Policy forum: Reconciling palm oil targets and reduced deforestation: Landswap and agrarian reform in Indonesia

Palm oil is very important exported commodity in Indonesia, which currently generates more than USD18 billion to the national earnings. Oil palm (Elaeis guineensis, Jacq.) is the most efficient crop in terms of productivity in producing oil compared with other crops, such as soybean, rapeseed and sunflower. Indonesia is a major palm oil producer in the world, where the oil palm plantation covers more than 14 million hectare of lands. The Government of Indonesia (GoI) has set a target to increase its palm oil production from 25 million tons in 2010 to 50 million tons by 2020. While the total palm oil production in 2019 is about 40 million tons, then it needs 10 million tons more palm oil production to achieve the target in 2020. Consequently, further forestland conversion maybe required to establish new oil palm plantations. This study proposes a scenario to swap forest lands with non-forests or low carbon lands in Central Kalimantan. The scenario will be successfully implemented through the presence of incentives to participate, appropriate policies, and facilitative government. Agrarian reform is a facilitative top down policy of landuse and land distribution has to be implemented by local government. This study concludes that integration of landswap proposal into agrarian reform, so called adjusted landuse scenario is relevant to the evidence-based policy that will provide local government with a strong institutional basis, simplifying process, and significant cost efficiency to perform land swap procedures. This policy has a great potential to reconcile growth of the oil palm plantation and reducing deforestation. •Central government in 2010 has set a target to make a double palm oil production by 2020.•To meet the target province government allocated 3.6 million hectare of lands for oil palm.•Currently 1.5 million hectare of oil palm has been planted and reached about 80% of the production target.•Integration of landswap and agrarian reform make a reduction of forest conversion feasible.•Instead of 3.6 million hectare, only about 1.9 million hectare of lands is required to meet production target.