A guide to palm oil in Indonesia : institutions and their effects on independent smallholder farmers

Abstract

Palm oil, Indonesia's second-to-largest export (accounting for $18.2 billion annually or 2% of Indonesia's GDP) has taken the world by storm. While palm oil has historically remained a staple food crop in Africa and Southeast Asia for hundreds of years, its worldwide commercial success is relatively recent, driven in part by a global shift towards biodiesels. Palm oil can now be found in over half of all American and European packaged products, and its demand has been increasing rapidly, making it one of the most quickly expanding crops throughout the humid tropics. Despite its economic success, palm oil breeds many long-lasting issues with its production, particularly: (1) loss of habitat for endangered species; (2) pollution and carbon emissions; (3) land grabbing and abuses to indigenous populations; and (4) abuses to workers, children, and local communities. In recent years, the palm oil industry has become a topic in public discourse, with large institutions (including public institutions such as the European Union) creating policies discouraging the product's use and availability. Amid the topic's popularity, this thesis aims to act as a guide to the industry by summarizing the various institutions (public and private) at play and examining their goals, ethics, and perception to other stakeholders, with a focus on indigenous groups and independent smallholder farmers. This thesis hopes to fill a niche in existing popular media where only one side of the palm oil industry-typically a negative side-is explored.