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ndonesian oil palm plantations have now reached more than 10 million hectares, making the country the world'€™s largest palm oil producer with an annual output of around 23 million tons.

In Papua, the oil palm industry started in the 1980s '€” when state-owned PTPN II started an oil palm business in Arso and Prafi.

The oil palm plantation was firstly intended to facilitate the transmigration program from other parts of Indonesia. A large part of the plantation is designed for a smallholder scheme allowing transmigrant families, mostly from Java and West Timor, together with Papuan customary land owners, to be allocated 2 hectares of oil palm per family and to sell their produce to the company.

Presently as space becomes limited in western Indonesia, investors are increasingly looking to the east for new land. Data from the West Papua Oil Palm Atlas show that currently there are 21 companies starting operations in Papua. Twenty other companies are in an advanced stage of the permit process and appear to be almost ready to start land clearing whilst dozens more are still applying for the permits they need.

Despite the negative impact of forest conversion into plantations, there is no doubt that oil palm also brought significant economic benefits to the region and in many cases improved the livelihoods of rural communities.

The oil palm sector, particularly crude palm oil (CPO) production, is an important source of government revenues. In 2008, CPO generated US$12.4 billion in foreign exchange from exports while about $1 billion in export tax was earned by the government at the same time.

The job-generating potential is another issue that fits the role of oil palm for poverty alleviation in Papua. A report by the Central Statistics Agency (BPS) said that until March 2013, West Papua was among eight provinces with the highest poverty rate (26.67 percent), second after neighboring Papua (31.13 percent). Oil palm allows poor people to have a job and earn an income for their family.

Referring to the money earned by the government from oil palm, we have an impression that smallholders or farmers can achieve incomes that enable them to improve their livelihoods significantly.

The most recent study by the University of Papua (UNIPA) and the Center for International Forestry Research (CIFOR) reveals that in terms of socioeconomic effects, oil palm estate development under the Nucleus smallholders estate (PIR) scheme has not been able to satisfactorily benefit local communities, who hold land rights. PIR schemes that rely on immigrant workers are prone to creating horizontal conflicts, injustice and envy among local communities toward immigrants.

Krystof Obidzinski '€” a senior scientist from CIFOR and also a researcher of the study '€” explained that '€œlocals who have a lack of skills and knowledge to effectively engage in modern agriculture productions may not benefit economically from oil palm.'€

The production systems '€” cultivation, harvesting, transportation and marketing '€” of palm oil products are very challenging. Locals who lack experience on how to maintain the palms, eradicate pests or prune and cut fruit bunches may not be able to compete with migrants to increase production.

A barrier to meeting global palm oil demand through smallholder production systems is that in areas such as Indonesian Papua, and many other areas where industrial producers are now beginning to operate, the potential for smallholders to be active in oil palm production is much lower. In these areas, smallholders can be limited by insufficient expertise, labor, fertilizer and other essential inputs.

Other studies have shown that even though oil palm provides much-needed revenue to rapidly developing countries, its economic benefits are not distributed evenly.

Large oil palm companies exert considerable power in shaping the expansion of the oil palm industry, and their actions may be to the detriment of landowners and smallholders. Native Papuans have lost access to the land that they traditionally used. As land became more commercially valued, migrants began to take control of it, while promised infrastructural improvements failed to arrive.

For the last three years the local media in Papua have blown up the issue of land-agreement violation by the companies. This has not only badly affected local livelihoods but also destroyed the environment and marginalized the customary land owners.

Oil palm has drastically changed the forest landscape.

Forests have long been considered a mother for native Papuans. Thus, the loss of forests will lead to disenfranchisement of ethnic Papuans from their traditional landscapes and lifestyles. The short-term economic gains from this are obvious, but the long-term losses less so.

If oil palm expansion schemes are seen as a way to further alleviate poverty and create economic opportunity, the needs of local communities for land should be taken into account so they can to continue their lives.

A rapid development through oil palm industries has also made it difficult for locals to adjust and learn how to cope with the need for increasing production yields. A more gradual approach has to be considered rather than large-scale investment in a short period of time.

In this difficult start-up period, industrial producers are likely to dominate oil palm production and could set the conditions for smallholder participation, unless there is political intervention and appropriate smallholder incentives.

Last but not least, land acquisition by some companies has been criticized for not recognizing the traditional land rights of local people. As land becomes increasingly scarce, conflicts over land acquisition between companies and smallholders are likely to increase.

Therefore, further expansion needs to be transparent and take into account the demand for compensation by customary land owners and the status of the land once the company'€™s business-use rights expire.
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The writers are lecturers at the Forestry Department and the Animal Production Department of UNIPA, Manokwari.