Expansion of Oil Palm Smallholders in a Frontier Area of Riau Province, Indonesia

Abstract

This study focuses on the expansion of oil palm cultivation in Indonesia and the phenomenon of a large number of migrants moving into the frontiers of the expanding oil palm area. It investigated how migrants began cultivating oil palm and how they succeeded in expanding their holdings in Riau province, located in the middle of Sumatra, the largest area of oil palm cultivation in Indonesia.

At the research site, L Village in Siak district, a private company developed a large oil palm plantation inthe late 1980s, after which numerous migrants from North Sumatra province started moving to the village. Their migration to the village had two objectives: the first was to clear land for oil palm smallholdings and the second was to work as plantation laborers. The landowners’ livelihood was dependent on oil palm cultivation, whereas plantation laborers initially earned a small income by working on the plantation or as part of large-scale farms. Some of these laborers subsequently bought land with their savings. The migrants who purchased land and started cultivating oil palm expanded their holdings by more than 10 ha if they met two conditions. First, it was important that the land had been purchased before prices rose too steeply. Until the 1990s, open forests still existed around L Village and land prices were relatively reasonable, even for plantation laborers. After the 2000s, however, land prices increased drastically because most of the land had been cleared by the migrants. Second, a large amount of additional funds had to be procured to expand their oil palm holdings. Migrants with larger holdings had easy access to banks and land-based collateral loans; those with smaller holdings, however, were forced to acquire additional funds by saving their wages or from other income sources (e.g., running small businesses).

Migrants who moved to L Village and bought land in the 1980s and 1990s, including plantation laborers, expanded their area of oil palm production. Presently, no more land is available for clearing in L Village. Consequently, migrants are relocating to other frontiers in search of new land for oil palm smallholdings. In Riau province, these cyclical migrations are an unintended side effect of oil palm expansion which occur from old to new frontiers.