The Political Economy of Indonesia's Oil Palm Subsector

Oil palm has been one of the most dynamic of Indonesia's agricultural subsectors. Dating from the late 1960s, the oil palm subsector expanded from around 106,000 ha to 2.5 million ha in 1997. This prolific growth has conferred important economic benefits inasmuch as it has become an important source of foreign exchange and employment. Yet it has also become a source of concern because much of the oil palm expansion has occurred at the expense of Indonesia's humid tropical forest cover. ¹ Oil palm expansion has also been held partly responsible for the 1997–1998 forest and land fires that affected more than 5 million ha in Kalimantan alone (Departemen Kehutanan dan Perkebunan 1998a; see Chapters 13 and 14 of this book).