Blog post

An independent look at palm oil in Indonesia

Published on
March 18, 2019

...oiled by Wageningen's academic network

The sustainability of palm oil has been getting even more attention in Europe recently with fears of the impact of expanding palm oil production on deforestation, biodiversity losses and carbon stocks. Palm oil is an ingredient in a multitude of industrial and consumer goods worldwide, with Indonesia the world’s largest producer of the oil. European signatories of the Amsterdam Declaration are discussing with Indonesia how to phase unsustainable palm oil out of their supply chains by 2020 and the European Renewable Energy Directive commits the Member States to phase out financial support to bioenergy feedstock "for which a significant expansion of the production area into land with high carbon stock is observed" between 2023 and 2030.  Around 58% of the production of this native African palm is in large national and private sector plantations, and around 42% on small-holder farms. Oil palm kernels are then transported and pressed in mills, and the resulting oil refined. Indonesia is the world’s largest exporter of refined oil, exporting around 5 billion tons for industrial, food and biofuel use, equivalent to 84% of Indonesian national production. The national and international trade contributes around 8% to Indonesian GDP and represents around 13% of total national exports, with around 16% of exporting going to Europe.

I  was invited to join an the Agrinatura team with colleagues from the Institut Pertanian Stiper (Instiper) in Indonesia, CIRAD, and the Natural Resources Institute, University of Greenwich on the Value Chain for Development VC4D project. We are investigating the social, economic and environmental impacts of palm oil in Indonesia by conducting a value chain analysis. Given the vastness of the country and huge amount of data available, we are using existing data, supported by selective interviews in the field. Getting hold of the right data is therefore key to analysing the impacts of all the activities involved in palm oil production and trade along the value chain.

Tapping into the Wageningen Indonesia network to obtain and contextualise information has been highly productive. Njimas Wardah, a Wageningen MSc Rural Sociology graduate, has been invaluable team member arranging meetings with government agencies, companies and farmers to obtain in Sumatra. Intan Kurniati Ningsih, MSc Forest and Nature Conservation graduate provided an insider view of how oil palm and commodity certification works. Achmad Dermawan, an Public Administration and Policy Group PhD candidate looking at the implications of zero deforestation commitment of palm oil companies in Indonesia on the palm oil value chain, provided insights into the relations between forests and palm oil, alongside Fitri Nurfatriani, also working at CIFOR, with whom Wageningen has an MOU. We also tapped into the extensive expertise of Prof Diana Chalil at the University of Sumatra Utara, who kindly took us into the field around Medan in North Sumatra, sharing her knowledge for a day.

At nearly every meeting with government agencies and companies, someone had studied at Wageningen or knew someone who had – helping to open up the doors to understanding the value chain. Such social capital and networks are proving essential to co-develop new knowledge on the chain with our Indonesian counterparts, which will provide evidence based information of use in international, multi-lateral decision making and policy dialogue on value chain operations, sustainability and accountability in Indonesia and Europe.