Trade-offs of growth: Smallholder Farmers Inclusion In The Palm Oil Global Value Chain and Sustainability. Indonesia Case

Smallholders are far from dead. In many cases around the world, smallholder farmers represent the backbone of rural and national economic development and are considered as both “beneficiaries and agents of sustainable development”. The expansion of commodity crops has positively impacted rural livelihoods, providing employment and boosting general well-being among rural communities. This, however, changed the way farmers interact with nature, leading to negative externalities such as deforestation practices, wildlife endangerment and unsustainable working environments. Palm oil (PO) has attracted global attention for its ambiguous and often problematic nature. On the one hand, palm oil’s market rapid growth in Indonesia raised dramatic environmental concerns, as its development has come at the expense of fundamental human rights and biodiverse, carbon-rich tropical forests. On the other hand, it brought rural development and increased the national economy, placing smallholder...Show moreSmallholders are far from dead. In many cases around the world, smallholder farmers represent the backbone of rural and national economic development and are considered as both “beneficiaries and agents of sustainable development”. The expansion of commodity crops has positively impacted rural livelihoods, providing employment and boosting general well-being among rural communities. This, however, changed the way farmers interact with nature, leading to negative externalities such as deforestation practices, wildlife endangerment and unsustainable working environments. Palm oil (PO) has attracted global attention for its ambiguous and often problematic nature. On the one hand, palm oil’s market rapid growth in Indonesia raised dramatic environmental concerns, as its development has come at the expense of fundamental human rights and biodiverse, carbon-rich tropical forests. On the other hand, it brought rural development and increased the national economy, placing smallholder farmers on a leading position. To investigate this trade-off of growth, the thesis was guided by the research question “how does the inclusion of smallholder farmers in the PO GVC contribute to sustainable inclusive development?” and was supported by the following three sub-questions: 1. What are the socio-economic implications of PO expansion on smallholder farmers in Riau and Jambi provinces? 2. What are the environmental implications of PO expansion in Riau and Jambi and how are these linked to smallholder farming? 3. To what extent has smallholders’ participation in the PO GVC contributed to the shift to the sustainable production of the crop and what facilitates this transition? The thesis was built on the sustainable and inclusive development theoretical framework and shed light on the role of smallholder farmers in enhancing rural livelihoods and boosting national economic growth. The analysis concludes that PO production has played a relevant role in poverty reduction and economic growth in Riau and Jambi, Indonesia. More specifically, its expansion manifested into increased income, access to land and capital, rural development through infrastructure and services and improved household dietary quality and food security. However, because of the strong influence of the Indonesian government's transmigration programme, inequality among farmers arised, as transmigrant smallholder families were given financial and technical support, while autochthonous ones generally were left forgotten. At the same time, palm oil expansion has replaced substantial amounts of tropical forests and led to numerous land conflicts across Indonesia.Show less

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Trade-offs of growth: Smallholder Farmers Inclusion In The Palm Oil Global Value Chain and Sustainability. Indonesia Case