Deforestation trends linked to palm oil in Indonesia

Introduction

Studies show that deforestation from large scale plantations is declining, but deforestation from small scale agriculture and as a result of fire is on the rise. The latest research on the causes of deforestation must inform government and industry efforts to clamp down on deforestation. This factsheet focuses on deforestation from palm oil and highlights the latest findings from sources operating in Indonesia.

Forests in Indonesia

To understand the challenge of protecting forests in Indonesia, one must first understand the underlying legal framework of spatial planning. According to the Ministry of Environment and Forestry, Indonesia has a land area of 188 million hectares (ha), of which 120.6 million ha is legally designated forest area and 67.4 million ha as legally designated non-forest area.

Fact Sheet

Land cover

(in million hectares)

Non-Forest Area

Forest Area

GrandTotal

%

A. Forested

Source: The Indonesian Ministry of Environment and Forestry “The State of Indonesia’s Forests 2018”

Extent of land cover types in forest area and non-forest area in Indonesia (2017)

- Primary forest

B. Non-forested

- Secondary forest

- Plantation forest

Total Terrestrial Area

85.8

44.7

34.7

37.8

3.4

120.6

8.1

1.5

59.3

5.4

1.3

67.4

93.9

46.1

94

43.1

4.7

188

50.0

24.6

50.0

23.0

2.5

100

Fact Sheet

In Indonesia primary forest loss shows a declining trend

Despite these two challenges, Indonesia has achieved a declining trend in primary forest loss since 2016, according to the World Resources Institute (WRI). A key driver behind the decline is a moratorium on the development of primary forest and peatland areas extended and reinforced in 2014 by President Joko Widodo. The moratorium covers about 66 million ha of forests, both primary- and secondary forests, on both mineral- and peat-soil, in both legal forest and non-forest areas, by prohibiting new permits for large-scale logging or agricultural plantations.

The two challenges

Firstly, legal designation and physical reality do not match for large swaths of land. The actual land cover of an area may vary from the legal designation. For example, according to the Ministry of Environment and Forestry, 34.7 million ha or 29 percent of legally designated forest area has land cover classified as non-forested. Similarly, Ministry figures indicate 12 percent or 8.1 million ha of legally designated non-forest area has land cover classified as forested (refer to table above). These contradictions not only complicate efforts to define forests and deforestation but also hinder forest protection efforts.

The second challenge relates to the causes of deforestation because there are so many. Some causes are corporate, for example, mining activities, logging concessions and agricultural expansion. Other causes involve small scale farmers and local communities, where, in most cases, they clear forests to grow food and cash crops. In some cases, they develop and sell the land to make a livelihood. Given the different public and private actors spread out over 34 provinces, 7,024 districts and 17,508 islands, no one solution exists to protect the forests of Indonesia.

Fact Sheet

Furthermore, the WRI observes that, while primary forest loss is declining inside concessions and overall, primary forest loss that occurs outside concessions is increasing. This trend highlights a shift away from deforestation from corporate actors and the palm oil industry makes a good case study in examining this shift.

Source: https://www.wri.org/blog/2020/06/global-tree-cover-loss-data-2019

Indonesia Primary Forest Loss, 2002-2019

Prim

ary

fore

st lo

ss (t

hous

and

hect

ares

)

20020

100

200

300

400

500

600

700

800

900

1000

‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19

324

929

272

Primary forest loss inside and outside the concessions across Indonesia

Def

ores

tatio

n H

ecta

res

00-010

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

01-02 02-03 03-04 04-05 05-06

Inside

06-07 07-08 08-09 09-10 10-11 11-02 11-12 13-14 14-15

Outside

Source: https://www.wri.org/blog/2020/06/global-tree-cover-loss-data-2019

Fact Sheet

Deforestation from large-scale palm oil is exaggerated and its contribution is decreasing

Popular media would have you believe that palm oil plantations have been the main driver behind deforestation in Indonesia. But the facts do not support this view. Palm oil is just one of the causes of deforestation in Indonesia. According to 2017 research1 from CIRAD, in the period of 1990 and 2008, 25 million ha of forest were lost, of which 7.5 million ha were used for agricultural production. Of these 7.5 million ha, 2.9 million ha correspond to oil palm plantations. Other industrial causes include pulp and paper, forestry and mining.

2 Gaveau, D. L. A. et al. Rapid conversions and avoided deforestation: examining four decades of industrial plantation expansion in Borneo

For a look at more recent data, 2016 research2 from CGIAR checked deforestation from palm oil in the period of 1973 to 2015 on the island of Kalimantan. Of the total deforestation of 14.3 million ha, the research attributes 1.9 million ha or 13 percent to palm oil development. The majority of palm oil plantations were developed on lands cleared before 1973 and on degraded lands.

The claim that large-scale palm oil plantations are to blame for the recent deforestation in Indonesia is similarly debunked by research. According to the 2019 paper by Austin, expansion from palm oil plantations into forest areas peaked in 2009 converting nearly 300,000 ha and has since steadily dropped to 50,000 ha in 2016.

188 million haIndonesia land area

2.9 million haDeforestation from palm oill

7.5 million haDeforestation from agriculture

25 million haDeforestation in 1990-2008

1 https://theconversation.com/the-geopolitics-of-palm-oil-and-deforestation-119417

3 https://chainreactionresearch.com/wp-content/uploads/2017/04/palm-oil-stranded-land-size-equals-ten-million-football-fields-crr-170407.pdf

Two factors explain this downward trend in deforestation from large scale palm oil plantations. Government regulations and buyer policies. The aforementioned government moratorium has not only halted the issuance of new business permits in primary forest and peatland areas, it also prohibits a company with an existing permit to convert any undeveloped primary forest and peatland area inside its legal concession. Reinforcing government regulations, consumer-facing brands and progressive traders/growers have implemented no-deforestation procurement policies throughout their supply chains suspending suppliers who do not comply. As a consequence of these corporate policies, Chain Reaction Research identified 6.1 million ha of undeveloped forests inside legal concessions that cannot be developed without violating buyers’ no-deforestation policy3.

The fact that deforestation from palm oil plantations is declining is good news. Regulations and policies have forced companies to focus on yield improvement, not expansion.

The bad news, however, is that research shows an increase of forest loss taking place outside corporate concessions. What are these non-corporate causes of deforestation in Indonesia?

Fact Sheet

Source: Kemen Austin, Amanda Schwantes, Yaofeng Gu and Prasad Kasibhatla (2019) What causes deforestation in Indonesia?

500

450

400

350

300

Are

a of

Def

ores

tati

on (’

00

0 h

a)

OIL PALM PLANTATION

250

200

150

100

50

02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year2013 2014 2015 2016

Annual area of deforestation in Indonesia by driver category

Small-scale farming and fires

Studies show an alarming increase in primary forest loss occuring outside concessions. For example, the aforementioned 2019 paper by Austin discusses the conversion of forests to small-scale agriculture/plantations and to grassland/shrubland.

While small-scale agriculture/plantations cleared nearly 150,000 ha of forests in 2009, the trend in subsequent years shows a doubling to nearly 300,000 ha in 2016. Austin estimates that 20 percent of that cleared forest made way for palm oil and the remaining 80 percent for other food or cash crops.

Forest conversion to grassland/shrubland is the most worrisome. Austin points to fires as the cause of this type of deforestation, as forest areas converted to grassland/shrubland show fire scars and a spike in fire activity the year before. While fires burnt about 100,000 ha of forests in 2009, the trend jumped five-fold to nearly 500,000 ha in 2016. Austin estimates that 33 percent of that burnt forest made way for palm oil.

Let’s deep dive into fires a little more. Fires are traditionally used by local communities to clear land for agricultural development. This method of land clearance is more affordable than the rental of heavy equipment and brings additional benefits of fertilising the land and warding off pests.

Fact Sheet

Annual area of deforestation in Indonesia by driver category500

450

400

350

300

Are

a of

Def

ores

tati

on (’

00

0 h

a)

GRASSLAND/SHRUBLAND

SMALL SCALE AGRICULTURE AND PLANTATION

250

200

150

100

50

02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year2013 2014 2015 2016

Source: Kemen Austin, Amanda Schwantes, Yaofeng Gu and Prasad Kasibhatla (2019) What causes deforestation in Indonesia?

Fact Sheet

It is lesser-known that most burning takes place on idle and abandoned land4. Where land tenure is unclear, or land conflict remains unresolved, actors use fire as a tool to make an informal claim to the particular piece of land5. With climate change bringing longer dry seasons and more frequent extreme, El Nino-type conditions, fires are difficult to control and can quickly spread, as Indonesia experienced in 2015 and 2019.

To summarise, what is the breakdown of deforestation due to palm oil in Indonesia in 2016? According to the Austin data, of the 850,000 ha of forests cleared, 276,000 ha or 32 percent were cleared for palm oil development and 574,000 ha or 78 percent for other agricultural uses. Of the 276,000 ha of palm oil plantation development, 50,000 ha or 18 percent were attributed to companies and 226,000 ha or 82 percent to small-scale palm oil farmers.

4 https://news.mongabay.com/2019/12/indonesia-fires-forest-burning-land/5 MEIJAARD 2017 – Chapter 9 Indonesia’s Fires in the 21st Century: Causes, Culprits, Impacts, Perceptions, and Solutions

574,000 haDue to other agricultural uses

850,000 ha forests in Indonesia cleared in 2016

276,000 haDue to palm oil

226,000 haDue to small-scale palm oil farmers

50,000 haDue to companies

Fact Sheet

A paradigm shift is needed

Research shows that to address deforestation we need to look at all causes of deforestation, not just the large scale plantation companies. Due to restrictions imposed by government regulations and buyer policies, these companies cannot rely on expansion for growth and must focus on yield improvement instead. Corporate-led deforestation remains a concern but is less urgent today than a decade ago.

The often underreported yet urgent challenge ahead is small scale farmers who convert forest areas into palm oil or another agricultural commodities, often, with fire. Industry actors – from private and public actors to NGOs and academic institutions – shouldn’t blame and disengage from these farmers, as they have the right to a decent livelihood for themselves and their families. Instead actors should focus on exploring and scaling solutions that work with farmers to ensure their livelihood whilst conserving forests.

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Ian Suwarganda