A Guide to Palm Oil in Indonesia:

Institutions and Their Effects on

Independent Smallholder Farmers
by
Fiona Tanuwidjaja
S.B. in Planning
Massachusetts Institute of Technology (2019)
Submitted to the Department of Urban Studies and Planning
in partial fulfillment of the requirements for the degree of
Master in City Planning
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
May 2020
○
c Fiona Tanuwidjaja. All rights reserved.
The author hereby grants to MIT permission to reproduce and to
distribute publicly paper and electronic copies of this thesis document
in whole or in part in any medium now known or hereafter created.

Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Department of Urban Studies and Planning
May 20, 2020
Certified by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Associate Professor Erica C. James
Department of Urban Studies and Planning
Thesis Supervisor
Accepted by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ceasar McDowell
Professor of the Practice
Chair, MCP Committee
Department of Urban Studies and Planning
2
 A Guide to Palm Oil in Indonesia:
Institutions and Their Effects on
Independent Smallholder Farmers
by
Fiona Tanuwidjaja

Submitted to the Department of Urban Studies and Planning

on May 20, 2020, in partial fulfillment of the
requirements for the degree of
Master in City Planning

Abstract
Palm oil, Indonesia’s second-to-largest export (accounting for $18.2 billion annually
or 2% of Indonesia’s GDP) has taken the world by storm. While palm oil has his-
torically remained a staple food crop in Africa and Southeast Asia for hundreds of
years, its worldwide commercial success is relatively recent, driven in part by a global
shift towards biodiesels. Palm oil can now be found in over half of all American and
European packaged products, and its demand has been increasing rapidly, making
it one of the most quickly expanding crops throughout the humid tropics. Despite
its economic success, palm oil breeds many long-lasting issues with its production,
particularly: (1) loss of habitat for endangered species; (2) pollution and carbon
emissions; (3) land grabbing and abuses to indigenous populations; and (4) abuses
to workers, children, and local communities. In recent years, the palm oil industry
has become a topic in public discourse, with large institutions (including public in-
stitutions such as the European Union) creating policies discouraging the product’s
use and availability. Amid the topic’s popularity, this thesis aims to act as a guide to
the industry by summarizing the various institutions (public and private) at play and
examining their goals, ethics, and perception to other stakeholders, with a focus on
indigenous groups and independent smallholder farmers. This thesis hopes to fill a
niche in existing popular media where only one side of the palm oil industry–typically
a negative side–is explored.

Thesis Supervisor: Associate Professor Erica C. James

Title: Department of Urban Studies and Planning

3
4
Acknowledgments
I would like to express my deepest gratitude for all those who have assisted me
throughout this process, including, of course, Professor Erica James for advising me
for not one but two years. To me, Professor James sets the example for the ideal
advisor, someone who is immensely knowledgeable, motivating, yet patient. Beyond
my advisor, I would like to thank my reader, Professor P. Christopher Zegras for
his insightful questions, helpful feedback, and flexibility. Both members of my thesis
committee approached the topic with grace and curiosity amidst a time of great
uncertainty (at the time of writing, in Spring 2020, the world is struck with COVID-
19; I wonder, future reader, how the world has recovered?).
Apart from my thesis committee, I would like to thank my friends and family
who have supported me in various ways. Namely, Kunto Nurcahyoko for teaching me
about Indonesian culture and connecting me with interviewees, along with countless
other family friends who broached the topic with interest and offered up their own
friends and coworkers as stakeholders for me to interview. Lastly, I would like to
thank my mother, Mieke Irawati, for always being a great mother, but specifically
for spending tedious amounts of time translating interviews and offering priceless
cultural context. And because we’re here, I would also like to thank my father, Iwan
Tanuwidjaja, for risking it all by following his dreams of emigrating to America.

5
6
Contents

1 Introduction 9
1.1 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2 The Basics: History, Policy, and Current Status 19

2.1 Where does palm oil come from? . . . . . . . . . . . . . . . . . . . . 19
2.2 Early history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Comparative policy example: Malaysia . . . . . . . . . . . . . . . . . 23
2.4 Current state: smallholders . . . . . . . . . . . . . . . . . . . . . . . 26
2.5 Current state: government and policy . . . . . . . . . . . . . . . . . . 29
2.6 Current state: public perception . . . . . . . . . . . . . . . . . . . . . 30

3 Environmental Impacts 35
3.1 Farming practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2 Environmental effects . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Ecological effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.4 Worldwide demand: do consumers care? . . . . . . . . . . . . . . . . 43

4 Social Impacts 47
4.1 Indigenous peoples . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2 Labor and exploitation . . . . . . . . . . . . . . . . . . . . . . . . . . 54

5 Activism and Certification 57

5.1 Role of activist groups . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.2 Skepticism of Western organizations . . . . . . . . . . . . . . . . . . . 63

7
 5.3 Certification schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.3.1 Roundtable on Sustainable Palm Oil (RSPO) . . . . . . . . . 66
5.3.2 Indonesian Sustainable Palm Oil (ISPO) . . . . . . . . . . . . 69
5.3.3 Comparison between certification programs . . . . . . . . . . . 71
5.4 Perception of certification . . . . . . . . . . . . . . . . . . . . . . . . 72

6 Conclusion and Recommendations 77

References 83

8
Chapter 1

Introduction

Palm oil has become a nearly inescapable part of daily life, appearing in over half
of all packaged products in American and European markets. It is often used as a
cooking oil or can be found in processed foods, cosmetic products, and biodiesels
(World Wildlife Fund, n.d.). Although more than half of all packaged products con-
sumed by Americans contain the ingredient, the United States is far from the largest
consumer of palm oil; India, China, and Indonesia are responsible for 40% of all
palm oil consumed worldwide. These markets are only expected to grow as their
economies develop further, thus increasing palm oil’s already extreme consumption
trajectory (Tullis, 2019). Despite palm oil’s prevalence, many customers do not re-
alize the potentially negative implications of their consumption: deforestation and
decreased biodiversity, increased air, water, and soil pollution from the byproducts of
oil production and refinement, and a plethora of human rights abuses and poor labor
regulations (Petrenko, Paltseva, & Searle, 2019). Concurrently, those that are aware
of these environmental implications are quick to shun the product entirely, without
further research done to explore the consequences of dismissing the industry.
Since 2008, Indonesia has been the world’s largest producer of palm oil, employ-
ing up to 3 million Indonesians. Indonesia’s palm oil industry, the country’s second-
largest export valued at over 2% of total GDP, has an estimated export value of
over $18 billion annually, and is projected to grow rapidly with global demand (The
Observatory of Economic Complexity, n.d.). In this agricultural sector, growth has

9
historically called for deforestation and environmental destruction, resulting in In-
donesia having one of the highest rates of primary deforestation worldwide and push-
ing many rainforest-dependent species to the brink of extinction (Tyson, Varkkey, &
Choiruzzad, 2018).

Figure 1-1: Graph showing the growth of Indonesia’s palm oil sector in relation to
GDP (The Observatory of Economic Complexity, n.d.)

Government and firm corruption are also rampant in Indonesia, with some sources
reporting that up to 80% of land clearing and logging occurs due to bribery and poor
law enforcement (Jones, 2014). Additionally, the rights of indigenous groups, such as
the Dayak (many of which live on rural land valuable to the agricultural and palm oil
industries), have been marked with controversy. Members of indigenous communities
have been reported to be routinely taken advantage of and coerced off their land and
into employment by large palm oil corporations, with negative implications not only
for their physical and economic well-being, but to their spiritual and community lives
as well (Colchester, 2011). Palm oil workers, especially migrant workers, regularly
make less than the Indonesian minimum wage in unsafe labor conditions. Lastly, In-

10
Figure 1-2: Map showing the the world’s five largest producers of palm oil and their
percentage of global output, with Indonesia in navy (Varkkey & Choiruzzad, 2012)

donesia’s growing palm oil sector has worsened international relationships; Indonesia’s
neighboring countries (e.g. Singapore, Malaysia, and Thailand) have been negatively
impacted by the increased air pollution and worsening smog caused by Indonesia’s
slash-and-burn farming techniques, and developed countries have rallied against the
exploitative and environmentally dangerous industry through media, activism, and
the deployment of nonprofit organizations (Hutton, 2017).
Popular media has caused palm oil to enter the public discourse; in recent years,
large journalism pieces have been published on the palm oil industry from news groups
like The New York Times and The Guardian. Articles published on the topic tend to
show only one side of the palm oil industry–typically the negative side–with emotional
headlines and graphics, such as images of orangutans, an endangered species. Perhaps
largely due to this type of media and activism, mainstream corporations have been
increasingly improving their corporate responsibility pledges. Four main trends have
found to be shaping corporate environmental responsibility and empowering Western
activist groups: (1) the globalizing power of social media; (2) the increasing number
of environmental campaigns; (3) the use of “sustainability” in brand and corporate

11
messaging; and (4) the spread of eco-consumerism (Dauvergne, 2017).

Figure 1-3: Graph showing the number of academic articles published on palm oil;
palm oil has become disproportionately popular in comparison to related topic groups,
such as ecology and agriculture (Web of Science, 2019)

Despite negative reactions to the valid environmental and social consequences of

the palm oil industry, especially by Western countries and organizations, Indone-
sia’s industry has played a vital role in job creation and reversing income inequality.
Since the 1960s, the Indonesian government has provided land, agricultural educa-
tion, and support to domestic farmers through the Nucleus Estates and Smallholders
(NES) scheme, with positive effects on rural socio-economic improvement (McCarthy
& Cramb, 2009). The palm oil industry, via the NES scheme, has raised the incomes
of more than 500,000 farmers (Zen, Barlow, & Gondowarsito, 2005). The Indone-
sian government and many industry players suggest that restrictions on Indonesian
palm oil, as the European Union has pioneered in 2019, or decreased global demand
will disproportionately hurt the independent farming community. Thus, while the
environmental and social issues spurred by the industry certainly exist, it is feasible
to understand the tension between environmental advocates, the Indonesian govern-

12
ment, and consumers. Indonesia, a developing country, desires to continue to grow
its economy and increase political support while corporations and consumers depend
on the cheap availability of palm oil products.
This then begs the essential question: how are ethics–either environmental, social,
or a combination or both–understood by all stakeholders in the palm oil industry? For
example, how impactful has activism from powerful organizations, like Greenpeace,
been in raising consumer awareness and decreasing worldwide demand for palm oil
products? What solutions have these organizations offered and how has this been
translated into the practices and livelihoods of independent farmers? How can the
palm oil controversy be examined through an international development and envi-
ronmental ethics lens? Entering this research (and as shown by my findings at the
completion of the project), I argue that that larger Western organizations in the
palm oil industry, such as the European Union and international activist networks
like Greenpeace, are using their power to threaten and coerce Indonesia’s palm oil
economy. These organizations may publicly appear to have the intention of advo-
cating for proper environmental reform, but fail to address the needs of everyone
involved in the industry, including as Indonesian workers who depend on the sector
for their livelihoods, or indigenous groups who may support environmentalism but
are skeptical of Western influence in their communities.
Ultimately, the palm oil industry can be seen as an example of the opposing
forces of environmentalism and international development. Several elements of the
palm oil industry relate to the concept of green neocolonialism, the exploitation of
developing countries’ institutions and industries by developed nations to promote
their own environmental agenda. In the words of Lim Ken Yaik, a Malaysian politician
who explained the concept of green neocolonialism in the context of the palm oil
industry in his 2009 New York Times op-ed:

Asian governments and businesses are not asking for much — simply the
chance to develop their natural resources as Europe did for hundreds of
years... There is a historical tendency in Europe to seek to mold others
in its image. This was part of what some styled the “white man’s burden”

13
 during the colonial era. Has this tendency reasserted itself as the Green
man’s burden? (Yaik, 2009)

From my research, I believe that the following are examples of green neocolonialism in
the palm oil sector: the outsourcing of pollution-causing crops from developed regions
to developing or industrializing countries; a shift in a nation’s diet and food depen-
dency to suit the needs of its developed trading partners; using threatening tactics
such as tariffs and trade bans (as the European Union did in 2019 when it banned
the use of imported palm oils in biodiesel); and theories of responsibility, such as
whether or not (or how) developed nations should logistically and financially support
a developing country’s attempts to become more environmentally-friendly. Through
this lens, some actors can be seen as following some or all of these practices, using
political force and will to impact the practices of all workers, including independent
smallholders who are otherwise minuscule in the global palm oil supply chain.
One other example of green neocolonialism comes in the form of "green grabs", the
selling of shares of land in hopes of conserving and protecting vulnerable ecosystems.
The United Nations (UN) instituted a program, Reducing Emissions from Deforesta-
tion and Forest Degradation (REDD+), which as the name implies, aims to reduce
emissions from deforestation and degradation. REDD+ is often regarded as a pow-
erful tool to decrease global emissions in developing countries. In order to do this,
the UN incentivizes national governments (i.e. the Indonesian government) to reduce
deforestation and protect forests by offering financial incentives in the form of direct
payments or carbon credits. In doing so, national governments in developing coun-
tries, by way of the UN, may take land away from populations–usually indigenous
groups, who tend to live in these forests REDD+ targets–in efforts to protect the
land and decrease degradation and deforestation (Fairhead, Leach, & Scoones, 2012;
Astuti & McGregor, 2016). Ultimately, green neocolonial strategies uses political
and market forces to pressure developing nations, such as Indonesia, to change their
policies and governance structures, disrupting local cultures, economies, and the way
of life of indigenous groups. Even beyond these concerns of green neocolonialism,
however, is a sense of hypocrisy. As will be further discussed, the Western actors

14
typically advocating for environmental reform and boycotting the industry, are not
representative of most consumers. Consumers around the world, including those in
more "eco-conscious" Western markets, are relatively uninterested in palm oil sus-
tainability as reflected in their unwillingness to pay a higher premium for sustainable
products.
This thesis will attempt to answer these questions of ethics, green neocolonialism,
and theories of responsibility through two main avenues: (1) a study of existing aca-
demic literature and media sources and (2) interviews with a wide range of palm oil
stakeholders. The literature review will cover Indonesia’s history and rise to success
in the palm oil industry, the facts on how palm oil is produced and the environ-
mental and social consequences, and a study on the role of Western activism and
certification programs. The interviews will provide further context from the fifteen
industry stakeholders (e.g. academics, representatives from corporations and NGOs)
with whom I conversed and will summarize their reactions to the palm oil controversy,
focusing on the perception and influence of Western institutions and their impacts
on independent smallholders, certification, and governance. This thesis aims to act
as an introductory guide to understanding the palm oil market and hopes to provide
an easily-understood picture for all readers while advocating that no actor or organi-
zation ultimately has the best interests in mind for all stakeholders in the industry.
While this thesis alone cannot delve deeply into all areas of the industry, I hope that
it can direct and inspire future academic research on the subject, especially in fields
that are previously unstudied.

1.1 Methodology
To gather more nuanced data for this thesis, fifteen stakeholders were interviewed.
This style of qualitative research was chosen to deepen insight into the complex palm
oil supply chain. In the world of palm oil, quantitative data is plentiful but often
fails to capture the intricacies of the palm oil sector and is devoid of the spiritual
and emotional components needed for the topic to gain traction and mutual under-

15
standing. Additionally, some groups composing Indonesia’s palm oil sector, such as
independent smallholders and indigenous peoples, are left out of the conversation due
to their remoteness. My hope is that these interviews will provide context for the
existing data on the palm oil market, and that the interviews will reveal additional
topics and questions that were not previously the focus of academic literature.
Stakeholders ranged from farmers and administrators, NGO representatives, cor-
porate representatives, supply chain academics, and one representative each from
RSPO (Roundtable on Sustainable Palm Oil) and GAPKI (Indonesian Palm Oil As-
sociation). Interviews mostly took place over phone or video chat, although some were
done face-to-face or through instant messaging (IM) platforms. On average, phone
and video call interviews lasted 43 minutes. Interviewees were given the option to
keep their names and the names of their organizations anonymous; all corporate rep-
resentatives chose this option while academics and representatives of NGOs were more
likely to reveal their names and the names of their firms. To protect privacy, some
interviewees also opted for simplified versions of their position titles.
The table below (1.1) outlines the types of interviews conducted and the name of
the stakeholder and representative organization.
The findings from these stakeholder interviews will be interpolated throughout
this thesis, in conjunction with the literature review.

16
 Name Position Organization Type Method
Anon Director Anon Corp. (Large) Phone
Anon Foreman Cargill Corp. (Large) IM
Anon Director Anon Corp. (Medium) Phone
Anon Director Anon Corp. (Medium) Phone
Anon Campaign Leader GAPKI Government Phone
Anon Policy Specialist Indonesian Government Government Phone
Alexis Bateman Director MIT CTL Academia Video
Yin Jin Lee PhD Candidate MIT IDSS Academia Video
Emmanuela Shinta Activist Ranu Welum NGO Phone
Lucy Radford Communications SOS NGO IM
Michael Guindon Demand Specialist WWF & RSPO NGO Phone
Anon Director Anon Supplier Phone
Anon Contractor PT SMP Supplier IM
Anon Administrator PT IGP Supplier IM
Anon Planter Anon Supplier IM

Table 1.1: Summary of Interviewees

17
18
Chapter 2

The Basics: History, Policy, and

Current Status

This chapter will lay the groundwork for the various institutions–within Indonesia
and in the broader global context–that have been responsible for Indonesia’s suc-
cess in the palm oil industry today. In this section, we will cover where palm oil
originates, how and when it first came to Indonesia, and the role of the Indonesian
government in incentivizing farmers to plant the cash crop. This chapter will also
compare Malaysia’s history with the crop, providing an interesting case study of how
similar but different governmental institutions have been able to shape palm oil’s suc-
cess. Lastly, this chapter will provide the state of current policy–especially policies
affecting smallholders–as discussed with interviewees. A more detailed explanation of
how palm oil is made and its farming practices will be discussed in the next chapter,
"Environmental Impacts".

2.1 Where does palm oil come from?

Firstly, what exactly is palm oil and where does it originate? The term "palm oil"
colloquially refers to the pulp within the fruits of the oil palm tree, of which there are
three species, although the African Elaeis guineensis is dominant in modern trading
and commerce. Thought to originate in West Africa (specifically Guinea), the fruits

19
of the oil palm tree have been utilized for thousands of years within local African
cuisines and have also been used as in traditional African medicine as a laxative,
diuretic, poison antidote, and as a treatment for a range of ailments (Lai, Tan, &
Akoh, 2012). In the early 1800s, colonizers attempted to establish commercial-scale
oil palm plantations in West Africa, but palm oil production was not able to fully
take off due to numerous obstacles, such as political instability and internal conflicts
caused by colonialist competition. It was not until the introduction of the oil palm to
Java, Indonesia (then known as the Dutch East Indies) in 1848 that the crop began
being used for industrial purposes. The beginnings of the palm oil industry can thus
be traced back to the original four oil palm trees in Java that were brought by Dutch
colonists via West Africa. The trees were originally used for decoration and were
displayed in the Botanic Gardens at Bogor (a garden that still exists today), south of
Jakarta, until the resulting seeds and fruits were found to be uniform and productive
enough for commercial planting. Most importantly, under Dutch colonialism, the
crop became widely used in Europe for its efficiency as a machine lubricant, causing
the first interest in palm oil as a multi-use product. Widespread planting of the oil
palm began in the 1910s, spreading to Sumatra (a large island in western Indonesia),
Borneo (another large island north of Java, of which the Indonesian portion is known
as Kalimantan) and peninsular Malaysia (then known as British Malaya) (Lai et al.,
2012).

2.2 Early history

After Indonesia gained independence from the Netherlands in 1945, palm oil investors–
who were primarily Dutch–withdrew as they lost the backing of the colonial govern-
ment. Indonesia’s palm oil industry began to grow again under President Suharto’s
New Order Regime, a bureaucratic authoritarian regime that lasted from 1967 - 1998.
Under the New Order, state agencies began to make direct investments in state-owned
companies and plantations created under new agricultural development policies. Con-

20
Figure 2-1: Map showing the location of Indonesia’s largest palm oil producing terri-
tories, with Indonesia in navy and Malaysia in gray

currently, the Asian Development Bank (ADP), a regional development bank head-
quartered in the Philippines, and the World Bank, an international development bank
headquartered in Washington DC, heavily promoted growth programs that supported
smallholder agriculture (Tyson et al., 2018).
With financial assistance from organizations like the World Bank, Indonesia was
able to launch its own version of the smallholder development program, eventually
known as the Nucleus Estate Scheme (NES). NES supplied aspiring farmers with two
hectares of land, financed the costs of relocating farmers and their families from urban
islands via a program known as PIR-Trans, provided agricultural loans and education,
and contractually obliged farmers (known as plasma farmers) to sell their harvests to
plantation estate mills (known as the nucleus), mostly run by state-owned companies.
In exchange for their labor, farmers would obtain full rights over their government-
distributed land upon payment of their palm oil development loans. Through the
collective NES policies, the Indonesian government implemented other development
policies while promoting political consolidation by gaining support from rural com-
munities (Budidarsono, Susanti, & Zoomers, 2013). Via the PIR-Trans migration
program, the government relocated several thousand peasants a year from Java and
Bali to islands suitable for agriculture while also spreading Indonesian nationalist

21
beliefs to remote areas (Pisani, 2014). As part of Suharto’s scheme to promote plan-
tation crops in the late 1970s, nearly 70% of the country–including areas home to
indigenous groups–became designated as state forest, making it possible for the gov-
ernment to facilitate the leasing of land to planters, investors, and companies.
In the 1980s, amid criticism from the World Bank and other Western institutions,
the Indonesian government began to change its methods of direct state intervention
into private-community initiatives. The state began withdrawing itself from the di-
rect financing of smallholders and instead favored foreign direct investment and gave
concessions to large private companies. The state continued to act as a facilitator
between smallholders and private parties by growing a farming labor force through
transmigration programs (i.e. continuing PIR-Trans). By 1995, driven by ideals for
an open and free market, the policy evolved to further reduce state intervention by fo-
cusing on the role of local landowners and market forces in a policy known as KKPA
(translated in English as "Primary Credit Cooperatives for Members"). Through
KKPA, which lasted from 1995 through the end of Suharto’s role in 1998, the gov-
ernment offered large development incentives to villagers in exchange for giving up
their land to plantation estates. In this development scheme, villagers gave up ap-
proximately a third of their land to a private company’s nucleus estate while their
remaining land was developed into an oil palm smallholding (McCarthy & Cramb,
2009). While these changes are not directly related to the more modern concept of
green neocolonialism (at the time, environmentalism was not yet a part of Western
organizations’ agenda), they nonetheless highlight the impact of Western influence on
changing political and social structures in developing countries like Indonesia. In this
scenario, the conversion from government-sponsored programs to companies in pri-
vate (and Western) markets via international pressures foreshadows the more recent
shifts towards "environmentally-friendly" agricultural methods.
Additionally, this free market concept, when viewed today, can be seen as hypo-
critical. The palm oil industry currently operates under the same market endorsed
by these organizations in the 1990s, yet today the industry is criticized for its various
malpractices even though palm oil products remain in high demand. This reflects the

22
shifting nature of interfering organizations; Western organizations sang the praises of
the free market, Indonesia adapted, then Western organizations pushed certification
(a market mechanism not delivering notable financial benefits to palm oil producers),
and Indonesia is forced to adapt again. These changes, along with the influence of
independent activist organizations like Greenpeace, force Indonesia to play catch-up
at the West’s various whims.

2.3 Comparative policy example: Malaysia

To better illustrate how various Indonesian policies and institutions have shaped the
palm oil industry to become what it is today, this section will offer a comparative land
use and policy example with Malaysia, the second-largest producer of palm oil and In-
donesia’s closest (economically and geographically) competitor. While Indonesia and
Malaysia–neighboring countries in maritime Southeast Asia–share virtually the same
ecosystem qualities and cultures, the two countries have diverged in terms of palm oil
productivity. Indonesia overtook Malaysia to become the world’s largest palm oil pro-
ducer in 2007, accounting for over half of global output and trade (Nesadurai, 2019).
However, while Indonesia creates more gross palm oil output annually, Malaysia cre-
ates more measurable output per hectare, indicating that the country’s farmers are
closer to achieving maximum potential yields (i.e. highest possible productivity).
Together, Indonesia and Malaysia account for approximately 85% of global palm oil
output (The Observatory of Economic Complexity, n.d.).
Productivity is often measured using tons of crude palm oil (CPO), the unrefined
palm oil product, per hectare per year. As of 2018 data, the worldwide CPO yield
is approximately three CPO per hectare per year. This is higher in Indonesia (CPO
of 3.8) and even higher in Malaysia (CPO of 4.2) (Varkkey, Tyson, & Banna, 2018).
While both countries boast CPOs higher than average, experts believe that with
improved productivity, CPO can continue to increase, although it is often susceptible
to externalities such as weather patterns. The biggest drivers for productivity depend
largely on intensification (i.e. maximizing the amount planted on a given plot of land).

23
Intensification, which also reduces the rate of deforestation, can be improved through
research and development (R&D) for higher-yielding technologies, irrigation methods,
the use of new fertilizers, advances in spatial planning and mill prioritization, and
information dissemination (e.g. agricultural education).
While intensification and expansion (the accumulation of more territory for plan-
tations) have occurred in both countries to some degree, Indonesia’s recent growth
has prioritized expansion, thus utilizing farming and deforestation methods which
are more environmentally hazardous but create larger outputs in the immediate fu-
ture. Malaysia has primarily followed a pattern of intensification, prioritizing the
palm oil crop over less lucrative ones (e.g. rubber) on existing plantation land in-
stead of expanding into virgin territory. This intensification strategy may be partially
attributed to the Malaysian government’s pledge in 1992 to keep 50% of forest land
intact. The pledge, while voluntary, was made under international pressure; at the
time of Malaysia’s independence in 1957, logging was the country’s largest export
industry. After following expansionist growth patterns to maximize on their abun-
dance of hardwood forests, Malaysia came under intense criticism and eventually
made the 1992 pledge at the United Nations Conference on Environmental Develop-
ment as a form of apology and as a peace offering (Varkkey et al., 2018). On the
other hand, Indonesia’s preference for expansion may be attributed to its infamous
bureaucracy; local rent-seeking activities caused by village and district leaders, facili-
tated by widespread corruption, helped corporations gain privileged access to licenses
and land, allowing expansion to thrive (Nesadurai, 2019).
Historically, what caused these behaviors to arise, and what institutions caused
Indonesia to fall behind Malaysia in terms of efficiency? Firstly, Malaysia’s gov-
ernment has played a more influential role in steering the industry’s research and
development. Malaysia has instituted several powerful advisory boards–notably the
Palm Oil Research Institute in Malaysia (PORIM) and the Malaysian Palm Oil
Board (MPOB)–which have overwhelmingly focused on technical-based intensifica-
tion strategies. MPOB alone has been responsible for many technological advances in
the palm oil industry, including the development of high-yielding seedlings, fertilizers

24
specifically designed for palm crops, and alternative uses for the byproducts of palm
oil manufacturing. Perhaps most notably, the MPOB shares research findings with
Malaysia’s smallholder farmers (which constitute nearly 40% of the country’s palm
oil workforce) in an effort to bridge the knowledge gap between smallholders and
corporate farmers. The Malaysian government has incentivized smallholder farmers
to intensify their crops–as opposed to utilizing deforestation methods–and improve
productivity through reward programs like the 30 Tonnes Club, which gives members
insider benefits, like expert knowledge and subsidized workshops.
Lastly, Malaysia’s intervention strategy differs from that of Indonesia’s by the
establishment of several land collectives, the most notable being the Federal Land
Development Agency (FELDA). FELDA was established by the government in 1956
and continues to operate today. FELDA aims to address the economic disparities
between wealthier ethnic groups (such as the Malay Chinese) and the poorer, native,
Muslim bumiputera populations. FELDA has acted as a federal land developer, giv-
ing large swaths of land to bumiputera farmers via an established smallholder system.
The FELDA scheme has been both profitable for the Malaysian government (accumu-
lating to over 12% of Malaysia’s dedicated palm plantation land) and advantageous
for smallholder farmers, who benefit from organization and government assistance
(Varkkey et al., 2018).
In direct contrast, Indonesia’s government has put forward little widespread reg-
ulation, policies, or incentive programs for more efficient research and development
in the past few decades since independence. Instead, the government has increas-
ingly focused on deregulation policies in hopes that market forces and foreign invest-
ment will shape the industry. The Indonesian government has supported smallholder
land development programs through NES, PIR-Trans, and plasma farmers (akin to
Malaysia’s FELDA), although under 9% of Indonesia’s palm plantation area is dedi-
cated to plasma smallholders, in comparison to over 20% for Malaysia’s smallholders.
As Indonesia’s plasma farmers are more productive in comparison to completely in-
dependent smallholders (those who are not contractually obliged to a plantation mill
or company), Indonesia loses an opportunity to educate a wider range of palm oil

25
workers, leading to a lack of agricultural and economic efficiency.
Indonesian growth has also closely intertwined any improvements to intensification
with further expansion, and thus deforestation. In comparison to Malaysian firms, In-
donesian firms are subject to poorer management and lack of oversight, which creates
patterns of illegal growth and expansion and lack of shareable technologies for small-
holders. The government has not constructed any modern research and development
or information-sharing programs like Malaysia has, thus worsening the technological
divide between affluent corporations and independent smallholders (Varkkey et al.,
2018). While Indonesia’s current trajectory may be worrisome, environmentalists can
continue to be hopeful that positive policy changes or government regulation can come
out of international pressures as it did for Malaysia in the 1990s. Environmentalists
continue to exercise their influence through the structure of large Western organiza-
tions (e.g. the UN) in the same vein that caused Malaysia’s 1992 forest protection
pledge and Indonesia’s shifts towards market-based plantation ownership.

2.4 Current state: smallholders

Today, independent smallholder farmers are a minority in Indonesia’s palm oil pro-
duction sector, although they claim ownership to over 40% of palm oil plantation area
and are expected to grow with global production. Most notably, independent small-
holder farmers have significantly less palm oil productivity in comparison to plasma
farmers and large corporate competitors with up to 116% less agricultural produc-
tivity. Independent smallholders are less likely to produce the same quantity and
quality of fruit due to several organizational features, such as scale of implementation
(affecting marginal costs and average costs of production), less formal knowledge and
training, and inaccessibility to farming and business techniques and strategies, such
as quality seedlings (Glenday & Paoli, 2015). Perhaps most importantly, indepen-
dent smallholders face unique vulnerabilities; palm oil fruit must be milled within
hours of their harvest to maintain quality. Without access to mills or infrastructure–
which partnerships with large corporations guarantee–the quality and price of the

26
fruit dramatically decreases (Hidayat, Glasbergen, & Offermans, 2015).
When asked, nearly all interviewees stated that smallholders were invaluable to the
future of sustainable palm oil farming. However, under current conditions, improve-
ments must be made to ensure that smallholders are recognized and compensated ap-
propriately as an incentive to either begin or continue more environmentally-friendly
farming practices. The main issue smallholders face seems to be that they are "not
very productive", in the words of one director at a large sized corporation. As also
commonly noted in the academic literature, smallholder farmers produce significantly
less output per hectare, averaging 35-40% lower yields in comparison to farmers in the
private or government sector (Lee, Ghazoul, Obidzinski, & Koh, 2014). "[Smallhold-
ers] don’t have the technology or understanding yet to improve their practices, but
we need to support them because they are a growing part of the industry," said one
company director. Without government or economic incentives, farmers–especially
smallholders–remain "motivated to reduce costs", as pointed out by another director
a medium-sized corporation.
According to those interviewed, there are a wide array of methods that could im-
prove smallholders’ farming practices. Larger corporations, especially those that have
been "pressured" by the media or activist organizations to adopt more environmentally-
and socially-responsible business practices, have paid smallholders above typical wages,
hired larger proportions of smallholders than the Indonesian government mandates,
offered assistance in the certification processes, facilitated access to finance, and edu-
cated smallholders on sustainable agricultural practices (e.g. intensifying land instead
of relying on deforestation). Therefore, perhaps contrary to intuition, the larger the
corporation, the higher the environmental and social standards due to the influence
of media and international pressures employed via green neocolonial strategies. This
view was shared across sectors by corporations and various organizations interviewed.
The corporations interviewed also had positive perceptions of smallholder farmers’
quality of life, especially those participating in the plasma scheme, although it is
impossible to transparently understand whether these perceptions are true for all the
smallholders they work with, due to smallholder remoteness and a general loss of

27
information along the supply chain. "We’ve seen massive increases in standards for
plasma farmers. We have photos showing this, even back to the 1990s. [The plasma
program] is a great program that the country has been doing, the best for poverty
alleviation, and it is important to continue supporting them," said a representative
at a large company. Plasma farmers may exemplify the ideal successful smallholder
due to the government-sponsored knowledge and resources directed through NES,
although this success is not yet emulated in independent smallholder groups, many
of which are remote and lack government involvement. It was unclear from these
interviews if independent smallholders experienced significantly different quality of
life in comparison to plasma smallholders.
Most of the private sector representatives interviewed used similar, albeit slightly
vague, language to describe what they were doing to help smallholders (whether as-
sociated with the plasma program or fully independent), including creating programs
to get independent plantations to sell directly to an open market, and increasing ed-
ucation on preventing forest fires. None of the interviewees explicitly expressed any
improvements made to living wages, housing, or social dynamics, although all compa-
nies stated that they cared for their smallholders as they cared for all their workers.
Additionally, all corporate representatives stated that it was difficult logistically to
micromanage smallholders due to the complexity of the supply chain and the relative
remoteness of independent farmers.
In recent times, NGOs and activist organizations have been vocal in their support
for smallholder farmers, especially by advocating to increase smallholder market share
and by offering certification and sustainability training in their mission statements.
According to the World Resources Institute, a DC-based nonprofit promoting envi-
ronmental sustainability, smallholders have become primary targets for policy change
as NGOs believe they may have the biggest impact in changing farming practices di-
rectly through information sharing or increased funding. Smallholders are also likely
to increase their impact in years to come (estimated to be up to 200% current agricul-
tural capacity by 2030), making them an important aspect for sustainability targets,
such as decreased or eliminated uses of slash-and-burn techniques and deforestation

28
(Suhada, Bagja, & Saleh, 2018). This activism has had some successes in recent years;
as will be described in future detail in Chapter 5.2 "Certification schemes", the role of
smallholders has been acknowledged by both powerful organizations and the Indone-
sian government. Some government-sponsored programs, which primarily depend on
expanding certification and other financial incentives, have been implemented with
the hope of modernizing the smallholder sector and increasing their livelihoods.

2.5 Current state: government and policy

Similarly to its relative success among smallholder populations, activism may also
be accountable for recent land use policy changes. One of which, established by the
Indonesian government in 2016, banned the deforestation of peatland, the effects of
which will be discussed in the next chapter, "Environmental Impacts".
Despite these policy changes and programs, according to all corporate represen-
tatives interviewed, the current Indonesian administration (led under President Joko
Widodo, who has been in office since 2014) has been very supportive of the palm
oil industry. One corporate representative even using the word "dependent" to de-
scribe the relationship with the existing administration. The most important policy
that interviewees mentioned was the B20 and B30 programs which mandate that,
in accordance with Indonesia’s move to making biofuels compulsory for all vehicles
and heavy machinery, blended biofuels contain twenty to thirty percent palm oil, re-
spectively. According to those interviewed, the implementation of the B20 and B30
policies are a "lifeline" for all individuals working in the palm oil sector, especially as
relatively large trading partners, like the European Union, begin restricting palm oil
imports. Regional policies such as these have become essential for Indonesian palm
oil producers, many of which have expressed feelings of general uncertainty over palm
oil’s future.
In addition to creating regional uses for palm oil, the Indonesian government has
also been working to limit its infamous corruption in hopes of attracting outside
investment. To improve global perception, the government has created dedicated

29
corruption eradication commissions and has encouraged the development and educa-
tion of farmers to improve land productivity. The companies surveyed had positive
perceptions of these attempts, especially the creation of the Indonesian corruption
eradication commission. As one corporate representative summarizes: "[Corruption]
is a whole other topic. I think it’s too difficult to go back and compare corruption
[...] now to back in the 1990s, but the anti-corruption agency is doing good things."
When asked about what the government was doing to improve its global impres-
sion, another mid-sized company representative said:

Bribery is a very sensitive thing, but everybody knows that Indonesia

is one of the [most] corrupt countries, right. But the government right
now, the people I’m dealing with, are getting less and less involved in
corruption things. They are more concerned with the growing of the
country’s economy itself. So what they do, especially with the Ministry
of Agriculture and and also the Ministry of Villages is they are trying to
maximize the production capacity now by using [intensification].

However, while the government has been trying to reduce corruption and concurrently
improve farmers’ productivity, gaps still exist. Corruption, especially when materi-
alizing as land grabs against indigenous groups still exists and will be discussed in a
later chapter, "Social Impacts".

2.6 Current state: public perception

While Western perception of the palm oil industry is arguably negative, perception of
the palm oil industry in Indonesia is mixed among the younger, more education popu-
lations, especially students, due to the influence of social media. Indonesians are also
receptive to activism originating from Western countries, including "hyped" videos
produced by Greenpeace, a large international organization based in the Netherlands
focused on environmental activism. The more affluent, younger Indonesians are also
more mindful of their health, and are thus concerned about the detriments of palm

30
oil consumption on their wellbeing, although the same interviewee who said this also
stated that palm oil is not any less nutritious than any other oil.
Among the plantation workers (encompassing planters, foremen, and administra-
tors), there seems to be great pride in working in the sector today, although this
may be highly localized to specific regions where palm oil makes up the majority of
a region’s economy. Among this population that I interviewed, all spoke positively
about their work and the lifestyle it has enabled them, although this should be taken
with a grain of salt due to their perception of myself as a young, Western foreigner.
According to one West Kalimantan-based palm oil worker, "The palm oil industry
in Indonesia will continue to flourish," citing reasons like Indonesia’s "limitless" re-
sources and the high demand for palm oil in cooking and biodiesel (both locally and
abroad); corporate representatives were less certain of palm oil’s future.
As previously mentioned, global activism and media influence has been successful
in affecting some consumer groups in Indonesia, such as students and other highly-
educated populations. To counteract this global backlash against the palm oil in-
dustry and the "Westernized" Indonesian youths, "palm oil-positive" media has in-
creasingly been pushed by the Indonesian government or independent organizations,
and by the Indonesian Palm Oil Association (GAPKI) in particular via a nationalist
lens. The GAPKI representative I interviewed offered an interesting lens of how a
palm oil-positive organization can advocate for continuing government and consumer
support across Indonesia. Most notably, several pages on the GAPKI website, as well
as internal documents, are dedicated to dispelling "myths" about the palm oil sector,
especially those propagated through Western environmental activism.
In one example, the GAPKI website in 2018 published one of many posts designed
to dispel "myths" that Indonesia’s palm oil industry is particularly environmentally
destructive; an example of a post is given below. Many international environmental
advocacy groups blame Indonesia for not doing more to protect its peatland. As
previously mentioned, peatland, which accounts for roughly 10% of Indonesia’s land,
stores massively disproportionate amounts of carbon in its soil. Peatland is often
highly valued for palm oil agriculture due to its fertility, nutrients, and ability to store

31
water, but when peatland is burned, its carbon reserves emit very large amounts of
greenhouse gases, thus upsetting environmental activists. To diminish these points,
GAPKI uploaded the following figure (2-2) to one of their posts.

Figure 2-2: GAPKI blog post: dispelling the "myth" about Indonesia’s peatland

Most interestingly, the post is not aimed at dispelling the more popular "myth"
that Indonesia is not fulfilling its global responsibility to protect vulnerable, carbon-
rich peatlands. In fact, the post never actually mentions this myth or points to any
sources that do. Instead, the post is focused on showing that Indonesia does not
have the largest peatland in the world. The pie chart produced compares Indonesia
(6.95% of the world’s peatland) to other continents, and it actually shows that In-
donesia has an alarmingly large proportion of peatland compared to "Others Asia"
at a mere 2.74%. Nevertheless, the text in the post highlights the fact that Indonesia
ranks fourth in the world for peatlands, after Russia, Canada, and the United States.
GAPKI’s post does not highlight how peatlands in other countries are being used
or whether or not they are being burned, therefore making it unclear what point it

32
is trying to make. Additionally, the data used for the figure is sourced by an in-
ternational NGO, Wetlands International, which is working in partnership with the
Indonesian government to dedicate and protect peatlands while reducing the number
and severity of peat fires. President Widodo’s various ministries use similar types of
messaging. In one article from The Jakarta Post, Widodo is said to have "regretted
that all the data and information about the actual condition of Indonesia’s oil palm
plantations conveyed by the Indonesian government and palm oil producers did not
receive attention from the EU" (Gorbiano, 2019).
Through these interviews, it is clear that the Indonesian government has been an
advocate for the palm oil industry. Amid public scorn of the industry in Western mar-
kets (and growing skepticism among Indonesian youths), the Indonesian government
has continued to shine light on the industry by portraying it in a positive manner. By
portraying the industry positively and attempting to appeal to trading partners by
making slow but steady changes to policy (e.g. banning deforestation of peatland),
the government will attempt to use the industry to gain political support and create
jobs, as it did in the 1980s. The government’s unwavering support of the industry
aligns with the country’s goals for independence and development. In addition to job
creation, the increasing popularity of the palm oil industry may lead to Indonesia
gaining independence through increased capital, allowing the Indonesian economy to
diversify overtime and become less dependent on outside resources and exports. By
hindering the palm oil industry through boycotts, Western powers reinforce green neo-
colonial practices by hindering Indonesia’s independence and its future development,
against Indonesia’s best interests.

33
34
Chapter 3

Environmental Impacts

This chapter will explain, in layman’s terms, the nature in which palm oil is grown in
Indonesia and how its production has had negative impacts on the environment. The
environmental detriments typically associated with the palm oil industry constitute
the bulk of global criticism of the industry. Whether the criticism is perceived to be
fair or not, one cannot dismiss the proven scientific harm that certain aspects of palm
oil farming has led to and the strain on native flora and fauna in conjunction with
increased greenhouse gas emissions.

3.1 Farming practices

From afar, the palm oil tree, Elaeis guineensis, bears resemblance to the classic co-
conut trees found in the coastal regions of the Southern United States or in tropical
vacation destinations, although the oil palm’s produce is arguably much more valu-
able. After a palm oil tree is fully grown (roughly four to six years after planting), the
palm will produce about 50 pounds of walnut-sized fruit every two weeks (Lustgarten,
2018). After the fruit is collected from the trees, a labor-intensive process which is
easier to complete when the palm oil tree is smaller, the produce gets transported
to a mill where the fruits are then pressed and turned into crude palm oil. Crude
palm oil’s primary use is in cooking, where it constitutes over a third of all vegetable
oil used, according to the World Wildlife Fund’s Palm Oil Scorecard. The remaining

35
kernel from the palm fruit gets processed into a product called palm kernel oil, an
ingredient common in processed foods and cosmetics across the globe.
Typically, palm oil seeds are selectively bred and nurtured separately by compa-
nies before being delivered as seedlings to plantations in Indonesia’s main agricul-
tural islands of Borneo or Sumatra. Arable farmland needs to be cleared and leveled
to increase production efficiency, a process which often entails the environmentally-
disastrous technique known as slash-and-burn. Slash-and-burn refers to an agricul-
tural process in which existing foliage on untouched land or old plantation land is
cut and then burned. In addition to clearing land, the slash-and-burn technique tem-
porarily rids the land of weeds and pests and creates a short-lasting, nutrient-rich
layer in the soil. Though an agriculturally-efficient and widely-used practice, the
slash-and-burn technique is known for releasing large amounts of carbon dioxide–a
greenhouse gas–into the atmosphere and contributing to forest fires. This process ul-
timately contributes to climate change, leading to complaints from environmentalists
and groups concerned about pollution, air quality, and global warming. The section
below, "Environmental effects" further describes the mechanism in which Indonesia’s
palm oil industry contributes to climate change.
For economically efficient planting, oil palms require relatively large areas of land
(7.5 hectares is often considered the bare minimum) with processing mills in close
proximity. Once the fruit of an oil palm is harvested, it must be processed within
48 hours to attain the status of high-grade oil. Fruit-producing palms typically live
and bear fruit for 25 to 30 years, depending on their lifespan. At 25 years, palms
can be around 40 feet tall, making it even harder for palm oil workers to extract the
heavy fruit (Budidarsono et al., 2013). The environmental implications of the palm’s
limited life cycle and the pollution caused by the razing and replanting routines is
often what causes outrage over palm oil’s environmental impacts.
Large areas of human labor are still necessary to start and manage a successful
plantation. During one palm oil production cycle, average labor requirements for a
larger plantation vary between 59 and 144 full-length days per hectare per year, with
many or most farmers responsible for multiple hectares. Smallholder farmers typically

36
have similar labor requirements for their smaller sections of farmland (two hectares
or less); in addition to farming the crop, independent smallholders are also burdened
with the responsibility of finding a mill in which to process the palm fruit. Mills
require labor too, although they favor skilled and technical workers and typically
have less physically intensive work than the daily roles of planters and harvesters.
In addition to hiring workers, many plantations face difficulties with housing and
allocating resources and wages to their large number of employees, many of whom
relocate to the plantations with their families (Budidarsono et al., 2013)1 . These
working conditions and employer difficulties (e.g. housing and resource shortage)
may be further aggravated by a switch to more environmentally-friendly practices
due to the implied costs these switches place on the employer, the majority of whom
are focused on reducing costs.

3.2 Environmental effects

An investigative report written by Abrahm Lustgarten and published by The New
York Times in 2018 showcased the detrimental environmental effects (namely green-
house gas emissions from deforestation) of the palm oil industry with an interesting
take: much of the modern demand for palm oil has arisen as a consequence of demand
for clean fuel sources. In 2007, then-President George W. Bush favored policies for
US "energy dependence" (e.g. shifts away from foreign oil to homegrown fuels). Un-
der his administration, an emphasis was placed on biofuels–primarily ethanol, which
is partially composed of vegetable oils–which could be used to power generators and
vehicles (Lustgarten, 2018).
Skeptics of Bush’s plan were concerned about the dilemma caused by the envi-
ronmental impacts of creating more vegetable oils. They were correct to think so;
fuel markets were quick to stock up on domestic soy oil (a type of vegetable oil) in
order to meet their new fuel mandates. As a result, the food industry began to seek
1
More information about labor conditions, particularly the use of forced labor, will be discussed
in the later sections, "Indigenous peoples" and "Labor and exploitation".

37
out soy alternatives, leading them to the cheap and widely available palm oil. In
relation to many other popular oils, palm oil requires significantly less land to pro-
duce one ton of vegetable oil 3-1. Bush’s proposal to quadruple biofuel production
was virtually impossible to accomplish on American land alone; the agriculture-heavy
Midwestern regions already maximized much of their cropland, thus sending demand
for vegetable oil overseas. Bush’s administration did not think about the global en-
vironmental repercussions of increasing national demand for biofuels, but the impact
was strongly felt in Indonesia where the palm oil industry expanded to meet the new
Western demand for vegetable oils (Lustgarten, 2018).

Figure 3-1: Graph comparing popular vegetable oils by their output per hectare of
land (International Union for Conservation of Nature, n.d.)

The environmental damage caused by planting new crops–in this case, palm oil
trees–is exacerbated in tropical Indonesia. To quickly prepare arable land for plant-
ing, cropland is usually cleared through slash-and-burn techniques, although the In-
donesian government and major certification programs (discussed in "Certification
schemes") are putting an end to this practice. The slash-and-burn processes un-
leashes carbon trapped beneath the soil. Indonesia’s tropical rainforests in Kaliman-

38
tan and Sumatra contain especially large reservoirs of carbon, primarily in peatland.
Researchers from NASA claim that the recent deforestation of Borneo’s forests have
spawned the largest single-year global increase in carbon emissions in two millenni-
ums (Lustgarten, 2018). Data from the European Commission reveals that Indone-
sia’s deforestation habit accounted for 626 megatons of carbon dioxide, more than the
annual output of Australia (Wright, Watson, Booth, & Jamaluddin, 2019). In ideal
circumstances–when arable and unvegetated land is converted to vegetable oil plan-
tations for the first time–the carbon can cancel out. The growing crops will absorb
carbon in the air and will have a net-zero effect after the biofuel is consumed. Unfor-
tunately, the environmental damage caused by redirecting vegetable oil production
to Indonesia’s carbon-dense (and ecologically diverse) forests in Borneo and Sumatra
have proved much more disastrous than expected.

From the US perspective, a move to "greener" energy sources has deflected the
damage and blame of greenhouse gas emissions to developing countries, in alignment
with the concepts of green neocolonialism. Some countries have recently reevalu-
ated their palm oil consumption; the European Parliament, hoping to learn from the
US, adopted a comprehensive energy plan that anticipates a ban on palm oil biofuels
"preferably" by 2020 (now 2030) while barring the counting of palm oil as a biofuel in-
gredient in the EU’s Sustainable Development Goals (European Union, 2017). While
an admirable environmental goal, the ban will likely negatively impact the liveli-
hoods of millions of palm oil workers in Indonesia and in other palm oil-producing
countries. Aside from the economic repercussions on Indonesian palm oil workers,
the ban also sends a discouraging message to producers by removing incentives to
modernize the industry and by discouraging any attempts to make the industry more
environmentally-friendly. Many activists and NGOs who have championed stricter
environmental policies also fail to mention that the desire for palm oil products stems
from these recent Western policies, such as from Bush’s 2007 program.
The European Union embodies this hypocrisy, preferring to place the blame on
Indonesia and other Asian trading partners. While the EU claims to care about the

39
matter of deforestation enough to ban Indonesian palm oil imports, the EU failed to
pledge protection for Germany’s forests until 2019, years after the initial discussion
of palm oil bans (Anderson, 2019). The EU, along with other Western organizations,
has failed to place this same level of austerity in their own countries, such as Germany
(which has extensive natural forests vulnerable to deforestation for other vegetable
oils), simply because it is inconvenient or acts as a front for protectionist measures.
Instead, an environmental double standard now exists between developed and de-
veloping countries. FELDA (Malaysia’s land resettlement agency) has been vocal
against these green neocolonial approaches and hypocrisy. Upon the EU’s proposed
bans against palm oil imports for biofuels, Malaysia responded by accusing the EU
of "economic colonization", stating that the EU’s decision was strategic (benefiting
European-grown oils) instead of based in environmentalism (Zein, 2019). In an inter-
view with The Guardian, a FELDA spokesperson said of the EU bans: "It’s the same
colonial attitudes, the white man imposing their rule on us by afar." (Ellis-Petersen,
2018)
Issues of fairness aside, Indonesia has recently made strides to improve the de-
forestation issue, thus curbing the amount of primary forest lost, reducing carbon
emissions, and slowing the rate at which endangered species dwindle. In 2016, the In-
donesian government announced efforts to temporarily ban the deforestation of peat-
land and primary forests (i.e. undisturbed forests composed of native tree species); in
2017, the moratorium results showed a sharply declining rate of primary forest lost,
with a 40% decrease in deforestation in 2018 compared to the annual deforestation
average from 2002 - 2016 (Mongabay, 2018). However, the ban, which has become
permanent law, does not yet prevent the deforestation of land that is not designated
peatland and primary forests; degraded forests (i.e. those with existing human ac-
tivity) and non-primary forests with high carbon stock or high levels of biodiversity
face no existing land use protection. Figure 3-2 shows improvements to deforestation
rates in recent years along with increased rates of primary forest lost due to global
demand of biodiesels in the late-2000s.
Despite Indonesia’s recent policy change attempts, media and activist groups have

40
Figure 3-2: Graph showing the amount of Indonesian primary forest lost, in units of
’000 hectares (Mongabay, 2018)

not slowed their criticism of the palm oil industry. From the environmental per-
spective, several improvements can continue to be made (e.g. protecting all forms
of forests). From Indonesia’s perspective, it may be difficult–or even impossible–to
comply with the environmental movement’s constant demands while appeasing the
country’s various companies and producers.

3.3 Ecological effects

In addition to palm oil’s impact on carbon emissions, the destruction of large areas of
Indonesia’s forests has contributed to global fears–and outrage–over the threat to In-
donesia’s biodiversity. Currently, agricultural expansion and intensification poses the
largest threat to biodiversity, and the palm oil sector (which grows by approximately
10% every year due to the expansion of biofuel markets and increased food demand
in developing countries) absorbs much of the blame, due to the tropical location and
unique flora and fauna in the countries of production (Fitzherbert et al., 2008). In the

41
2001 - 2016 period, palm oil accounted for the largest cause of deforestation (23%),
although other industries, such as timber (14%), were also large contributors (Austin,
Schwantes, Gu, & Kasibhatla, 2019). Additionally, the replacement of primary forests
with palm oil plantations has disproportionate effects on biodiversity; in a scientific
study, oil palm plantations were found to host less than half as many vertebrate
species as undisturbed forests (Fitzherbert et al., 2008).
The International Union for Conservation of Nature (IUCN), a large international
organization located in Switzerland, found that 193 species regarded as "threatened"
by the organization’s Red List would be negatively affected by global palm oil pro-
duction (International Union for Conservation of Nature, 2018). The orangutan, the
most famous of these threatened species, is endemic to Indonesia and Malaysia and
is currently only found on the islands of Borneo and Sumatra, where palm oil planta-
tions happen to be numerous. Orangutans, which translates in Indonesia and Malay
to "men of the forest", have become the poster children for environmental activist
groups, such as the World Wildlife Fund, Greenpeace, Rainforest Action Network, and
other organizations, a few of which are solely active in orangutan conservation. As an
example of the almost idolization of orangutans in this industry, Greenpeace released
a popular video (with over 700,000 views), about a cartoon baby orangutan named
Rang-tan, who was orphaned after his mother was killed by palm oil deforestation 2 .
The video, along with other forms of media that showcase orangutans, use the haunt-
ing and human faces of orangutans young and old to represent their causes. Other
news sources have chosen to cover the palm oil industry with this same tactic; in the
summer of 2019, The New York Times published an article with the devastating title
"One Casualty of the Palm Oil Industry: An Orangutan Mother, Shot 74 Times".
Despite the "over popularity" of orangutan-related messaging, activists are correct to
worry about the species. The two species of orangutan existing are either registered
as endangered or critically endangered, and it is estimated that their numbers have
dwindled by over 50% over the last century, concurrent with Indonesian deforestation
2
Greenpeace’s production can be found here: https://www.youtube.com/watch?v=
TQQXstNh45g

42
and industrialization (World Wildlife Fund, n.d.). While the use of the orangutan
in international media and activism has rather successfully popularized the issue of
palm oil, other social issues embedded in the conflict–such as the recognition and
rights of indigenous peoples–remains left out of the conversation. The next chapter,
"Social Impacts", will discuss these issues at a greater length and will hopefully raise
awareness of the plight of people who may, like orangutans, experience exploitation
by the palm oil industry and its critics.

3.4 Worldwide demand: do consumers care?

Due to palm oil’s environmental repurcussions, Western countries have essentially
shunned the crop, or have appeared to do so. However, among those interviewed,
it seems that the negative perception we see and hear on social media is not repre-
sentative of actual Western consumers despite the amount of public discourse and
media that would make us believe that Western consumers are interested in paying
a premium for more environmentally-friendly products. This disparity between what
organizations advocate for and what the average customer wants is not unique to
the palm oil industry. Several other industries, including coffee, tea, and cocoa, ex-
perience a similar disparity, although these industries may still benefit from having
sustainable products (i.e. fair trade) priced higher, unlike in the palm oil industry
where certified oil brings very little financial benefit (Marconi, Hooker, & DiMarcello,
2017).
To put it bluntly, one corporate representative interviewed believes that "People
need to put their money where their mouth is." Western policy (specifically recent
European Union policies) have made it seem that Western consumers care about the
environmental detriments of palm oil production enough to spend more on certified
palm oil, although this does not reflect in market prices. Again and again, interviewees
mentioned how certified palm oil has few economic benefits for the companies that
produce it. According to MIT supply chain researchers, Alexis Bateman and Yin
Jin Lee, Indonesian companies face a surplus of certified oil, since Western countries

43
are not the largest trading partners and because of a lack of general demand for
certified oils. Meanwhile, one interviewee even mentioned hearing prejudices against
his profession in the palm oil sector: "I went to [an American university] recently [for a
presentation] and some guy asked me what I did. When I mentioned that I was in the
palm oil and agriculture business, he looked at me like I was a pedophile." Although it
is unknown whether this specific individual actively avoids buying products containing
palm oil or pays a premium for certified products, they are representative of the type
of consumer that Western media and activism pushes for. Ultimately, despite the
efforts of Western organizations and activist networks, consumers hardly share these
same goals (or at least not willing to pay more to support them), placing the burden
on palm oil companies and farmers for potentially little reason but to appease the
media and other organizations.
Additionally, according to a representative from the RSPO, the largest palm oil
certifying body, the majority of Indonesia’s palm oil export recipients are located
in less developed countries like India and China, where there is even less demand
for environmentally sustainable or certified products. According to their data from
the RSPO and WWF, less than 20% of Indonesia’s palm oil exports go to Western
markets. For the RSPO, and for other environmental NGOs, the focus has grown to
trying to change the consumer mindset in Eastern or Southern markets. One corpora-
tion interviewed stated that Eastern markets "are still miles away" from caring about
the ethics of the products they’re importing; their main priority is to source cheap
vegetable oils to placate the masses. "100% sustainable palm oil will not happen if
these developing countries do not prioritize buying it," says an RSPO representative.
Instead, land use policies in Indonesia need to change to ensure that proper environ-
mental practices are used whether or not there is an economic demand for certified
products, similarly to Indonesia’s ban on peatland mentioned earlier. Despite the
relative indifference of consumers, even those in Western markets, palm oil producers
will continue to face pressure by international organizations. International organi-
zations further push restrictions on palm oil companies by lobbying for improved
working conditions and treatment of native populations, as will be discussed in the

44
next chapter.
Lastly, activist organizations and major news sources almost never cite Indonesia’s
other crops (i.e. soy, rubber) which use similar deforestation practices and actually
require several times more land than palm oil crops (Figure 3-1). When asked about
their ideas on future policymaking, two corporate representatives interviewed stated
that they would support seeing a carbon tax, which would be an appropriate method
to treat all "harmful plantations" across various sectors equally. According to one
representative, the implementation of a carbon tax should be worldwide because
"developed countries, like the United States, can be hypocrites. They have their
own deforestation, and yet they still point their fingers at the palm oil industry and
other industries in developing countries, while they are not helping." Along these
lines, all corporate representatives interviewed mentioned a bias against palm oil
producers specifically; in their minds, other popular Indonesian industries (especially
soy and rubber) are equally, if not more, harmful for the environment and should be
treated with the same scrutiny and restrictions. If environmental organizations and
consumers truly care about the sustainability of the products they are purchasing,
then we should expect that they would extend the same scrutiny to other agricultural
crops, or at least be willing to pay the premium that environmental organizations push
onto palm oil producers by way of green neocolonial strategies like blame, restrictions,
and certification.

45
46
Chapter 4

Social Impacts

As palm oil production intensifies to meet the growing demand, issues regarding the
rights of indigenous peoples and plantation workers have increasingly entered public
discourse, although not to the same extent as environmental issues. Indigenous groups
and workers have been the victims of coercion and land conflicts initiated by private
companies and have faced nonsensical fines and even time in prison for attempting
to push back against companies or law enforcement. In addition to these disputes,
an interview with a Dayak activist has shown that another element of indigenous
communities is at stake due to the palm oil industry: the protection of native customs
and traditions. This chapter hopes to shine some light and perspective on these lesser-
known effects of the industry.

4.1 Indigenous peoples

Indonesia’s indigenous peoples are often not officially recognized by their government,
despite the fact that Indonesia is a signatory to the United Nations Declaration on
the Rights of Indigenous Peoples. The subject is a contentious one due to the coun-
try’s composition as a network of of various islands with different cultural traditions,
of which 95% of the total population deems itself native. Government officials ar-
gue that indigenous status is inapplicable as most Indonesians, except for Chinese
Indonesians and immigrant minorities, can be classified as indigenous to some ex-

47
tent (International Work Group for Indigenous Affairs, n.d.). Indonesians have a
term for this concept, pribumi, meaning "first on the soil", which differentiates the
majority of Indonesians, notwithstanding which island one comes from, from their
Chinese, Dutch, or Indo-European counterparts. Instead, indigenous forested ar-
eas and smallholder-owned land are often not given any official government-granted
land titles. The land is classified as "non-productive" lands or "bare lands" and
can be targeted by future corporate-owned palm oil plantations (Sirait, 2009). As
transmigration for the palm oil industry becomes more commonplace, an agrarian
transformation is sweeping over Southeast Asia, contributing to a plethora of local
land conflicts, negotiations between smallholders and companies, and issues related
to wages, debt, and labor conditions (Pye, 2010). These issues are only expected to
increase in frequency; Indonesia’s palm oil plantation land, especially in Kalimantan
where numerous indigenous groups call home, is expected to double in the years to
come. While activist networks (many of which are Western-based) and grassroots
indigenous movements have attempted to assist indigenous groups in land conflict,
they have not been successful at preventing all conflicts due to corruption by local
politicians and law enforcement.
The integration of indigenous peoples into national law has been controversial
since the beginning of Dutch colonialism in the 17th century. The Dutch political
government spawned two distinct legal systems: a Western-based system used for
the majority of the population (Dutch and Indonesian alike), and an adat system
in which certain indigenous groups (i.e. very rural and tribal) could continue their
customs, including traditional land ownership practices. However, the legal status of
indigenous groups under adat is still uncertain in the present day. Amendments to
the Indonesian Constitution mandate that for indigenous peoples to be recognized,
they must "exist and accord with development of the society and the principles of the
Unitarian State of Republic of Indonesia, as regulated by law" (Republic of Indonesia,
1945). The Constitution also declares that "land, water, and all natural resources that
belong to common pools and public goods, are under state control and will be utilized
for the maximum welfare of the people". Using this language, Suharto’s regime was

48
able to reallocate community-owned indigenous land as state land in "the name of
national development" (Marti, 2008).
Additionally, the methods in which indigenous groups are to be identified are
ambiguous, and enforcement of adat protections vary widely around the country.
Thus far, only four adat communities have been formally identified by the Indonesian
government and only three districts and one province have issued formal regulation
to recognize adat rights. In the province of West Kalimantan, where roughly half
of Indonesia’s palm oil plantation land lies, no district- or provincial-level protection
of indigenous peoples’ rights exists. Instead, any recognition of adat is left to the
local governments. Partially due to a lack of indigenous protection, land claimed
under adat has fallen drastically from nearly 7 million hectares in 2003 to only 60,000
hectares by 2006. Under Indonesia’s system, the land change has been categorized
as a conversion to private individual land ownership, but indigenous groups in the
region have continued to struggle for a reclamation of rights to the land (Sirait, 2009).
By converting this land into private use (and allowing local politicians to divvy up
use permits), the Indonesian government benefits from increased opportunities for
agriculture and foreign investment.
In the past, indigenous groups and other peasant communities have actively
sought formal government recognition and protection. Near the end of Suharto’s
New Order rule, in the 1980s and 1990s, several peasant organizations formed, such
as Serikat Petani Sumatera Utara (the Peasants Union in North Sumatra). Peasant
organizations–and later, international NGO grassroots organizations–were established
in response to the expansion of Indonesia’s territorial control. As the state began pos-
sessing large shares of land to promote the growth of the plantation economy, existing
farmers and indigenous peoples lost their land rights and economic livelihoods, includ-
ing the people of West Kalimantan. After Suharto’s reign ended in 1998, in a period
known as Reformasi, thousands of landless peasants, farmers, and smallholders joined
activist-made groups, such as Federasi Serikat Petani Indonesia (the Federation of
Peasant Unions in Indonesia) and Aliansi Masyarakat Adat Nusantara (Alliance of
the Indigenous Peoples of the Archipelago).

49
 During Reformasi, groups initially oppressed under Suharto’s regime had greater
political freedoms and more opportunities for collaboration, but negative perceptions
and general suspicion of the government remained. Concurrently, the Reformasi pe-
riod was tied to changes in economic growth; the palm oil industry skyrocketed as
the agricultural sector became increasingly privatized, leading to an influx of land
conflicts. A study of Indonesian plantations between 1998-2001 found over 800 ar-
rests, over 400 cases of torture, and twelve deaths that were closely related to land
conflicts with company-owned plantations (Klenden, Indradi, & Chidley, 2009). An-
other study in 2000 found that 100% of 81 plantations in South Sumatra had been in
some form of land conflict with local communities. Lastly, a report by Sawit Watch,
a palm oil watchdog, found that between 500 and 1000 palm oil land conflicts were
still ongoing in 2008 (Marti, 2008). Recent changes in the past few years have created
an avenue for indigenous groups to claim official recognition of their land in Indone-
sia, but this process is bureaucratic, as to be expected. For land recognition to be
successful, groups need to present maps (amid other documents), something which is
impossible to accomplish for many communities due to past traditions and a different
legal approach to land ownership.
Land conflicts continue to exist in modern day despite the government’s efforts
to curb corruption and to create an avenue for indigenous land recognition. Em-
manuela Shinta, a Dayaknese activist, was able to offer a unique perspective to this
discussion. In Emmanuela’s view and based on her personal and learned experience,
corruption remains rampant, especially in her province of West Kalimantan, and es-
pecially against indigenous groups who can be the subject to scarring violations, such
as land seizure. Activists or affected peoples in similar situations to Emmanuela may
want the Indonesian government to focus on recognizing indigenous communities and
their rights instead of promoting national economic growth alone. In Emmanuela’s
words:

I talked to people who were sent to jail by companies, and [the company]
grabbed the land from the community, land that was inherited from an-
cestors. I thought, you know, it’s a lie in the past, but actually, that’s

50
 real, it happened! ... This man, he had like twenty hectares being grabbed
from him and he was arrested because he stood against the company, and
they pushed him to sign a letter that stated that he lied and made a
fake claim and the land was meant for the palm oil company. Otherwise,
[they threatened] that his sons will be in jail forever. He’s okay right now
because he signed the letters, but his sons were in jail for five months."

Government officials are supposed to ensure that land seizures do not happen and
that those who use coercion are disciplined, but many transactions happen under the
table, leaving victims without legal aid. Emmanuela’s conversation with the man
who had his land stolen was made into a short video, published on YouTube 1 .
This process is estimated to continue–if not worsen–as palm oil products become
increasingly popular (Pye, 2010). It is approximated than an additional 20 million
hectares of land will be issued via provincial government licenses to plantation com-
panies, as the prices and profits of crude palm oil continue to rise (Sirait, 2009).
Because the land allocation process is decentralized from the national government,
local politicians utilize their power to take advantage of palm plantation permits in
hopes of gaining financial support from wealthy corporations by selling land and nat-
ural resources to large foreign conglomerates. To help eliminate any conflicts with
the local communities, many local governments have instituted partnership schemes
called plasma-inti. In the plasma-inti scheme, corporations will manage the majority
of the plantation land while the local community will get approximately two hectares
per family and will lose sovereignty on the remainder. Plasma-inti farmers are able
to sell their produce to plantation mills, thus differentiating them from independent
smallholder farmers. Local governments also create task forces, made up in part by
the military, chiefs, adat leaders (heads of the indigenous communities’ law systems,
as implemented during Dutch colonialism), and other influential individuals. The task
forces are responsible for negotiating the plasma-inti scheme with local land owners,
thus creating incentives for the village leaders to work for the local government instead
1
Emmanuela’s organization (Ranu Welum) published a short documentary documenting this land
conflict case. It can be found here, with English subtitles: https://www.youtube.com/watch?time
_continue=45&v=SXS47OjY1ck&feature=emb_logo

51
of prioritizing representation of their communities (Sirait, 2009).
According to a report by the international NGO Friends of the Earth, many
communities, including indigenous groups, do not hear about plantation projects until
the "bulldozers" first arrive to establish the plantation. Many others say that meetings
were called to discuss plantation projects, but the process was neither transparent nor
participatory. Local communities have blamed plantation companies for their broken
promises or for misleading them; private companies (both Indonesian companies and
international giants) often tell villages that they will build infrastructure for them
in exchange for using their land, although this rarely happens on the ground or
has an indefinite timeline. Local communities are seldom compensated for the rising
living costs associated with plantations moving in, or the externalities associated with
pollution or loss of culture or indigenous identity. In addition to the takeover of land,
local people are obliged to sell their harvests (from their family-allocated two hectares
of land) to palm oil companies as a way to settle any debts, with information about
harvest value and sell-back prices withheld in a blackbox. In reality, many farmers
cannot pay back their debts to the plantation companies and are then forced to
provide labor instead. Local people who do get compensated for their produce are
limited to making minimum wage, with many casual laborers earning less than this
standard (Marti, 2008). Due to government mismanagement and corruption, outside
agencies, like international NGOs and certification bodies, have been forced to step in
and mediate, although the majority of NGO interest is still geared in environmental
protection instead of indigenous advocacy.
Lastly, aside from the land conflicts previously mentioned, the palm oil industry
may also be responsible for causing inner conflicts (i.e. cultural, religious) between
members of indigenous communities. Emmanuela shared the view that while rural
populations may benefit from opportunities in the palm oil sector (including small-
holders and plasma farmers), their work comes at a social and spiritual cost which
often trumps any economic gain. In certain tribal areas, such as among the West
Kalimantan (Dayak) people in which Emmanuela identifies, the forest represents more
than an income. To her and to many, the health of the forest and the environment

52
symbolizes the well-being of their community and can be connected to animist reli-
gions and traditions. Even the "good" palm oil companies "destroy the identities of
the Dayak people". In Emmanuela’s perspective, the media has been focused on the
environmental effects of palm oil, but the voices of the indigenous peoples have been
limited when portraying the lost traditions and cultures associated with shifting to a
palm oil economy.
Despite the importance of addressing the concerns of indigenous populations and
other vulnerable communities, the media and Western activism continues to focus on
the industry’s negative environmental outcomes. Emmanuela’s organization, Ranu
Welum, attributes its success as a grassroots organization to using media, primarily
video, to capture the stories of indigenous peoples, whose voices are often left out of
the discussion:

Often, activism is about the environment, but it doesn’t mention the con-
flicts and the struggles of my people... That’s why camera and video bring
up the voices of the voiceless. That’s also why my advocacy, with Ranu
Welum, we always use the bottom-up approach and a cultural approach
based on identity.

Using these media methods, Ranu Welum has made significant progress in their local
community. In a confrontation lasting eight days, Emmanuela, on behalf of Ranu
Welum and youth activists, met with her province’s parliament, which resulted in
the governor signing a petition to acknowledge the impact and causes of Kalimantan
forest fires and to stop using local indigenous farmers as a scapegoat. Emmanuela
remembers this experience as a "good step." Local activists are more likely to at-
tempt industry and policy changes by talking directly to local government officials.
In contrast, non-profit organizations and activist groups, such as RSPO or Green-
peace, change consumer behavior as a way to gain power, either through a market
mechanism like certification or through industry boycotts. Emmanuela’s approach,
along with the approaches of other NGOs, recognizes their limited power in world-
wide consumer behavior and national politics and instead are able to appeal more

53
successfully to local agencies, many of which hold more power over regional palm oil
politics than national bodies. As affected populations in Indonesia begin to gain more
traction in the activism space (as opposed to "outside" activists from international
organizations), they will be better able to advocate for their representative needs, in-
cluding advocating for the views of indigenous communities instead of just portraying
the environmental aspect of the industry.

4.2 Labor and exploitation

Aside from the various issues associated with the industry that were already men-
tioned (i.e. greenhouse gas emissions, loss of biodiversity, and land theft from in-
digenous groups), many issues regarding labor and worker exploitation remain unad-
dressed. Exploitation, like the rights of indigenous groups, has become increasingly
prevalent in public discourse, but not to the same extent as environmental destruction
and, specifically, orangutan habitat loss. The lack of discussion around exploitation
can be partially attributed to the geographic isolation of many palm oil workers; their
stories remain confined to the remote plantations where they both live and work. A
study by the Fair Labor Association, a US-based nonprofit focused on promoting ad-
herence to international and national labor laws, found that coercive practices, such
as threats, violence, and lack of clarity or transparency were very prevalent in the
palm oil industry. The most frequently occurring forced labor indicators included:
unrealistic work targets and quotas, a lack of permanent or long-term contracts, de-
pendency on “limited-duration” workers (also known as kernet) and child labor, low
wages, and the inability to organize (Fair Labor Association, 2018).
The heart of exploitation issues likely stems from the high quotas that plantations
set; harvesters and planters typically need to meet a weight-based quota by the end
of each day in order to be paid a minimum wage and be recruited for later work.
Due to the usually unreasonably high quotas, contracted workers need to hire infor-
mal kernet workers or other family members, especially wives and children. Female
workers, typically married to men who are formally registered as workers, are par-

54
ticularly vulnerable due to their casual, non-contractual status and to the dangerous
conditions which they are assigned to. Women are typically given tasks with con-
siderable health risks, such as the application of fertilizers and pesticides. It is also
difficult to determine the extent to which women are abused in the workplace; some
workers admit to knowing other women who were forced to grant sexual favors in re-
turn for job security, but many women do not feel comfortable sharing their personal
experiences with sexual harassment. Similarly, the employment of children remains
somewhat taboo. The vast majority of working children do so under their parents,
who ask them to work out of necessity of fulfilling their quotas. In plantations where
migrant workers are common, children do not have better options than working at
a young age; many migrant workers are illegal, especially in neighboring Malaysia,
and a lack of documentation means that children are unable to enroll in school (Fair
Labor Association, 2018).
Low wages and the inability to organize are two other serious issues in the palm oil
industry. Kernet workers, who make up to 50% of the plantation workforce, lack many
of the benefits, such as job security or time off, that are offered to contractual farmers.
Daily and kernet workers regularly make between 20% - 75% less than their full-time
counterparts, making as little as $37 - $65 a month even if they work the full duration.
Comparatively, fully-employed workers still only make around $145 a month, which
many say is not enough to support both workers and their families. Wages are often
set by collective bargaining agreements made between plantation companies, and they
usually exclude workers from the negotiation process. Additionally, workers lack the
right to formally organize and collectively bargain through independent unions. Many
workers expressed a fear of reprisal, and rightfully so; many plantations, even well-
established ones, use intimidation tactics and threaten to transfer or fire workers who
attempt to organize or join unions (Rainforest Action Network, 2018).
However, as companies find themselves increasingly under pressure by certification
bodies (discussed in the next chapter), many activist organizations and NGOs (e.g.
Human Rights Watch, Amnesty International, Fair Labor Association) have been
advocating for more responsible recruitment strategies. Companies that depend on

55
selling palm oil products have joined various organizations that advocate for better
human rights practices and increased transparency to improve media outlook and
public perception. Human rights-focused organizations have been using the media
to pressure companies into reforming their labor practices, and many have called for
more critical action from both consumers and international certifying boards, the role
of which will be discussed in the next section, "Activism and Certification".

56
Chapter 5

Activism and Certification

NGOs (specifically Western non-profits) have played a significant role in the palm oil
industry by advocating for policy changes and attempting to change consumer behav-
ior. Large international activist networks, such as Greenpeace, have been responsible
for popularizing the environmental side effects of the palm oil industry in public dis-
course, shaping consumer behavior to a degree, directing public policy, and creating
certifying bodies for more environmentally- and socially-responsible palm products.
This section hopes to outline the major contributions of activist organizations and
NGOs in the industry while discussing the popular critique of Western influence, its
oversight, and the role of certification.
First, it is important to establish the different stakeholders in the activism space.
The institution map below (Figure 5-1) aims to capture the major stakeholders men-
tioned in this thesis, such as the Roundtable on Sustainable Palm Oil (RSPO),
founded by the World Wildlife Fund for Nature (WWF) under "International Agen-
cies" and the Indonesian Sustainable Palm Oil (ISPO) standard, established by the
Indonesian government under "Regional Agencies (Indonesia)". In this thesis, non-
profits (used interchangeably with the term "NGO" which carries the connotation of
working outside the United States) are mostly Western-based or Western-founded in-
stitutions (i.e. international), meaning that their philosophies, goals, and higher-level
staff members are based in Europe or North America. Large, Western-based NGOs
in the palm oil space typically have offices, staff, or volunteers located in Indonesia

57
or Southeast Asia, although they are usually involved in several other non-palm oil
related projects globally.

Figure 5-1: Institution map showing the major stakeholders in the palm oil indus-
try, including the RSPO and ISPO certification bodies, major non-profits, for-profit
companies, and Indonesian agencies (excludes mainstream media sources and news
agencies which are nonetheless influential in the industry)

Activist networks, usually also based in Europe or North America unless other-
wise specified, are constructed similarly to non-profits and NGOs within the palm oil
space. While NGOs overlap with activist networks and share similar missions and
activities, activist networks take it one step further; think Greenpeace or similar or-
ganizations, technically classified as NGOs, which use more radical messaging (often
directed at consumers against private companies) and employ volunteers and the use
of social media platforms to disseminate knowledge or initiate calls to action. Lastly,
the term "international agencies" consists mostly of intergovernmental agencies like

58
the United Nations, which has significant leverage when promoting sustainable de-
velopment program and upholding international law, among others responsibilities.
Some organizations (such as WWF) are categorized as international organizations due
to the amount of power they wield within the space–affecting policies and consumer
habits in both the United States and in Indonesia–and because of the significant
amount of funding (20%) provided by government sources (Jeffries, 2014).
As one can see from Figure 5-1, many of the industry’s most influential institutions–
especially public or non-profit organizations–are Western-based or Western-founded
despite the fact that the vast majority of palm oil production occurs in Eastern or
Southern countries like Indonesia. Thus, the composition of these stakeholders alludes
to concepts like groupthink and also suggests the large amount of power and prestige
they carry. Fundamentally, these stakeholders are reminiscent of concepts of neocolo-
nialism more broadly due to the economic wealth–and thus political influence–they
carry.

5.1 Role of activist groups

As previously mentioned, NGOs and activist organizations have been largely success-
ful in pushing companies into striving for higher environmental or social standards
than the Indonesian government currently mandates. On occasion, the influence of ad-
vocacy is enough to sway policy; this is seen in how the European Union implemented
its ban on palm oil in biodiesels and how Indonesia’s government has attempted to
institute land use policies in recent years. On other occasions, advocacy (in the form
of NGOs) permeates Indonesia via a watchdog role, filling in for the Indonesian gov-
ernment in enforcement when the government is unable or unwilling to. The impact
of NGOs can be felt on specific companies but also the industry as a whole. While
NGOs and activist organizations are able produce admirable outcomes, their exact
impact has not been well-documented or summarized in the literature due the grass-
roots nature of activism. Additionally, the interests of discontented smallholders and
plantation workers may not be represented by the wishes of activist organizations.

59
Western activist organizations, especially those advocating for reformed environmen-
tal practices, often support bans on palm oil products, which has negative repercus-
sions on the livelihoods of smallholder farmers, who are unfairly burdened by lack of
access to greener technologies. This section aims to fill some gaps in the literature by
summarizing the role of Western activism on corporate responsibility in the palm oil
sector and by outlining future areas for improvement.
As articulated in a piece in the Journal of Environment & Development, four main
trends have been shaping corporate environmental responsibility and empowering ac-
tivist groups: (1) the globalizing power of social media; (2) the increasing number
of environmental campaigns; (3) the use of “sustainability” in brand and corporate
messaging; and (4) the spread of eco-consumerism. Ultimately, three factors prevent
NGOs and activist groups from drastically shaping the palm oil industry: (1) corpo-
rate and government influence over palm oil certification schemes; (2) ongoing sales
of uncertified oil due to complex supply chains; and (3) bribery and weak regulatory
enforcement in both Indonesia and Malaysia (Dauvergne, 2017).
Perhaps one of the most well-known non-governmental environmental organiza-
tions, Greenpeace, has been repeatedly involved in advocating for greener palm oil
practices in Southeast Asia, including Indonesia. In 2008, Greenpeace campaigned
specifically against Unilever’s Dove brand, criticizing Unilever for its role in rainforest
deforestation. The campaign, like many to come, utilized powerful emotional imagery
and included images of deforestation in action, deceased orangutans and other jungle
species, and indigenous children working in poor labor conditions. The campaign
was ultimately deemed a success as Dove, under media pressure, became the first
global brand to switch to 100% sustainable palm oil. Greenpeace’s 2008 campaign
was deemed a success by many activists and spurred on more movements by other
environmental NGOs (Dauvergne, 2017).
In 2010, Greenpeace gained even more success and launched an aggressive viral ad
campaign to attack Sinar Mas, one of the largest palm oil conglomerates in Indonesia.
The ad campaign focused on the negative environmental impacts of palm oil harvest-
ing and again included heartfelt imagery surrounding wildlife, such as orangutans.

60
Greenpeace used accusatory rhetoric to uncover Sinar Mas’ practices, such as claim-
ing a “lack of transparency, [acts of] deforestation, and threats to biodiversity.” After
launching the ad campaign, Greenpeace pressured large companies (notably Nestlé
and HSBC, both of which are based in Western countries) who were partnered with
Sinar Mas. The end result was that several corporations dropped their partnerships or
investments in palm oil companies to save face. Despite Greenpeace’s efforts, the bulk
of the impact can also be attributed to the power of social media which helped spread
the campaign. During the time of Greenpeace’s campaign, 70% of conversations re-
volving around the palm oil industry happened over blogs, and mainstream media
sources like Reuters and The Guardian became involved in widespread information-
sharing. These actions contributed to the dip in share prices for Sinar Mas as well as
a damaged reputation and reduction in palm oil business (Harrild, 2010).
The size and scale of Greenpeace’s operation caused other companies who used
palm oil products to reconsider their relationships with palm oil conglomerates, even
if they were not directly affected by the campaigns. Several other companies followed
suit after Nestlé and other Greenpeace targets made zero-deforestation pledges. Other
activist organizations quickly joined the scene, including the Rainforest Action Net-
work, Friends of the Earth, and SumOfUs, all of which are global NGOs headquartered
in Western countries. Companies not directly targeted but ultimately influenced by
the 2010 Greenpeace campaign included: Kellogg’s, General Mills, Procter & Gam-
ble, and McDonald’s, all of which have since committed to zero-deforestation pledges
(Dauvergne, 2017). Activists have also been successful in conducting change in in-
ternational organizations. After a campaign involving several multinational activist
groups, the International Monetary Fund and the World Bank Group pledged to
suspend financial support to the palm oil sector, which is admirable from an envi-
ronmental standpoint but may not represent the wishes of smallholder farmers (Pye,
2010).
Despite their best efforts, global NGOs and activist groups are still limited in the
power they can leverage. When directly pressured by activist groups, large companies
attempt to appease critics in the short-term, instead of finding long-term solutions.

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Corporations may appear to be vocal for sustainable palm oil, but behind the scenes,
many of them are concurrently lobbying for weaker environmental and labor regu-
lations (Higgs, 2014). Additionally, the confusing supply chain patterns that many
large corporations use make it difficult to determine where palm oil is sourced and
if it was intentionally done unsustainably. Lastly, bribery and weak law enforcement
in many palm oil producing countries, including Indonesia, are still commonplace.
As previously stated, up to 80% of land clearing and logging in Indonesia can be
attributed to bribery or lack of law enforcement (Jones, 2014). Because of this, it is
difficult to estimate whether “sustainably-sourced” palm oil has truly met all necessary
requirements.
The literature has suggested that NGOs and activist groups, especially environ-
mental activist organizations, have been successful in the targeted palm oil campaigns
they released in the 2000s. Many large corporations, including household names like
Nestlé and Dove were pressured in part by the media to switch to more sustainable
agricultural tactics. The reach of environmental activists has also stretched indirectly
to companies not specifically targeted by campaigns, such as McDonalds, due to mar-
ket pressure and competition. Despite the clear benefits of activism on producers,
the exact impact on consumer behavior is still relatively unknown. Consumers may
have been temporarily angered by palm oil’s negative effects on the environment or
on labor but may remain unaware that they were continuing to support the indus-
try by purchasing non-obvious palm oil products, such as shampoo, conditioner, and
other cosmetics. Few companies have made their sourcing targets publicly available,
making it difficult for consumers to easily understand how sustainably-sourced their
purchases are and what consumer demand is for more eco-friendly products. Addi-
tionally, the global push for sustainable palm oil products (accelerated in part by
NGO advocacy and media) happened concurrently with the global economic crisis,
making the premium higher than buyers were willing to pay for at the time (Schouten
& Glasbergen, 2011). Thus, it is unknown how much consumers would be willing to
pay for sustainably-sourced palm oil products or how informed they are about the
palm oil market and related products, although from first-hand experiences and in-

62
terviews, it appears as if sustainable and certified products reap little premium. This
lack of consistent economic benefit is the basis of the typical corporate complaints
against environmental activism (mentioned in Environmental Impacts). To corpora-
tions, the global focus on palm oil is unfair and targets only the palm oil industry
despite the similarly-polluting natures of other popular agricultural crops, such as
soy.

5.2 Skepticism of Western organizations

A wealth of NGOs, activists, and volunteers either work on-the-ground in Indonesia to
advocate for palm oil reform or verbally champion their views and positions from afar.
Unfortunately, the influence of these organizations–many of them founded or based in
Western countries–has created a sense of skepticism and mistrust among Indonesians,
including the government. The NGO representatives interviewed stated that the In-
donesian government has become increasingly skeptical of Western NGOs. According
to Lucy, the communications director for SOS: "the government is clamping down
on interference from outside Indonesia." In one surprising example, the Indonesian
environment ministry ended its partnership with WWF due to "public spat" in 2020
(Jong, 2020). Historically, some Western NGOs have not offered the Indonesian gov-
ernment helpful strategies that could reasonably be implemented, instead choosing to
shun and boycott the industry as a whole. Therefore, organizations like Lucy’s must
"be careful not to use language that looks as if [Western organizations] have done all
the work. We have to ensure we acknowledge government and local support where
applicable" in addition to offering concrete implementable suggestions.
It is not just the national government experiencing these feelings; across Indone-
sia, companies and citizens have felt increasingly impatient with Western NGOs.
In her interview, Emmanuela, the Dayak activist, pointed out that not only have
some Western organizations failed to offer concrete solutions or been welcomed by
the Indonesian government, but many have been ineffective, especially at engaging
indigenous farmers:

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 Some organizations are very strict, very confrontational. They are funded
by Western organizations as well. I notice that there is a tension there as
well; is this really what the [indigenous] community wants? For me, I take
the side of the community; that’s my people and I experience the struggle
with them ... I asked the elders how many [Western] organizations have
come to your [homes]... They said that a lot of organizations have been
involved in this for thirty years. And I ask, is there any [improvement]
over these thirty years? And they say, ’None.’ ... We don’t want [Western
organizations] to use the struggles of my community to get money.

Although Western organizations may come to Indonesia with good intentions, they
may not be well-received due to a range of factors, including skepticism rooted in In-
donesia’s history of Dutch colonialism, little effort on the part of the NGOs to foster
interpersonal connections made with farmers and indigenous groups, and a lack of
progress due to an absence of action-oriented, realistic, and motivating recommenda-
tions. By failing to meet the needs and desires of Indonesia’s palm oil workers and
companies, Indonesian stakeholders have become increasingly resistant to environ-
mental activism and global norms, and perhaps with good reason.
For the time being, Western organizations will continue to have an impact in In-
donesia. As a palm oil demand specialist at WWF and RSPO explained during his
interview, NGOs have been acting as watchdogs, partially filling in the role of govern-
ment corruption eradication agencies or certifying bodies by investigating companies
and spotting compliance issues that companies or the government may not be report-
ing. In addition to this role, NGOs focusing on human rights may also investigate
land conflicts and provide legal aid to individuals who have experienced coercion
by private companies. Thus, while the Indonesian government may be skeptical of
Western "interference" in the palm oil sector, they must rely on NGOs to enforce
certification programs and provide adequate assistance to citizens because, currently,
the Indonesian government does not have the capability or capacity to do so, or at
least cannot be trusted to.
To counteract the Indonesian government’s antipathy toward Western organiza-

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tions, some NGOs working in Indonesia, such as SOS and Ranu Welum (the environ-
mental and tribal advocacy group led by Emmanuela), practice a more grassroots-
based approach. This approach has had more success among Indonesian citizens and
the Indonesian government. For example, both SOS and Ranu Welum prefer to em-
ploy and educate those directly affected by the palm oil industry, such as planters and
distributers, who are in a position to carry on the goal of the organization without con-
stant, direct interference. These organizations are more likely to gain support from
Indonesian officials and are more likely to advocate for reasonable, action-oriented
steps, instead of shunning the industry as a whole. Additionally, according to Em-
manuela, there has been a growing movement for Indonesian-based organizations to
lead environmental and social activism; native-led NGOs have appeared in Borneo
and Sumatra, the two islands in Indonesia where the palm oil sector is most dom-
inant. In addition to being more successful with the government, Indonesian-based
groups are more likely to advocate for social and indigenous rights, which as men-
tioned in the chapter "4.1", is often left out of mainstream media and activism. It
is the hope of other international organizations, like SOS, to adopt these grassroots-
based methods, but until then, the Indonesian government will likely remain skeptical
of any organizations, especially international NGOs, promoting harsh all-or-nothing
environmental approaches to palm oil.

5.3 Certification schemes

Palm oil certification programs have been the main technique that consumers can
use to incentivize palm oil producers to follow more environmentally- and socially-
responsible products. Certification programs, especially the dominant Roundtable
on Sustainable Palm Oil (RSPO), a consortium of palm oil stakeholders, have been
consistently recognized and supported by international organizations, including the
United Nations, although certification programs have often faced significant criticism
for either being too unattainable or for not being more stringent.

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5.3.1 Roundtable on Sustainable Palm Oil (RSPO)

Roundtable-like organizations have become increasingly common in the agricultural

industry; typically, they can make greater impacts in global markets (in comparison
to government initiatives) because of stronger power dynamics and partnerships with
NGOs and large corporations (Schouten & Glasbergen, 2011). The Roundtable on
Sustainable Palm Oil (RSPO) was organized in 2004 in Geneva and Kuala Lumpur
by the World Wide Fund for Nature (WWF), a global environmental NGO, and has
been by far the largest actor in palm oil certification. The RSPO’s mission statement
is to build relationships and sustainability commitments between industry leaders
and environmental organizations. Their ultimate goal, as outlined on their website,
is to “guide palm oil growers to produce Certified Palm Oil (CPO)” and to “trans-
form markets to make sustainable palm oil the norm” (Roundtable on Sustainable
Palm Oil, n.d.). The RSPO relies on a set rule of recommendations, called Principles
& Criterias (P&Cs), which lobbies against unsustainable palm oil farming practices.
Such policies outlined in the P&Cs include commitment to zero deforestation, com-
mitment to transparency, humane treatment of workers, proof that plantation land
is conflict-free, and the completion of environmental and social impact assessments.
The Roundtable contains a varied stakeholder group with large shares of participa-
tion by planters, manufacturers, NGOs, retailers, and investors. Many major corpo-
rations are members of RSPO, including Johnson & Johnson and Kraft-Heinz, both
of which were targets of a Greenpeace campaign against transparency malpractices.
The RSPO aims to change set global standards for palm oil products, although the
majority of their certified goods are sold in Western markets, due to increased demand
for eco-conscious products relative to other markets (Kilvert, 2018).
Like other certification schemes, such as the Indonesian Sustainable Palm Oil
(ISPO) scheme (detailed below), environmentalists and labor rights activists have
critiqued the RSPO for not doing more, even denouncing RSPO for covering up the
actions of close corporate ties. A German NGO, Rettet den Regenwald, published a
critique of the RSPO program, “International Declaration Against the ‘Greenwashing’

66
of Palm Oil by the Roundtable on Sustainable Palm Oil” which was signed by over
250 organizations worldwide. Mainly, the RSPO has been criticized for using vague
terminology and criteria as well as not enforcing a punishment mechanism or using
“minimal” punishments. As in most private certification programs, auditing practices
are weak and overseeing the implementation of sustainable practices throughout the
entire supply chain is complex (Fair Labor Association, 2018). Many activists are
concerned that governments will use the RSPO as an excuse to not take action or
implement their own standards or policies, instead depending on the RSPO’s market-
based mechanisms, which may not be enough to encourage full palm oil sustainability
globally, depending on consumer demand. Human rights activists have been disap-
pointed with the high levels of conflicts related to land use and worker rights, es-
pecially for indigenous groups, which have not been solved by RSPO certification
programs alone (Schouten & Glasbergen, 2011). Additionally, obtaining RSPO certi-
fication is difficult, time consuming, and bureaucratic, especially for smallholders who
may not feel incentivized to change their practices for potentially meager economic
benefits. RSPO policies are constantly changing, a positive for environmentalists and
advocates seeking stricter standards, although such responsibility often lands on the
hands of farmers, who are unable to meet existing requirements or lack knowledge
of the quickly-evolving rules and guidelines. Currently, Indonesia’s most important
export markets are in China and India, where demand for eco-friendly palm oil prod-
ucts is low (Hidayat, Offermans, & Glasbergen, 2018). Demand for certified palm oil
is as low as 12% in the global market but is expected to rise to 15% by 2020 (Higgins
& Richards, 2019).
The overall impact of the RSPO certification scheme is difficult to measure. One
2018 assessment published in the Environmental Research Letters found that RSPO
certification has no significant environmental effect in Kalimantan, using the sus-
tainability metrics on which the RSPO has prided itself. For example, the rate at
which orangutan populations decreased, the number of forest fires outbreaks, and the
prevalence of poverty remained insignificant between RSPO-certified and non-certified
plantations during the period of study. According to the research, the only potential

67
benefit of RSPO certification is minimally increased share of profits for fresh palm
fruits (Morgans et al., 2018).
Despite the criticism and skepticism brought to attention by activists and NGOs,
RSPO has made improvements to its standards in recent years that have benefited
smallholders. Previously, for example, RSPO did not formally recognize any dis-
tinctions between independent and scheme (e.g. plasma) smallholders. Independent
smallholders, defined as those not contractually paired with a plantation mill, often
have less resources than their scheme counterparts, and are thus much less likely to
obtain certification. It was not until 2019 that the RSPO differed from its generic
P&Cs to create a step-by-step approach designed for independent smallholders to ob-
tain full compliance. This new approach also offers slightly more financial incentives
for smallholders; smallholders in this new program will be allowed to sell increasing
amounts of "credits" as they reach full compliance. Credits formally prove that a
given amount of palm oil was produced meeting RSPO standards and can be traded
from smallholder directly to a company, allowing smallholders to reap the financial
benefit of producing certified products even if the smallholder does not have a direct
buyer who is already RSPO certified (Roundtable on Sustainable Palm Oil, 2019).
An additional approach, which the RSPO representative calls the "jurisdictional ap-
proach" hopes to ease smallholder participation by an additional avenue: local gov-
ernment. This approach, which is currently being piloted in some Indonesian and
Malaysian provinces and states (including one province in Kalimantan), aims to bet-
ter prepare local governments, simplify the certification process, and reduce costs by
sharing certification burdens among different parties, especially the government. The
RSPO is hoping that more states and provinces will join the jurisdictional approach,
thus guaranteeing that all plantations in a given jurisdiction, including those owned
and operated by smallholders, gain certification. However, it is unclear how willing
Indonesian jurisdictions are to join these programs and set target goals, as well as
for the government to establish legal requirements on private companies. The suc-
cess of the jurisdictional approach will heavily depend on leadership and coordination
between government institutions, which is something that many interviewees stated

68
was a continuous problem.
While there is opportunity for RSPO to further improve, the recognition of one
of the certification program’s largest oversights is a positive step in the right direc-
tion of more smallholder-friendly changes. At heart, the RSPO program, while well-
intentioned and improving, continues to enforce green neocolonial ideals by excluding
populations like independent smallholders from certification, while concurrently not
being financially worthwhile. The end result is that the RSPO program is criti-
cized from all sides (environmentalists and independent smallholder advocates) while
changing palm oil production norms through strategies based on condemnation and
groupthink.

5.3.2 Indonesian Sustainable Palm Oil (ISPO)

The Indonesian Sustainable Palm Oil (ISPO) program was established in 2011 in re-
sponse to a perceived burden experienced by smallholders in complying with RSPO’s
more rigorous certification requirements. With this goal in mind, ISPO certification
is much less exhaustive in comparison to the RSPO; its main goal is to set different
standards that are more attainable and less exclusionary, especially for smallholders.
ISPO certification is meant to ensure competitiveness with markets in the Global
South, such as China and India, instead of Western markets where eco-friendly prod-
ucts have greater demand (Higgins & Richards, 2019). Currently, ISPO certification
is mandatory for all plantation companies and large producers but is still volun-
tary for both types of smallholder farmers (i.e. plasma and independent). In an
attempt to further strengthen the existing program, the Indonesian government is
aiming to make certification compulsory for all farmers, including smallholders, in
2022 (Hidayat et al., 2018). To receive certification, farmers would need to meet
"minimum sustainability requirements" including improved land management and
stricter deforestation and slash-and-burn policies. In addition to receiving certifica-
tion, farmers would also benefit from official government regulation, assistance in legal
land titles, and other forms of support not typically offered to independent farmers.
Producers must also comply to additional standards to receive certification, which

69
includes observing long-established palm oil production regulations, environmental
management, and responsibility to workers and social communities (United Nations
Development Programme, n.d.).
The exact percentage of farmers certified by the ISPO is difficult to measure; a
variety of sources have estimated that 5-20% of all smallholder farmers are currently
certified by the ISPO with lower average levels for independent smallholders. As ex-
pected, independent smallholders lack knowledge about palm oil plantation policies
and certification programs; they do not have adequate information on legal busi-
ness practices or regulations which require palm oil to be sustainable on the global
market. Applying for ISPO certification requires some proof of legal claim to land,
although such proof is relatively weak in comparison to the requirements for RSPO,
which require proof that land is owned without conflict. Such proof, even for the
ISPO’s more lax requirements, is virtually impossible for many independent small-
holders to provide; historically, large areas of smallholders began cultivating oil plan
on traditional, indigenously-owned land without clear border signs or government
recognition(Hutabarat, n.d.).
Eventually, when properly enforced, the ISPO certification scheme will become
a prerequisite for tradable palm oil products to get legal status and access to the
global market, thus affecting the livelihoods independent farmers. Smallholders will
be required to gain ISPO certification by 2020, although an estimated 50% of farmers
will not be ready, due to lack of knowledge or capital for investment in more sus-
tainable practices, such as more efficient seeds or fertilizer. The ISPO is expected to
be challenging to mandate given the geographical spread, diversity, and isolation of
smallholders and may be even harder to check for compliance, although if not certified
on time, smallholders may be fined or even jailed (Jong, 2018). Village-level or lo-
cal governments lack incentives to push ISPO certification and ensure widespread
compliance (Hidayat et al., 2018). Despite the access difficulties, many interna-
tional activists have continued to criticize the certification program for not doing
enough, especially in adequately preventing environmental damage or illegal land
seizure (Johnson, 2015). Lastly, analysts remain concerned that ISPO certification

70
will be burdensome to smallholders and will not provide worthwhile market bene-
fits; Indonesian certificate holders may lose their competitive edge with uncertified
producers because the ISPO does not contain a premium price or additional fee for
sustainable oil, unlike the RSPO. Lastly, the ISPO is not yet recognized by global
market players as a credible sustainability standard, unlike the RSPO, due to its new-
ness and less rigorous requirements, which may not satisfy Western markets (Hidayat
et al., 2018).

5.3.3 Comparison between certification programs

The Forest Peoples Programme, a UK-based NGO and advocacy group focused on
tropical forests and indigenous peoples’ rights, published an in-depth report compar-
ing several of the palm oil certification programs, including the ISPO and RSPO. As
mentioned earlier, the RSPO certification standard has the most comprehensive and
robust guidelines in comparison to the ISPO scheme, especially in regard to human
rights and labor safeguards. In contrast, the ISPO program has its strength in being a
“mandatory” national-level program, but it has the least clearly-defined requirements
(McInnes, 2017).
As previously mentioned, the RSPO program recognizes community land rights
(although enforcement is uncertain); the standards require that certified companies
must prove an absence of conflict over land rights and must provide a map displaying
legal boundaries through participatory mapping techniques. The ISPO program has
no mention of a formal land title process. The RSPO strictly prohibits coercion by
force (such as the use of mercenaries or paramilitaries) whereas no other mention
exists in other certification programs. On the environmental side, the RSPO requires
impact assessments to be conducted prior to any land conversion and has guidelines
for site waste reduction and recycling. Lastly, the RSPO vastly excels over ISPO
in terms of core labor standards. The RSPO requires safe working conditions, fair
employment agreements, and social benefits, including access to health and family
programs as well as education and training opportunities. The ISPO has no special
policies on worker rights besides Indonesia’s bare bones standard, which mandates

71
enrollment in the government’s social security program and weakly enforces child
labor policies. Additionally, the ISPO has no mention of forced or migrant labor
or collective bargaining (McInnes, 2017). Certification may be the most widespread
mechanism, but both of the two most popular certification programs has its faults:
bureaucracy and difficult registration processes, too stringent or not stringent enough
requirements, lack of monetary incentives, and an unclear future due to palm oil
import restrictions among the biggest buyers of certified oil (i.e. the European Union
pre-ban).

5.4 Perception of certification

Smallholder palm oil farming has been considerably less environmentally sustainable
in comparison to the practices of larger corporations, especially when viewed through
the limited lens of certification. While smallholders are as likely as their corporate
peers to contribute to illegal deforestation and other non-sustainable farming prac-
tices, independent smallholders are much less likely (1% compared to 35%) to be
sustainably-certified by the RSPO’s higher standards, largely due to a lack of infor-
mation about certification programs and requirements and limited access to expensive
agricultural technology (Suhada et al., 2018; Glenday & Paoli, 2015). Many small-
holders do already comply to RSPO and ISPO standards, but are unable to gain
certification because of barriers to entry, such as bureaucracy, a time-consuming and
tedious application process, or lack of interest in financial incentives. As summarized
by Lucy (from SOS):

There are smallholders who already produce palm oil in a sustainable

way, but they don’t know how to get certified or don’t have the resources
to do so, so they can’t sell their oil as a sustainable product for that
reason. From our work, there is lot of willingness for companies and for
smallholders to change [their practices], but often the barrier is how to.

This quote emphasizes the imperfections associated with existing certification scheme,
particularly the RSPO. Smallholders and independent farmers are unable to gain cer-

72
tification and to reap the benefits of it due to the opaqueness of the certification
process. Smallholders, unlike larger companies, are less likely to have the resources
to dedicate to understanding certification and compliance. Of course, this is assum-
ing that smallholders even want to pursue certification, keeping in mind the small,
if not nonexistent, financial benefits associated with it. According to an intervie-
wee’s research at WWF and RSPO, the annual cost of certification, including audits
and membership fees, routinely cost smallholders up to 12% of their annual incomes.
As technology and agricultural intensification improves, smallholders are expected to
produce up to 60% of the nation’s palm oil, making it important for organizations
like WWF and RSPO to increase smallholder participation in certification programs.
RSPO certification may be more attainable for smallholders in the near future, espe-
cially once ISPO certification becomes compulsory in upcoming years, although this
will place further burden on independent smallholder farmers, many of whom are
already behind.
Although certification is arguably most difficult to attain for smallholders, they
are not the only population affected by difficult and always-changing certification
requirements. All interviewees essentially shared the perspective that the goal of cer-
tified palm oil is an admirable one, but all participants also shared concerns with
the existing RSPO program. According to a representative from a large corporation,
"The RSPO is good. The problem is that they change the rules a lot, and when
they change them, they look at your past history, say from 2005, and it’s unfair."
For many companies and planters, the ever-changing regulations that Western orga-
nizations push erode trust, create frustration, and also discourage companies from
trying to keep up with compliance. "It’s like a tennis court where the court keeps
getting smaller. There’s been a lot of discussion [within the industry] about it. It’s a
shared perspective." The GAPKI representative, called the RSPO certification pro-
cess "very long and unpredictable, with nobody knowing [how long it takes]. Maybe
one, to two, or three years." According to one corporate representative, the large
amount of time and resources it takes to understand certification requirements and
enact them, including doing a careful trace of usually obscure supply chains, often

73
requires additional staffing dedicated to solely researching the certification process.
The RSPO, through my interview with a representative, seems to understand these
complaints, although the organization’s prestige is simultaneously tied to its rigorous
guidelines in order to ensure worldwide credibility, creating a sticking point for those
seeking certification but lacking resources and know-how.
In addition to the constantly changing rules and bureaucracy, RSPO certification
has proven to be costly, without any (or very minimal) added financial benefit to palm
oil producers and traders, as previously mentioned. One plantation administrator
summarizes, "RSPO certification is not financially successful. RSPO-certified oil is
not more expensive." This comes as a shock, especially given the large amount of
press pushing for more sustainable products. For the large corporations mentioned,
the purpose of gaining certification and working with certified planters is "because [our
company] wants to differentiate ourselves from the ’bad’ ones, but it’s not financially
beneficial. Burning land is actually more efficient, and we’re not doing that [because
of certification requirements]." All interviewees had similar remarks on the lack of
profit driven by certification; the premium that companies can charge for certified
oil is less than the costs associated with gaining and renewing certification. Instead,
companies comply with RSPO to reduce the chance that NGOs or the media may
publicly attack them.
Despite the bureaucracy and small economic benefits associated with the RSPO
certification process, NGOs–especially the WWF (RSPO’s creator)–typically believe
that certification is the best method for ensuring more environmentally sustainable
practices. According to a RSPO representative:

I think, more broadly, the RSPO is not perfect, but it is the best orga-
nization that we currently have at scale that has the potential to have a
strong impact on how palm oil is produced. As of right now, all of 20%
of palm oil is certified by us, which is quite good in comparison to other
certification schemes. We have a strong standard that we’ve been pushing
for several years, which been strengthened and adopted. I think where the
RSPO currently falls short is in implementation and enforcement of the

74
 standards, but there’s a lot of work that’s been going on and emphasis on
investing on [improving implementation].

This view is shared among many of the stakeholders interviewed. While many have
expressed frustrations with the current certification program, most representatives, es-
pecially those representing NGOs or large corporations, have stressed the importance
of improving the existing certification schemes and market mechanisms, instead of at-
tempting a different approach; such "improvements" to market mechanisms includes
marketing the environmental and social benefits of certified products in Western mar-
kets and increasing knowledge and consumer awareness in developing markets. In the
meantime, while certification programs are working to fix existing market mechanisms
and improve participation by all palm oil workers, activist organizations will continue
to pressure both certification schemes and the corporations that join them to have
even stricter environmental and human rights responsibilities, essentially placing the
burden on smaller companies and even independent smallholders who are already
behind.

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Chapter 6

Conclusion and Recommendations

Indonesia’s palm oil industry is complex; it never has been a simple agricultural
commodity. No segment of the industry is deserving of full praise or full criticism,
not the Indonesian government, corporations, the farmers themselves, the media,
activists, or NGOs. Indonesia’s palm oil industry is instead a key example of the
clash between environmentalism, international development, and even consumerism;
all of which are topics that permeate our lives and public discourse today. The
palm oil industry also exemplifies the concept of green neocolonialism. Although
Western actors have been successful in gaining traction through the media–and to
some extent, the Indonesian government–they have yet to improve the livelihoods of
certain populations (e.g. independent smallholders) and have failed to even ask or
advocate for the needs and desires of these groups.
Green neocolonialism also creates a juxtaposition of what large actors, such as ac-
tivist organizations and even the UN, want in comparison to what we, as consumers,
want. As found in my research, environmentalism has yet to be adopted in consumer
behavior, even in Western markets, as seen through the lens of palm oil’s largest certi-
fying body, the RSPO. Despite what the media and activism is proposing, consumers
are unable or unwilling to pay more for "sustainable" palm oil products, although
these actors have nonetheless been successful at changing the agricultural status quo
in Indonesia through international pressure, funding, and even trade threats. Mea-
sured this way, green neocolonial strategies have indeed been successful at molding

77
Indonesia’s agricultural methods to fit the West’s perception of what is sustainable,
even if this process excludes significant groups of people, such as independent small-
holder farmers or indigenous populations.
Despite the limitations of this research (some of them including a lack of fieldwork
research conducted in Indonesia and few transparent conversations with plantation
workers themselves) and its limited scope, it offers avenues for future academic re-
search to be conducted in the fields of urban planning, international development, and
environmental policy. This research can be expanded in future research on several
sections, particularly the history of institutions relevant to smallholders today, the
perception of outside activism in Indonesia, and the influence of consumer behavior
on the demand for sustainable palm products. This project offers a model for con-
sumers and researchers to learn more about the intricacies of the products they are
buying or criticizing.
Below are recommendations based on my research and interviews.

Policy implementers

Improve smallholder awareness and education

Indonesia can follow in Malaysia’s footsteps by implementing research and advisory
boards (like Malaysia’s Palm Oil Research Institute) to advocate for technical-based
intensification while supplying smallholders with the information and technologies
needed to modernize.

Adopt land use policies to decrease deforestation

The Indonesian government can ensure that farming is as environmentally-friendly as
possible by reducing the amount of available forest land that can be legally converted
to plantations. By adopting new land use policies, Indonesia will be less dependent on
the successes of market mechanisms (i.e. RSPO certification) to prevent deforestation,
which alone may not be financially encouraging enough and which do not encapsulate
all industries that participate in deforestation (e.g. soy). Deforestation policies,
especially as they pertain to protecting lands owned by indigenous groups, can also be

78
strengthened in the land use requirements of ISPO certification, which is mandatory
nearly all farmers.

Lessen the burden of certification programs

Indonesia’s agriculture-heavy provinces can participate in the RSPO’s jurisdictional
approach which reduces barriers to entry (primarily information and cost) for small-
holders who do not yet have certification. The jurisdictional approach depends heavily
on local leadership to implement but ensures certification–and the proposed benefits
it brings–to a large number of palm oil workers.

Recognize indigenous peoples and offer support

The Indonesian government should listen to indigenous claims to ancestral land and
provide both much needed oversight and legal production for indigenous groups vul-
nerable to coercion by plantations. Indonesia can facilitate more legal services for
indigenous groups who are currently trying to collect proof for land protection appli-
cations.

International activists and organizations

Advocate for an improved industry, not an abolished industry

International activists and NGOs can work more closely with Indonesian stakeholders
affected by the industry, including hiring them for leadership positions. By better
understanding the reasons why stakeholders participate in the industry, activists and
NGOs can better offer concrete solutions for improving the industry and the market,
instead of advocating for the elimination of the entire industry and its workforce.

Improve accessibility of RSPO certification programs for smallholders

RSPO can continue refining its policies to create incremental steps for smallholders
to follow, such as implementing the stepwise credits plan previously mentioned in
Chapter 5. To further encourage smallholder uptake, RSPO can further improve upon
its guidelines (or create a separate certification option) for independent smallholders,
of which many may still not have the ability to achieve full certification despite a

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step-by-step approach.

Consumers

Be mindful of mixed messages presented in the news or media

To understand the palm oil industry’s various shades of gray, consumers can read a
wide breadth of literature, including news from reputable sources, activist organiza-
tions, and journals. For example, learning about the palm oil industry through only
one source focused on protecting biodiversity prevents a greater understanding of
other issues (e.g. indigenous rights) and perspectives (e.g. workers trying to improve
their livelihoods).

Consider where the products you buy come from or how they are made
A wealth of resources exists for consumers inspired to research the products they are
buying and consuming. Some companies have strong commitments to environmental
and social responsibility, including–or going beyond–RSPO certification. While the
supply chain is complex, consumers can reference resources such as the World Wildlife
Fund’s Palm Oil Buyers Scorecard, the largest scorecard in its category.

From my research, I believe that all–or at least most–of the stakeholders in Indone-
sia’s palm oil industry have good intentions. Despite what popular media portrays,
many farmers (including independent smallholders) already practice environmentally-
sustainable and socially-responsible farming methods. Concurrently, many companies
(often portrayed as evil corporations) are doing their best to stay up-to-date on in-
dustry best practices while hoping to increase employment activities (only possible if
the palm oil industry continues to grow) and providing relatively cheap palm oil prod-
ucts for us consumers out West. Activist organizations and NGOs, especially those
based in Western countries or on Western philosophies of environmentalism, have con-
tributed to the health of Indonesia’s ecosystem and have held polluters responsible
for their contribution to global greenhouse gas emissions, in addition to occasionally
protecting the rights of vulnerable populations like indigenous groups. In keeping

80
with the customs of Western tradition, many of these environmental protection ef-
forts come to fruition via market-based incentives: promising certification premiums
for palm oil workers or extending carbon credits to the Indonesian government.
Unfortunately, the West’s well-intentioned actions create tensions among small-
holders when intruding on the lives of palm oil workers due to various institutions,
such as difficult certification processes, local government corruption, bureaucracy, and
a lack of information-sharing among smallholders. Ultimately, the green neocolonial
strategy of placing market-based incentives on the palm oil industry burdens vul-
nerable populations, such as independent smallholders who just want to provide for
their families, or indigenous groups who want to protect their land rights and tradi-
tional customs, all under the false claim of moral superiority. The palm oil industry,
closely tied with Indonesia’s developing economy, cannot succeed or improve without
patience and opportunity, which is often denied by Western institutions (e.g. the
European Union) under the influence of radical environmentalism. Until Western
institutions come to understand their own role in pollution (i.e. industrialization)
and over-consumption, they will not be able to understand the needs of developing
countries, like Indonesia, that are trying to improve their industries while keeping
all stakeholders placated and employed. By boycotting the palm oil industry, ac-
tivists are unintentionally placing the burden on Indonesia’s vulnerable populations
and simultaneously limiting Indonesia’s chances for development, leading to a cycle
of dependence on Western institutions.

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