Investments in Agriculture and land governance (case study : Palm Oil in Indonesia)

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1 Investments in Agriculture and land governance (case study : Palm Oil in Indonesia) Abetnego Tarigan Executive Director WALHI 2012 ASIA LAND FORUM Imperial Garden Villa and Hotel, 2 October 2012, Phnom Penh, Cambodia

2 Introduction Palms can be cultivated only in tropical areas of Asia, Africa and South America. Global demand for edible vegetable oils has grown strongly in recent decades and palm oil production has expanded rapidly to meet that demand. From the 1990s to the present time, the area under palm oil cultivation had increased by about 43%. Today, seventeen countries produce palm oil, though Malaysia and Indonesia account for 85% of global palm oil production, where 4.5 million people earn a living from palm oil. The top five producing nations are: Indonesia, Malaysia, Thailand, Nigeria, Colombia About one quarter of palm oil production worldwide is used domestically, three quarters is exported. Asia, the European Union and Africa are the main importers of palm oil.

3 Of the estimated 34M tonnes of palm oil exported in 2008, 16% went to China, 15% to the European Union, 17% to India and 8% to Africa. Increasing demand for biofuel Palm oil in Indonesia Planted (2011): 11,9 M ha Release permit (2011): 28,9 M ha CPO (2011): 26 M ton's/2011 Productivity: 3.37 ton CPO/ha Government revenue (2010): USD 9,11 Billion (12% National Budget). Plantation Control 30 holding company, > 2000 company

4 Land Acquisition Oil Palm Plantations should develop in Other Utilization Land (classification area in spatial planning). If plantations are developed in state forest areas, permits to release the land from the ministry of forestry are necessary including the approval of parliament. 70% of all Indonesia land is categorized as state forest. To date only 12% of these Forest Areas have been properly gazetted as State Forest Areas.

5 The majority of plantation and agricultural expansion is in forest areas (Forest Conversion Area as target). There are about 33,000 villages in forest areas Communal land/customary rights remain unrecognized

6 Applicable Law and Regulation Act No.5/1960 on Basic Agrarian Law stipulates Land Use Right (allows leasing state s land (deny land restitution when HGU expiry) Act No.26/2006 on Spatial Planning Act No.41/1999 on Forestry (Change of use and function of forest) Act No.18/2004 on plantation (allows 95-year leasing period deny land restitution when HGU expiry) Gov t Regulation No. 40/1996 (Further provisions on the Land Use Right as referred to in Chapter II of Act No. 5 /1960) Ministerial regulation No.26/2007 regarding guidelines for plantation business permits (extends the size of location permit from 20,000 ha up to 100,000 ha per company in one province for oil palm plantation) Ministry of Agriculture Regulation Permentan No.14/2009 on the guidelines on the use of peatlands for oil palm cultivation (allows conversion of 3 meter deep peatland)

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8 Land Acquisition and Conflict Today, there is a general notion that the expansion of oil palm plantations runs parallel with the increase of land conflict and land conflict is a national problem. The conflict is commonly that between local communities/ indigenous peoples and plantation companies Year Existing Plantation Growth Conflict Growth % % % % % % % % Source: Sawit Watch (Jan 2011)

9 Roots of Conflict Unrecognised communal land/customary rights There is no effort to resolve the status of ownership of land in villages that are inside the forest area Lack of clarity of spatial planning (at the sub-national level) Protecting investment is a higher priority than securing rights of the communities over their lands (political development agenda of the government ) Abuse of power

10 Escalating Conflict Land clearing without permit of release from forest areas Manipulation of Environmental Impact Assessment (EIA) data Land Use Rights are given without deep investigation. Dividing up companies into smaller entities to be able to qualify to receive location permits higher than maximum limits.. Status and proposed utilization are different from the activities in the field. Using communities to open forest areas for the purpose of opening oil palm plantation Natural boundaries are not respected in granting (Land Use Rights) Companies give facilities (eg. vehicles, etc) to law enforcement institutions Operating in an area outside their Land Use Right Area or operation without Land Use Rights.

11 Efforts to Resolve Conflict Litigation Desk/unit of conflict resolution in government institution (eg.mof, MoA, National Land Agency) Private Sector Initiative (eg.safeguard, RSPO)

12 Weakness of Efforts to Resolve Conflict Efforts Litigation Conflict Unit/Desk Private sector Initiative Weakness Resolution is only on a case to case basis (no national effort/scheme to address conflict) Does not address the root of the conflict Community members have difficulty in showing proof of their rights over the land. Cost of going to court is expensive for the community. The absence of legal assistance for communities Resolution is only on a case to case basis (no national effort/scheme to address conflict) Does not address the root of the conflict Partial approach (sectoral) Very dependent on capability and preparedness of government party Resolution is only on a case to case basis (no national effort/scheme to address conflict) It isvoluntary Does not address the root of the conflict legitimizes industry and their responsible expansion. The initiative will only mitigate worst impacts and are not sufficient for achieving all necessary improvements in the commodity sector There is no guarantee that the whole company will join in the initiative being developed

13 Conclusion Land conflict in Indonesia has fundamental problems in the Agrarian Law The process of legal and policy reform in the protection of local communities/ indigenous peoples rights to land in Indonesia are outpaced by the speed of investment of large scale companies. There is a pattern, orientation of companies seeking the highest profits despite escalation of conflict The resolution of conflict is still based on cases (no national scheme/program) Local communities/ indigenous peoples are the main victims of land conflicts