Indonesia is one of the world’s largest producers of
palm oil and the industry has been the economy’s most
valuable agricultural export sector for the past decade.
The palm oil industry is a significant contributor to
production in Indonesia. In 2008, Indonesia produced
over 18 million tonnes of palm oil. The industry also
contributes to regional development as a significant
source of poverty alleviation through farm cultivation
and downstream processing. Palm oil production provides
a reliable form of income for a large number of
Indonesia’s rural poor, with one source suggesting
that employment generated from palm oil production
in Indonesia could potentially reach over 6 million
lives and take them out of poverty. Over 6.6 million
tonnes of palm oil is produced by smallholders representing
over 41 percent of total palm oil plantations.
In 2006, it was found that around 1.7 to 2 million people
worked in the palm oil industry.
The Indonesian palm oil industry has recently come
under fire from a number of NGOs who have campaigned
against the industry and its perceived contribution
to deforestation, carbon emissions, and
biodiversity loss. As a result, there have been wide
spread complaints that palm oil is not sustainable and
proposals to have all future forest land conversion
halted or restricted.
In May 2010, the Indonesian Government foreshadowed
a two-year moratorium on new concessions to
clear natural forests and peatland under a deal signed
with the Norwegian Government, aimed at reducing
greenhouse gases. In return for the agreement,
Norway has agreed to invest $1 billion in forest
conservation projects in Indonesia. A year prior, the
Indonesian government had announced it would double
palm oil production to 40 million tonnes by 2020.
The successful growth of the Indonesian palm oil
industry will be impacted greatly by any restrictions
on land conversion as well as negative campaigns
targeting the industry. The achievement of the
Indonesian government’s target of doubling oil palm
production will also be significantly impacted by the
moratorium, as some level of land conversion is
required for economic development.