Just Transition in the Palm Oil Industry – Part 2

by | Sep 21, 2021 | Report and Publication

The palm oil industry is plagued by land conflicts. Photo: Indigenous farmers block a road to a palm oil plantation and ritually spill pig’s blood in West Kalimantan, Indonesia © Irendra Radjawali

Mosaic Landscapes as a Transformative Vision for the Palm Oil Industry – Land Rights and Ecology

Some of the most devastating environmental and social impacts of the oil palm industry come from the fact that the vast majority of oil palms are grown in large-scale monocultures that are managed by national and transnational corporations under the unquestioned paradigm of short-term profit maximization, while ecological and social concerns and resulting long-term costs are ignored.

As an alternative to the current status quo, we propose a palm oil future based on rights-based mosaic landscapes that are ecologically more sustainable, respect community rights, developed without dispossessing local landowners, and provide space for a diversified smallholder economy where oil palms are grown among other crops and create alternative livelihoods.

Forest gardens as developed by indigenous peoples could be a model for agro-forestry systems that integrate palm oil into mosaic landscapes. Photo: Forest Garden in East Kalimantan, Indonesia © Michaela Haug

What do we mean by mosaic landscape?

Many indigenous groups and local farmers who live in the forested uplands and hinterlands of the Indonesian Archipelago have conserved forests and practiced sustainable livelihoods. These are characterised by having a diverse economic portfolio, which includes subsistence agriculture, cash crop production, animal husbandry, agro-forestry and the collection of wild-growing forest resources. The result of this diversified economy is a mosaic-like landscape, consisting of fields, small-scale plantations, forest gardens, secondary growth of different ages and protection of remaining primary forest. Recognition of indigenous and local community land and management rights is central to achieving a mosaic landscape.

What is good about this for the environment?

A mosaic landscape consists of intensively cultivated areas and (semi-)natural elements, like remaining patches of secondary or primary forest. These (semi-)natural elements, even if they comprise only a small part of the total area, often provide the habitat for most of the landscape’s biodiversity. The crop diversity of a mosaic landscape supports biodiversity and a denser canopy works against drying out of the soil. Further, intercropping techniques and organic farming techniques can help to reduce the use of chemicals (herbicides, pesticides and fertilizer). Mosaic landscapes can also prevent the clear-cutting of large tracts of forest and instead include cyclical cultivation patterns. Indigenous and local communities have effectively conserved forests, biodiversity and the carbon stored in its trees through their traditional ecological knowledge. A rights-based mosaic landscape with formal recognition for their land rights ensures the continued protection of forests.

What is good about this for indigenous peoples?

Indigenous peoples benefit from mosaic landscapes as they correspond to their traditional patterns of land and forest use. No dispossession and no displacement would occur for the establishment of large-scale plantations. Instead, customary rights are acknowledged and indigenous people have the chance to integrate oil palms into their diversified economic portfolio. This prevents them from becoming dependent wage labourers and instead enables them to remain independent smallholders. This does not only promote local values of self-determination but also contributes to food security.

What is good about this for smallholders?

About 40% of oil palms in Indonesia are cultivated by smallholders, either as participants in various (more or less advantageous) smallholder schemes or as as independent producers (Li 2015: 2). An oil palm smallholding is officially defined as a commercial crop holding of less than the area that requires a plantation license, which means below 25 hectares (Article 6.1, Licensing Guidance for Plantation Businesses, Minister of Agriculture Regulation No. 26/Permentan/OT.1401,2/2007).

However, the standard plot size allocated per household under most tied oil palm smallholder schemes is 2 hectares. If farmers have no additional income sources, it is difficult to make ends meet with just 2 hectares of oil palm. In addition, the conditions of many smallholder schemes are so unfavourable that the smallholders are left with a mountain of debt that they can hardly pay off. The mosaic landscape we imagine is thus based on independent oil palm smallholdings (and not smallholder-schemes tied to plantations). People have the economic advantage of diversification and profit from the resulting economic resilience. They do not depend on one crop and thus can better react to changes in prices and demand and additionally grow food for their own consumption.

Short term profit versus long term gains

Supporters of the classic model are certainly bothered by the fact that palm oil production in such a mosaic landscape is much less profitable than in monocultures. Given the current overproduction crisis in the industry, a strategy that only focuses on higher yields per hectare is short-sighted. The mosaic landscape approach and its diversified economy follow different values and consider different measures. The diversified economic portfolio provides stable and resilient incomes for independent farmers who own their own land avoiding the creation of more landless ‘surplus’ populations. It also reduces future costs arising from climate change and environmental degradation as well as supporting food security, health and the well-being of the local population. These social and ecological functions cannot all be measured in monetary terms. It is clear, however, that even if they produce less palm oil overall, they are of indispensable value for Indonesia’s future.

Intercropping could be one element of a sustainable palm oil landscape. Photo: Ginger and free range chickens under oil palms (the fence protects the ginger plants from the chickens), Sarawak, Malaysia © Lukas Kliewe


Pathways to mosaic landscapes

While the mosaic landscape aligns well with demands of indigenous peoples and environmental justice movements on land rights recognition and rights-based conservation, more discussion is needed on how it could be an attractive prospect for workers as well.

Land reform that breaks up large-scale monocultures and returns concession areas to local landowners could result in significant layoffs. How will the mosaic landscape model absorb workers? Can it provide alternative livelihood to workers? One possibility is to include workers as recipients in the land redistribution of plantation areas which transforms them into oil palm smallholders with the possibility of diversifying their crops in the long-term.

Another possibility is the down-sizing and restructuring of the existing plantation management to a mosaic landscape and transforming the ecological and social impact model that the current monoculture failed to address. Workers would still work for the palm oil company but manage a diversified landscape of small agroforestry palm oil units (see below). But the ownership structures could also be challenged, i.e. by transferring the plantation or the mill into a cooperative.

Abandoning the plantation economy altogether and transitioning into a low-carbon economy could be a third option. Workers could be trained and employed in community-based conservation and restoration by offering long-term job and social security. Workers who come from forest-dependent communities would already have ecological knowledge and skills to offer that were previously not valued.

These potential pathways could exist alongside each other. Ultimately, they need to be explored by labour and in conversation with Indigenous Peoples and environmental justice movements. The mosaic landscape will need to offer a clear pathway for social and economic justice so workers are not exploited again in the new vision.


Mosaic Landscapes as a Transformative Vision for the Palm Oil Industry – Labour Rights and Social Justice

Confronted by the demands of indigenous peoples and the environmental justice movement, leading palm oil corporations have responded with certification schemes in the RSPO and similar initiatives that address branding concerns but leave the basic business model intact. With regard to key ecological benchmarks such as the end to further expansion, an alternative to large-scale monocultures, a strategy for carbon neutral production, or the end to pesticide use, the corporate position is silent, vacillatory or downright hostile (Pye 2016). Arguing that everyone employed in the sector is in the same boat, corporations attempt to rope in labour representatives and workers to oppose environmental regulations, for example in their attempts to prevent tougher legislation on agrofuel subsidies in the EU.

From a labour perspective, however, workers and management/owners are not in the same boat. Corporations do not only regulate the workers and labour conditions but also the extraction and use of natural resources and thereby the environment. The power of corporations to enforce their interests (profit-maximization, accumulation, low production costs and global competitiveness) has driven a wedge between the needs of the environment and workers despite the fact that nature and workers are both exploited by capital. Management and corporation owners are directly responsible for the pitifully low wages in the sector, for the precarious working conditions and temporary contracts, for piece rates that force workers to include their families in the plantation work, for unhealthy working environment etc.

Pesticides are a major ecological problem of palm oil production and a serious health risk for women who are employed to spray them for very low wages and on short-term contracts. Photo: Workers preparing to spray pesticides in North Sumatra, Indonesia © Kartika Manurung

If labour and capital interests are so different with regard to social issues, perhaps they are also not so similar with regard to the environment? We argue that the interests of workers and of capital operate according to completely different logics. Whilst the palm oil industry’s main objective is increasing profits and therefore for higher and higher volumes of palm oil, workers are predominantly interested in their social reproduction, i.e. a decent living wage and job security so that they can support their loved ones. Also, the impact of climate change on the agriculture sector may well make a transition for plantation workers inevitable as extreme temperatures make agriculture workers a high-risk group to heat stress that will exacerbate inequality and displacement (ILO 2019).

A major concern for workers is that a tighter regulation or a downsizing of the industry could lead to job losses. Another is that the workload—already too intense—could become harder. At the same time, there are many unresolved issues, starting with decent wages, that have not been resolved in the current, unsustainable mode of production.

Could a mosaic landscape perspective offer a solution? How can key ecological demands be reconciled with workers’ interests? And what social improvements need to be included in a social-ecological transformation perspective? The following table summarizes some of the issues and potential synergies between the environmentalist position and a possible response by labour:

Table 1. Potential Synergies between Environmental Justice and Labour from a Just Transition Perspective

Key environmental benchmark Potential Labour Position
1. End Further Expansion (Deforestation, Peatlands, Biodiversity) The end of further expansion could mean potentially fewer future jobs, but no job losses for current workers. Overall potential job losses could be compensated by shorter working hours across the industry.
2. Mosaic landscapes instead of large-scale monocultures Mosaic landscapes would be much more labour intensive and would require more skilled jobs. A smallholder model could incorporate former workers, leading to the transition from wage labourer to smallholder.
3. The protection of indigenous land rights and livelihoods A downsizing towards a mosaic landscape could return land claimed by indigenous communities whilst at the same time providing high skilled stewardship jobs for workers. In a more radical break up of corporate plantations, workers should be included as land reform beneficiaries in a post-plantation mosaic landscape.
4. Organic fertilizers instead of NPCO chemical fertilizers. A transition towards ecological land practices is more labour intensive and requires skilled workers. This could be incorporated into the trade union demand for more permanent jobs and recognizing upkeep jobs as high-skilled and permanent.
5. Integrated Pest Management instead of herbicides and pesticides, important for biodiversity and health. Because of the health impacts on women workers applying the herbicides, this should be a key trade union demand. IPM would require higher skilled and better paid permanent jobs for women currently exploited in precarious daily contracts.
6. Processing of Palm Oil Mill Effluent (POME) to methane and organic fertilizer (circular production models) as an important step towards carbon neutrality. The introduction of a circular production model for the palm oil industry would require a highly skilled workforce. Trade unions should pro-actively demand this in conjunction with on-the-job paid training courses.
7. Generally less production towards a more sustainable production (e.g. no agrofuels). From a labour perspective, unlimited growth of volume is counter-productive, leading to over-production crises and price collapse. Smaller volumes coupled with a more labour-intensive production (more jobs per tonne CPO) would be a pro-worker position.


Taking the two most prominent concerns from the environmental justice movement and the labour movement first, i.e. the halt to further expansion and decent living wages, we can immediately see a correlation between these two demands. The higher workers’ wages are, the less super-profits can be made in the industry. Finance flows into new plantations because the expected rate of return is so high. If this is reduced and made more reasonable through substantially higher wages, then this will relieve some of the investment pressure to open up more land and forests for palm oil development.

But what about legislation that prevents new plantations from being established? Wouldn’t this prevent new jobs from being created? From the perspective of the trade union movement, the defense of existing jobs takes priority over potential new jobs. There is therefore no necessary reason for trade unions to support the establishment of new plantations before they exist. At the same time, the loss of potential jobs created by the further expansion of a business model of few workers per hectare could be compensated by a business model based on a higher ratio of workers per hectare and supporting existing local livelihoods. This is where the mosaic model comes in as a key element of social-ecological transformation.

A mosaic landscape production – understood as a reform of plantation management towards small, agroforestry units – would automatically mean more workers per hectare. Not only are the economics of scale reduced, meaning a reduction in labour productivity (but an increase in land productivity), working on smaller farms over a larger area for the same overall acreage also means more travel time to the worksite, more coordination, additional tasks etc. A mosaic landscape production would mean more jobs per hectare and more jobs per tonne of CPO. Palm oil companies try to permanently increase the economics of scale and worker productivity to stay competitive. Workers tend to resist productivity drives and a general move towards mosaic production for the whole industry would transcend that competitive necessity.

Palm Oil Mill Effluent could be used to produce biogas and organic fertilizers. Photo: Palm Oil Mill Effluent (POME) lagoon in Sabah, Malaysia © Oliver Pye

A similar perspective could be developed for Integrated Pest Management and the production and use of organic rather than chemical fertilizer. To start with, overcoming the widespread use of pesticides is in the workers’ best interests, particularly the female workers usually entrusted with this task, who face many health issues as a result. This is also more feasible in a mosaic landscape, in which there is more biodiversity, more insects, more natural checks and balances to the pests that live off oil palms. A perfect source of organic fertilizer would be the Palm Oil Mill Effluent (POME) left over in the milling process. That would have to be collected and processed by workers in biogas operations.

Once ready, in combination with shredded palm fronds, this would make an excellent mulch to spread round the oil palms, not only to fertilize them but also to suppress grass, thereby eliminating the need for herbicides as well. All this requires more work and skilled work at that. Rather than conducting the same monotonous task every day for a minimum wage or for unrealistic piece rates, this type of work needs skilled workers – land stewards – on permanent contracts. Ideally this could also raise awareness for ecological cycles and environmental needs.

Finally, the question of ever more production of palm oil is important. This is hardwired into the corporate perspective—also of the RSPO—because more sales mean more profit. But from a labour perspective, this is not necessarily the case. The uncoordinated expansion has already led to a crisis of overproduction. Overproduction leads to a fall in the global price. And lower prices are always an excuse for the company to freeze or cut wages. Workers have a common interest in higher prices for their product and for a limited supply. This gives more job and income security in the long term.

As a mid-term perspective, the labour movement has an interest in changing badly paid and precarious jobs – classified as ‘unskilled’ or ‘low skilled’ – into skilled jobs that pay better on a permanent basis. The social-ecological transformation of the industry, breaking the large monocultures into smaller farms, restoring peatlands, reconnecting forest corridors and rewilding river landscapes, would require a workforce trained in an ecological understanding of the landscape, as stewards of the land. Rather than labourers exploited solely for their physical labour, it would require trained workers, properly paid and with a long-term investment in the landscape—who don’t produce palm oil in alienation from nature, but in accordance with its laws and needs.

Workers have the skill and potential to become stewards of sustainable palm oil landscapes.

The transformation of large-scale plantations to mosaic landscapes could take place in consultation with indigenous communities surrounding the plantation, i.e. downsizing by returning indigenous land. From a labour perspective, this would make sense firstly because local workers are rooted in the community and secondly because it would entail an upgrading of jobs and pay towards skilled jobs in the stewardship model. A pathway towards a mosaic landscape via land reform and the break-up of existing plantations into smallholder plots could also be attractive for workers. Historically, the Indonesian plantation workers’ union SARBUPRI supported this strategy in the context of mass occupations of plantations and land reclaiming for subsistence production in the 1950s (Stoler 1995).


Just Transition – Part 3

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