Governing Sustainable and Equitable Palm Oil

Doc. Special / The economic condition of Menapar Village (where PT. KPC/GAR operates) has improved along with the increase in IDM status from Very Underdeveloped in 2018 to Developed in 2022., BOGOR – Oil palm plantation activities have long attracted public attention due to news reports in various regions about social issues. These social protests reveal another portrait of plantation governance that contributes to deforestation and harms communities, rather than providing welfare benefits. This process has been going on for a long time and is still going on today.

There are two main contexts behind the need for the government to pay serious attention to the issue of palm oil governance. First, palm oil governance is closely related to national-local interests. It cannot be denied that palm oil has become a prima donna in the global market. This is because of its huge economic value per hectare. Indonesia (as well as Malaysia) is the largest palm oil producer in the world, supplying the needs of various continents. From an economic point of view, oil palm plantations provide benefits to the state and regions (local revenue).

Second, economic restructuring at the global level. At the end of 2022, the European Commission, the EU Parliament, and the EU Council created the Deforestation Regulation (EUDR). This regulation contains restrictions on imported goods deemed to cause deforestation and forest degradation. Although Europe is not a major trade preference when it comes to palm oil, this regulation could be a barrier to market absorption of our commodity.

This is an important moment for the Indonesian government to change its palm oil governance system to a more sustainable and equitable one. The significance of sustainable and equitable palm oil must consider upstream to downstream processes. As long as the extractive pattern is still used, production disruptions, both natural disasters and social conflicts, will become more massive.

The problem that arises is that even though the Roundtable on Sustainable Palm Oil (RSPO) is a forum for various sectors of the palm oil industry that are oriented towards sustainability and equity, so far it has not proven its significant role. As a result, community dissatisfaction with oil palm development protracted, to the point where it became a complicated problem to resolve.

Current Portrait

The research report of the IPB University’s Centre for Agrarian Studies (PSA IPB) entitled “Study of Development and Analysis of IDM-Based Environmental Areas: Techno-Participatory Approach, Comparative Study of Cases of Villages Around Plantations” is interesting to watch. This step was taken because there was no certainty from the RSPO which so far was expected to become a forum, a mediator. The action research itself was conducted collaboratively involving civil society organizations (CSOs), companies, stakeholders, and communities in several villages in Kapuas Hulu District, West Kalimantan, where PT Kartika Prima Cipta operates, and Siak District, Riau, where PT Ivomas Tunggal operates. These two companies are subsidiaries of Sinarmas Group (SMG)/Golden Agri Resources (GAR), a holding company that is an active member of the RSPO.

This study uses the Village Development Index (IDM) to capture village development based on the implementation of village laws that direct the appropriateness of interventions in policies with appropriate correlations of interventions from the Government (central and regional), and supported by community participation, including private parties operating in the village. This is a composite index, including social resilience, economic resilience and environmental resilience indexes.

There are several important points that need to be underlined in this research process. First, field findings show that civil society and companies are trying to reach an agreement to create mutually beneficial cooperation. Companies have made efforts to adapt to a sustainable and equitable governance model. Furthermore, there has been a transformation process from the application of the “social and community engagement policy” (SCEP) to the triple bottom line and sustainable and equitable palm oil to the application of “integrated ecological agriculture”. In addition, social engineering in the form of CSR programs in the fields of economy, education, improvement of public facilities, and health are also promoted.

Read more : General Directorate of Plantation’s Three Programs for Integrated Palm Oil Governance

Secondly, IDM successfully illustrates that in some aspects there is a positive correlation between company programs and improvements in welfare indices, and households. It should also be noted that this occurs in some villages with a weak correlation. In addition, there are still gaps in company CSR programs. This can be seen from the imbalance between social, economic, and environmental programs. It is noted that social programs get a larger portion than economic and environmental programs, although the allocation of funds for economic programs is greater than that for social and environmental programs.

Third, the company program has an important impact on village development. Semitau Hulu village, which was originally had IDM status as Developing Village in 2016 turned into an Independent Village in 2022. Likewise, Menapar village and Tanjung Harapan village, which were originally had IDM status as Very Underdeveloped villages in 2016 turned into Developing Villages in 2022. Mantan Village experienced a change in status from a Very Underdeveloped village in 2016 to a Developed Village in 2022.

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