Losing Ground The human rights impacts of oil palm plantation expansion in Indonesia A report by Friends of the Earth, LifeMosaic and Sawit Watch February 2008 Losing Ground, February 2008 “Indonesia is a uniquely diverse country whose communities and environment are being sacrificed for the benefit of a handful of companies and wealthy individuals. This report should help the Indonesian government to recognise that there is a problem, and to step up efforts to protect the rights of communities. In Europe we must realise that encouraging large fuel companies to grab community land across the developing world is no solution to climate change. The EU must play its part by abandoning its 10 per cent target for biofuels.” Serge Marti, LifeMosaic - Author of Losing Ground "Oil palm companies have already taken over 7.3 million hectares of land for plantations, resulting in 513 ongoing conflicts between companies and communities. Given the negative social and environmental impacts of oil palm, Sawit Watch demands reform of the Indonesian oil palm plantation system and a re-think of plantation expansion plans." Abetnego Tarigan, Deputy Director, Sawit Watch “This report shows that as well as being bad for the environment, biofuels from palm oil are a disaster for people. MEPs should listen to the evidence and use the forthcoming debate on this in the European Parliament to reject the 10 per cent target. Instead of introducing targets for more biofuels the EU should insist that all new cars are designed to be super efficient. The UK Government must also take a strong position against the 10 per cent target in Europe and do its bit to reduce transport emissions by improving public transport and making it easier for people to walk and cycle.” Hannah Griffiths, Corporate Accountability Campaigner, Friends of the Earth. Cover photo © Tom Picken, Friends of the Earth Friends of the Earth, LifeMosaic and Sawit Watch 2 Losing Ground, February 2008 CONTENTS CONTENTS ............................................................................................................................. 3 Acknowledgements .................................................................................................................. 5 ACRONYM LIST .................................................................................................................... 6 EXECUTIVE SUMMARY ..................................................................................................... 7 i. Introduction ...................................................................................................................... 7 ii. Who owns the forest?....................................................................................................... 8 iii. Consultation, persuasion and broken promises ................................................................ 8 iv. Conflict .......................................................................................................................... 10 v. Jobs and prosperity ........................................................................................................ 10 vi. Water and pollution ........................................................................................................ 12 vii. Destroying Cultures ....................................................................................................... 13 viii. Conclusions .................................................................................................................... 13 LOSING GROUND: The human impacts of palm oil expansion ......................................... 15 1. INTRODUCTION ......................................................................................................... 16 1.1 Reason and scope for this report ............................................................................ 16 1.2 Context ................................................................................................................... 19 1.2.1 Oil Palm Expansion Plans in Indonesia ............................................................. 19 1.2.2 The Environmental Impacts of Oil Palm ........................................................... 19 1.2.3 Endemic corruption ............................................................................................ 21 1.2.4 Indonesia’s international human rights obligations ........................................... 22 2. LAND ACQUISITION AND THE INDONESIAN PLANTATION SYSTEM ......... 24 2.1. Whose Land? Customary Law Versus State Law .................................................. 25 2.2. Colonial Origins of the Plantation System............................................................. 26 2.3. Laws Regulating Land Acquisition and Plantation Establishment ........................ 27 2.3.1 Laws after Independence in 1945 ...................................................................... 27 2.3.2 Reform Era ......................................................................................................... 28 2.3.3 Land Acquisition and Plantation Establishment since 2004 .............................. 29 2.4. The Permit Process by Law ................................................................................... 30 2.5. Land Acquisition in Practice: Irregularities in Community Consultations ............ 31 2.5.1 Many communities not consulted ...................................................................... 31 2.5.2 Pay-Offs and Inflated Promises in Community Consultations .......................... 32 2.5.3 Communities are not told they are losing rights to land .................................... 33 2.5.4 Lack of clear negotiations on the allocation of oil palm smallholdings ............ 34 2.6. Land Acquisition in Practice: Permit Irregularities ............................................... 35 2.6.1 Land Clearance Outside HGU Boundaries ........................................................ 35 2.6.2 Land Clearing without permits .......................................................................... 35 2.6.3 Problems with Environmental Impact Assessments .......................................... 35 2.6.4 Companies obtain permits only for clearing forest ............................................ 36 2.6.5 Corruption .......................................................................................................... 36 3. LAND DISPUTES AND CONFLICT .......................................................................... 37 3.1 Scale of Oil Palm Related Conflict ........................................................................ 39 3.2 Factors Exacerbating Conflict ................................................................................ 41 3.2.1 Historical Grievances ......................................................................................... 41 3.2.2 Present company practices in obtaining land ..................................................... 42 3.2.3 The role of the judiciary and security forces ..................................................... 43 3.2.4 Transmigration ................................................................................................... 45 3.2.5 Environmental degradation……………………………………………………47 Friends of the Earth, LifeMosaic and Sawit Watch 3 Losing Ground, February 2008 3.3 Case Studies: Ongoing Conflicts from the Suharto era ......................................... 47 3.3.1 Pergulaan village, North Sumatra .......................................................................... 47 3.3 Case-Studies: Conflicts from New Plantation Expansion ..................................... 48 3.3.1 Tambusai Timur village, Riau, Sumatra ............................................................... 48 3.3.2 Semunying Jaya village, Bengkayang District, West Kalimantan .................... 49 3.3.3 Conflict between Wilmar group and Senujuh village, West Kalimantan .......... 50 4. ECONOMIC IMPACTS OF OIL PALM ON LOCAL COMMUNITIES .................... 52 4.1 Diversity to Monoculture: Community Economies Transformed ......................... 54 4.1.1 Community Economies before Plantation Establishment.................................. 54 4.1.2 The Transformation of Community Economies to Oil Palm ............................. 58 4.1.3 Community Alternatives to Oil Palm ................................................................ 62 4.1.4 Obstacles to Community Alternatives ............................................................... 65 4.2 Economic Realities for Estate Smallholders .......................................................... 66 4.2.1 Land Acquisition and Plantation Establishment Phase:..................................... 68 4.2.2 Productive Life of the Smallholding: ................................................................. 70 4.2.3 Debt Bondage..................................................................................................... 73 4.3 Economic Conditions for Oil Palm Workers ......................................................... 76 4.3.1 Job creation and security .................................................................................... 77 4.3.2 Low Wages ........................................................................................................ 78 4.3.3 Casual Labourers ............................................................................................... 81 4.3.4 Women workers ................................................................................................