Biofuel

and Prosperity
Myth
(FIELD STUDY ON BIOFUEL PROGRAM IN JAMBI
PROVINCE)

Cooperation with Sawit Watch and
Supported by MISEREOR
Introduction

The rocketing of price of Oil Fuel which now broke the figure of US$ 100/barrel per October 2007,
added by flaming in Middle East which never subsided, and the reserve of oil fuel which only
sufficed for two decades ahead, added again with the condition of worsening of global climate in
consequence of the energy use of oil fuel which was sourcing from fossil, the coal more pushed
various world hemispheres including Indonesia to think seriously looking for alternative fuel which
of course had the bright future.

This alternative fuel was expected to be able to answer the entire issues above. Actually, the
development of alternative energy had been started since 1970-s, and had become the global
program when the price of oil fuel jumped up raising. The alternative energy program then
disappeared in the years of 1990-s in line with the return of the oil fuel price to normal price. But
now all parties were back made to realize about the important of renewable energy use, when the
climate crisis that was caused by the use of fossil enegry was more causing apprehension.

The use of renewable energy having a source from the vegetable raw material actually was a wise
action, beside environment-friendly, could also open the new work place in the rural area.
According to the government of Indonesia, the biofuel project which became the mainstay of
supplying the alternative energy coming from the plant producing this oil would create the work
place of 3-5 million work place (Kompas, 13 March 2007). In line with this tendency, it was nothing
wrong if the government of Indonesia increasingly planned and carried out various programs to
gradually increase the biofuel production with CPO raw material and castor oil. Not only for filling
the global consumption would the oil need from oil fuel, but the domestic consumption could not
also be said small. If in the domestic scale the energy use from the petroleum fuel reached 65
million kiloliter or equivalent to 64 billion liter/year with the detail of transportation sector pervading
48%, industry 19%, household 18% and electrical matters 15% per year, thus for global
consumption, the demand of diesel fuel energy and world kerosene reached 2,487 million ton/year.
Thus nothing wrong if it was said that the dependence on the petroleum energy was really high.
Meaning the future of alternative energy would be bright as the replacement of fossil petroleum.

When the dream to become the palm oil producer as food stuff could not afford to wrap up
Malaysian country, thus the dream was then diverted to the hope to become the producer of raw
material for biggest alternative energy in the world, although the first dream was not vanished from
the mind of the government of Indonesia. Climate suitabillity, land area, availability of cheap
manpower made the plant of raw material producer grow healthy in this country. And another
reality that Malaysia experienced the stagnation of estate expansion except for Serawak and
Sabah in Kalimantan opening the change of Country of Indonesia not only as the producer of raw
material for food stuff but also alternative energy /biofuel.

As the umbrella for the interest of project provides the machine meal, the government issued
several policies to support the alternative energy project. There was the Government Rule No 5
2007 about the national energy policy, the Presidential Instruction No 1 2006 about the supply and
make use of biofuel as alternative energy, the Presidential Decree No 10 2006 about the formation
of national team on Biofuel development in order to accelerate this project more proved that “the
wet” of this project. There would be the time where the palm oil product no longer ended in the
shopping center for food, and cosmetics, but it ended in SPBU.

When the biofuel project now became the focus, not only at the elite level but also at the lowest
community level, although actually they did not know the substance of the Biofuel itself, had made
the land, estate, wet field, oil palm tree, to become the things which were seized, had made many
people did not care about another food crops. And when this project run, and had become the
dead price for the future issue, the question was: Was it capable Biofuel to answer the poverty
issue and to clean the climate? Or even this “irrational imitative behavior” more dissapeared small
people in poverty, hunger potential, and more warming the earth?

To find out clearer about the answers of some questions above, we explained about the poverty
potential, hunger and the potential of earth warming in this report then taken from field
investigation, document research and data related to biofuel project and impacted mainly in Jambi
province.
Chapter I

A. Situation of Oil Palm Estate in Jambi Province

From year to year, the growth of oil palm estate in Jambi province can be said it is very
dynamic, where every year experiences the increase of number of area. Until the year of 2006,
the oil palm estate had experienced the growth which was very significant, from 365,304 Ha in
the year of 2004 increasing to 403,467 Ha in the year of 2005, and in the year of 2006
returning to experience an increase achieving 422,888 Ha1 or increasing to achieve 4.81%,
meaning it happened the addition of estate area around 40,000-60,000 Ha/year2. And
according to Governor of Jambi Province that it was planned in 2007 the estate area would be
increased to until 1 million Ha3. The dream was not only the idea, beside this commodity
became the support of alternative energy in the future, apparently this commodity could result
the high devisa for Jambi province. You see, if in 2004 the export volume reaching 4,350,000
kg with the value of US$ 1,457,000, so the export volume in 2005 increased into 97,858,360 kg
with the value of US$ 43,417,070. But there was the export volume decrease in the next year,
i.e. in 2006 which volume was only reaching 93,000,000 kg with the value also decreased i.e.
US$ 31,750,000. But although the decrease of export value did not influence the government
plan for keep giving the wide space for this sector growth. Indubitably if the provincial
government targeted the estate area reaching 588,441 Ha with the productivity prediction
reaching 2,854,103 ton CPO/year4.

Persentase Perkebunan sawit jambi

88.407; 22%
perkebunan Inti(swasta
149.659; 37% dan negara)
perkebunan plasma

perkebunan rakyat

165.401; 41%

The oil palm fever not only influenced the government of Jambi province, but had affected the
existing districts in Jambi province, from cutting the forest to become the oil palm estate to
conjure up rice and wet rice fields to become oil palm trees. For example, Tanjung Jabung
Timur District would plant the oil palm in the wet rice fields which were regarded as no longer
productive5.

1
Annual Report in Jambi Province 2006
2
Annual Report of Estate Agency of Jambi Province 2005
3
Kompas, 19 April 2007
4
Annual Report of Estate Agency of Jambi Province 2006
5
Jambi Ekspres, 19 April 2007
The oil palm program in Jambi was started in 2000, although actually the oil palm estate had
been there in 1986 where in this year the area only achieved 6,000 Ha. The inclusion of oil
palm estate development project followed the transmigration development, where at that time,
beside rubber, oil palm became the commodity which needed the mobilization of manpower
and farmer, which then was parallelled with the poverty elevation program and the
development distribution program which was carried by New Order.

But it was very regretted that the future plan of estate in Jambi province was never poured out
in the blueprint of oil palm estate of Jambi province, so it was not astonishing if then the
development of oil palm estate never followed the principles of RTRW above all the principles
of environment and social. It was not astonishing if the estate sector became one sector which
was very satisfied with the social and environment conflicts.

68.504 Ha
181.294 ton

14.663 Ha
13.254 tons
77.530 Ha
205.982 tons
101.116 Ha
192.481 tons

63.878 Ha
146.046 tons

40.493 Ha
124.728
37.283 Ha
72.810

MAP OF OIL PALM ESTATE AREA AND PRODUCTION IN JAMBI PROVINCE IN THE YEAR OF 20056

The plan of oil palm estate in Jambi Province put RENSTRA Department of Agriculture,
Propeda and RENSTRA of province in the years of 2001-2005 as the development base. With
the target which had been determined would be carried out in the two programs i.e. the
agribusiness development program and the development program for food endurance and
safety. But was it correct if the presence of oil palm estate had helped the realization of food
endurance in Jambi province? Or it became the cause of the more and more lost of estates
and wet fields as the food source of community to change into the oil palm estate?

6
Processed from the Estate Statistics of Jambi Province in 2005
B. Hotspots of Biofuel Program In Jambi Province

Biofuel or now it is more known as Agrofuel is oil or energy which is produced from all kind of
plants containing oil level (palm oil, soybean, sunflower, castor oil fruit and so on) which will
produce biodiesel and plant which is fibrous and starch and containing high sugar (corn, sugar
cane, cassava, and on) which will produce bioethanol. The two products are replacing the use
of oil which is coming from the bowels of the earth/fossil and coal. If the biodiesel is expected
to be able to replace the diesel fuel, so the bioethanol is expected to be able to replace the
gasoline. So it is quite enough, that later the motorized vehicle no more emits the smoke from
the petroleum incineration, but from the incineration of plant oil.

Nationally, this program has been officially reverberated in Indonesia since the president
issued the presidential instruction No 1 in the year of 2006 about the supply and use of biofuel
as the alternative energy, and Presidential Decree No 10 in the year of 2006 about the
formation of national team of acceleration of Biofuel development. And since then, the whole
program which is produced by the government, is to support this program. There is the
PPAN/Program Pembaharuan Agraria Nasional providing land of 8 million Ha, and Land
Rehabilitation program with the concept of People Plant Forest (Hutan Tanaman Rakyat) of 9
million Ha, for estate revitalization program has prepared the land of 2 million Ha, while for
Vegetable Fuel (Bahan Bakar Nabati) program itself has allocated the land of 5 million Ha, and
the entire government program has been intergrated with the financial or banking policies.
Where the credit model which will be contributed later has the requirement that the
development of oil palm estate for supporting the government program about BBN will become
the funding priority.

If in the national scale it has been scenario like that, the regions becoming the concentration of
oil palm estate are also not ashamed to make the oil palm estate sector to become the regional
main commodity. Nothing excepted Jambi province, since BBN program nationally is
reverberated, the government of Jambi province directly states that Jambi is the most ready
with the government program. Where it is planned, Jambi will develop the estates achieving 1
million Ha, the estates will become the supply for cooking oil company and also the factory
which will produce biofuel.

Beside it will developed the oil palm estate as the fuel for biofuel, the government of Jambi is
also proclaiming the development of biofuel factory which will process CPO from various raw
material supplies from various oil palm estates existing in Jambi province and also raw material
supply from the estates of oil palm farmer which area is reaching 55% from the area of oil palm
estate on the whole. There is PT Agrowiyana which will conduct the expansion aiming to fulfil
the raw material for Biofuel which will be produced by the factory to be developed in Batam
Riau Province, PT Agrowiyana will cooperate with Bakri Rekin Energy or its brother which is
also sheltered under Bakri Sumatera Plantation. Beside that, there are also PT Biodiesel and
PT Bioenergy which only concentrate on the biofuel factory development.
Location becoming the target of Biofuel project7

PT Agrowiyana (Bakri) luas
kebun untuk biofuel 25.000
Ha, untuk bahan baku pabrik
biofuel di Batam dengan
kapasitas 60.000-100.000
ton/thn
Pabrik PT Biodiesel
Jambi, kapasitas 1000.000
ton/thn, yang akan disuply
dari 27 pabrik kelapa
sawit di Jambi

PT Bioenergy kapasitas
1.500 kiloliter/hari, pabrik
akan dibangun berdekatan
dengan kebun PTPNVI

a. Bakri Group and biofuel project in Jambi province

Maybe because this group is very serious at the oil palm estate sector, or maybe
because its capacity to read the opportunity, for the period of time of 1 year (2006-
2007), this group will be able to conduct the expasion in the estate sector, in one year
only the company has added the estate company from only 4 units in the year of 2006
to become 8 units in the year of 20078. Not only its seriousness to develop the oil palm
estate as the food material, this group which has been gated by Aburizal Bakri also
steals a glace at renewable energy as the plan in the future. Indubitably, Bakri
Sumatera plantation as the holding company for estate sector established PT Bakri
Rekin Bioenery in the mid of 20079.

To develop the business in the renewable energy sector, this group which also
occupies this telecommunication sector, has provided the land of 25,000 Ha in Jambi
province, not only developed the estate as the land for raw material supply, this group
has also planned to develop the biofuel factory in Batam with the capacity of installed
achieving 100,000 ton in Batam10.

7
Processed from the local, national, international information and field investigation
8
PT Bakri & Brother Tbk. In Analyst Briefing Nov 2007
9
PT Bakri & Brother Tbk. In Analyst Briefing May 2007
10
PT Bakri & Brother Tbk in the Analyst Briefing Nov 2007 about Expanding Estates Areas &
construction new processing facilities
Bakri Group has operated in Jambi province since obtaining the permit for location in
the year of 1991 and getting the HGU certificate in the year of 1995 with the company
name of PT Agrowiyana located in the area of Tebing Tinggi Tungkal Ulu, Tanjung
Jabung Barat District. According to the annual report of this group, the estate land
operating in Jambi which has been existing to achieve 17,147 Ha with the detail of
9,356 Ha is the nucleus estate, and the rest is the plasma estate or around 7,701 Ha.
Whereas in the location permit which was issued in 1991 only reached 13,000 Ha and
the year of 1996 it reached 1,200 Ha11. Beside having the estate area which has
produced, this group also has land of 1,500 Ha which is in the estate development,
and has the land bank achieving 17,000 Ha which of course it is prepared to support
the development of oil palm estated. If the land which has already been there is for the
food material supply, so the land which is the new development process of course will
be prepared to fulfill the raw material need of their biofuel which is planned in the year
2008 has been ready to produce the biofuel.

Beside PT Agrowiyana, there is a local company which they bought in the mid of 2007,
and the company operated in Muaro Jambi District located under the management of
Bakri Sumatera Plantation/BSP, the company name is PT Sumberpratama Nusa
Pertiwi (PT NSP) which does not only has owned the estate but also has owned the
CPO processing factory. PT NSP which beforehand is owned by this local company,
operated on the turf land, so according to the information of Public Relation of PT
Agrowiyana, almost every year the oil palm plantation which area reaches 8,000 Ha for
nucleus estate and 1,600 Ha for plasma always soaked flood if the rainy season
comes, and always burnt if the dry season comes. The potential of detriment which is
big is to push the company using the partnership scheme with the pattern of 80:20, to
cover the detriment experienced by the company. But the question is, why the
community should pay the detriment?

b. Who will follow Bakri?

Beside Bakri Group which has planned will seriously occupy the project of vegetable
fuel (bahan bakar nabati) from the palm oil specially in Jambi province, widely there
are some big groups which is also not inferior to, for example Wilmar Group which
bases in Singapura will pull the Archer Daniels Midland/ADM which has been
announced last year, and this company plannned will develop biofuel factory in Riau
province with the name of Wilmar Bioenergy which will produce biofuel of 350,000
ton/year12. Wilmar Group has 1 affilliate which also operates in Jambi province with the
concession area of the estate reaching 20,000 Ha.

Don’t want to be lose in the two players above, not ill-timed Astra Agro lestari will
develop 2 Biofuel factories all at one, 1 unit in Riau and 1 unit in Central Kalimantan
with the value of US$ 14 juta. Of course, these groups will follow the investors from
overseas to fund this project.

11
Investigation of October-December 2007
12
Data Base SETARA tentang Agrofuel di Indonesia 2007
Biofuel Investment Reach Rp 7.67 Quintillion

15/01/2008 17:41:19 WIB
JAKARTA, investorindonesia.com

Badan Koordinasi Penanaman Modal (BKPM) until 31 December 2007 had given the
investment agreement for at least 17 companies running in biofuel development of Rp
7.67quintillion.

"The investment consists of 10 companies of penanaman modal asing (PMA) and
seven penanaman modal dalam negeri (PMDN). They are the companies investing
biofuel in a large number," said Secretary of Tim Nasional Pengembangan Bahan
Bakar Nabati, Evita H Legowo, in Jakarta, on Tuesday.

The ten companies of PMA with the total investment of Rp 3.42 quintillion are PT Pelita
Agung Agri Industri of Rp 626 billion in Riau, PT Murini Samsam of Rp 515 billion in
Riau, PT Darmex Biofuel of Rp 423 billion in West Java, PT Sari Dumai Sejati of Rp
422 billion in Riau, and PT Eternal Buana Chemical Energi of Rp 399 billion in Banten.

Beside that, PT Eterindo Nusa Graha of Rp 357 billion in East Java, PT Ciliandra
Perkasa of Rp 293 billion in Riau, PT Mitra Puding Mas of Rp 146 bilion in Bengkulu,
PT Anugrah Inti Gema Nusa of Rp 123 billion in East Java, and PT Bina Fitri Jaya of
Rp 115 billion in Riau.

While, PMDN which has obtained the approval from BKPM with the total value of Rp
4,25 quintillion is PT Adi Sakti Persada in Jambi of Rp 709 billion, PT Bumi Sriwijaya
Abadi in South Sumatra of Rp 709 billion, and PT Bio Energi Mas in Riau of Rp 611
billion.

Beside that, PT Bio Ekatama Abadi in North Sumatra of Rp 575 billion, PT Biomestika
Abadi in North Sumatra of Rp 575 billion, PT Nabati Energi Mas in North Sumatra of Rp
570 billion, and PT Indo Lampung Buana Makmur in Lampung of Rp 500 billion. Evita
also said that, until 31 December, the realization of cassava planting has reached
52,195 ha from the target in the year of 2010 which is 782,000 ha and sugar cane
realized 400,100 ha from the target in the year of 2010 which is 698,000 ha. For the
castor oil tree, continued Evita, it has realized of 121,000 ha from the target in the year
of 2010 which is 1.54 million ha and oil palm of 10,000 ha from the target of 3.43 million
ha. She also said, the production realization of "bioetanol" until 31 December reached
135,000 kiloliter per year. (ant/gor)
Chapter II

A. Biofuel: creating the new battle (the fight portrait of land and commodity in Jambi province)

“ more than 3 billion people in the world will die before its time becase hunger and thirst because of the American dream
to change the food material like corn will become the fuel for carl” Castro 2007

The community of Indonesia is threatened hunger! Maybe this word which is suitable to be
yelled out when seeing the condition of Indonesia at the moment. According to the report
of the world food organization, Food and Agriculture Organization (FAO) in Crops Prospect
and Food Situation which is just released encodes at least around 37 countries, including
Indonesia which need to get the special attention related to sensitive to food supply in the
last year and which is enable to keep on going in the year of 2008. The food sensitivity is
occurred in the area which ih hit by the natural disaster like earthquake and flood.
According to FAO report that the deficiency of food material is enabled to be because the
production capacity is less, the access is limited, and a big problem in certain area13.

But actually it is not that simple, there is a basis why then the food sensitivity occurs in
various countries including Indonesia. The climate change, has influenced the food
production, the climate change has expressed a flood disaster and a long dry season. And
because the climate change which has made the government develop new program i.e.
preventing the climate change, and one of them is Biofuel project where this project is the
project which will conver the palm oil, soybean and other food material to become the
vegtable fuel (bahan bakar nabati), which in its turn will impact to more concentrated to
food sensitivity and hunger.

Frame of land fight for fulfilling the raw material of cooking oil and Biofuel in Indonesia14

In the year 2010 the CPO need
for domestic market will increase
Cooking oil, from 4 million to 10 million ton
butter

It has prepared the land of 24.4 million ha (5
Big scale oil palm estate CPO million Ha for new expansion/BBN, 2 million Ha
for revitalization, 9 million Ha for rehabilitation,
and 8 million Ha PPAN

Biofuel/biodiesel
which has
replaced diesel In the year of 2010 the
domestic CPO need for
fuel biofuel production in is of 2.01
million ton

13
Harian Bisnis Indonesia, Wednesday, 26 December 2007
14
From the compilation result of biofuel data of SETARA Jambi in the year of 2007
The above frame clearly shows that in the year of 2010 (this year becomes the target of
Indonesia to reduce the emission of GRK) it will happen the concentration the land fight in
Indonesia, and including in Jambi province which points are the lands of agriculture, and
the forests of living source of community will be disappeared.

If in the national scale it has been prepared the land of 24.4 million hectare, so to support
the land readiness, Jambi province has provided the land of 128,000 Ha to support the
Rehabilitation program15, although actually the initial concept is People Plant Forest (Hutan
Tanaman Rakyat)/HTR aiming to fulfill the shortage of wood raw material for industry, but
then it is given the laxity for community to select the plant which is regarded in accord with
the capacity, and we will surely guess, and the answer is OIL PALM. Beside because the
oil palm has been very familiar with the community, the farm of the wood for industry is
very small the profit compared to the farm of oil palm. Beside price, the availability of oil
palm factory is very many in Jambi province. The land which has been prepared is ex-
HPH which of couse is in form of secondary forest, and it is misfortune 3 area prepared is
in the buffer zone of 3 National Parks in Jambi province (PT Hatma Shanti is on the border
of TN Bukit 30, PT Siva Gama is adjacent to TN Bukit 12, PT Rimba Karya Indah is near
with TNKS).16

Frame of fight of CPO commodity, for human or for machine?17

The world need reaches: 33 million
ton in the year of 2005. And
Indonesia can only supply 10 million
Cooking oil, butter
ton for world market from the
production of 13.3 million ton from the
estate land of 6 million Ha.

Big scale oil palm CPO
estate

?
Biofuel/biodiesel
which will replace Market demand will BBN reach 71
diesel fuel million ton

If in the initial frame describing about the potential of land fight due to Biofuel project, in the
next frame it is clearly seen that it will occur the fight against raw. If in 1960-s to 1990-s
CPO will only end in the minimarket in form of cooking oil, margarine and so on, so since
2000-s CPO will not only end in the minimarket, but also it will end in SPBU.

15
Presentation paper in the workshop on HTR socialization in Jambi province in 9 January 2007
16
Presentation paper in the workshop on HTR in Jambi province in 9 January 2007
17
Presentation paper of SETARA in the program of Reflection at the End of Last Year about 2008 and
Expectation of Biofuel. On 31 December 2007
The problem then emerges if we pay close attention to two frames above. That will occur
the forest opening on a large scale to fulfill will be the land for fulfilling the food material
which has source in oil palm and fulfilling the biofuel raw material, because if it is still
determined on the lands which is neglected as the saving for being developed the oil palm
estate, of course the impossible matter, because almost the entire land which is neglected
has been managed by the community, both local and outsider. Beside that, the expreience
during this time proved that almost 80% of oil palm estate which is existing at the moment
is in the beginning in form of secondary forest and underbrush (agroforest estate) and
community forest. So, it can be predicted that the opening of estate land for fulfilling the
food material and fulfillment of Biofuel raw material will be more threatened the existence
of natural forests which are left in the National Park, the sensitive lands like turf, and
community estates, which in turns will be more exacerbating the estate conflict.

Beside the land fight, also it will occur the commodity fight, and we already know that it will
be won by whom, of course the fight will be won by Biofuel which nota bene has the more
competitive price. It can be said that the fight between human and machine, it is the same
as the fight between the poor and the rich.

a. Biofuel and decreasing of food producer area in Jambi province

If from year to year the growth of oil palm estate area keeps increasing, so the wet rice
field area keeps decreasing. Not only because it keeps decreasing the farmer’s
interest of rice to keep owning the rice field because of the availability of good climate,
but also because of the rice price is no longer promising. And the most important is in
the policy scale, it occurs no integration between agricultural and estate policies. If the
expectation toward the estate sector is such good, from the access opening toward
credit, the market to infrastructure, not like that with the expectancy toward the
agricultural sector (read; food). There is no “soft” credit, there is no good infrastructure
development, and even there is no “soft” credit facility for food farmers. It is not
surprising if then occurred is that the change of local community agricultural model,
from the subsistence agriculture to industrialist agriculture.

Frame below is clearly describing the happening of the increase of estate area, and
the happening of wet field area as one example of community food production areas.
Luas Lahan Sawit & Sawah Propinsi jambi 2004-2006

450000
422888
400000 403467
365304
350000

300000
250000 245248 240018 Saw it
220324
200000 Saw ah

150000

100000
50000

0
1 2 3
Source: BPS Jambi Province

In another case, in various districts of Jambi province, it occurs the big transfer of wet
rice field area into the oil palm estate. Like Tanjung Jabung Timur District which is in
the coastal area, almost 70% of rice field dependent on rain and unirrigated rice field
now has changed into oil palm estate18. Due to the more narrowing of food agricultural
land in Jambi province surely becomes the challenge where it will be food sensitivity in
Jambi province. It is misfortune again that the direction of estate policy doed not touch
the food security issue above all the food sovereignty.

If the case above describes that the community changes from the rice food farmer to
oil food farmer which is cause of not competitive rice food price compared to oil food,
and the treatment of policy toward the oil food agricuture better compared to food
agriculture. Thus in many cases, the land decrease of rice food agricultural area is the
impact from the transfer of function of food agricultural land to become the oil palm
estate land. On the research which we do that almost 50% of area which now
becomes HGU big scale oil palm estate initially is the productive agriculture which is
planted by unirrigated ricel field19. It is not surprising if the conflict created between
community and company is dominated by not only the traditional land issue, but also
the issue of transfer of food agricultural land function owned by the community which
is forced.

If only for planting “food” material for human in various Europe countries by changing
the local food lands has donated the occurrence of decrease of agricultural area of
local community, above all if added with Biofuel project. And of course the
communities which are now has transferred their functions to become “food for human”
farmers will double their roles as the “machine food” farmer and when the forest is
18
Complain of Farmer from Muara Sabak in the program of Talkshow RRI in December 2007 Jambi
19
Assistance case in Penyabungan Sub-village 1998-2006
already gone, when the rice has been sensifitive, and when the stomach is started to
starve, so at that time we will realize that we cannot drink CPO.

b. Biofuel and the change in the nutrient consumption pattern of poor community in Jambi
province

Toward the closing of the year of 2007, not only the price of petroleum which is piling,
but also the price of cooking oil which is coming from the oil palm. Until the opening of
the year of 2008 the price of cooking oil is not moving go down like what is predicted
by many parties as the policy abuot the tax increase of CPO export reaching 10%.
The example of the price of poured down (curah) cooking oil now reaches Rp 10,000
per kg20, while in Bantul Jogjakarta the price of cooking oil reaches Rp 10,300 per kg.

Harga Minyak Goreng Curah Propinsi Jambi Tahun 2006-2007

8205 7873 8484 8330 8067 8133
7579
7253
6481 6305 6442
5839
5252 5187 5019 5360 2006
4770 4697 4684 4553 4565 4620 4613
2007
ni
ei

li
et
i

r il

s

r

r
er
r
ri
ar

Ju

be

be
be
tu
Ju
M
ua

ar

Ap

ob
nu

us

m

m
em
M
br

kt
Ja

pe

se
Ag
Fe

O
pt

No

De
Se

Source: BPS Jambi province

Cooking oil not only experiences the price increase, but also disappears from the
market. Indubitably, this which makes the community more and more be in a complete
dither. The price increase of cooking oil is not only triggered by towering of the price of
petroleum which now reaches US$100 per barrel, but only some other factors which is
also influential, which actually many parties which does not make this factor as
something which should be analyzed. And some factors below put biofuel as the key
factors which are not only for conflict issue, food sensitivity, but also the forcing to the
community to be well adapted toward the potential of nutrient sensitivity.

Some factors are21 :
1. The oil palm entrepreneurs are more interested to export CPO raw material to the
international market, this is because the price is higher compared to domestic
market. Without exception the companies which operate in Jambi province, during

20
Liputan 6 pagi SCTV on 21 January 2008
21
Paper on position of SETARA which its publication is in 2007
2006 the export volume of CPO Jambi reached 93 million Kg or equivalent with
31.75 million US$22. Meaning, the companies of oil palm keep making the export
market as the main focus in reaching for profit. The height of CPO price in the
international market is because the need of international market for conversing
soon the fossil fuel to vegetable fuel. Indubitably, than many countries mainly
Europe, fight for the raw material of this CPO. The market law is then played, the
raw material is scarce, the price increases.

3,756.28
4,095.66
3,441.77

2,454.60 10,989.15
2,092.40
10,376.19

1,080.90 8,661.60
1,087.27
6,333.70 6,386.40
4,903.21
4,110.00

2000 2001 2002 2003 2004 2005 2006*

Volume (ribu ton) Nilai (juta dollar AS)

Source: Central Statistics Agency23

2. The accumulation done by persons, which want to reach for profit from the
increase of the price of palm oil. Always happened, the accumulation of raw
material will follow the price increase. The accumulation will cause the scarce of
raw material in the market. The accumulation is also closely related with the need
of buifuel raw material in the international market.

3. The accumulation done by the collectors in the overseas. This prediction is
strengthened by the high volume of export nationally, if in the year of 2005 the
export volumen is only 9.6 million ton so in the year of 2006 the volume increases
into 11.5 million ton. Whereas the overseas market need during this time is
completed by the CPO supply from various producer countries like Malaysia,
Indonesia and PNG.

4. The government tendency which keeps rolling the issue of Bakar Nabati use, one
of them is biofuel (bahan bakar nabati from oil palm raw material) without seeing
the supply suitability so there will be no anticipation of the occurence the raw
material fight for the interest of food stuff and BBN raw material. Since the issue of
biofuel energy use as renewable energy and as the energy which is environment-
friendly which can lessen Gas Rumah Kaca/GRK, the government of Indonesia

22
Annual Report of Estate Agency of Jambi province in the year of 2006
23
Kompas, 5 May 2007. Warga Serbu OP Minyak Goreng.
like finding new toy. This is because Indonesia has area and natural resource
which is rich and adaptive with oil palm estate as biofuel main raw material. It is
not surprising if then the government issues various policies about the acceleration
of estate development for biofuel raw material, like INPRES number 1 in the year
of 2006.

5. Almost 90% of biofuel factory which will operate in Indonesia is the CPO
producers as food stuff, and of course this reality will threat the cooking oil raw
material.

Adaptation toward the potential of the lack of nutrient?

Ih in the climate change, to handle the impact of change is by adapting toward the
climate change, how is also with nutrient adaptation? Due to the price increase of
cooking oil which also as one of the nine Staple Supplies (SEMBAKO) can force the
community to lessen the fat consumption which comes from the cooking oil, which of
course has potential for the performance of next generation. The decrease of
consumption happens for family which still has nutrient choice for the cooking oil
replacement, but how is with poor community? According to our investigation, we
found that now poor community, fried trader, food trader start to consume used oil
(Jelantah), which of course this oil is not feasible to be consumed24.

If the issue of food unsafe (rice, ubi dll) is the impact from the development of oil palm
estate as Biofuel raw material, so the food unsafe (in form of cooking oil) is the
consequence from the fulfillment of food stuff for machinery in Europe.

Biofuel has to sacrifice many generations, biofuel also has made the poor community
becoming poorer, and has made them havin no access to obtain the good nutrient. Is
the interest for giving machine food should sacrifice the next generation?

B. Biofuel and threat for forest preservation, and the local community right in Jambi province
24
Investigation of SETARA on 26 May 2007 in the traditional market of Talang Banjar , Jambi province.
a. Forest; among the two choices. Surviving or Gardening?

Above we have already got the picture how greedy the machines which “environment-
friendly” are, the existence has not only pushed human to step aside from their
estate/garden, but also has pushed the human to sacrifice one of their food stuff. If
above Biofuel has narrowed the community agricultural space, now the biofuel also
has potential to lessen the moving space and wild animal living space. One of them is
the existence of one of companies owned by Torganda Group of Ganda Sitorus which
got Izin Usaha Perkebunan (IUP) on 5 December 2006 issued by Regent of Merangin
District Rotani Yutaka. The permit for cultivating the oil palm estate is allocated for one
of affiliates owned by Torganda Group to be operated in Sungai Manau Sub-district
(the sub-district having boundaries with TNKS) which will operate with the area
reaching 20,000 Ha. PT Tujuh Kaki Dian gets the permit of location with the
partnership pattern in the local communtiy with Number 550 in the Year of 2005 dated
17 October 2005 will be started in 2007-2011 with the locations in 25 villages25.

If the forest has been finished due to the development of oil palm estate and industrial
timber estate (HTI), now the forest which is left behind is the National Park, and now
the existence is threatened, not only from the illegal logging actors, but also due to the
expansion of oil palm estate. Beside the National Park of Kerinci Seblat in Kerinci
District which now started to be slowly scraped due to the existence of a company
owned by Torganda group, National Park of Berbak is also threatened with the
existence of oil palm estate owned by Minamas Plantation based in Malaysia, the
existence of company in the bordering area of this turf National Park has caused the
fire which continuously occurs during the dry season. It is not surprising if the company
in Malaysia which is very playing role in exporting the smoke to the neighbour
countryis including Malaysia.

According to our notes that the forest in Jambi province has not many choices, except
for illegal logging, oil palm or HTI. It is not surprising that the forest remained is only
the forest existing in National Park, which also its condition is very apprehensive
about.

b. Biofuel; the threat for local community right in Jambi province
25
Chronological Report of PT TKD, Lembaga Tiga Beradik in the year of 2007.
Konflik Diperkebunan Kelapa sawit Jambi

60
56
53
51
50

40

32
Tahun 2001-2003
30
Tahun 2005-2006
22
20
20

9
10

1
0
Kemitraan Tanah HGU Limbah

If to produce the raw material for the need of human food has expressed the conflict
which is very varied, moreover if then the expansion of oil palm estate to produce the
raw material for vegetable fuel, biofuel, which is nota bene for giving the meal to
machines.

The traditional land conflict dominates the issue in the estate in the span of time of
2001-2003, then followed up by partneship issue, and the partnership was dominated
by the partnership pattern of PIR-Trans. But the years of 2005-2006 or also called the
time span Biofuel project is increasing, the issue in the plantation is dominated with the
partnership conflict. The domination of partnership conflict is not meaningful that the
traditional land conflict has been finished, but not, and the partnership confict is the
new realization of traditional land conflict, because almost some of the completion of
traditional land conflict is finished with the partnership compensation which point has
also a heavy issue. And the traditional land which becomes its bet. And Jambi
province is saving the conflict wave which is bigger.

Beside from the Indonesian dream not only as the CPO producer as food material but
also biofuel, now the pressure toward the local community right toward the land now
added again with the dream of competitor country convinced Malaysia to develop the
oil palm estate. And darn it almost 1.5 million Ha the land of oil palm estate in
Indonesia is under the management of company and group in Malaysia country. For
example, Golden Hope Sdn, which will expand the estate area reaches 150,000 Ha of
estate in Indonesia which is allocated to plant the raw material for 4 their biofuel
industries which will produce biofuel reaching 100,000 ton/year26.

26
Infosawit 2007
Chapter III

A. Biofuel; who needs it?
Indonesia keeps pushing the CPO production to the limit, until 2006 the CPO production
reached 15.9 million ton, and it is expected in 2007 the production reached 17.1 million
ton27. And it is possible the production will keep increasing if seen from the government
keeps incite the expansion in the oil palm estate. Beside because the CPO crude oil price
reached U$ 800-900 per ton, the need of raw material for biofuel also became the factor
keep being incited this commodity.

If in the previous chapter, it is recorded that the biofuel project has chased away the
community from the land, has made the poor community unable to farm subsistence again,
has made the poor community adapt to change the nutrient need. Thus, in this chapter, we
will see that, who actually needs this phyto-fuel? So should sacrifice the community
prosperity?

1. Rich countries, Bioenergy and fulfilment of living style

The price of petroleum in the world market which keeps increasing, has forced the rich
countries which nota bene as importer of petroleum is turning the reins. Not only the
price, but the provision is started to diminish and the global warming issue becomes
the trigger of rich countries which no longer to seek for the petroleum field, but it is
started to hunt for the vegetable oil field. It is not surprising if the prediction about the
world war III is the vegetable oil field fight. As the example, United States of America
which only has the population around 4 percent of the world population need 35
percent of the total world energy. Meaning every USA citizen consume energy eight
time higher compared to the citizen of developed country. Whereas beside Middle
East countries, Indonesia, Venezuela are including the countries which have field of
this energy, do not consume energy like its consumption of the rich country citizen.

With the consumption level on energy which is such high, inversely proportionaly with
the energy reserve existing has made the rich country then seeking the new energy
field. The climate change mandates in order the use of energy which is sourcing from
the petroleum is converted to become the use of renewable energy. But the choice is
falled down on the bioenergy or energy which is sourcing from the plant.

With the meaning it is not disturbing the living style, the rich countries become the
global warming issue as the mask. Indubitably, the rich country like United States of
America competes for pushing this energy. If USA has issued the policy about the
subsify for company which is developing the Agrofuel industry among them the big
companies such as Cargill and Monsanto impacting to the occurence of transfer of
soybean estate lands to become the corn estate field. So other rich country such as
European Union in lively groups invest their money to build the estates and biofuel
industry in Asian countries including Indonesia.

The impact which is very felt by the poor community in the entire world is the
bioenergy program, the poor community throughout the world should experience
hunger, and since this program is rollled on, the price of food stuff like wheat, milk,

27
Kompas 12 December 2007
cooking oil, soybean, sugar and food stuff which has its basic stuff oil experience the
increase price from year to year. So the beginning of 2008, the condition all the more
describes that due to the conversion of food stuff become fuel has been stated that the
world is in the apprehensive condition!

Whereas in the Kyoto protocol, it clearly mandated several countries producer of
carbon emission, to lessen the Gas Rumah Kaca until the average of 5.2 percent frpm
the emission level in the year of 1990 in the period of 2008-2012. If seen the interest of
advanced countries, not for lessening the carbon emission, but it just increases GRK,
because forest clearing away, turf conversion and land burning shift the land function
donates the biggest emission. Not only that, the activity for producing the bioenergy
not rarely use the ways which are aggravating the concentration of GRK in the
atmosphere.

2. American and European Union; infected the policy blunder to Indonesia

Rich countries are the countries which are very interested in biofuel project, beside
because of petroleum reserve which is more and more diminishing, the environmental
issue becomes one of their mandate to lessen emission to become the biofuel as the
answer for the two things. It is not surprising when the mandatory energi is falled down
on bioenergy, almost entire European lands state that there will replaced their
consumption to biofuel.

Some policies in rich countries above are then translated by the government of
Indonesia to become the language of Pro Job, Pro Growth and Pro Poor to justify the
policy what they issued, although actually it contains the meaning of pro Job bagi
industri, because the existence of biofuel industry and its estate cannot handle the
unemployment in this country, pro growth gives the meaning of macro economy
growth in the meaning of the country income height of this sector, but not pushing the
micro economy growth to become the living support of low class community, and pro
poor with the translation that biofuel has added the length of poverty occured.

Because the reality is, the policy of rich countries to make bioethanol and biodiesel as
the mandatory energy has made corn, oil palm, soybean, tuber commodities to
become the commodity which is fougth for because it occurs the increase of demand
until reaching 30%, and cause the prices of several commodities experience the
increase and even experience the scarcity.

3. Biofuel; Who will have profit?

Although the biofuel project has become the national program and then spread to
regions in order to support the government program, but keep possible the allocation
of this project for the community is seen small. This project only will add the quantity of
oil palm farmer, this project will only add the quantity of oil palm estate, and of course
the result cannot be enjoyed by its planter in form of biofuel product. Beside because
of the not competitive price with the price of oil fuel from fossil, the machine is needed
which indeed is made for consuming the fuel from vegetable.

Beside that, for producing the fuel of biofuel, it is needed the cost which is not little,
moreover, the fossil matter is still dominating the mixing of the maker stuff of this
biofuel.
It can be said that the Interest of CPO for biofuel raw material, this time can only be
enjoyed by the international market, because PERTAMINA (Indonesia state energy
corporate) which is appointed by the government as the company which produce
vegetable fuel state that the stopping of production is because the detriment which is
experinced during this time(May 2006-March 2007) reaching Rp 16.9 billion. This
detriment is experienced since the biofuel program is launched in May 200628.

B. Biofuel; the challenge for MDGs

1. MDGs and Global Committment in Renewable Issue

Millenium Declaration signed by 189 countries in the meeting at high level PBB which
contains among them about the international solidarity for development and poverty
reduction throughout the world, including Millenium Development Goals/MDGs, is the
initial of the emergence of MDGs as the world initial commitment.

To fight against the poverty and hunger is the first point of 8 (eight) Millenium
Development Goals (MDGs), this is very basic since the world target for reducing half
of poverty figure in 2015 with the special challenge of Afrika.29

MDGs is developed from commitment and agreement made by countries in PBB and
other conferences in the world, which then becomes the national commitment, but the
achievement is much depending on the initivative in the local level. This initiative is
escorted with various policies, by referring to the poverty is closely related and has
cause and effect with the policies which are made at local, national and international
levels.

Basically, to fignt against the poverty and hunger are the minimum needs which
become the main targets of MDGs, and entry in the qualification with community social
economy right. These ares the efforts to establish a base on the basic principle of the
achievement of MDGs which among them to put in front the community right through
synergization of stakeholder (community, government). Beside that, also MDGs has
principle to localize the aim and targets with paying attention to disparity among
provinces, districts, villages and so on.

Another point which is also becoming the part in 8 Sustainable Development Goals is
the attempt to guarantee the environment preservation. If it is related to the world
expression at the moment various efforts are initiated to synergize this commitment
including the obligation of every country for participating in tackling the global warming.

In this phase, Indonesia itself needs to measure the competence in interpreting the
global commitment meant, because there is complexity which will be faced by every

28
Statement of Hanung Budya, Deputy Director for Marketing and Commerce of Pertamina in Antara 10
May 2007
29
Titik Hartini, Executive Director For Community Empowerment (ACE), Realitas Kemiskinan dan
Pemiskinan serta Pemenuhan Hak EKOSOB di Indonesia, paper, 2006
country without exception Indonesia. We are not only demanded to conduct
reconstruction toward one side but exactly should give continuity to other side. As the
example, to preserve the sources of biological power will relate with the marginal
community right and or tranditional community. One side of community has obligation
to maintain the forest as the world lungs, but on the other side the government
perpetuates the investor’s foot to add the forest leafless, removes the community
which become one unit with the ecosystem, and replaced with monoculture estate with
the reason which refraction its meaning and without direction.

Biofuel is an entry point to guarantee the environment conservation with the
requirement it should be a road map solution which should be passed with the
involving of various parties which have interest including the farmer which is the main
railway coach in the estate result production process

During this time the farmer is the victim in the circle of estate development concept
among other parties. Farmer has weakness in fighting for his/her right. Farmer also
has narrow ‘space’ in questioning what has been acted with the result of my estate.

Road map solution should be guarded with aim and certain step accompanying it. As
the example to develop the global partnership for development as the global
commitment which is poured forth in MDGs should be based in the big scale estate
development context which in its process also involves the farmer.

2. Biofuel; and a lot of questions about poverty, hunger and global warming

Three questions above are something which should be answered, and Biofuel is
regarded to be capable of answering all. Pro Job which is expected to be able to
lessen the figure of unemployement, pro Growth and pro poor which are able to fight
against poverty. And one again, biofuel not only can answer the povery issue, but also
can answer the issue of global warming which also triggers the occurrence of
concentration on poverty and hunger in various world hemispheres. But is it biofuel
becoming the second God in this century?

In Indonesian context, the reduction or efforts to eliminate the poverty is serious
challenge. The wealth of natural resource which is abundant becomes the potential for
reverse for poverty scale in a region. The bigger of natural resource owned, the
potential of marginal community and traditional community to be prevented from
authority of their right become big. Paradigm of neoliberal which is practiced of state
(government through policy) has opened the access for the poverty process with the
involvement of external party like international financial institution like Word Bank, IFC,
ADB, IMF, also the multinational company, transnational, and local entrepreneur with
various propaganda market free, climate change, until to alternative energy (biofuel).

The impact valuation whe the focus is directed to the alternative energy context which
is escorted by the policy which is directed on the sustainable oil palm estate sector for
the fulfilment of biofuel by efficiency of forest land, turf land, and even also agricultural
land. With the scenario of global need, the land ecosystem is changed by the import
ecosystem, like oil palm estate which nota bene comes from Africa mainland. Other
Other pair of scales when the lands should be converted to become the oil palm
estate, the consequence which should answer is the availability of clean water, clean
air, and health problem.

In the downstream sector, the processing industry with the raw material of oil palm is
not developed as expected. Indonesia is only capable in developing simple industry
like processing to become olein and cooking oil, not caprice industry high technology
like cosmetics, biochemical, and other. Beside that, olein industry and cooking oil are
only authorized by one or two companies/big conglomerates with the authority the
market segent which is very big. The government step curb the export with the
increase of CPO export tax and allocate it to domestic market with high price can be
seen as form of economic distortion seriously because the use picker which mostly
economic actor which number only several people, meanwhile other economic actor
like farmer and gardener with big numbers is damaging. The development scheme of
agro-industry particularly of downstream industry for biofuel like that is not taking the
use in the economic development, above all of community prosperity.

The generation of palm oil is one alternative of basic stuff for cooking oil as the staple
need material for the community in Indonesia. Even it is observed about the nutrient
aspect of palm oil is not proved as the cause of the incresae of cholesterol level, even
containing the beta karoten as pro-vitamin A.30 So it is proper if then the palm oil
becomes the plant which is an idol. But, the emergence of biofuel expression has
dragged the position of human food need become the food need for machine. This
shift causes the food stock for human become a littlle, and for guaranteeing the
continuity with the need it is necessary the additional cost.

Beside that, the loss or limited access of marginal communtiy toward the source of
living due to the process of efficiency of agricultural land to become the estate land is
the structural poverty process. The consequence of land conversion does not stop
when the agricultural structure has changed into estate, the food stuff which previously
is easy to get now it is difficult to look for. The structure of community means of
livelihood is changed from farmer to garderner even gardener/garden labor and the
last even to labor in its own garden.

Without realizing the concept of community prosperity which is fougth for by multi party
mainly government, experiences the distortion of meaning. Indicator which puts on the
value that the community prosperity will be materialized if the minimum need in form of
food can be fulfilled. This means that becomes the measure is the need will be source
of living will be food, change into the second indicator, that which become the measure
value is the financial sufficiency and difficult to describe the social-economy condition
of actual community.

And apparently: “the economy indicatory used for measuring the poverty level has
failed to describe the actual condition and cannot be made reference for what which

30
Perkembangan Perkelapasawit, www.deptan.go.id
should be done to handle the important problem and insist in realizing the sustainable
development.”31

31
Farah Sofa (Deputy Director of Campaign, Walhi), Tujuan Pembangunan Milenium: Jangan Menjadi
Tujuan Minimum, 4/7/2005
Monday, 22/10/2007
Biofuel for threatened alternative fuel

JAKARTA: National biofuel industry (vegetable oil), having a source from crude palm oil (CPO), is forced to stop
their production activity since the last 2 months, because the price of raw material which keeps moving up to
exceed S$800 per ton. President Director of PT Sumi Asih Alexius Darmadi said that the price increase of crude
palm oil (CPO) made the biofuel industry cannot be made alternative fuel, following the price of petroleum which
has touched the level of US$90 per barrel. "We do not produce [produce biofuel]. We stop for the time being. For
that moment, almost [almost all companies] never produces biofuel," he said last week. Ideally, the biofuel will
become economic to produce at the time when the petroleum price keeps increasing at the moment.

But the increase of petroleum also is followed by CPO price which at the moment, according to Alexius, has
exceeded US$850 per ton, makes the producer of biodiesel cannot found the point of equilibrium for biofuel to get
replacement of petroleum. "This [now] waits for the equilibrium. The increase of petroleum price just happens and
doesn’t know if it will hold out until when. Meanwhile, CPO itself also keeps moving up. This industry [biofuel] is
dead before growing," explained Alexius. Whereas last July, Chief of National Team for Development of Bahan
Bakar Nabati (BBN) Alhilal Hamdi said that the private investment for biofuel development in Indonesia until the
first semester/2007 reaches US$17 billion (around Rp153 quintillion), increases US$4.6 billion since the program is
moved nationally on January 2007. The private investment which is multi years until 2010 is 75% of the fund need
of biofuel development which is estimated of Rp200 quintillion (US$22.2 billion). "Previously there were 58
investors and corporations which participated in signing the MoU on January 2007. Investor from Sweden, i.e.
Sweden Bioenergy, just stated its interest in the energy sector with the value of hundred million dollar," he said.
(Bisnis, 24 July 2007)

Meanwhile, to reach the using target of 5% biofuel in the energy diversification in Indonesia, the government
targets the land use around 5.,25 million hectares from 22 million hectares of the potential land which can be used
for biofuel until 2010.

Blow to the oleochemical
The increase of CPO price also joins in blowing on the national oleochemical industry. But the price increase of
raw materia can be covered with the increase of selling price, even if not as big as the percentage of raw material
price increase. TheChief of Asosiasi Produsen Oleochemical Indonesia (Apolin) Steve Goei King An said that the
users of oleochemical product understand the increase of selling price because the CPO price keeps increasing.
"Of course there is an impact [CPO increase] to oleochemical. But it is not too big, because the price of [selling the
oleochemical product] in the market covers [production cost]. The market has started to adjust, but the profit
margin is forced to go down in order the selling price is not going up too high," said Steve.

She also evaluates the level of CPO price at the moment making the biofuel production become feasible to be
continued, although the petroleum price also still keeps moving up. "At the moment not feasible again [to produce
biofuel]. The price difference is between biofuel having a source from biodiesel and the soybean has not been too
far. That makes our biofuel industry difficult to keep producing," Steve added. (yeni.simanjuntak @bisnis.co.id)

By Yeni H. Simanjuntak
Bisnis Indonesia