Socio-economic impact assessment of palm oil production

In 1935 Indonesia became the global leader in palm oil export, with a plantation area of 75,000 ha. Seventy five years later it re-gained the number one position that it had lost to Malaysia with a planted area of over 8 M ha, 100 times more than in 1935, but still less than 5% of its land area. In much of the humid lowland tropics, oil palm production is one of the most economically attractive forms of land use. The introduction and expansion of oil palm in Indonesia reflects its economic attractiveness and benefits, but the social interactions between companies and local communities have had a mixed track record that requires attention. Ambiguous and contested land tenure in local communities and the state issuing concession licenses has been at the heart of most of the problems in this regard. In the debate about the potential negative environmental consequences of conversion to oil palm, the development impacts (negative in situations dominated by conflict, potentially positive elsewhere) also need to be quantified. This study characterizes the social and economic context of palm oil production across the various plantations sampled and the smallholders in their neighborhoods that sell oil palm fruit to the mills involved in the study. Socio-economic impact was assessed at two levels: (1) village level (rural development); and (2) household level (livelihood).

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