Editor's note: I have been anticipating the rise of the politics of palm oil for Indonesia. I've been tracking the importance of smallholders to Malaysia's UMNO-BN in electoral politics for a few years now.
A few things are coming together for Indonesia:
a) The young BPDP/palm oil fund will become an increasingly contested area. There will be a political policy tussle on allocation of funds for independent smallholder replanting versus allocation for biodiesel subsidy. The latter goes directly to a handful of conglomerate quota holders, albeit for the purpose of supporting palm oil prices for all.
b) We have the coming of a more populist Presidential election in 2019 as the timing shift of the Presidential election to coincide with national legislative elections diminishes the previous system that let political party coalitions decide the Presidency. So we have Jokowi on big tours of Sumatra in 2017 and Kalimantan in 2018, to reach out to the rural voter-base.
c) Watch for the important smallholder associations like Apkasindo and plantation worker unions. While union leaders have tried to strike deals with politicians, these don't always work out such as recently on the minimum wage tussle.
Watch out for how this will affect the balance of political-economic power between the center and the periphery in Indonesia's decentralised political system.
In the case of Thailand, the need to support domestic prices for oil palm smallholders has caused narrowing margins for millers, sometimes causing millers to shut down operations for a while.
On the allocation of BPDP funds:
A few things are coming together for Indonesia:
a) The young BPDP/palm oil fund will become an increasingly contested area. There will be a political policy tussle on allocation of funds for independent smallholder replanting versus allocation for biodiesel subsidy. The latter goes directly to a handful of conglomerate quota holders, albeit for the purpose of supporting palm oil prices for all.
b) We have the coming of a more populist Presidential election in 2019 as the timing shift of the Presidential election to coincide with national legislative elections diminishes the previous system that let political party coalitions decide the Presidency. So we have Jokowi on big tours of Sumatra in 2017 and Kalimantan in 2018, to reach out to the rural voter-base.
c) Watch for the important smallholder associations like Apkasindo and plantation worker unions. While union leaders have tried to strike deals with politicians, these don't always work out such as recently on the minimum wage tussle.
Watch out for how this will affect the balance of political-economic power between the center and the periphery in Indonesia's decentralised political system.
In the case of Thailand, the need to support domestic prices for oil palm smallholders has caused narrowing margins for millers, sometimes causing millers to shut down operations for a while.
On the allocation of BPDP funds:
- https://www.cnnindonesia.com/ekonomi/20180126165425-85-271834/petani-sawit-kritik-subsidi-biodiesel-untuk-konglomerat
- https://www.cnnindonesia.com/ekonomi/20180116202504-92-269411/lima-konglomerat-sawit-disuntik-subsidi-mega-rp75-triliun/
On supporting palm oil farmers with replanting, seeds, land titles:
- http://www.tribunnews.com/bisnis/2017/10/13/dari-sumatra-presiden-jokowi-awali-peremajaan-sawit