Mutualism Between Oil Palm Plantation and Crop Farmers

The value of transactions between local crop farmers and communities working in oil palm plantations reaches Rp 60 trillion per year

Perhaps it is not widely known how the economic life of crop farmers, livestock farmers, fishermen is in a faraway remote, rural areas, especially on the island of Sumatra, Kalimantan and Sulawesi. They are very far from the urban areas, even some are not yet accessible by four-wheeled vehicles. So deep into remote areas, that they have not been reached by the development program even though it has been 71 years of independence. It is very different from the crop farmers on the island of Java and Bali, who enjoy many subsidies from the government and always enjoy the development.

The presence of oil palm plantations in 190 districts became a part of the economic booster of crop farmers, livestock farmers, and small fishermen in remote areas. The daily need of people who work in the oil palm plantations are mostly supplied by the crop farmers, livestock farmers, and fishermen around. Since the beginning of palm oil plantation development, economic mutualism between crop farmers, livestock farmers and local fishermen has been established. This dependency is growing into the core and the forerunner of what is called the local/regional economy. People working in oil palm plantations become the target market of food products, livestock products, and fish produced by local farmers. Business transactions take place every day and throughout the year. The volume of transactions is getting bigger along with the development of oil palm plantations.

Based on statistical data of rural population expenditure, National Socio-Economic Survey (BPS, 2014), it can be calculated how big the revenue of the crop farmers, farmers, local fishermen business with communities in oil palm plantations in 190 districts as the market. The value is quite significant, which is around Rp 60.7 trillion per year. The value of that transaction is calculated from direct transaction only (direct effect). If we want to know its contribution to the local economy, we still have to calculate the multiplier effect of income which in economic terms is called the induction effect of consumption. There is also a multiplier effect on job creation, and so on.

This kind of growing economic mutualism, then is captured by World Growth (2011) and PASPI (2014). Studies found that oil palm plantations in Indonesia are an important part of rural development and rural poverty eradication. Economic transactions between communities working in oil palm plantations and crop farmers, livestock farmers and fishermen have driven the economic wheels of the rural areas, thus creating wider income and employment opportunities in the rural areas.

Such local economic booster is clearly highly qualified and sustainable. It is safe to say that because it is based on local initiative and creativity, and without subsidy or relying on government budget. If urban economies are often whining for government help in the event of a global economic crisis, those in rural areas choose to solve their own problems. The mutualism of local economy is so resilient in the event of economic turbulence.

The government needs to appreciate those who strive in the rural areas because besides not burdening the government, they also reduce the burden of government in reducing poverty. Bringing government policies that support the development of oil palm plantations in remote areas is a way of protecting the local economic symbiosis.

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