Community-company partnerships for smallholders: An examination of recent policy reforms, Indonesia


Abstract: Oil palm is a globally important commodity, accounting for 38% of total vegetable oil production, yet it is highly controversial. It is linked to rural and national development in the countries that grow it, but also with increased greenhouse gas emissions, biodiversity loss, land grabbing and land conflict. In Indonesia, where 55% of world production occurs, palm oil is a major tool for advancing national development goals due to the high participation of smallholders in its production. A key vehicle for implementing palm oil as a development tool in Indonesia is the smallholder scheme – whereby smallholders are tied by contract to a central mill/plantation company, in theory ensuring guaranteed supply for the company and agricultural extension and inputs for smallholders. This project investigates the impacts of a major change in the smallholder-company relationship resulting from a 2006 legislative amendment that sought to reduce corporate risk from smallholder schemes by reducing smallholder interaction with the core plantation. I examine the impacts of this policy via an ethnographic analysis of three villages linked to one plantation in West Kalimantan, Indonesia. I find differences in the benefits obtained by smallholders as well as by village and identify smallholders’ pre-existing wealth and status as well as pre-existing village landholding as major factors for these differences. I conclude that although benefits vary across households and villages, they appear better than those suggested in other papers but that benefits may change over the course of the scheme as the benefits of secure tenure may not outweigh reduced monetary returns.

Also served as co-organizer of this student conference/workshop