Oil palm plantations in Indonesia: are they sustainable?

Oil palm provides opportunities for people to improve their incomes. However, oil palm expansion is accompanied by environmental costs, rapid immigration, urbanization and a challenge to food supply. It is these indirect effects that bring into question long-term sustainability, say Suseno Budidarsono, Ari Susanti and Annelies Zoomers



Palm oil developments have had a positive impact on the incomes and living standards of nearly all involved. Oil palm plantations have high labour requirements and show high return to labour. However, even though oil palms are not a problem in themselves (they are ‘green’), the rapid expansion of plantations across Southeast Asia, and particularly Indonesia and Malaysia, is linked to the destruction of rainforests as well as a lot of social problems and insecurity of food supply.

Colleagues have shown that communities already experience serious problems with plantation companies and there are many land conflicts. There is a widespread

Oil palm, Indonesia, sustainability

Oil palm is an attractive income source for smallholders in Indonesia

feeling in some communities of being cheated by the companies and of being pushed into agreements through false promises without having a voice in decisions. To the extent that people are employed, labour conditions are often not favourable. Rapid immigration and urbanization often follow the establishment of plantations, bringing associated social and environmental costs. Even though policy attempts are made to control land conversion or to stop deforestation, much of what is happening today cannot easily be regulated.

It is not difficult for policy makers to show that oil palms are an economically rentable crop with a huge potential for further economic growth. Palm oil, being a multi-purpose vegetable oil, is enjoying a growing demand from the commercial food and oleo-chemical industries that use the product in processed foods, cosmetics, soaps, pharmaceuticals, industrial and agro-chemical products, and as a feedstock for bio-diesel. In addition to national demands, the growing worldwide interest in biofuels as an alternative to fossil fuels is likely to increase demand and lead to the expansion of oil palm plantations in climatically suitable regions. On the basis of a cost–benefit analysis of various crops, oil palm will probably continue to be seen as a highly profitable crop with interesting possibilities for being promoted as a source of ‘green’ development. The Indonesian population has increasingly been attracted to this crop, as it provides them with opportunities to benefit and multiply their incomes, providing capital for increasing consumption and having a good life.

The indirect effects and multipliers bring into question the long-term sustainability of this particular development model. The establishment of new settlements, rapid urbanization and continuing immigration require additional employment opportunities. And along with the growing population and the conversion of rice lands into oil palm fields, security of food supply will increasingly become a problem.

Rather than making quick money from oil palm production, the Indonesian government might make wiser decisions to control the indirect effects and, especially, to investigate how to make oil palm-based economies more sustainable and equitable in the longer term.

Without interventions—and with today’s laissez-faire approach—further oil palm expansion will soon lead to the depletion of natural resources and an increase in social tensions as a result of unemployment and food insecurity.


Edited by Robert Finlayson


Read the article

Budidarsono S, Susanti A, Zoomers A. 2013. Oil palm plantations in Indonesia: the implications for migration, settlement/resettlement and local economic development. In: Fang Z, ed. Biofuels: economy, environment and sustainability. New York, USA: InTech. p. 173–193.






This work is related to the CGIAR Research Program on Forests, Trees and Agroforestry


Rob Finlayson

Robert Finlayson is the Southeast Asia program's regional communications specialist. As well as writing stories for the Centre's website, he devises and supervises strategies for projects and the countries in the Southeast Asia region, including scripting and producing videos, supervising editors and translators and also assisting with resource mobilization.

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