The Hesitant boom: Indonesia's oil palm sub-sector in an era of economic crisis and political change

By A. Casson. 2000

260 citations recorded by the source corpus.

Planted oil palm areas increased 20-fold and crude palm oil (CPO) production had a 12% average annual increase from 1967-1997. This conferred important economic benefits but threatened Indonesia's natural forest cover. Large-scale plantations displaced local communities and social conflict resulted. Early in the economic crisis, it was expected the boom would continue, and be propelled by currency depreciation and lifting of foreign investment constraints. However, there was a slowdown in area expansion and CPO production. The government estimated that 177 197 ha of oil palm would be planted in 1999, 33% less than in 1997. CPO production declined to only 5 million t in 1998, 7% less than in 1997. Key reasons include: (1) the government's export tax policy; (2) reform policies targeting the oil palm sub-sector; (3) social unrest and consequent withholding of foreign investment; (4) changes to the CPO distribution system; (5) credit access difficulties; (6) changes to the state-owned plantation sector; (7) the 1997/98 drought and fires; (8) decline in the world price of crude palm oil; and (9) increased production costs. The Indonesian oil palm sub-sector is now poised to expand again. CPO production was expected to increase by 12% to 5.6 million t in 1999 due mainly to increased rainfall. Other factors will continue to stimulate plantation development: (1) lower interest rates; (2) regulatory changes that facilitate further oil palm development; (3) debt restructuring opportunities; (4) availability of land cleared in the drought and related forest fires; (5) predicted growing global demand for CPO; (6) government's reduction of the export tax; and (7) cooperation between Indonesian and Malaysian oil palm producers to push up palm oil prices. While most immediate expansion is likely to be in Sumatra, companies will seek concession areas in forest lands in Kalimantan, Irian Jaya and Sulawesi. Without fundamental changes to forest land allocations in Indonesia, expansion in the oil palm sub-sector will continue to reduce Indonesia's forest cover.

Subfields: Ecology

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Citations in the corpus

Research, part of a Special Feature on Local, Social, and Environmental Impacts of Biofuels Environmental and Social Impacts of Oil Palm Plantations and their Implications for Biofuel Production in Indonesia (2012, background): “Casson (2000) shows that, between 1982 and 1999, about six million ha of forestland were converted into oil palm plantations.”
Why do Farmers Prefer Oil Palm? Lessons Learnt from Bungo District, Indonesia (2010, background): “In Indonesia it also provides considerable income to the national and regional governments and, as a consequence, huge forested areas have been earmarked for oil palm development, especially in Sumatra, Kalimantan (Casson 2000) and more recently in the province of Papua (Sheil et al. 2009).”
Sustainable palm oil as a public responsibility? On the governance capacity of Indonesian Standard for Sustainable Palm Oil (ISPO) (2018, background): “On the one hand, this analysis results in a rather pessimistic view -that is often shared by the respondents- in which we conclude that ISPO will not be able to solve problems regarding the competitiveness of Indonesian palm oil in the global market, deforestation of protected and unprotected forest”
The livelihood impacts of oil palm: smallholders in Indonesia (2010, background): “…those on food security, health, social and cultural change, and the loss of environmental goods and services remain little understood (except see Casson 2000; Koczberski et al. 2001; Belcher et al. 2004; Colchester and Jiwan 2006) and further research is urgently needed to address these issues.”
Quantifying changes in the rates of forest clearing in Indonesia from 1990 to 2005 using remotely sensed data sets (2009, background): “A principal deforestation dynamic in Indonesia during this period was the expansion of oil palm estates, which grew in area from 100 000 hectares in the late 1960s to 2.5 million hectares by 1997 (Casson 2000, FWI/GFW 2002).”
Can oil palm plantations be made more hospitable for forest butterflies and birds (2008, background): “Malaysia and Indonesia are two of the most cost-efficient countries in the world for oil palm agriculture due to their favourable climate, rich soils and relatively low labour costs, which allow for year-round harvesting and high fruit yields (Casson 2000).”
Review of Environmental, Economic and Policy Aspects of Biofuels (2007, background): “Similarly in Malaysia and Indonesia, the government has encouraged the development of the palm oil sector through a variety of concessions at every step from planting to export (Casson 2000, Pletcher 1991).”
The impacts and opportunities of oil palm in Southeast Asia: What do we know and what do we need to know? (2009, background): “Such a shortfall sparked protests and riots in 1999 (Casson 2000).”
Economic Growth and Sustainable Development in Indonesia: An Assessment (2018, background): “In response to the growing international demand for palm oil, about 7% per annum (Casson 2000), the land used for oil palm cultivation expanded rapidly after the mid-1990s.”
Mapping and monitoring deforestation and forest degradation in Sumatra (Indonesia) using Landsat time series data sets from 1990 to 2010 (2012, background): “However, rapid land use conversion in support of agro-industrial development have led to the removal of natural forest cover with a corresponding loss of biodiversity and forest carbon stocks (Whitten et al 2000, Casson 2000).”
Is oil palm agriculture really destroying tropical biodiversity? (2008, background): “Nevertheless, a recent study has shown that these FAO statistics for Malaysia and Indonesia correspond well to estimates of cropland and forest areas generated from a remote-sensing analysis using Landsat TM satellite imagery (Stibig et al. 2007).”
REDD in the red: palm oil could undermine carbon payment schemes (2009, background): “In some oil palm developments that involve new plantings, the sale of timber products from clearing of land may be used to subsidize plantation development (Casson 1999).”
Driving forces of tropical deforestation: The role of remote sensing and spatial models (2006, background): “…expansion (World Bank, 1990; Indrabudi et al., 1998) but in addition to tree crop production, oil palm estates (Dove, 1993; Osgood, 1994; Chomitz & Griffiths, 1996; Casson, 2000) timber extraction and conversion to industrial plantations (Angelsen, 1995; Fuller & Fulk, 2001; Dennis & Colfer, 2006).”
Towards better practice in smallholder palm oil production. (2006, background): “In terms of access to capital, perhaps the next most important problem, international and domestic banks provide large loans to estates (Casson 2000), but do not target smallholders, for the following reasons (IIED et al 2004): • Lack of creditworthiness • Limited deal sizes • Hence applicable risk…”