Oil Palm Plantations in Indonesia: The Implications for Migration, Settlement/Resettlement and Local Economic Development

Palm oil is the world’s most traded vegetable oil: in August 2012, the share of palm oil (including
kernel oil) in world supply was 37.6% [1]. Palm oil is extracted from the fruit of the
oil palm tree (Elaeisguineensis); the main products are crude palm oil (CPO) and palm kernel
oil (PKO). In terms of land use, the oil palm tree is more efficient than any other oil crop [2],
and in economic terms palm oil is highly competitive. The value chain of palm oil and its
derivatives has a strong degree of vertical integration [3], and its production costs are relatively
low compared to other vegetable oils. It is therefore seen as one of the cheapest and
most attractive vegetable oils traded on the world market [4, 5].
The palm oil sector provides income and employment for a significant number of individuals
in developing countries [6]. A study of the Indonesian palm oil industry carried out as
part of a global study under the coordination of the Australian National University, concluded
that palm oil developments have had a positive impact on the incomes and living
standards of all involved [7]. According to an assessment carried out in Sumatra, oil palm
plantations have high labour requirements and show high return to labour [8].