Palm oil is often blamed to have caused environmental damage and contributed just small to regional economic development. But the latest facts show that it is otherwise.
The palm oil has been proven to have generated the growth of local economies, especially those in the least developed areas. Usually developed in remote areas, the oil palm plantations have opened the villagers’ access to better infrastructure, raised the income of farmers, and pushed up the gross regional domestic product (PDRB) significantly.
Based on the research conducted by the Palm Oil Agribusiness Strategic Policy Institute (PASPI 2023), there had been at least 50 least developed areas that had been transformed into new centers of economic growth based on the oil palm plantations.
The oil palm plantations were initially developed in remote, isolated, and marginalized areas. But then the existence of oil palm plantations, palm oil mills, guaranteed market for palm fresh fruit bunches (FFB), and the increase of smallholders’ productivity had gradually transformed the areas into a new magnet that attracted other business players to take advantage of doing other supportive businesses and developing infrastructure and facilities.
The results?
- Road and market access opened
- Mobility of local economy increased
- The rise of new businesses as related or supporting businesses
Data in 2021 shows:
- Income of oil palm farmers reached around Rp30 million per year
- Income of non-oil palm farmers lagged far behind that of oil palm farmers
The income of oil palm smallholders is derived from regular sale of FFB, which is purchased by the palm oil mills every month, securing cash flow for the smallholders, which is rare in other agricultural sub-sectors.
The economic activities generated by the oil palm plantations have pushed up the growth of gross regional domestic product significantly. Data collected from the palm producing areas shows the following facts:
-Palm producing regencies saw higher and faster PDRB growth compared to other areas.
-Compared to non-palm oil producing areas, the trend of economic growth in the palm producing areas show a consistent acceleration.
It has proven that palm oil is not just an agricultural commodity, but the driver of local economic growth.
50 isolated areas transformed into new growth centers
Areas that were used to be isolated but now had been transformed into new centers of economic growth include:
- Nagan Raya, Aceh Singkil
- Pasaman Barat, Sijunjung
- Stabat, Belarang (North Sumatra)
- Bengkulu Selatan, Mukomuko
- Sungai Lilin, Tugumulyo
- Sarolangun, Sungai Bahar
- Sanggau, Bengkayang
- Sampit, Kuala Pembuang
- Batulicin, Kotabaru
- Samarinda, Kutai Timur
- Mamuju, Donggala
- Tenggarong, Sangatta
- Sorong, Manokwari, Papua Barat
People in those areas have now had access of market and road infrastructure, and managed to raise their purchasing power to higher level than before when they were isolated from economic development. (*)
PASPI (2023) – Mitos Vs Fakta Industri Minyak Sawit Indonesia dalam Isu Sosial dan Ekonomi. BPDPKS – Sawit Bangkitkan Daerah 2024. Data lapangan dan infografis resmi Sawit BDPKS
