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Finding Balance Between Palm Oil, Economy, and Environmental Sustainability



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Finding Balance Between Palm Oil, Economy, and Environmental Sustainability

InfoSAWIT, JAKARTA - President Prabowo Subianto recently made a bold statement: "We should not be afraid of the deforestation issue." This remark was made during the National Development Planning Meeting (Musrenbangnas) for the National Medium-Term Development Plan (RPJMN) 2025-2029 at the Ministry of National Development Planning/Bappenas, ahead of 2025. The President even emphasized the need for increased palm oil planting to support the national economy. However, this statement has sparked both support and opposition, especially amid global concerns about deforestation.

Undeniably, the palm oil industry is the backbone of Indonesia's economy. In 2023, this industry contributed $36.2 billion in foreign exchange, with crude palm oil exports reaching $14.43 billion by September 2024. The industry also employs 17 million workers and serves as a key driver of downstream processing and national energy sovereignty. At the regional level, palm oil significantly contributes to local revenue (Pendapatan Asli Daerah, PAD) and rural development.

However, behind its substantial economic contributions, the palm oil industry faces serious environmental challenges. Data from the Ministry of Environment and Forestry (KLHK) in 2023 indicates that forest conversion for palm oil results in the loss of 684,000 hectares of forest each year. Deforestation not only damages ecosystems but also threatens the environmental carrying capacity essential for sustainable development.

The clearing of forests for palm oil is often done without considering ecosystem regeneration. As a result, degraded land loses its productivity, requiring significant costs for recovery and exacerbating the ecological crisis. Additionally, forest conversion for palm oil is a major contributor to greenhouse gas (GHG) emissions. The World Resources Institute (WRI) Indonesia reports that this activity generates carbon emissions equivalent to 1.8 gigatons of CO2 annually. This poses a significant challenge to Indonesia's commitment under the Paris Agreement to reduce emissions by 29% by 2030.

To address environmental impacts, an agroforestry approach based on palm oil could be a solution. This system maintains tree cover while maximizing plantation yields, thereby reducing pressure on natural forests. Furthermore, the adoption of low-emission technologies, such as mechanical harvesting and biomass utilization, can reduce the carbon footprint while enhancing production efficiency.

Satellite technology also offers great promise for real-time deforestation monitoring. With this tool, the government and stakeholders can oversee illegal activities and take swift action. On the other hand, research into developing superior palm oil varieties that are more productive and climate-resilient should continue to be encouraged. These varieties can reduce land requirements without sacrificing productivity.

Sustainability certifications such as ISPO (Indonesian Sustainable Palm Oil) and RSPO (Roundtable on Sustainable Palm Oil) are essential tools to ensure palm oil production meets global standards. However, these efforts must be complemented by education for smallholder farmers, who often play a crucial role in land clearing due to a lack of understanding of sustainable agricultural practices. Support programs, such as those conducted by the Kehati Foundation, have proven that smallholders can increase productivity without encroaching on new forests.

 

Learning from Malaysia

Malaysia, as the world's second-largest palm oil producer, has demonstrated successful sustainable palm oil management. Sime Darby Plantation, for instance, implements strict sustainability policies, including the use of satellites to monitor land activities. The company is also active in RSPO initiatives and has successfully reduced carbon emissions by 15% over the past five years.

Additionally, Sime Darby launched the "Love My Palm Oil" campaign to raise consumer awareness about the importance of choosing sustainable palm oil products. This step proves that education and community participation can drive sustainability in the palm oil sector.

Nevertheless, significant challenges remain. Weak law enforcement and oversight of illegal activities in the palm oil sector are major issues. A report by Greenpeace Indonesia in 2023 noted that there are still many land clearings without permits in conservation areas. Furthermore, conflicts between companies and indigenous communities continue to occur. The Alliance of Indigenous Peoples of the Archipelago (AMAN) revealed that as of 2023, there were over 800 land disputes involving indigenous communities and palm oil companies.

To address this, a participatory approach to plantation management, involving local communities from the outset, is key. Additionally, the government must expedite the legalization of illegal palm oil land in forest areas and ensure consistent law enforcement.

President Prabowo's statement that "we should not be afraid of the deforestation issue" actually underscores the importance of responsible palm oil governance. By adhering to regulations and prioritizing sustainability, the palm oil industry can continue to be a driver of development without harming ecosystems.

Sustainability is not just an end goal but also a concrete step that must be taken immediately. With a collective commitment from the government, industry players, and society, palm oil can become a successful example of environmentally friendly development. If this is done consistently, then President Prabowo's assertion holds true: the palm oil business can always align with nature conservation, eliminating the fear of deforestation!

Author: Andi Setyo Pambudi (Doctoral Student, Perbanas Institute)


Disclaimer: The article has been edited without altering its content, taken from the official website of Perbanas Institute.


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