JAKARTA – Besides contributing to the fulfillment of global need of foods, the palm oil industry has also played an important role in reducing the poverty rate in Indonesia and increasing the public welfare in remote and less developed areas, the agriculture ministry’s plantations directorate general reported recently.
Based on the research conducted by the Palm Oil Agribusiness Strategic Policy Institute (PASPI), the oil palm plantations have proven to be successful in developing the remote and poor regions to become the new centers of economic growth across the country. The new economic centers are located in the provinces of Aceh, North Sumatra, Riau, South Sumatra, Jambi, Central Kalimantan, East Kalimantan, South Kalimantan, West Sulawesi, Papua and West Papua.
“The palm oil industry has contributed to the efforts of realizing the United Nations’ (UN) Sustainable Development Goals (SDG), especially in the goal of reducing poverty,” PASPI Executive Director Tungkot Sipayung said when addressing a webinar on “the role of palm oil in eradicating poverty and in increasing agricultural exports”, which was organized by agricultural journalists association (Forwatan) on Wednesday, 31 March 2021.
Tungkot noted that the palm oil industry has not only contributed to the reduction of poverty in Indonesia, but also to the reduction of global poverty through three ways. First, through its on-farm activities. Second, through the development of its downstream industries in importing countries. Third, through the consumption of the palm oil.
He said that after the end of the logging businesses under the so-called HPH (forest concession rights), many cities in Indonesia became ghost towns as they were deserted following the collapse of the logging business. “As a result, the local people there became poor,” he said.
“Then there comes the oil palm growers. They restored the damaged forests with the planting of oil palm trees, which then created economic and environmental benefits as the palm oil industry managed to generate the local economies and restore the environmental function through the carbon sequestration of the oil palm trees,” said Tungkot.
The local economies are generated through mainly the transactions between the plantation communities and people living in villages and cities around the plantation areas. The transaction value between the plantation communities and urban communities amounted to Rp202.1 trillion per year, between the plantation communities and villagers reached Rp59.8 trillion per year.
The growth of oil palm plantations in each region has contributed to the poverty reduction. Such economic condition is also seen in Malaysia, Thailand, and Papua New Guinea.
“So, wherever the oil palm plantations are developing, there the poverty is declining as the plantations absorb the local workers and grow the local economies. And there new economic centers will be emerging,” he said.
Such multiplier effect is also seen in the development of downstream palm oil industries in the importing countries. A total of 2.73 million job opportunities have been created in the palm oil importing countries. “We see such positive impact in India, China and countries of the European Union (EU),” he said.
“Actually, the EU just pretends that they reject the palm oil. If they really act to reject it then their job opportunities and income will decrease,” said Tungkot.
Other speakers addressing the webinar include the agriculture ministry’s annual and refreshing plants Director Heru Tri Widarto and Forestry Analyst Dr. Bedjo Santoso.
Bedjo Santoso noted that Indonesia’s palm oil industry absorbs a total of 16.2 million workers, comprising of 4.2 million workers who are directly employed and 12 million indirectly employed. “The palm oil industry is the backbone of Indonesian economy and the largest contributor of foreign exchange. In 2018, it contributed foreign exchange income at a total of Rp240 trillion,” he asserted. (*)
Source: KONTAN.CO.ID
