Production of Palm Oil in Indonesia

Country-focused commodity analysis in the context of the Bio-Macht project.

This study provides insights into the commodity based characteristics, environmental and social hot spots and policy instruments such as certification for palm oil production in Indonesia as a result of the Bio-Macht Project funded by the German Federal Ministry of Education and Research (BMBF). In a first step, basic agro-technical particularities of the oil palm are covered followed by an analysis of the global as well as the Indonesian markets for palm oil. Numerous certification schemes for palm oil were developed aiming to foster sustainability in the value chains for palm oil. As their ambition level varies considerably, the schemes are evaluated comprehensively. In a second step, a study team by Oeko-Institut e.V. (Germany) and Universitas Padjadjaran (Indonesia) conducted field-research including primary data collection via stakeholder interviews in the provinces West-Java, Riau (Sumatra) and Central and South Kalimantan (Borneo), Indonesia. The resulting empirical evidence suggests a rather limited effectiveness of the analysed certification schemes with regards to the analysed environmental hot spots, whereas some positive impacts on social concerns could be observed. Concluding, the study recommends additional measures such as the landscape certification approach as well as appropriate financial mechanisms and due diligence requirements to more effectively tackle environmental and social hot spots in the context of palm oil production in Indonesia.

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