Deconstructing the Palm Oil Industry Narrative in Indonesia: Evidence from Riau Province

By Tyson, Adam; Varkkey, Helena et al. | Contemporary Southeast Asia, December 2018 | Go to article overview

Deconstructing the Palm Oil Industry Narrative in Indonesia: Evidence from Riau Province


Tyson, Adam, Varkkey, Helena, Choiruzzad, Shofwan Al Banna, Contemporary Southeast Asia


Indonesia is the leading global producer of crude palm oil. Mass production of palm oil requires large-scale land conversion, resulting in Indonesia having the world's highest rate of annual primary forest loss. (1) In 2017, palm oil production required approximately 12 million hectares of land (an area the size of North Korea) to produce 38 million tons of palm oil. In 2016, Indonesia exported 22.8 million tons of palm oil valued at US$14.4 billion. (2) Given the contentious nature and scale of palm oil production, this article examines the ways in which discourse coalitions seek to legitimate the agronomy of rural development in Indonesia. The authors consider whether Indonesia represents a variant of the developmental patrimonialism model that is often used in reference to African countries. Developmental patrimonialism in the context of Indonesia suggests that state power--expressed through various discourse and policy coalitions--tends to favour palm oil companies, enriching clients and cronies while seeking legitimation through broad claims about national economic benefits. (3) Specifically, this developmental model is legitimized by claims of absolute poverty reduction, employment and tax revenue. However, these gains are often offset by the reproduction of inequality, resource dependencies and environmental degradation. Evidence from Riau province suggests a mismatch between the national narrative of palm oil as a force for good and the persistence of local underdevelopment, notably underinvestment in public services and infrastructure, which undermines the legitimacy of some palm oil industry claims.

It is generally understood that agriculture can be a positive developmental force when sound policies and managerial approaches are pursued. In the case of Indonesia, Rob Cramb and John McCarthy find that specific combinations of inexpensive land, cheap labour and accessible capital explain patterns of palm oil production since the late 1970s. (4) With the exception of 2015, growth rates have been robust since 1998, the year Indonesia transitioned to democracy and announced IMF-mandated decentralization policies. It is logical to assume that communities that convert more land for palm oil will experience greater poverty reduction. (5) The positive effect on local livelihoods and national fiscal revenues is the most compelling argument that can be made in favour of palm oil cultivation. But the argument can only hold up to scrutiny if the complexity of local experiences are taken into account, along with the negative externalities, risks and environmental uncertainties caused by increased production. Our evidence and observations from Riau --the centre of palm oil production in Indonesia--suggests that references to the success of rural development is a misnomer, or at least misleadingly simplistic, in a province that has mixed experiences with, and ambivalent attitudes towards, the ongoing spread of cash crops.

There is no public survey data about attitudes towards palm oil in Indonesia. A 2014 Pew Global Attitudes survey concerning the "greatest threat to the world" showed that only 13 per cent of Indonesians believed this threat to be "pollution and environment" (ranked bottom of a list of five threats), compared to 26 per cent who chose religious and ethnic hatred. (6) According to a 2016 Ipsos Global Trends Survey, 56 per cent of Indonesian respondents agreed that "even scientists don't really know what they are talking about on environmental issues". (7) In this trust and data vacuum there exists an opportunity for palm oil companies and their support coalitions to claim the moral high ground by asserting that the industry serves the national interest. The Indonesian government's prioritization of rapid economic growth, and ambition to rank among the world's top 10 economies by 2025, favours the expansion of agribusiness, while casting doubt on international pledges to cut emissions and reduce deforestation. …

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