Ghosts in the palms
Indonesia wants to massively expand its palm oil production, including for biodiesel. Food shortages are starting as a result. A visit to the island Kalimantan, where the world’s biggest plantation is to come into being.
Written by Christina Schott and Fitriani Dwi Kurniasih, photograph by Alex Supartono
When evening comes in the west of Kalimantan, the Indonesian part of the island Borneo, the villagers try to be home. The indigenous Dayak say that’s because the palm trees come alive. For hundreds of miles palms fringe the roads from the provincial capital, Pontianak, to the heart of Borneo. Weird things happen then, they say, many people have disappeared in the twilight never to be seen again.
It actually is kind of creepy driving even just the five kilometres in the rapid tropical nightfall from the small town Bodok to the Dayak village Perontas in the Sanggau district. Here, near the border with Malaysia, oil palm plantations stretch as far as the eye can see. Occasionally there are just a few crop plants for own consumption. There’s not much forest left. The only vehicles passing regularly are the factory trucks transporting palm fruit or the oil made from it to the nearest town – a run of at least six hours.
When evening comes the farmers of Perontas often sit together sipping sweet tea and talking till their heads are hot. Today about a dozen men with sun-bronzed faces are sitting in the stilted house of Matius A. by candlelight because the power’s down again. All present belong to the independent association of palm oil farmers, SPKS.
They’re into their pet subject: the rampantly growing plantations and an unjust government claiming more and more land that by traditional rights should belong to them, the indigenous people. A word keeps popping up in the farmers’ discussion: biodiesel. Biodiesel is the new magic formula of the Indonesian government. The fuel from various plant oils is to solve unemployment, slowed foreign investment, constraints in the energy supply and out-of-control subsidies that have kept fuel prices low for decades. This year Jakarta has budgeted a trillion rupiahs (€85 million) to support farmers investing in crops from which biofuels can be made: sugar cane, manioc, jatropha and above all oil palms. “They’re taking us for gullible fools: biodiesel serves only as a pretext to take the last land for independent use away from us,” rails Asngandi of the SPKS.
Mega biodiesel plant for China’s automobiles
The biodiesel boom is driven from the highest echelons. With all his might President Susilo Bambang Yudhoyono is pushing fast development of the new industry not only to alleviate the fuel shortage in the country but also to sate the growing hunger for the alternative fuel of the European Union (EU and the United States. By 2020 ten per cent of all fuels used in the 27 EU countries are to be sourced on regrowing raw materials. The most favourable of them is currently palm oil; despite the long transport it is 20 to 30 euro cents cheaper than European rapeseed oil.
Experts expect the global demand for palm oil to continue growing. Current world production is more than 30 million tonnes. By far the largest proportion of it ends up in food and cosmetics. In Germany palm oil imports have more than doubled since 2000 to 924,000 tonnes in 2006. But so far the oils are not turned into bio diesel but mainly into margarine, soap or lipstick.
Indonesia and Malaysia already produce some 80% of the world’s supply of palm oil. But the land available in Malaysia is limited; the only potential left for developing new plantations is in the states of Sarawak and Sabah on Borneo. So that’s a golden opportunity for the much larger Indonesia to move full speed ahead into the palm oil business. Investors seem to be queuing up. At the start of this year 59 international energy corporations signed up to an agreement to invest 12.4 billion US dollars into palm oil production; added to that will be five billion dollars from local investors. In addition to local firms, which grew big under President Suharto, such as the Bakrie Group and the Salim Group, many international enterprises are entering the biodiesel business, including the world‘s biggest palm oil producer, the IOI Corp. of Malaysia. Also included are Genting Biofuels from Malaysia, the Japanese corporations Mitsubishi and Mitsui, the oil giant Petrobras of Brazil and agricultural company Wilmar of Singapore.
The biggest single investment is in the world‘s largest biofuel factory in Kalimantan. Over the next eight years the Chinese oil company CNOOC, the Indonesian Sinar Mas Group and Hong Kong Energy plan to build a plant for 5.5 billion dollars for making biodiesel from palm oil and bioethanol to be produced from sugar cane and manioc. It is to supply primarily the Chinese market. The committee specifically set up by the Indonesian government to develop biodiesel is jubilant. “From 2010 we will be producing 200,000 barrels of biodiesel per year,” predicted the committee chairman, Al Hilal Hamdil.
Millions of hectares for new oil palms
To meet the demand for this and other production facilities, the Indonesian agriculture ministry intends to massively expand plant oil production – especially palm oil. That means primarily expanding the land dedicated to it. The government intends to free up an additional 6.5 million hectares for growing sugar cane, manioc, jatropha and still more oil palms. That‘s to create more than four million jobs. Along the 2,000-kilometre border between Indonesia and Malaysia the world‘s biggest oil palm plantation is to be established. Its 1.8 million hectares will be equivalent to the area of the German state of Saxony. Yet the Center for International Forestry Research (CIFOR), based in Bogor Barat, Indonesia, has found in a study that large parts of the designated area are not suited to growing oil palms. Oil palms grow best on dry, flat land, whereas the intended area lies much too high, many of its slopes are too steep and the soil is not fertile.
At the latest at this point local and international environment and human rights advocacy groups are screaming because the rampant plantation industry is the main cause for the disappearance of the last remaining rainforests and indigenous cultures of Indonesia. Every year the huge peninsula state loses about two million hectares of jungle, which corresponds to about half of The Netherlands. Often the smoke from burning off the forests darkens the sky over Kalimantan and Sumatra as well as the neighbours Malaysia and Singapore. The high carbon dioxide emissions damage the atmosphere – Indonesia alone is responsible for a third of all emissions from forest fires worldwide. According to present plans the intended mega plantation in the heart of Borneo would run through as yet untouched mountain forests.
That’s not the way the government tells it. “There are no protected forests on our list. The fears of some international nongovernmental organisations are unfounded. We will only use fallow or critical land to grow plants for biodiesel production,” states Nenny Sri Utami, head of the development department of the energy ministry. And Al Hilal Hamdil of the biodiesel committee adds: “We encourage new plantation operators to cultivate so-called unproductive land, for example land that was cleared and then left behind unused.”
Illegal fire clearing, fake purchase contracts
But even then ownership is often unclear. “What about if new forest has already grown there? Or if people living next to the land, which by traditional law belongs to the community, are now using the land to farm?” asks Sabhan Stiawan, head of the West Kalimantan office of Walhi (Friends of the Earth Indonesia), the country‘s largest environment advocacy organisation. “Expansion of the growing area also always involves forced seizure of lands or intimidation. Often groups of paramilitary thugs are hired for the purpose and often local authorities are involved which were previously bribed. Even we have been threatened and terrorised,” says the activist in his office in the provincial capital Pontianak.
Just in West Kalimantan last year, Walhi worked on 200 disputes connected with unclarified expansions of plantations. For example in the neighbour villages Senujuh and Sijang in the Sambas district at the Malaysian border. In the middle ages a sultan ruled there over the flourishing sea trade with India. Now several subsidiaries of the Singaporean Wilmar are actively expanding their palm oil plantations for biodiesel production.
In March 2006 some villagers out collecting firewood in the commons forest of Senujuh came across employees of the Wilmar Sambas Group. These communally used forests mainly serve everyone to offset the natural imbalance caused by the large agricultural areas – for example to prevent floods during the rain season and droughts in the dry season. With heavy tree felling equipment the workers of the plantation enterprise had already penetrated five kilo metres into the forest. The locals confiscated the equipment and held the timber cutters until the authorities took up the case. It was claimed that the chief of the neighbouring village had issued documents allowing the purchase of the forest which could not be sold. It’s still unclear what he was paid and by whom. A few months on, in July 2006, the inhabitants of Sijangs themselves got trouble. Villagers of Yunus and Natsir claimed to have seen employees of the Wilmar Sambas Group going with lit torches into a clearing that had already been clear-felled. Torching is the cheapest way to make the meter-thick peat ground of former jungle capable of planting. But burning peat emits enormous amounts of carbon dioxide. Although the enterprise had legally acquired the land, the illegal burn-off destroyed neighbouring farmland and strong smoke development forced villagers temporarily to leave their homes.
Both cases – Senujuh and Sijang – are in court in the county capital Singkawang but neither is likely to have any consequences for the enterprises. The defence argues that the fire in Senujuh was caused accidentally while the land was being surveyed.
The regional government doesn‘t want to lose a big investor. “The government here defends Wilmar as if it were its spokesperson,” angrily says Laili Khairnur of the human rights organisation, Lembaga Gemawan, which is offering the villagers affected legal aid. The environment activists already see the activities of the Wilmar Sambas Group as part of the mega plantation project along the border. There’s been no official statement on the matter. And the corporation itself goes into lock-down in regard to visitors. Anyone approaching without permission is stopped by security guards. Critical questions are not allowed.
Food is already getting scarce
Access to the state-owned oil palm plantation and factory PTPN XIII in Parindu in Sanggau district is easier. Since 1982 an endless procession of trucks have been tipping their red mushy loads into trolleys pushed by workers – mostly resettlers from overpopulated Java – into steamy factory halls for processing. Behind it stretch more than 48,000 hectares of oil palms of all ages.
Much of the palm oil produced in Sanggau is to be turned into biodiesel in the coming years. So far it‘s been used mainly for further processing into foodstuffs and cosmetics. “Nothing much is going to change for us because of that; we produce palm oil and what happens to it after that is decided in Jakarta,” explains factory manager Jono Pinem, to whom the farmers of the SPKS association also deliver their harvest. “And we won‘t change over to other plants, either, because the Governor, a businessman, wants us to stick to farming oil palms.”
The Sanggau farmers are still afraid that their bad experiences in the 1980s will be repeated. The government of the dictator Suharto then simply confiscated traditional common land and forced the indigenous farmers to lease back their own land to plant oil palms. The traditional growing of rice, cocoa, rubber, pepper and other crops has since then been reduced to a minimum.
Things are similar elsewhere and so in the agricultural country Indonesia food shortages are worsening. Rice and sugar already have to be imported because not enough is home-grown for the 230 million people in the country. If even more rice paddies were to go and palm oil and sugar cane to be increasingly used for biodiesel, basic foodstuffs like rice, sugar and cooking oil would soon become unaffordable for a large part of the population. And so the word biodiesel appears as threatening to the Dayak farmers in West Kalimantan as the evil spirits they suspect lurking in the forests of dying oil palms.
Biodiesel is a niche market in Indonesia itself
So far there have only been a few smaller biodiesel refi neries in Indonesia, the only somewhat larger one in Surabaya, east Java. Recently production of biofuel also began in Medan in northern Sumatra. That output, expected to reach 600,000 tonnes this year, is so far destined mainly for export.
By the year 2025 Indonesia‘s government wants biodiesel meeting five per cent of the national energy demand. To achieve that, production would have to rise to 4.6 million tonnes a year, which would require a plantation area of some 300,000 hectares. And many new factories would have to be built. Fifteen enterprises already want to build biodiesel refineries. The first two – subsidiaries of Wilmar Holdings and the Bakrie Group – are slated to start operating by 2008/09. It is not known how much of their product is to be exported. To convince consumers and investors within the country of the new product, the state-owned oil company, Pertamina, last year started selling “Bio-Premium B-5” at its fuel stations in the capital, Jakarta. The diesel fuel with five per cent admixture is sold at the same price as standard petrol. The government regularly puts on road shows with “Green Cars”.
But even if all promises were kept, in the coming years Indonesia is likely to produce only just short of a million tonnes of biodiesel per year. Nor has the government‘s biodiesel committee presented a concept yet that would guarantee a stable biofuel price on the home market through subsidies or tax breaks.
