Fostering Economic Resilience in Berau through Smallholder Crop Diversification

The expansion of the palm oil industry over the last decades has resulted in deforestation and other land use shifts across Indonesia (K.G. Austin et al., 2017). At the same time, palm oil is touted as a major economic driver and a source of welfare for smallholders. An estimated 40% of Indonesia’s total plantation area is managed by smallholder farmers involved in palm oil production, and this continues to grow as international demand rises[1].

The Berau regency in Eastern Kalimantan is a good example to understand this trend at the community level. A recent study from CPI (Mafira et al, 2019) shows that Berau’s economy is undergoing a shift from extractive industries, particularly coal mining, to agricultural production, with a particular focus on palm oil.

However, this upward trend in palm oil increases the dependence on one main commodity, putting Berau’s economy at risk, as was previously the case with coal (Mafira et al, 2019; Mafira, et al. 2018). It also poses as a conflict to Indonesia’s national and community goals with palm oil plantations potentially increasing deforestation, and consequently causing other harmful environmental impacts.

Source: Climate Policy Initiative
Author: Brurce Muhammad MeccaTiza MafiraLuthfyana Kartika Larasati and M. Windrawan Inantha