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Palm Oil Production and Conflict in Indonesia

26 April @ 08:30 - 11:00

Center for Sustainable Development Goals Studies and Faculty of Agriculture Universitas Padjadjaran invite you to join our seminar series on “Palm oil production and conflict in Indonesia” with Dr. Rashesh Shrestha (Economist at The Economic Research Institute for ASEAN and East Asia) as a speaker, Ir. Ronnie Susman Natawidjaja, M.Sc.,Ph.D. (Lecture at Faculty of Agriculture UNPAD) as discussant and Dr. rer.pol Ernah, SP.,M.Si. (Lecture at Faculty of Agriculture UNPAD) as moderator. This seminar is free to the public.


This paper theorizes that the production technology of palm oil encourages violence by generating a predatory political economy. In spite of palm oil being a legal bulk commodity, its relatively capital-intensive nature, its labor organization requirements, and the oil palm lifecycle provide opportunities for multiple actors to engage in criminal and collusive practices aimed at capturing rents generated by the industry. This paper uses newly available panel data on the expansion of Indonesian palm oil plantation coverage from 2005 to 2014 derived from satellite imagery along with survey data aggregated to the subdistrict level to show that plantation expansion generates an increased incidence of resource conflict. Using a panel estimation empirical strategy to control for subdistrict heterogeneity and variation over time, we find that the relationship between plantation expansion and conflict is increasing but non-linear over time. To understand the causal mechanisms, we conducted qualitative investigations in several locations, interviewing members of local communities, plantation staff, police and government officials. We found three main patterns of violence, all intimately tied to the predatory political economy of palm oil: conflict over land use, inter-ethnic violence, and criminal or mafia violence, the last of which was the most significant. The findings provide new insights into the relationships between agrarian production technologies, political order, and violence.


Rashesh Shrestha is an Economist as ERIA. He earned his PhD from the Department of Agricultural and Applied Economics in the University of Wisconsin-Madison. Afterwards, he conducted research and taught at the Arndt-Corden Department of Economics at the Australian National University. During this time, he taught courses on Applied Microeconomics and Aid and Development Policy. His research interests are labor markets, economic development, and human capital investment. He is originally from Nepal.


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