Borneo
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The Impact of Oil Palm in Borneo

By Rhett A. Butler

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Palm oil activist murdered in Jakarta
(05/23/2015) An Indonesian activist who opposed unbridled oil palm expansion was stabbed to death by a group of men before dawn this morning outside a nightclub in South Jakarta. Whether the attack was related to his activism or the spontaneous result of a barroom brawl is not yet clear. But Indonesian media are reporting that one of the assailants shouted that he was a soldier as he brandished the knife that killed Jopi Peranginangin, the 39-year-old head of campaigns for Sawit Watch, which strives for social and ecological justice in the palm oil industry.


Primary rainforest cleared for massive palm oil plantations in Peru
(05/20/2015) More than 9,400 hectares of closed-canopy Amazonian rainforest has been removed for two oil palm plantations in the Peruvian region of Ucayali since 2011, according to scientists working for MAAP, the Monitoring of the Andean Amazon Project. The two plantations are linked to Czech entrepreneur Dennis Melka.


VICE’s 'Indonesia's Palm Bomb' presents a tragic view of palm oil driven deforestation from the frontlines
(05/20/2015) For the sixth episode of its third season, HBO’s Emmy-winning news series, VICE, focused its lens on Indonesia’s palm oil industry. The episode, entitled, 'Indonesia's Palm Bomb', follows VICE correspondent, Ben Anderson, as he investigates the environmental and social impact of widespread (and, at times, illegal) deforestation on wildlife and indigenous communities in Sumatra.


Golden Agri takes another hit as sustainability guru suspends its membership
(05/20/2015) The charity that Indonesia's Golden Agri-Resources has enlisted to devise and implement its zero-deforestation and community-engagement commitments suspended its cooperation with the palm oil giant yesterday, following breaches of the policies they had designed together. A few hours later, Golden Agri announced the resignation of its chief sustainability officer.


Luxury hotel chain linked to destruction of rainforests
(05/19/2015) The Mandarin Oriental hotel chain has landed in environmentalists' crosshairs for the practices of its sister company Astra Agro Lestari, a rapidly expanding palm oil producer with fully developed plantations on an area larger than Singapore. The new She's Not a Fan campaign – a play off Mandarin's celebrity-fan endorsement drive – launched yesterday with a petition calling on Astra to stop destroying forests and elephant habitat. Multinational conglomerate Jardine Matheson owns both firms.


Malaysian palm oil body encourages fiction over fact
(05/17/2015) In this commentary, David Dellatore, Program Manager at the Sumatran Orangutan Society, questions the value of the Malaysian Palm Oil Council's essay-writing contest which will pay contributors to conclude that palm oil is not a driver of deforestation


Wilmar, Musim Mas supplier caught clearing elephant habitat for palm oil in Aceh
(05/12/2015) A new report provides evidence that a supplier of palm oil giants Wilmar and Musim Mas is bulldozing valuable forests in Indonesia’s Leuser Ecosystem in violation of the companies’ zero-deforestation policies as well as the Indonesia Palm Oil Pledge (IPOP), a high-profile, joint sustainability pact that also includes Golden Agri-Resources, Asian Agri, Musim Mas and the Indonesian Chamber of Commerce and Industry (Kadin).


World's critical habitats lost Connecticut-size area of forest in a decade
(05/08/2015) Many of the world's endangered animals live in only one place, making them hugely susceptible to environmental upset. One fell swoop, and entire species could disappear from existence forever. New analysis shows that possibility may be edging closer and closer to reality in some areas, with forests known to harbor high-risk species losing an area of tree cover the size of Connecticut in a little over a decade.


Golden Agri's wings clipped by RSPO in West Kalimantan
(05/08/2015) The Roundtable on Sustainable Palm Oil has prohibited Golden Agri-Resources, one of its most prominent members, from "acquiring or developing any new areas" pending the resolution of a formal complaint against the palm oil giant in Indonesia's West Kalimantan province. The decision is a stern directive from an organization that has been criticized for failing to take action against companies that flout its standards.


Palm oil certification body to establish stronger voluntary standard
(05/08/2015) Due to its widening impact on tropical forests yet high profit margins, palm oil is one of the most polarizing crops in the tropics. Scientists and environmentalists warn of the high ecological costs caused by converting peatlands and rainforests for oil palm plantation, but growers and food producers argue that as the highest-yielding oilseed, palm oil is a critical part of the solution to feeding a growing human population as well as a profitable form of land use in otherwise poor areas.


THE SOCIAL IMPACT OF OIL PALM IN BORNEO

For most of its history Borneo was scarcely populated by humans. The unforgiving climate and dense rainforest kept populations small and scattered. In the past half century this has all changed. The influx of more than half a million transmigrants into Borneo over the past thirty years has doubled the island's population and created tremendous demand for jobs. Initially the rubber and logging industries provided employment, but when this collapsed in the mid- (Malaysia) to late-1990s (Kalimantan), work opportunities dried up for most of the local population. Despite this, hundreds of new arrivals continued to show up in Borneo on a weekly basis.

Rising unemployment was a serious concern in Borneo in the late 1990s and early 2000s and ethnic conflict raged in parts of Kalimantan during this time. The sudden rise of the oil palm in the late 1990s and early 2000s was seen as a welcome opportunity for many residents and local governments. Observers are only now seeing the full-cost of rapid growth in the sector.

Environmental Impacts

Beyond the obvious deforestation that results from clearing lowland rainforest for plantations (86 percent of deforestation in Malaysia from 1995-2000 was for oil palm plantations), there are other environmental impacts of oil palm cultivation. Several studies have found a significant reduction (on the order of 80 percent for plants and 80-90 percent for mammals, birds, and reptiles) in biological diversity following forest conversion to oil palm plantation. Further, many animals will not move through plantations while others, like orangutans, become crop pests putting them at risk of defensive poaching by plantation managers. The use of herbicides and pesticides can also impact species composition and pollute local waterways. Drainage systems required for plantations (oil palm plantations in Borneo are often established in swamp forest) may lower water tables, affecting neighboring forest areas. Further, destruction of peat lands increases the risk of flooding and fire. Land-clearing fires set by large oil palm plantation owners were the single largest cause of the massive 1997-1998 fires in Borneo.

For more see Why is oil palm replacing tropical rainforests?

Social Impacts

The social impacts of oil palm plantations are just beginning to be understood, in a large part thanks to the work of Dr. Lisa Curran. While there is no doubt that oil palm plantations provide much needed employment opportunities in Borneo there are questions on the fairness of the existing system which appears to sometimes lock small plantation owners into conditions akin to slavery.

Given the scarcity of timber in parts of Borneo, much of its population has few economic options at present. Oil palm seems to be the best alternative for communities that are just eking a living off rubber cultivation, subsistence rice farming, and fruit gardens. When a large agricultural firm enters an area, some community members are often eager to become part of an oil palm plantation. Lacking legal title to their land, deals are often structured so that members of the community acquire 2-3 hectares (508 acres) of land for oil palm cultivation. They typically borrow some $3,000-6,000 (at 30 percent interest per year) from the parent firm for the seedlings, fertilizers, and other supplies. Because oil palm takes 3-4 years to bear fruit, they work as day laborers at $2.50 per day on mature plantations. In the meantime their plot generates no income but requires fertilizers and pesticides, which are purchased from the oil palm company. Once their plantation becomes productive, the average income for a 2 hectare allotment is $682-900 per month. In the past, rubber and wood generated $350-1000 month, according to Curran. The low level of income combined with large start-up costs and relatively high interest payments virtually ensures that small holders will be perpetually indebted to the oil palm company.

Curran said this debt, combined with almost total dependence on entities they barely trust, has a psychological impact on communities. Because there are no ways to contest actions by the company, conflicts invariably arise within communities, especially when a large part of the community (Dayaks often oppose oil palm schemes) has opposed the plantation. At times under-the-table means are used to sway a community. For example, a gift of a motorbike can win over influential community leaders. Once the oil palm firm gets the approval, it may negotiate on a one-on-one basis with each household, eliminating any sort of bargaining power of the greater community.

Surveys by Curran suggest that communities in West Kalimantan are deeply concerned about flooding after the establishment of oil palm plantations. They also worry about loss of forest resources and culture -- older community members don't always like the idea of women and children working on plantations. Oil palm cultivation also makes local people more dependent on agricultural firms since they no longer grow their own food. Finally, some communities have expressed dissatisfaction for working for Malaysians. They would rather be working independently, according to Curran. While they have a litany of complaints, few see other alternatives.

Meanwhile oil palm firms are making a fortune. By Curran's calculations, some firms in West Kalimantan are seeing a 26 percent annual internal rate of return over a 25-year period, an astounding number. Because of booming demand for biofuels, they have little downside risk.

"Firms are making a lot of money without a lot of accountability," said Curran, speaking at Stanford University in January 2007.

For more see Oil Palm




PICTURES OF OIL PALM IN BORNEO  






REFERENCES  


  • Lisa Curran, personal communication
  • WWF Germany, Borneo: Treasure Island at Risk, June 2005 [pdf, 773 KB]
  • mongabay.com


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    Copyright Rhett Butler 2013