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SOCIO ECONOMIC ASPECTS OF OIL PALM DEVELOPMENT THE INDONESIAN CASE



Colin Barlow and Ria Gondowarsito

ABSTRACT

Oil palm with it’s high economic returns is a potent vehicle of socio economic improvement, and a most significant tool of rural development. But the roles of govermnet and other interveners, and the methods of intervention to secure such development, are subjects of international debate, where useful guidance for the future may be drawn from past Indonesian and other experiences.


This paper addresses these issues, looking first at rationales for intervention, methods of organizing it, and economic, social and other criteria on which it merits may be assessed. The paper then examines improvement through a range of crops in Indonesia and elsewhere in Southeast Asia and Africa. It next focuses on the two main methods of Indonesian Oil Palm intervention, which are through ‘nucleus estates’ and ‘extension to individual smallholdings.’

The interventions through these methods are addressed in turn, reviewing key advantages and setbacks of each, and drawing on information from recent field studies. The outcomes of applying the methods over many years are assessed against relevant criteria, quoting anonymous case studies to illustrate the arguments.

While the analysis shows nucleus estates and individual smallholding extension to be partly complementary, it sees smallholding extension to be broadly superior on economic, social and sustainability grounds for long-term socio-economic improvement through oil palm. Ways in which both methods might be implemented more successfully in the altered Indonesian political environment are detailed, and lessons to incorporate from other Indonesian and foreign development schemes are highlighted.


Keys : Indonesia, socio-economics, development, interventions, Elaeis guineensis 

By : Department of Political Science and Change, Australian National University, Canberra, Australia