Biofuels - solving poverty, destroying forests?

Biofuels - solving poverty, destroying forests?
AB Radio Australia 5th September

The oil palm is transforming the environmental and social landscapes of Indonesia and Malaysia. On the one hand, the current bio-fuel boom is providing a way out to a better life for many poor rural communities, while on the other hand, many view the rapid expansion of plantations as an environmental timebomb.

Presenter: Tom FayleSpeaker: John McCarthy, resource management specialist at the Australian National University in Canberra, who's studying agrarian change in both Malaysia and Indonesia

McCARTHY: Well, the Ministry of Forestry in Indonesia has said that there is about eight million hectares of Indonesia that are slated for transformation into oil palm, and recently there was an article in Kompas saying that there was about four million that were planned for transition into oil palm in the province of Papua alone.

So we're talking about a very large transformation, but the figures are not all that easy to come by about exactly how big this is. But if you visit areas of Sumatra, there are very large areas of Sumatra as you drive along the road. You will see people converting remnant areas of forest or areas of what they call jungle rubber which are extensive areas of rubber into oil palm.

And in Kalimantan, there are very large areas also set aside for plantation development. In one district I visited, 12 new plantation licences had been issued in the last four or five years and each license is about 20,000 hectares. So that is 12 by 20, so it's about 240,000 hectares just in one particular district. So if you multiple that across many of the districts across Indonesia, it's enormous transformation, given that in Australia, according to estimates, there are about 20 million hectares under agriculture in Australia now.

FAYLE: Yes, palm oil gets a lot of environmental flack doesn't it. But there are positives?

McCARTHY: Yes, across the world, not just in Indonesia, palm oil for more than 30 years has been used as an instrument for poverty reduction and particularly during the Suharto period in Indonesia.

There were a lot of palm oil developments across Sumatra and Kalimantan and many of these areas, transmigrants were brought in from Java ended up becoming quite well off.

There was one survey of these farmers pointing to the fact that they were emerging 50 per cent above the poverty line. And if you go visit these areas, during the boom in prices earlier this year, farmers were getting something like ten million rupiah a month, which is above the salary that professors in Indonesia get.

So I interviewed during that time a group of teachers, 13 teachers in one school, and nine of them were developing small scale palm oil plantations. So there is a lot of economic benefits and I think as Francis Seymour your earlier interview pointed to a lot of roads and all kinds of things are built and for more remote parts of Indonesia, this is an enormous benefit.

And of course we have also got to remember that Indonesia is a developing economy and it needs to obtain as much foreign currency as possible and this is really a winning part of Indonesia's economy.

FAYLE: Yet there are major negatives to this sort of cultivation, are there not? Just what are the main drawbacks of this sort of agriculture?

McCARTHY: Well, there's the environmental problems, which Frances Seymour pointed to earlier. Firstly, especially the opening of an oil palm in peat swamp areas leds to enormous emissions of carbon. In fact there was one report last year pointing to the fact that Indonesia was now number three in the world in terms of oil palm greenhouse emissions and this was largely due to the opening of oil palm in peat areas.

Now the president of Indonesia tried to curtail this, but it's still I think a difficult issue for the Indonesian Government to tackle. The other issue is that the economy of oil palm, the nature of oil palm as a commodity favours the big players, because it entails very large investments.

One study suggested that 3,500 US dollars per hectare is required for developing one hectare of very lucrative oil palm estate. And this, the kind of technology and seedlings that are required are well beyond the capacity of small local, small holders unless they are in partnership with these big plantations.

And this means that a lot of the poor end up being pushed aside by this development process. Because when there is an economic shock, these people sell on areas of land and as this kind of continues over time, there is one part of the community that are into oil palm that are able to leverage themselves and buy more and more land and then in one part of the community that are not integrated into oil palm, and these people end up being pushed aside and they are losing a lot of their land. So we end up with a lot of social tension.