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Seminar 13 Mar 2013 - Session 4 - Smallholders oil palm production in Indonesia_ by SBudidarsono
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Seminar 13 Mar 2013 - Session 4 - Smallholders oil palm production in Indonesia_ by SBudidarsono

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Smallholders represent a significant portion (38%) of oil palm cultivation in Indonesia, and represent a critical component of the palm oil industry, as well as constitute a significant opportunity to …

Smallholders represent a significant portion (38%) of oil palm cultivation in Indonesia, and represent a critical component of the palm oil industry, as well as constitute a significant opportunity to improve livelihoods in resource-poor settings. Smallholders’ engagement in oil palm cultivation began as part of Indonesian government to promote tree plantation crops in the late 1970s. The initial programme consisted basically of direct state investments through state-owned companies (PTPN) and was integrated with government-sponsored transmigration programmes to provide a labor force for the new plantations. This integration was embryonic for smallholder engagement in state-led agribusiness. The emergence of smallholder oil palm planters constituted a spread effect of plantation development led by the government. The state agribusiness-driven policy has transformed rural areas and settlement development was started in the surrounding of large-scale oil palm plantation.


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  • 1. Suseno Budidarsono One Day Seminar “Tree cover transitions and investment in multicolored economy : hypotheses grounded in data” Bogor, March 13, 2013
  • 2. Oil palm plantation distribution in Indonesia, by provinceBPS (2012), Indonesian Oil Palm Statistics 2011. Jakarta
  • 3. 5,000 100.0%4,500 90.0%4,000 80.0% Planted area (1000 ha)3,500 70.0%3,000 60.0%2,500 50.0%2,000 40.0%1,500 30.0%1,000 20.0% 500 10.0% - 2002 2007 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2008 2009 2010 2011 0.0% 1999 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Smallholders State-owned plantation Large scale private plantation Smallholders State-owned plantation Large scale private plantation2010Smallholders : 39.6%, State-owned plantation : 7.7%, Large scale-private plantation : 52.8%
  • 4. 14,000 100% 90%12,000 80% CPO production (1000 ton)10,000 70% 60% 8,000 50% 6,000 40% 30% 4,000 20% 2,000 10% - 0% 1995 1992 1993 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 Smallholders State-owned plantation Large scale private plantation Smallholders State-owned plantation Large scale private plantation2010 Smallholders : 37.6%, State-owned plantation : 8.5%, Large scale-private plantation : 53.9%
  • 5. Direct and indirect impact of oil palm plantation onsocio-economic of local people  at the village level : infrastructure development, employment generation, income opportunities, land pressure and migration (PODES)  at the household level : welfare and livelihood, such as education, family income, employment, capital accumulation (household survey)
  • 6. Parameters, variables and data to be observedin the socio-economic impact assessment ofpalm oil industry at village level. Parameters VariablesSettlement development Settlements patterns (in the surrounding area of the plantations) Physical characteristics and its natural resource endowment Accessibility Public utility and infrastructureDemographical development Population growth Migration Employment Education HealthRural Economy development Economic activities
  • 7. Main findings on comparison between villages with oil palm asmain commodity (OPC) and villages with other main commodities(NOPC) in the surrounding area of the 23 plantation samples1. Adoption rate : • 11.4% within 10-km surrounding areas (11.4% of the villages have oil palm as the main commodity) and ranges from 3-45% across the 23 samples • 7.9% within 20-km surrounding areas with a range from 0-35% adoption rate across samples2. Villages of OPC tend to be more highly populated and the percentage of men in the population is significantly higher than that in NOPC.3. The percentage of households that makes use of governmentally owned Electricity Company is not significantly different between OPC and NOPC
  • 8. 4. Percentages of households served by non-government electrical company are much higher in OPC than NOPC, perhaps with the facilitation or helps from the oil palm companies or the higher income generation that allow people to access other facilities.5. Accesses to elementary schools are similar between OPC and NOPC. Distances to secondary schools, hospitals and other medical services are significantly higher in OPC than NOPC. This means that perhaps OPC are more remote and that public/government facility developments perhaps are not prioritized in OPC.6. With regards to health indicators, OPC show significantly lower prevalence of malnutrition, per capita health insurance for poor family and also per capita service for poor people than those in NOPC.7. From industry-sides and economic opportunities, only wood industry, number of shops, and number of minimarkets and number of hotels are significantly higher in OPC and NOPC.8. The number of cooperatives (koperasi) and village unit cooperatives (KUD) are significantly higher in OPC than in NOPC villages
  • 9. 7. From industry-sides and economic opportunities, only wood industry, number of shops, and number of minimarkets and number of hotels are significantly higher in OPC and NOPC.8. The number of cooperatives (koperasi) and village unit cooperatives (KUD) are significantly higher in OPC than in NOPC villages
  • 10. Sumatera 209 Kalimantan 204 Island 43 Sulawesi Partnership 137 Independent 222 97 Mixed Plot Management Indigenous 225 statusFarmer Migrant 231 91 North Sumatra 88 Riau 30 South Sumatra 47 West Kalimantan Province 72 Central Kalimantan Household level survey : sample distribution 50 East Kalimantan 35 South Kalimantan 43 West Sulawesi 456 Total
  • 11. Households characteristicsVariable % Household sample (n) 456 Family members 2007 Nuclear 1807 97.5 Extended 200 2.5 Sex Ratio 1 : 1.08 Household Size 1–4 268 58.8 5–8 183 40.1 >8 5 1.1 Average Family size 4.4 Economically Active Population 70.6 Dependency ratio 41.7
  • 12. Households characteristics :Occupation of oil palm household members family Variable % member Main Occupation Oil palm farmer 378 55.1 Non-oil palm farmer 55 8.0 Entrepreneur 79 11.5 Farm & non-farm labourer 71 10.4 Civil Servant 28 4.0 Private company employee 74 10.8 Total 685 100 Side Occupation Oil palm farmer 73 24.1 Non-oil palm farmer 79 26.1 Entrepreneur 51 16.8 Farm & non-farm labourer 43 14.2 Civil servant 9 2.9 Private company employee 48 15.8 Total 303 100
  • 13. Households characteristics : Educational attainment n % Respondents 453 100 Never go to school 4 0,9 Elementary School 221 48,6 Junior High School 105 23,2 Senior High School 108 23,6 University 18 3,7 Family members Never go to school 16 0,8 Elementary School 694 34,6 Junior High School 393 19,6 Senior High School 386 19,2 University 70 3,5 Not in schooling age 448 22,3
  • 14. Households characteristics : Housing Survey Indonesia* Variable n % %Floor area < 19m2 2 0.4 5.5 20 - 49m2 97 21.3 35.3 50 - 99m2 238 52.2 43.1 100 - 149m2 78 17.1 10.5 > 150m2 41 9.0 5.7Floor area per person (m2 ps-1) 19.59Main drinking water source Packaged water 16 3.5 13.1 Public tapped water 36 7.9 15.3 Well pumps 277 60.7 17.8 Well and springs 76 16.7 48.4 River and rain water 50 11.0 5.2 Others 1 0.2 0.2
  • 15. Households characteristics : Housing Survey Indonesia* Variable n % %Lighting State electricity 268 58.8 89.3 Privately generated electricity 167 36.6 4.3 Pumped lamp 4 0.9 0.8 Oil lamp 17 3.7 5.0 Others 0 0.0 0.6Domestic sewage and toilet Yes, indoor 287 62.9 63.8 Yes, outdoor 153 33.6 17.4 No 16 3.5 18.8
  • 16. Households characteristics : Landholding Std Number of Max Number of Avg Min Dev Land use type plots (Plot (ha households -1) (ha HH-1) (ha HH-1) (ha HH HH-1) HH-1)Oil palm 456 2 4.66 0.12 80.0 7.59Rubber 95 1 1.85 0.10 20.0 2.35Coconut 9 1 3.36 0.25 9.5 2.85Food crops 73 1 1.39 0.16 16.0 2.38Abandoned 26 1 3.98 0.25 20.0 4.78landTotal 5.56 0.40 80.0 8.18
  • 17. Households characteristics : Oil Palm plantation Land holding (ha) n average min max sdType of farmer Non migrant farmer 225 3.28 0.12 30.00 3.51 Migrant farmer 231 6.00 0.40 80.00 9.92Land management Partnership 137 3.28 1.00 75.00 6.49 Independent 222 3.98 0.12 80.00 7.33 Mixed 97 8.21 2.05 66.00 8.57
  • 18. Households characteristics : Landholding Asset ownership Number of assets Type of Asset HH (unit) % of total HH (n=456)Car 61 50 10.96Truck 55 37 8.11Motorcycle 711 428 93.86Bicycle 227 158 34.65Television 412 412 90.35Cellphone 877 419 91.89Radio 104 104 22.81DVD Player 255 255 55.92Complete furniture 190 190 41.67Refrigerator 160 160 35.09Savings 234 234 51.32Jewellery 377 377 82.68
  • 19. Profitability of smallholding oil palm  Independent : + Returns to land of independent smallholder oil palm plantation : IDR 92 -- IDR 143 million per hectare + Return to Labor : IDR 122,000 -- IDR 178,000 per person day.  For plasma farmers (with direct link to a nucleus plantation) + Returns to land varied between IDR 125 -- IDR 266 million per ha + Return to labor vary between IDR 67,000 -- IDR 297,000 per person day
  • 20. » Oil palm cultivation is not the only source of household income. About 45% of the family members included in the survey engage in non-agricultural activities» Oil palm cultivation contributes only 61% of total family income. ˃ Sumatra : ranging from 63% to 78% ˃ Kalimantan : ranging from 31% South Kalimantan and to 61% East Kalimantan) ˃ Monthly per capita : IDR 1.34 millions IDR 1.22 million (in Sumatra) and (Kalimantan and Sulawesi )
  • 21. Monthly per capita income of the household sample by province Monthly per capita income in 2009 Plantation Household Province / Island (IDR 000) sample sample average min maxNorth Sumatra 3 91 994 146 5,750Riau 2 88 1,628 176 11,250South Sumatra 1 30 1,521 333 4,070 Sumatra 6 209 1,336 146 11,250West Kalimantan 1 47 747 142 2,783South Kalimantan 1 35 1,728 140 10,208Central Kalmantan 3 72 1,101 150 5,253East Kalimantan 1 50 1,071 250 4,120West Sulawesi 1 43 1,140 265 3,542Kalimantan Sulawesi 7 247 1,123 140 10,208 13 456 1,221 140 11,250
  • 22. Monthly per capita expenditure the household sample by province and Island Monthly expenditure per capita Number poverty Household (IDR 000) plantation samples poverty Poverty samples average min max line*) incidentNorth Sumatra 3 91 443 116 1,227 189 9.9%Riau 2 88 542 199 2,048 227 3.4%South Sumatra 1 30 425 209 898 190 Sumatra 6 209 482 116 2,048 5.7%West Kalimantan 1 47 242 90 663 167 19.1%South Kalimantan 1 35 407 130 975 181 8.6%Central Kalmantan 3 72 529 108 1,883 199 5.6%East Kalimantan 1 50 493 123 3,942 225 18.0%West Sulawesi 1 43 474 254 870 157 0.0% Kalimantan and 7 247 439 90 3,942 10.5% Sulawesi 13 456 459 90 3,942 8.3%*) in thousand IDR, BPS (2010)
  • 23. Households economy Sumatera Kalimantan & SulawesiHousehold sample engagein oil palm cultivation to 121 households 177 householdsreplace their previouslivelihood, 5-10 10 years 5-10 10 yearsYears of engagement < 5 years < 5 years years < years <Household with Familyincome increased afterengage in oil palm 19% 31% 44% 22% 38% 36%cultivation, by years ofengagement 2.01- 4.38- 25.34- 3.20- 13.17- 22.34-Average incrased times times times times times timesHousehold with Familyincome increased afterengage in oil palm 1% 2% 4% 2% 1% 1%cultivation by years ofengagementAverage decreased (%) -7% -25% -20% -47% -6% -34%