The Oil Palm Question: Agribusiness and Smallholder Poverty in Sumatra. John F McCarthy

Size: px

Start display at page:

Download "The Oil Palm Question: Agribusiness and Smallholder Poverty in Sumatra. John F McCarthy"

Ginger Paul
6 years ago
Views:

1 The Oil Palm Question: Agribusiness and Smallholder Poverty in Sumatra. John F McCarthy

2 Agribusiness Introduction dynamic and efficient agribusiness spurs agricultural growth, can reduce rural poverty (World Bank ). NGOs and social movements exclusionary corporate agriculture (McMichael 2009: 243).

3 Introduction (2) Biofuels vast market links remote, degraded areas where the poorest live to global markets (Siregar and Sugino 2008 p2). new social vulnerabilities, increasing pressure and competition for land food security of the most vulnerable (Mol 2008).

4 Oil palm replacing rubber

5 This paper What are the characteristic paths to agrarian change? What casual processes lead to the key distributional outcomes? how is this related to particular processes of differentiation?

6 1. Temporal: shifting policy settings & schemes outcomes This paper twofold strategy

7 70:30 model Smallholder plasma 70% Policy Models Kemitraan: social-private partnerships Nucleus estate 30% Nucleus estate <80% Smallholder plasma <20% 20:80 Kemitraan model Pre reformasi PIR: direct state involvement KKPA: subsidized cooperative schemes Post reformasi Swadaya Independent (lassiez faire) Kemitraan Partnership (privatesocial)

8 2. Spatial variation: investigate the high variability in outcomes how similar underlying processes led to contrasting outcomes in neighbouring locations.

9 PIR/NES scheme 1. Enclosure of Melayu land 2. Inclusion of small nos of Melayu 3. Maturation period: 50% of Javanese returned to Java 4. Most now prosperous farmers expanding

10 KKPA: Same scheme, different outcomes retain plasma entitlements Village 1: 80% Village 2: 60%; 10% landless Village 3: 5% retain; 30% landless

11 KKPA: Same scheme, different outcomes (2) 1. KKPA - inserted into differentiated social landscape. 2. Land sales: under conditions of abundance, crisis, manipulation 3. Village control over the institutions and processes that affect their capacity to participate» village teams & cooperative.» Control over the circuits through which farmers obtain legal certification & access inputs, market outputs, benefits» Village leadership 4. impact of economic, geographical and social isolation structural disadvantages

12 Laissez faire period The Swadaya village (1) 50% landless since the advent of oil palm

13 Laissez faire period The Swadaya village (1) 1. Collapse of rubber prices oil palm 2. Melayu villagers: sell off unproductive rubber land elite enlarge landholdings Sales of village commons 3. Unable to cross thresholds of inclusion Seedlings, fertilizer etc 4. Independent factories: integrated into different value chains

14 Stratified survey Prosperous farmers: more than 6 ha sawit Progressive farmers: 2-4 ha sawit Poor farmers: no sawit unggul Labourers and waiting farmers

15 average land holding by farmer classification (hectare) prosperous farmers progressive farmers Poor farmer 5 0 mature jungle rubber immature jungle rubber immature high yielding rubber Unselected mature oil palm unselected immature oil palm high yielding mature op high yielding immature oil palm total

16 Comparison of Incomes by village (Rp.) 300,000, ,000, ,000, ,000,000 Dusun Mudo (KKPA) SP (PIR Trans) Rantau Benar (Swadaya) 100,000,000 50,000,000 - Rubber unselected OP Unggul Off farm Income Total Keseluruhan Saving

17 average income by farmer classification 350,000, ,000, ,000, ,000, ,000,000 prosperous farmers progressive farmers Poor farmer Labourer/ waiting farmers 100,000,000 50,000,000 0 jungle rubber unselected oil palm high yielding oil palm Total Net farming income Off farm income Total Saving

18 Policy Models Kemitraan: social-private partnerships 70:30 model Smallholder plasma 70% Nucleus estate 30% Nucleus estate <80% 20:80 model Smallholder plasma <20% Jambi: (KKPA) 70% land 50 percent of yield (after credit & production costs) Sanggau (Kalbar) 20% land 30:70 production sharing arrangement further deductions for plantation costs and credit repayments.

19 Discussion (1) state intervention and withdrawal generate the conditions for prosperity for some differentiation two waves

20 Discussion (2) WDR: unpalatable message a small segment of dynamic market-orientated smallholders while letting the rest find alternative pathways out of poverty, through wage labour or migration Critique of agribusiness village processes: without intervention

21 Discussion (3) agricultural intensification & integration into global markets Dualism: inclusion/exclusion inclusion on disadvantageous terms (du Toit p2). depend on the terms under which smallholders engage with oil palm

22 Main findings 1. the pathways of agrarian change are highly variable» how livelihood strategies enabled/constrained by economic, social and political relations» vary over time and space. 2. the effect of oil palm» depend upon the terms under which smallholders are inclused

23 Main Findings (2) 3. Need to distinguish» Exogenous agribusiness expansion» Endogenous market expansion each: advantages & risks for smallholders, leading to distinct pathways of change. 4. oil palm: particular character as commodity» Without significant support poor terms» lure to become rich trap.

24 Main findings (3) 5. vulnerable landowners even more exposed to the risk of adverse incorporation under the later laissez faire & Kemitraan scenario

Online publication date: 23 September 2010 PLEASE SCROLL DOWN FOR ARTICLE

Online publication date: 23 September 2010 PLEASE SCROLL DOWN FOR ARTICLE This article was downloaded by: On: 27 September 2010 Access details: Access Details: Free Access Publisher Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: