure 5. Land cover in 1989,1996,1998 based on the GIS on Landsat TM image combined with SAR at Tumbang Titi West Kalimantan. (Ruchiyat, 2001)

There are many environmental problem occurs during oil palm plantation developed. The impact of this are pest attack, changes in soil surface water runoff, increased soil erosion, and environmental pollution because of large quantities using of fertilizer and pesticide and another negative impact from natural tropical forest. Beside environmental problem, there is also social problem such as, development of oil palm plantation in large-scale area has also led to remove the local communities who lived in the area of oil palm development. In addition, land claims by local communities against oil palm plantations also to be a big social problem. These issues have sparked a protracted social conflict issues and is very detrimental to all parties - especially for people who get the negative impacts from development palm oil plantations. Environmental costs and social costs that occur should be taken into account in the analysis of oil palm plantation investments. However, private plantation companies never include the cost of environmental and social costs in the financial analysis of oil palm plantation development project in Indonesia. Reference Casson, A. 2000. The Hesistant Boom: Indonesias Oil Palm Sub-Sector in an Era of Economic Crisis and Political change. CIFOR Occasional Paper No. 29. CIFOR,

Bogor, Indonesia. Manurung,T. 2001. Analisis Valuasi Ekonomi Investasi Perkebunan Kelapa Sawit di Indonesia. Technical Report of Environmental Policy and Institutional Strengthening IQC,Jakarta, Indonesia. Ruchiyat, 2001. The Underlying Causes and Impact of Fire.CIFOR Workshop project of Community development through rehabilitation of Imperata grasslands using trees: A model approach growing Vitex Pubescens for charcoal production in Kalimantan Indonesia. Pontianak , Indonesia.