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The impacts and opportunities of palm oil in Southeast Asia

The impacts and opportunities of palm oil in Southeast Asia

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Published by Ganip Gunawan
CIFOR Palm Oil Report June 09
CIFOR Palm Oil Report June 09

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Published by: Ganip Gunawan on Jan 26, 2011
Copyright:Attribution Non-commercial


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Contested tenure afects most large-scale
developments in the region. Tough
communities or individuals have
traditional claims, formal recognition

of these claims is very limited, especially
where the land is forested or deemed

In Indonesia, communities rarely
challenged President Suharto’s military-
backed government and its claims to
forested areas. Today, although the state
is less feared and despite decentralisation,
ownership of considerable areas is still
contested. Local politicians are reluctant
to lose control over proftable investments
such as plantations.

Indonesian regulations enable
government to repossess land if deemed
in the public interest (Wakker 2006). Te
rights of indigenous people to customary
lands are not fully recognised by the
Indonesian state. While laws recognise
the rights of customary communities to
their lands, procedures for gaining title
to such lands are ambiguous, absent,
defective or rarely applied (Colchester
et al. 2006).

Potential tenure conficts may be one
reason why companies prefer developing
forested lands and peatlands rather than
cleared areas. Forest lands are ofen
within the claim area of one or only a
few villages. Tis makes negotiations
relatively simple and, once key leaders
in a village can be convinced to give up
ownership of a forest area and accept the
concomitant fnancial compensation,
companies can lay strong claims to the
land. In deforested areas, however, many
individuals may move into an area and
claim ownership. Companies in such
areas need to negotiate with many more
stakeholders than in forested ones,
increasing costs and potentially delaying
plantation establishment.

Land tenure and the recognition of
ownership rights afect how locals
beneft. In 2000, every oil palm company
in Sumatra had land disputes with
local communities (Vermeulen and

40 | The impacts and opportunities of oil palm in southeast asia

Goad 2006). In Sarawak, Malaysia,
communities have tried to secure their
land claims by planting the disputed
land with other crops (Cooke 2002).
Communities are also demanding the
return of land taken during the Suharto
regime in Indonesia, and replanting
programmes for overmature plantations
have revived conficts with local people
who lay claims to land allocated to large-
scale plantations (DTE 2001; Potter
2007). Land tenure disputes have led to
confict, injury, intimidation, arrests,
torture and even death (DTE 2000;
Nicholas 2005).

Plantation developers exploit uncertain
tenure. By working closely with the
government and accepting government
ownership, powerful interests gain easy
access to large areas of contested land.
However, in some locations such tactics
are increasingly difcult, and plantation
owners have ofen found it useful to work
more directly with local people.

‘Nucleus estates’, though not without
their problems, provide assistance
and socioeconomic benefts to an
estimated 500 000 smallholder farmers
in Indonesia (Zen et al. 2006). Tese
‘nucleus–plasma’ schemes recognise
local tenure over some land and ofer
a share of the oil palm development in
return for company ownership of the
rest of the land. Tese schemes mean
that companies ensure production on
both the land they hold (nucleus) and
the land held by smallholders (plasma).
However, in practice the schemes
are ofen problematic. Smallholders
are ofen obliged to take out loans to
establish plantations and receive limited
technical support. Te sites allocated
are ofen suboptimal and distant from
the community. Social confict between
oil palm companies and smallholders is
also common because smallholders enter
into price contracts with companies and
are not able to beneft from any marked

price rises for CPO. Some smallholders
also have a desire to plant other crops on
their land, but are contractually obliged
to plant oil palm on the majority of
their land holding (for more details of
problems see Marti 2008).

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