Conflict Mitigation Strategies for Sustainable Agriculture in Palm Oil Expansion

Palm oil in Indonesia was one of the most prominent Indonesian exports. In 2018, the export value of palm oil reached 29.67 tons, with a total value of USD 18.3 billion [1]. Palm oil production is suspected of increasing, mainly in Indonesia and Malaysia. State policies also play a significant role in increasing the productivity of palm oil. The policy to support palm oil plantations is given by the government of Indonesia, such as subsidies for licensing and investment for the development of smallholder plantations. This policy caused oil palm cultivation to significantly improve with the agricultural model managed by local communities and prominent entrepreneurs in Indonesia. Also, there are small, medium, and large-scale plantations managed by local communities, especially plantations in the form of small-scale plantations [2]. Sustainable palm oil practices cannot exist without supporting sustainable farmers, including oil palm smallholders working in this field. On the other hand, Smallholders in the palm oil sector are generally categorized based on Minister of Agriculture Regulation No. 98 of 2013, i.e., those whose land ownership is under 25 hectares or below and according to RSPO [3], which is landowners or their delegates that do not have the enforceable decision-making power on the operation of the land and production practices; and freedom to choose how they utilize their lands, type of crops to plant, and how they manage them (whether and how they organize, manage and finance the land). However, most land is owned by companies, and local communities still do not own their property [4].

The expansion of oil palm plantations has become the main trigger for land issues involving companies and the community. This condition is also related to adverse socioeconomic effects due to local population movements and an oil palm value chain with unclear and unprofitable requirements, making oil palm smallholders vulnerable to manipulation by companies and government officials [2]. The problem between companies and the community causing many palm oil companies has drawn criticism from NGOs, especially regarding environmental degradation, land disputes, and other consequences the local community must bear due to palm production activities. NGOs also launched various campaigns that carry the agenda of stopping oil palm generation. On the other hand, the industrial sector of oil palm plantations also has positive impacts, such as being the primary source of employment, supporting the economies of several provinces in Indonesia, generating employment, and increasing the salaries of workers in the area. However, uncertain legal, regulatory, and overlapping policies are also obstacles for local communities in meeting their socio-economic needs through the oil palm plantation sector [2, 5]. These problems are proven by smallholder palm productivity being only 50% of its production potential [6].

Unequivocally, the primary message of the crusade concentrated on the obliviousness of oil palm companies towards the goals of the Sustainable Development Goals (SDGs) declared by the United Nations. As some targets in SDGs reinforce each other, highlighting potential synergies. In the seven SDG frameworks, there are interactions between palm oil as an energy source, water, and food. For example, palm oil as an energy source improves water efficiency and energy efficiency and reinforces both energy access and sustainable water withdrawal targets. These agendas with Sustainable Development Goals (SDGs) have strengthened the urgency of sustainable palm oil. In this perspective, optimizing yield from existing oil palm plantations is an essential factor in supporting what is called sustainable agriculture. The government has made some efforts, including stimulus to oil palm smallholders who cultivate their land in areas rich in biological resources. Therefore, policies and implementation related to land use planning must be sufficient. Within the plantation scheme in Indonesia, small-scale oil palm farmers are divided into several roles.

With demand continuing to increase and the unclear status of the moratorium on forest clearing for oil palm plantations in Indonesia, palm oil companies are trying to increase the supply of Fresh Fruit Bunches by improving the supply chain. The development of palm oil smallholders can significantly contribute to poverty alleviation and rural development by offering livelihood opportunities, while also promoting economic stability and improving quality of life. The implementation of plasma collaboration on community-owned land entails both positive and negative repercussions, notably leading to conflicts between larger corporations and small-scale oil palm farmers.

One area in Indonesia where conflicts have occurred several times between smallholders and companies is South Sumatra. There are various palm oil companies operate in this area. In addition to major players, there are many small and medium-sized palm oil companies operating in South Sumatra. Table 1 indicates several conflicts between communities and palm oil companies that occurred during the year 2001-2021.

This research conducted in-depth interview with 50 conflict land owners and former employees of larger palm oil company in one village in South Sumatra's areas. This conflict land is mostly community land managed by larger palm oil companies using a plasma system. The conflict started because the companies did not meet the agreed-upon cooperation contract, a profit-sharing system. Moreover, from the interview it is described Free, Prior, and Informed Consent (FPIC) activities were not carried out for some smallholders.

From the point of view of smallholders, the palm oil companies have defrauded the agreed-upon profit-sharing system during the contract period. Initially, smallholders trusted their land under the plasma procedure operated by the company with the promise of large profits. A profit-sharing system was established to pay the company's capital for land demolition and planting, and smallholders paid in instalments for each harvest. However, until harvest time, smallholders who owned the land claimed they were not receiving the profits as written in the initial contract.

Table 1. Lists of conflicts between palm oil companies and local communities in South Sumatra (2001-2021)

Before the beginning of the contract, smallholders must submit their lands' Certificate of Ownership (COO) to the company as a guarantee. Thus, all the land is then owned by the company. Smallholders cannot take back the COO because, according to the agreement, they will only reclaim the COO if they have paid their debt. Several smallholders who had submitted grievances gave up because there was no resolution.

The smallholder communities were divided into different opinions. Some of the landowners work for the company. Some avoid being bothered by what is happening, and some are disappointed because the larger company has taken the land to manage. Community leaders have created a Semindang Aji Oil Palm Forum for land owners. This forum is moving to take away the rights of the community. Through this forum, the community blocks all Company access to land, offices, housing and other assets at the location.

The in-depth interview results with former palm oil company employees emphasize these findings. They stated that the company could not fulfil the agreed cooperation due to the unproductivity of the land. The company must refrain from continuing the agreement due to their internal conditions: budget and funds, leadership, and unresponsiveness in resolving problems.

This is a scourge for companies, since blocking business access caused lost time, which is considered detrimental from an economic perspective. So far, there has been no attempt to negotiate with the community. The company prefers to develop land in other areas. The company ordered all employees to withdraw from the conflict area. Many employees were laid off and/or transferred. As a result, some employees were demoted and transferred to other regions. The company leaders were worried about casualties due to clashes with the community. The negligence on both sides, resulting in suspicion and distrust towards larger palm oil companies, which became a source of significant conflict.

Many challenges can threaten smallholder Palm Oil Plantation. Research in Sumatra also found a 6.8 tons /ha yield gap between independent and supported farmers. Yield gaps strongly relate to planting practices, as defined in previous research, that fertilization and harvesting frequencies significantly affected yield gaps [6]. Differences in productivity results, planting practices, distribution systems, and science [2, 7, 8] became a challenge for plantations managed by local communities to survive and be socially, economically, and environmentally sustainable. Consequently, the potential negative impacts of oil palm cultivation and sustainability awareness have increased consumer scrutiny [9]. The increasing consumer scrutiny has led to the development of several certification systems and palm oil standards due to the problem of sustainability of this resource, including Roundtable on Sustainable Palm Oil (RSPO), International Sustainability and Carbon Certification (ISCC), Roundtable on Sustainable Biomaterials, and Indonesia Sustainable Palm Oil (ISPO) [9-11]. These certification needs to cover the social impact of development, which became a challenge for local farms to survive. The certification system trend for oil palm plantations does not meet the certification system trend for oil palm plantations [9-11]. However, The inability of these local plantations to meet the requirements is not caused by their unwillingness to meet the requirements but due to limited information, knowledge, and fulfillment of the costs of obtaining the certification [12].

On the other hand, The inequality in benefits derived from the oil palm plantation sector can be an external factor that can threaten local community oil palm plantations [13]. One of the imbalances in the benefits of the development of oil palm plantations for local farmers is the ability to access the legality of land ownership. Local farmers who are most likely not to have land documents have caused their land ownership to be illegally recognized [2]. Another challenge local farmers must face is the productivity of palm oil produced to meet their social and economic needs. Challenges related to the productivity of palm oil that local farmers must face include Risks resulting from natural environmental factors such as temperature, CO₂ concentration, the acidity of the soil, drought, and photosynthetic radiation; Risks generated from the response to yields on planting practices such as inundation systems, drainage, fertilization, eradication of pests and diseases, and land replanting practices; The challenge is to get good-quality seeds. The farmer's education level can also affect the productivity of oil palm because there is a lack of information for the farmer.

In contrast, smallholder and medium-holder local farmers can only sell their palm oil to intermediaries who sell and sort oil palm yields given characteristics [2]. Alternative strategies are needed to be prepared to encourage community participation in managing mangrove forest ecosystems that are effective and based on sustainable environmental management principles, which cover ecological, economic, and social aspects. Therefore, in this study, we aim to analyze the strengths, shortcomings, opportunities, and threats inherent in the development of oil palm plantations managed by local communities using the SWOT method (Strength, Weakness, Opportunity, Threat) and QSPM Analysis (Quantitative Strategic Planning Matrix).

3.1 SWOT analysis

The matching stage matrix we use in this research is derived from Strength-Weakness-Opportunities-Threats (SWOT) analysis. SWOT examination is a technique for an investigation that is completed by distinguishing the qualities, shortcomings, openings, and dangers of an association or issues and arrangements to accomplish an objective or accomplish a basic leadership assessment of issues and strategies so a system can be produced and created by concentrating on its qualities, limit dangers, take the best reasonable profit by circumstances accessible to the association, and use it to protect against dangers [15]. Since the focal point of this exploration is on the supportability of the advancement of smallholders-oversaw oil palm manors deal, a SWOT Investigation is utilized to break down the vital administration. The way toward distinguishing internal factors in this examination was completed by recognizing information and sources from different works of writing identified with social manageability and oil palm estates. These interior and outside elements are then delegated being a piece of qualities, shortcomings, openings and dangers (Table 3).

Table 3. SWOT identification

Once the alternative strategies were determined, considering the qualities and shortcomings of internal and external factors, a Quantitative Strategic Planning Matrix (QSPM) was used as the analytical method to compare these alternative strategies. Assigning any inside and outside components recognized in the SWOT analysis process is not mandatory. However, if the SWOT analysis process will be continued with the QSPM analysis process, it is necessary to assess the weighting of scores on each factor [27]. Therefore, in this study, due to the QSPM analysis process will be carried out, we provide an assessment based on questionnaires and interviews that have been conducted. The alternative with the highest score was selected as Indonesia's most feasible strategy for managing watershed policy. The QSPM method uses a self-judgment principle, where each alternative is rated based on its weight and significance.

The SWOT strategy matrix process will produce four types of strategies with the description of the four-cell strategies that are strategies generated from a match of Strength-Opportunity (SO), Weakness-Opportunity (WO), Strength-Threat (ST), and Weakness-Threat (WT) (Table 4) [27]. The weight of each alternative was defined by the predicted size of the effect of these exercises; the bigger the impact of a given alternative, the higher the weight. Next, the significance rating was scored based on the possibility of its implementation, judged according to how specific, measurable, attainable, relevant, and timely its realization. The significance rating was scored from 0 to 4, where 0 = not relevant, 1 = not acceptable, 2 = possibly acceptable, 3 = probably acceptable, and 4 = most acceptable. Finally, the final score for both SO-ST and WO-WT alternatives were compared to establish a higher score. Next, activities with a higher total score (> 0.50) were selected as the most appropriate strategy or strategies for implementation. Those strategies with the highest scores could inform improvements to Indonesian watershed management policy.

The outcomes from SWOT mapping can be utilized as references to planning the board as the procedure draws near. The SWOT analysis process will then be continued with the Strategy SWOT process, which will be arranged in a SWOT strategy matrix (Table 3). Stages Analysis of the SWOT strategy is one of the analyzes of the matching stages in the strategy formulation process [16]. The four strategies produced can be used for the sustainable social development of community-scale oil palm plantations. The SO match strategy is categorized as an aggressive strategy because the strategy used is a strategy that can utilize internal strength to get the maximum benefit from external opportunities and the WO strategy is a review strategy in which this strategy will be a strategy aimed at minimizing funds to correct weaknesses, as well as making the most of the external opportunities [15, 27, 28]. The ST strategy is a category of diversification strategy because it uses internal power to avoid or minimize external threats. The WT strategy is defensive because it aims to reduce internal weaknesses and avoid external threats [27, 28].

Table 4. Inter-factor interaction mapping for Indonesian smallholder palm oil plantation sustainable development strategy

3.2 Quantitative Strategic Planning Matrix (QSPM) analysis

QSPM analysis helps to meet the shortcomings of the SWOT analysis, namely determining the relative importance of the inner and outer components that have been recognized and the overall engaging quality of every system for the inward and outside variables generated. The benefit of using QSPM analysis is that it systematically evaluates the internal and external factors. It has benefits that help decision or problem-solving processes related to environmental threats [27]. These strategies are prepared to address the root causes of conflicts in palm oil smallholder development by promoting collaboration, local empowerment, and equitable access to resources, ultimately contributing to sustainable agriculture and community well-being.

The Inter-Factor Interaction Mapping for Indonesian Smallholder Palm Oil Plantation Management Strategy in Table 3 resulted in 13 alternative strategies (6 SO, 2 ST, 3 WO, and 2 WT). In order to decide on the most feasible of the 13 alternative strategies, a QSPM method is used to compare the different strategy options identified in the SWOT Matrix. The strategy alternatives in Table 3 are evaluated, judged, and rated based on their significance and likelihood of implementation. The QSPM matrix and rating of the SO-ST-based strategy analysis are shown in Table 5, and the WO-WT-based strategy analysis is shown in Table 6.

Table 5. Matrix of SO-ST alternatives for smallholder palm oil plantation sustainable development strategy in Indonesia

Notes: (Significance Rating Score (sig.): 0 - not relevant; 1 = not acceptable; 2 = possibly acceptable; 3= probably acceptable; 4 = most acceptable)

Table 6. Matrix of WO-WT alternatives for smallholder palm oil plantation sustainable development strategy in Indonesia

Notes: (Significance Rating Score (sig.): 0 - not relevant; 1 = not acceptable; 2 = possibly acceptable; 3= probably acceptable; 4 = most acceptable)

Established on an examination of comparisons and scoring in Tables 3 and 4, proposed SO-ST-based alternative strategies (Total score = 2.35) score the same as proposed WO-WT strategies (Total score = 2.35). Suggests that both SO-ST and WO-WT strategies are suitable for implementation in Indonesia. However, when considering the most implementable and significant alternatives, only strategies with a total value of 0.50 or higher are considered relevant (the rows with blue highlights), as the impact of implementing these strategies is higher compared to other strategies. Only one strategy from SO-ST Matrix (Table 4) passed the criteria of total value > 0.50 for respective strategy alternatives, which is for oil palm companies conducting knowledge sharing, training, and assistance for smallholders in managing sustainable oil palm plantations [3SO, =0.60]. Furthermore, there are two strategies from WO-WT Matrix (Table 5) that passed the criteria, namely: 1. To recruit more local workers to lessen the economic and social inequality in the community [2WO, = 0.90] and 2. The Government of Indonesia expands the land reform or reforma agraria/land reform program (legalization of assets, redistribution of land and social forestry) for palm oil smallholders to improve welfare by recognizing private, state and public land rights that are used to meet the interests of the community [2WT, = 0.60]. Other alternative strategies are eliminated because they have a value below 0.5, which is not considered impossible to implement. The purpose of elimination is to make determining chosen strategies more efficient.

Palm oil is a very prospective industry in Indonesia, and smallholders are a significant contributor to the potential support of the palm oil industry. Nevertheless, as oil palm smallholders, they are often faced with problems such as profit management, productivity, legality, and sustainability. The study of smallholder palm oil plantation sustainable development in Indonesia provides three implementable alternative strategies and recommendations for the consideration of the related stakeholders, namely: palm oil smallholders as primary stakeholders, the Indonesian Government and palm oil certification NGOs (RSPO, ISPO, ISCC) as policymakers, and larger palm oil companies that act as patron and partner to the smallholders. The three strategies consist of one strategy based on the SO-ST matrix and two based on the WO-WT matrix. This study contributes to the field of sustainable agriculture and planning by proposing novel strategies for palm oil smallholder development: 1). Collaborative efforts between oil palm companies and smallholders to share knowledge and training for sustainable plantation management; 2). Implementing initiatives to recruit local workers, aiming to mitigate economic and social inequality within communities; and 3). Advocating for expanded land reform programs by the Government of Indonesia, including the legalization of assets, redistribution of land, and social forestry, to improve smallholders' welfare and recognize diverse land rights, thereby aligning with community interests.

It is strongly recommended that palm oil companies prioritize assisting smallholders through knowledge sharing, training, and support to promote sustainable farming practices, mitigate environmental impacts, and advocate for the expansion of Indonesia's land reform program by the government, as these strategies have demonstrated substantial potential for fostering sustainable development, reducing inequality, and improving welfare within the palm oil industry and local communities.

Further study is necessary to examine how the implementation of alternative strategies in the palm oil industry can be tailored to the specific conditions and needs of smallholder farmers, while also considering the terms set forth by policymakers and patrons.