Europe’s agrofuels imports: check the reality on the ground in Indonesia

Bondan Andriyanu of Sawit Watch in Strasbourg, September 2013 (Photo: DTE)

DTE 96-97, December 2013

Bondan Andriyanu of Sawit Watch, visited Berlin, Brussels and Strasbourg in September 2013. The aim was to convey to Europe’s policymakers the urgent need to reform the EU’s policies on agrofuels due to their harmful impacts in Indonesia.

Prior to the trip to Europe, DTE interviewed Bondan about his organisation, and his intentions in Europe.

DTE:Could you update us a little about your organisation? What is the current focus of your work?

Bondan Andriyanu: Sawit Watch is a non-governmental organisation (NGO) with individual and group members that works for better practice in the development of oil palm plantations. We have 140 members throughout Indonesia from varying backgrounds: smallholders, labourers, indigenous peoples, NGO activists, members of the government, and others. Sawit Watch is working for social change for smallholders, labourers, and indigenous peoples, towards ecological justice. Working for ecological justice for these groups includes, amongst other things, initiatives to:

  • Set up, manage and provide data and information;
  • Increase the capacity of smallholders, labourers and indigenous peoples, according to their needs;
  • Facilitate conflict resolution between companies and smallholders, labourers and indigenous peoples in large-scale oil palm plantations;
  • Establish synergy between smallholders, labourers and indigenous peoples;
  • Encourage the adoption of state policies that protect the interests of smallholders, labourers and indigenous peoples.

DTE: What are you hoping to achieve while you’re in Europe?

BA: Sawit Watch is hoping that we’ll have the opportunity to inform people face to face about the facts and about the reality of what’s happening in the oil palm plantation industry.

Different meetings will have different opportunities for us:

  • At the GIZ RSPO Meeting (CSO-Meeting) in Berlin, our main aim is to speak about the many weaknesses of the Roundtable on Sustainable Palm Oil (RSPO) which are evident alongside the positive impact that the RSPO has had, since Sawit Watch became the member in 2004. Sawit Watch will share information from our field visits to oil palm plantations. We’re hoping that this information will be taken up by European CSOs attending the meeting, in their campaigns on oil palm plantations and the international palm oil trade.
  • At the RPSO European Summit, also in Berlin, Sawit Watch is not hoping for much from the RSPO itself. It’s clear that this event will focus on increasing Certified Sustainable Palm Oil (CSPO) in the European market, whereas, it’s our view that the focus should be on the practices in the field of RSPO members themselves. There are still many cases of conflict involving communities and RSPO members, which are, at the same time, trying to get certification. One of the main issues is tracking the CPO (crude palm oil) on its journey from the farmers or growers, through the processing, up to the moment it is traded on the international market. We can talk about this.
  • At the Journalists’ Workshop on EU Biofuels Policy, our main aim is to provide journalists with information about the practices of the oil palm companies that are producing CPO for agrofuel.  There are many issues to be flagged up: environmental and social impacts, and human rights violations that result from oil palm industry practices.
  • In any opportunities for public action, Sawit Watch will aim to highlight the environmental hazards, social destruction, and human rights violations associated with making agrofuels from palm oil and to get this message to the public in Europe. So that they can think again about using agrofuels sourced from oil palm plantations.
  • At the European Parliament, we want to flag up the fact that agrofuels policies still have a lot of negative impacts. There may well be good regulations and good policies, but on the ground the reality is that practices are poor. So we want to highlight the need for systems to monitor and track conditions at the plantation level, where the agrofuels crops are grown - check the impacts for farmers, indigenous peoples’ and local communities’ lands.

DTE: What is the key information that people in Europe should know about palm oil imports from Indonesia?

BA: Sawit Watch believes that the development of oil palm plantations in Indonesia is dependent on market demand. There are no import criteria in Europe which require a social impact assessment for plantations whose palm oil enters Europe. Where the market is so wide open, it encourages producer countries in the global South, like Indonesia, to pass regulations which make it easier for businesses to expand their oil palm plantation operations. There is no added value for small-scale producers in this type of open market because there is no prerequisite to protect their interests.

There are three main actors in Indonesia’s palm oil production: smallholders, the private sector and the state. Plantations operated by the private sector and state-owned companies tend to be socially and environmentally destructive, whereas those of small-scale farmers record almost zero levels of conflict or deforestation. The impacts are being driven by the Indonesian government’s target to expand the area of land under oil palm plantations to more than 24 million hectares with a production target of more than 40 million tonnes a year by 2020.

Sawit Watch will be providing information, resulting from our field investigations, on what happens at the various stages in the process of developing oil palm plantations. These include

the process of acquiring a permit for the plantation; land clearing; the ‘partnership’ process between companies; the certification process and the policies supporting large-scale investment in Indonesia.

DTE: What are the impacts of palm oil expansion in Indonesia?

BA: Human Rights: Local communities and indigenous peoples’ lose their rights. Indigenous peoples are losing their territory. The number of cases in which indigenous peoples and oil palm growers are criminalised is increasing every year. According Sawit Watch data, there were 643 communities in conflict with companies in 2012. And criminalisation of farmers too, continues to rise. In 2010, there were 141 victims of criminalisation of farmers, and in 2012 there were 156 victims.

Sawit Watch found that investors were paying the military and police to deal with community protests aimed at securing payment from oil palm plantation companies for their land. In many cases communities lost their case in the courts, because the judges had been paid off by the company.

Environment: Cases include forest fires caused when big companies use burning to clear land – there were a lot of fires in May and June 2013. We identified 925 ‘hotspots’ (indicating fires)  on land leased to oil palm plantation companies. Peasants and workers become victims in these cases, because they’re accused of arson. The fact is that they are paid by the company to set the fires.

Meanwhile, many rivers are full of waste from the palm oil mills. The same rivers are still used by the local community for drinking, cooking and washing.

Farmers have never been empowered by the government: in schemes planned by companies and the government, they are never the decision-makers, only the targets. The government and the oil palm industry, by controlling the availability of mills and the price they pay farmers for the fresh fruit bunches (FFB) they harvest, create a situation in which farmers mount up excessive debts. Many smallholder plots in company-run schemes are poorly set up in terms of Good Agricultural Practices (GAP), while some companies fail to develop any smallholders’ plots altogether, even though communities have relinquished their land for oil palm.

Smallholder oil palm growers fall into two main types:

First, ‘plasma’ farmers (outgrowers) are participants in a company-run scheme in which the company develops a central or ‘nucleus’ plantation and the ‘plasma’ farmers are allocated plots on which to grow oil palm, with all fruits being processed by a central mill operated by the company. They are regulated exclusively by the government. They have been developed in Indonesia since 1979 through various partnership models, including the PIR-Transmigration model, KKPA (Cooperative Primary credit for Members) and the Revitbun (Plantation Revitalization) model, all of which are currently in use.  This group generally meets the following criteria:

  • The total area allocated to smallholders is 1.3 million ha.
  • Each household gets an average of 0.5 ha - 2 ha.
  • Plantation productivity is below 16 tonnes per hectare per year.
  • In theory, these smallholders get a better price according to the standard provisions of the government (the price is set by a team including both company and smallholders representatives, in accordance with Regulation of the Minister of Agriculture No. 17 of 2010) as they can sell directly to the partner company's factory. In practice, however the farmers don’t get a higher price.

Secondly, independent farmers or smallholders: these are farmers who grow oil palms independently and have no restrictions as long as they manage areas of less than 25 ha. The total area cultivated by this group is about 2.8 million ha. They are called independent, because the farmers manage their oil palm land from investing the capital through to raising seedlings planting and harvesting.

However, these farmers are still dependent on big companies because their harvest still needs to be processed in mills, which are owned by companies. Independent farmers often have these things in common:

  • Their production of FFB (fresh fruit bunches) remains low at below 15 tonnes per hectare per year;
  • They have a poor knowledge and low implementation of standards of Good Agricultural Practices (GAP) and of conservation and sustainability principles;
  • They must still deal with middlemen (they don’t have direct relations with the plantation company mill), so the sale price of FFB is still below the price specified by the government.

Climate Change: Sawit Watch has found that of the total area of 12.3 million hectares of oil palm plantations in Indonesia, almost 11 million hectares are planted on peatland. Carbon emissions from peatland drainage is one of the biggest contributors to climate change.

Labour: Recent research by Sawit Watch found that a plantation company operating in East Kalimantan failed to pay its labourers for two years. Many of these labourers left the plantation, because they were so badly treated there.

DTE: Where are cases like this documented?

BA: We have a lot of information on specific cases in our publications, including:

-       Research into labour conditions in East Kalimantan

-       Research on company land leases

-       Land Grabbing Issues

-       Green House Gases and oil Palm Plantations

-       ‘Raja Limbung’ the A century of the palm oil journey  in Indonesia (Indonesian only)

-       Promised Land

-       Ghosts on Our Own Land

-       Independent Smallholders

-       Losing Ground

DTE:  What is at the root of these problems in your view? What kind of changes are needed in Indonesia and internationally to address these impacts?

BA: In Sawit Watch’s point of view, the root of these problems with oil palm plantations is the massive expansion underway in the sector and the total disregard for the rights of local communities and indigenous peoples. This expansion is supported in multiple ways in Indonesia. The changes that need to happen in Indonesia include:

  • Policies governing oil palm plantations should bring advantages for farmers, local people, and indigenous peoples;
  • The oil palm plantation companies should be required by law to respect the rights of local communities and indigenous peoples to their land.
  • We need well-implemented spatial planning at the local and national levels, to ensure there is no more overlapping of land use and conflict of interest;
  • Optimising the oil palm plantations that already exist in Indonesia, by improving systems and management so that there are no negative impacts;

The changes needed from the international level include:

  • market regulation in the form of sustainability criteria to exclude trade in any palm oil that does not meet environmental and social standards.
  • Exclusion and sanctions for companies that continue with poor social and environmental practices in the palm oil supply chain.

DTE: Are there any positive impacts of the palm oil boom? For example, do some small, independent farmers benefit?

BA: The only ones to benefit are those who make use of the weak system and poor practices in oil palm operations to their own advantage, such as district heads, and indigenous leaders who are willing to accept company bribes in exchange for their people’s land. Also, a lot of smart people take advantage of oil palm plantations in their village, such as the truck-owner who rents his vehicle to the company and the food stall business owners that set up inside oil palm plantations, who are usually transmigrants from Java.

High demand for palm oil on national and international markets does not produce positive value for independent farmers. Since these growers don’t have direct access to the mill, they have to rely on brokers who cooperate with private companies and mills.

DTE:  How should Europe change its policies?

BA: Europe should support and prioritise palm oil production from small-scale farmers because they are farming sustainably, with a low level of social and environmental problems, while large plantation carry high social and environmental risks.

Europe should develop a a road map to stop using palm oil produced by large companies which promote their products as ‘green’.

Europe should recognise that all ‘green’ oil palm products derived from large-scale industrial production are not green at all.

DTE:  Should consumers in Europe avoid buying palm oil­ whether for fuel or non-fuel?

BA: They should have a tracking system that ensures that palm oil entering Europe is not associated with social and environmental degradation. It would be good to promote cooperation between Indonesia and the EU in protecting their farmers. This is more important than promoting the interests of companies which create social and environmental degradation.

DTE:  How should palm oil consumers in Europe respond to claims by companies that they only use ‘sustainable palm oil’ or that their products are certified sustainable by the RSPO?

BA: There are many companies that are RSPO members and whose operations are already certified, but which are still problematic. Sinar Mas’ plantation in Labuan in North Sumatra, for instance, where the company is in conflict with hundreds of people in the Padang Halaban District. There are so many instances of oil palm plantation companies who have already secured RSPO certification, but which are still damaging the environment and mistreating the local community. This means that  RSPO certification is no guarantee that the plantation is socially and environmentally sustainable in practice.

Sawit Watch would like to see consumers in Europe stand up and question what is really happening on the ground in oil palm plantations. We’d like to see them push for accountability all the way back through the supply chain to the plantation where the palm oil was grown.

DTE:  How can concerned European citizens show solidarity with people affected by oil palm expansion?

BA: You can build a strategic collaboration which, in the short term, would monitor and assess the traceability of palm oil sold in Europe, exposing the false claims of sustainability for palm oil derived from plantations developed at the expense of community land for growing food. The long-term aim of this collaboration could be to strengthen the position of small-scale independent oil palm farmers, so that their products can be sold direct to the market, independently. You can also develop a long-term road map aimed at transforming the market.

DTE: Palm oil companies claim they reduce poverty, provide jobs, and create revenues for Indonesia’s development ­ should we believe them?

BA: Reduce poverty? Not really. Sixty percent of workers in the palm oil sector are day-labourers. Wages of agricultural workers are insufficient to meet even their daily needs. Child labour is used and women are also forced to work on the plantations because it is the only way to make ends meet.

Talking about poverty, we should make a ‘before and after’ comparison of areas planted with oil palm. Before, local people don’t have to buy rice, chili, vegetables, and other local food for daily use. After, they need to buy all these foods. Yes, their incomes have increased, but so have their cash needs.

Creating revenues for Indonesia’s development? -  we need to have more data about this, because there is no record about real incomes at the local level that shows the exact figures generated by oil palm plantations.

Oil palm plantations should not be developed in forests – we can’t call it development if this happens.

Oil palm growers who become ‘partners’ in company schemes do not become better off; some of the reasons are:

  • From the FFB price payable to the farmers, the company deducts an amount for the operational cost of the plantation (around 300-400 Rupiah per Kg)
  • The fruit sorting process is undertaken unilaterally by the company and is not transparent.
  • The transportation costs  - due to the bad infrastructure - are borne by the farmers
  • Under a new scheme called “One Roof Management”, the entire cost of maintaining the ‘plasma’ plantation areas is deducted by the company (about 50 of the FFB price). A further 30% is deducted to pay off farmers’ debts, meaning that only 20% goes to the farmers.
  • Many smallholders are allocated less land than they handed over to the company. For example, in the case of PT MAS II and BKP in Kapuas Hulu District, West Kalimantan, around 21% of oil palm farmers have less than 2 ha of land, even though they handed over 2 ha of land to the company.

DTE:  What about the renewable energy situation in Indonesia? Should Indonesian palm oil be used for food and energy in Indonesia rather than exported to Europe and other countries?

BA: The use of renewable energy in Indonesia has already been signalled by Susilo Bambang Yudhoyono’s government, by promoting the development of plantations growing energy crops, such as jatropha and oil palm. They realise that fossil fuels in Indonesia will only last for another 12 years, according to Daulay Mustafa, General Secretary of the National Association of Manufacturers of Oleochemicals (APOLIN). The only problem is, building a renewable energy industry based on oil palm plantations means we have the same environmental and social problems.

On the use of oil palm itself, the government doesn’t set percentages or make any divisions between food and energy end use.

Sawit Watch thinks we first need to establish an improved system and good practices in the oil palm industry before we consider choosing between food or energy uses. We need to prioritise securing the improvements in systems and practices so that there are no environmental or social conflicts. It would be wrong to start talking about these choices before addressing the main problems and while there are so many unresolved cases of conflict in the sector.

On the export of palm oil to Europe and other countries, Sawit Watch thinks that Indonesia should first calculate who benefits most from the exports. If the only ones to benefit are the big companies, while the farmers and small growers gain nothing, it would be better to think twice about exporting Indonesian palm oil.

DTE:  How have people in Europe responded to these messages so far?

BA: Europe has, up to now, only seen agrofuels as a means of reducing carbon emissions; people haven’t seen the whole picture: how agrofuels are produced. Europe should be more open to looking into what happens in oil palm plantations in Indonesia and other countries. And, on the global scale, many stakeholders are not fully aware of the conditions for plantation workers, for peasants (small farmers) and indigenous peoples in Indonesia. There is a kind of egotism, or competition between the environment and social sectors: sometimes the environmental considerations are noted but the social issues ignored. However, in the case of oil palm plantations in Indonesia, the more pressing issues are social, related to conditions for people in and around the plantations.

DTE: Do you have any other message for European governments, companies or civil society?

BA: Using renewable energy is a brilliant and noble idea, in terms of saving the world from global climate catastrophe, but we need to consider how that renewable energy is made and where it comes from.  Ask if it comes from crops that directly or indirectly replace forests, peatlands, or take over the lands of indigenous peoples. Find out if the renewable energy or agrofuel you are using and the policies that promote imports from countries like Indonesia are merely serving the interests of big business in new and inventive ways, while ignoring the rights of indigenous peoples and global catastrophe.

File 523