JAKARTA – Many people are divided in their view regarding the existence of oil palm plantations in rural areas. To some, such existence has only worsened the condition of backwardness in the villages. But to others, it has really helped the countryside inhabitants to lift their living standard.
Most of oil palm plantations are developed in rural and isolated areas, least developed regions, and degraded lands. With such condition, the development of palm plantations has been often categorized as an economic pioneer. It has been proven that through development of oil palm plantations, the degraded lands are restored and transformed into new growth centers in many regions across Indonesia.
The process of restoration can be divided into three phases (photo 13). Pioneering phase (A and B), which is shown by the development of palm plantations under the scheme of nucleus and plasma plantations, which were then followed by independent plantations, small and medium scale enterprises (UMKM) and private cooperatives.
Factors like open access road, the availability of palm oil mills as market guarantee for palm fresh fruit bunches (FFB) and the success of previous smallholders have functioned as magnet for business players to invest in areas around the palm plantations.
The development of the palm plantations has also driven up the growth of other economic sectors, such as transportation of FFB from plantation areas to the palm oil mills, transportation of CPO from palm oil mills to CPO ports, financial/banking services, office goods suppliers, foods trading services, food stalls and restaurants, inter-city trade, etc. All of those economic activities in the rural areas then agglomerate into a city.
The oil palm plantations can also create economic benefits for other people in villages of non-producing areas and those in cities. The local people who work for the oil palm plantations (smallholders or plantation workers) are consumers of food products and non-food products produced and sold by both people in cities and villages.
PASPI study based on spending (BPS, 2021) shows the amount of transaction value between palm communities and city communities reached Rp367 trillion per year (photo 14).
The transactions between the palm communities and village communities reached Rp146 trillion per year. Total national transactions between the palm plantation communities and communities outside plantations reached Rp514 trillion per year. It means, the growth of palm plantations in villages raised the capacity of local economies to create output, income, and job opportunities in the palm plantation sector and other economic sectors outside the palm plantation sector (rural non-farm) in villages and cities.
According to the ministry of transmigration and manpower, in 2013 there were at least 50 underdeveloped/isolated rural areas that had grown into new growth centers with palm oil production bases.
PASPI study (2017) reveals that new growth centers based on palm plantations have grown in many areas from Aceh to Papua (Table 4).
The success of palm plantations in pushing up regional development can be also seen through the village developing index (IDM). PASPI study (2022) shows that the composite progress of economy, social, and environment (IDM) in villages with palm plantations is higher if compared to other villages without palm plantations. It shows that the existence of palm plantations in villages has driven up the village development. The study has also confirmed the study of World Growth (2011) which states that the oil palm plantations in Indonesia play an important role in the development of villages.
All of the facts have shown that the existence of palm plantations in the rural areas has not worsened the backward condition of villages. Conversely, the development of palm plantations has transformed the underdeveloped areas into new growth centers. (*)
Source: Mitos & Fakta Kelapa Sawit – 4th Edition
