LARGE-SCALE PALM OIL PLANTATION DEVELOPMENT, CUSTOMARY LAND ACQUISATION AND LOCAL PROTESTS: An Experience of West Sumatra, Indonesia[1]

By: Dr. Afrizal[2]

INTRODUCTION

Having inherited poor economic condition from Soekarno's government, led by Soeharto, the New Order regime attempted to achieve high economic growth by implementing its five-year development plans begun in early 1970s. For this, the New Order government stimulated investment in which two important policies were implemented: Firstly, the state itself invested in resource-based industries in rural areas (Bowie and Unger 1997, pp. 49-52); Secondly, the concentration on inviting foreign capital was intense, and this made the Indonesian state at that time “really became a foreign investor’s paradise” (Taylor 1974, p.18).

Then, the decline of revenue from oilbrought about tremendous development in agricultural sector. This is because the New Order government endeavoured to find alternative sources of income, one of them was in the field of agro-industry (Fauzi 1999, pp.162-186), in this case, the government viewed agriculture as “a major catalyst for economic development” (Kuntjoro-Jakti 1981, p. 42). To increase the contribution of agriculture to the national economy, apart from efforts to grow rice/food production, export-oriented agricultural products such as rubber, palm oil, coffee and tea were developed (Langill 1978, p. 184). Palm oil plantations are the most important one,which recently has grown dramatically both in terms of the area of plantations and number of large-scale palm oil plantation companies.

Based on an intensive study in West Sumatra[3] and focus the attention to the process of land acquisition, this article will shows that the development of large scale plantations has serious implications for local people in the region. The process of land alienation lacked recognition and respect of customary rights (hak ulayat) by the governments and businesses took advantage of this and, therefore, they also did not respect local people’s customary rights. This brought about local people lost their customary land and conflicted with palm oil companies.

THE TREND OF PALM OIL PLANTATION GROWTH IN INDONESIA

Although palm oil plantations have existed in Indonesia since 1911, there was a new phase of development after 1940 although by that year it was already one of the important crops in the country. Great need for palm oil in Europe[4] brought about remarkable increase in the size of palm oil plantation areas in Indonesia. It was only 1.2 thousand hectares in 1916 and increased little to 109.6 thousand hectares in 1940, and even up to in 1978 the area increased only to 250,000 ha. But then, this increased dramatically to more than 2 million ha in 1998/1999. By 2004, it was reported about 4.1 million ha of land and in 2006 about 6.1 million ha of land were used for palm oil plantation but concentrated only in the Island of Sumatra and Kalimantan. Some 50% of them were controlled by private large-scale plantations. There were 170 palm oil estates recorded in 1985, which was number four after rubber, tea and coffee in that year. By 1999 the number of palm oil estates had jumped four-fold to 683 (Biro Pusat Statistik, 1985, p. 248 and 1999, pp. 208-9, Soetrisno et al. 1991, pp.72-75, PDBI 1998 in Basyar 1999, p. 35 and Colchester et al., 2006, pp. 21-22). This makes “Indonesia now leads the world…and set to become the number one palm oil producer overtaking Malaysia by 2010, or even earlier” (Colchester 2006, p. 25).

The incredible development of the palm oil plantations was related very much to the governments’ actions because it was the governments in Indonesia that had a major role in their development. The central and the local governments encouraged and facilitated their development. They provided the needs of investors to establish their large-scale palm oil plantations by issuing permits, allocating land and guaranteeing investors to be able to control land in long term by issuing long lasted Commercial Use Leases, HGU). It is important to look at why the governments encouraged and facilitated their development.

There was a rather populist idea behind the development of palm oil plantations. It was true that the development of palm oil plantations was seen by the central government as a tool for improving macro-economic performancefor it can increase exports (Basyar, 1999, p. 49 and Bachriadi, 2001, p.229). But the development of palm oil plantations was also seen by the governments as a tool to improve local people’s economy. The provincial and district apparatuses also saw the development of palm oil plantations as fundamental for the improvement of local community economy (Afrizal 2005, pp. 112-113 and 2007, pp. 95-96[5]). This can be seen from the fact that the governments attempted to prevent the large-scale plantation corporations’ monopoly on palm oil plantations, and wanted that local people had share in the plantations. For this, from 1974-1975 the governments introduced and applied a new mode of plantation production, the Nucleus Estate and Smallholder (NES) mode of plantations to improve the well-being of small farmers, (Soetrisno et al. 1991, p. 94-95), and even 1986 the Presient isued a decree to support this model (Asian Agri 2007). Under this scheme, a plantation consists of two parts: a nuclear estate that is the asset of big investors; and smallholder plantations (kebun plasma), which is the asset of small farmers (Soetrisno et al. 1991; pp. 95-96, Basyar 1999, p. 66; Fauzi 1999, pp.187-188 and Bachriadi 2001, p.239).

Both plantation investors and the state play significant roles in NES development. The former is responsible for developing of plantation smallholders (kebun plasma), improving the management quality of plantation smallholders and buying their palm oil fruits. The latter is responsible for recruiting recipients of the plantation smallholders, organising land for the plantation andproviding loans for the development of the smallholder plantations[6] (Soetrisno 1991, pp. 99-100). The recipients of smallholder plantations obtain three plots of land from the state: two hectares of plantation land; 0.75 hectares of land for farming and 0.25 hectares of land for settlement (Soetrisno 1991, p. 99).

THE CASE OF WEST SUMATERA

West Sumatra Became A Centre of Large-Scale Palm Oil Plantations

Palm oil plantations were introduced to West Sumatra by the Dutch before independent with the first palm oil plantation, Ophier, was established in what now West Pasaman in 1934. It used about 1100 hectares of land, began to produce in the time of Japanese occupation but was destroyed during the second Dutch aggression of 1948 (Departemen Penerangan 1953, pp. 730-739). Then, in early 1980s the government of West Sumatra, supported by the West German Development Bank (KFW), developed the area as a palm oil plantation again. At this time, the Nucleus Estate and Smallholder (NES) mode of plantation production was introduced (Soetrisno et al. 1991, p. 104).

Local governments played a significant role in the development of West Sumatra became one of the centres of palm oil plantations. The local governments invited or facilitated investors to invest in West Sumatra. For example, in the middle of the 1980s the headof Pasaman District gave much attention to palm oil plantation development in the area by inviting private investors and providing the nagari community’s communal land for investors’ palm oil businesses (Singgalang 29 October 1989).[7] The result of an interview with a local informal leader who was involved much with the development of palm oil plantations in Pasaman shows how it happened. Pak NJB, a 60 year old man who was a retired Haluannewspaper journalist living in Simpang Empat, knew much about the history of large-scale palm oil plantation development in West Pasaman. He remarked:

In the middle of the 1980s, after visiting the Ophier palm oil plantation that was run by PT. Perkebunan Nusantara VI, private investors came to Pasaman sub-district lineage leaders including Nagari Kinali to ask for land. The lineage leaders told them to approach the Pasaman state apparatus for this purpose. At that time, local lineage leaders were supportive to the investors. After that, the headofPasaman District (Rajuddin Nuh) invited all the kinship group leaders of Pasaman sub-district including NagariKinali to discuss agribusiness development in the region. The head of the district tried to persuade the kinship group leaders to provide their communalland for palm oil plantation development. He said that the development of the plantations would benefit lineage members. The head of the district said that they would be provided with plantation partnership by corporations as had occurred at Ophier plantation. Accordingly, the kinship group leaders agreed to provide their communal land for private investors.[8]

The other research’s findings confirmed this (see Colchester et al. 2006, pp. 132-133).

The West Sumatran government's policies to encourage and facilitate investors in palm oil plantation resulted in many large-scale (above 1000 ha) palm oil plantation companies (several of them with their own mills) operated in West Sumatra. Up to 2001, there were 41 companies operated in West Sumatra, controlled about 336,600 ha to 489,000 ha of land[9], and more and more of them are owned by Malaysian investors recently[10]. Although the area of palm oil plantation in West Sumatra is only one-third of the area of the same plantations in RiauProvince, this is number 4 in Indonesia after Riau, North Sumatra and Central Kalimantan (Colchester 2006, p. 24).

Palm Oil Plantations for the Improvement of Local Community's Welfare

The ideas behind the development of large-scale palm oil plantations in West Sumatra by inviting big investors were to improve local people's economic livelihood, besides, offcourse, to provide sources of revenue for the government. It was clear that local state apparatuses and the Province of West Sumatra viewed the development of palm oil plantations as crucial for the economic improvement of local communities[11] (BAPPEDA Tingkat I Sumatra Barat and BPS Sumatra Barat 1983, p. 49). The contents of conversation between local government officials and local community members reveal this. For example, in 1989 the head of the Pasaman District, Rajuddin Nuh, said that the development of large-scale palm oil plantations in the region was designed to apply the Nucleus Estate and Smallholder scheme in order that local people obtain benefit from the development of large-scale palm oil plantations. Quoting the head of the district, Singgalang news paper reported that “…investors must involve the local community by providing smallholder plantations, particularly to those whose land is utilised by the investors” (Singgalang 29 November 1989). When the Bupati attended the ceremony to mark the beginning of palm oil planting of a given grower he said again that the company must organise smallholder plantations for landholders (Singgalang 29 November 1989). The other study also confirms this with the researchers concluded their findings that “the Bupati of Pasaman said that the main goals of estates development was to improve the welfare and standard of living of the local population (Colchester et al., 2006, p. 133).

It can be concluded from the above discussion that in West Sumatra, palm oil plantations should have been organised in such a way that local people must obtain the advantage of the development of palm oil plantations. This is should be done by applying Nuclear Estate and Smallholding model. Local government officials labelled this model bapak angkat-anak angkat (step parents-step children model). What is meant is that local people be provided with smallholding palm oil plantations as part of the development of large-scale palm oil plantations owned by big investors. However, as will be discussed below the development of the large-scale palm oil plantations ignored local people’s rights, based on their customary laws, and this is contradictory to the aims of the development of large-scale palm oil plantations in Indonesia in general and in West Sumatra in perticular.

Unfair Processes of Customary Land Acquisition

1. Land Taken Over By Plantation Companies Without Landholders' Free Consent

It was found that there were pal oil companies that had taken over land by force from local landholders. Sometime, police personnel get involved in supporting the companies. The table 2 below shows an example of local people's land taken over by force by plantation companies in a nagari in West Pasaman District.

Table 1. Local People’s Protests over Illegally Taken Land In Nagari Kinali

Protesters / Date / Companyand complaint / Land size (ha)
Farmers association of Padang Sungkai/Air Meruap / Oct. 3 1997 / Backed up by two army personnel, PT. TR took their fish ponds by force. / 70
Eight kinship group leaders / Oct. 25 1996 / PT. AMP was accused of planting beyond land provided and hiding documents showing the real size of its plantation. / Unknown
M. Dt. Majobasa, M. Zaman and Samsir / Oct. 24 1999 / PT.PN VI took their farming land without their consent / Unknown
Bukini and six friends / June 19 1996 / PT. PMJ took their rice field without their consent. / Unknown
Farmers associations of Aur Serumpun and Batang Lambau hamlets / April 10 2000 / PT. PN VI took their farming land by force. / 197
130 Javanese transmigrant farm-households / July 17 1998 / PT. TSG took their land without their agreement. / 87

Sources: 1. Daftar Investor Perkebunan Sawit Di Kecamatan Kinali 2001.

2. See the letter of the Dewan Pengurus Daerah to DAN DEM POM 1/6 Sumatera Barat on 16 October 1997 (author given a copy of the letter from datuak BBS).

3. See the letter of the leaders of the farmer associations of Aur Serumpun and Batang Lambau hamlets to the director of PT. PN VI on April 10, 2000.

4. Interviews with datuak BBS, 7 May 2002; ABMA, 25 April 2002; datuak MM, 27 April 2002; datuak LJN, 21 April 2002; and IMS, 7 May 2002, Nagari Kinali.

Unfulfilled Adat Requirement: Siliah Jariah

Local people protested to palm oil plantation companies demanding the fulfilment of siliah jariah (communal land improvement compensation as the compensation for improvements carried out by local landholders on their communal land, such as creating irrigation schemes) be made. In most cases kinship group leaders requested that palm oil plantation companies pay adat payments (customary dues) and provide their kinship members with schemed smallholder plantations, this was because they had not sold their communal land neither to the state nor to the companies. The companies gave them the requested adat payments. However, local people also demanded that the companies pay compensation for communal land improvement because part of the land that the companies now utilised had been local people's cultivated communal land.

Companies did not make communal land improvement compensation because the need for this payment to be made was not identified at the time of the process of customary land acquisition carried out by the local government land alienation committee. As a result, the company management did not recognise the necessity of this payment (Afrizal 2005, p. 123-125, 2007, 105-107).

UnfulfilledPromised Schemed Smallholder Plantations (Kebun Plasma) as Compensation for Customary Land Provided[12]

Both the local government and plantation companies had promised customary landholders that they would gain schemed smallholder plantations in return for the their customary land they provided to the companies through local governments or directly to them. This was stated explicitly in the letters of communal land alienation (the land alienation transfer statements).[13] For example, the letter of communal land alienation of nine kinship group leaders of Nagari Kinali stipulated that ‘based on providing land mentioned in the first point, the second party (the Bupati of Kabupaten Pasaman) has an obligation to organise the development of plantation in the form of step father and step child (smallholder plantations)’.[14] The letters mention that about 60 to 70% of total land provided for investors by local landholders was for the nucleus estate of the corporations while 40 to 30% was for smallholder plantations.[15] There was a different case of a palm oil company. Although, schemed smallholder plantations are not mentioned in the letter agreeing to transfer communal land to the company, both the Bupati of Kabupaten Pasaman and the management of the company had promised orally to landholders that they would be provided with the schemed smallholder plantation (Singgalang 29 November 1989).

However, as far as smallholder plantations are concerned, local communal landholders were neglected. The promised schemed smallholder plantations were not provided, while companies concentrated on their own estates. In certain cases, smallholder plantations were not developed at all, while local people provided land for this. In other cases, smallholder plantations were developed even produced, but these plantations are kept by companies.

Customary Land Became the StateLand Without Local Landholder' Knowledge and Consent

In West Sumatra, the land that has been utilised by large-scale palm oil plantation corporations was the communalland of local people to which they have customary right based on Minangkabau customary laws. The communal land is called in local terminology as tanah ulayat or tanah kaum (for more information, read Afrizal 2005 and 2007). Local governments recognised this land tenured as hak ulayat or tanah ulayat of local people as this appeared in any land alienation agreement letters singed also by the head of the district (bupati).[16] In general, the land was previously uncultivated and swamp located outside local farmland, but small part of the area taken over for plantations area was local people’s farm land.[17]