Buy something in a supermarket and there's a good chance it will contain palm oil, an industry worth more than $50bn each year globally. The companies behind the country's palm oil boom have seen their profits soar this year as global prices reached record highs. Indonesia's super-rich list is already stacked with palm oil billionaires. The Widjaja family, who control Golden Agri-Resources, stand second place in Forbes' rich list for Indonesia; Anthoni Salim, who is the CEO of the Salim Group, sits one below in third place.But the companies that sell it to major firms like Johnson & Johnson, Kellogg's and Mondelēz are depriving indigenous communities of potentially millions of dollars of income.
Vast tracts of the world's most biodiverse forests have been cleared for palm oil plantations. On the once jungle-covered Indonesian islands of Borneo and Sumatra, plantations now stretch for miles on end. The trade-off was the promise of economic development. In order to gain local support and access to government financing, companies often promised to share their plantation with villagers, in plots known as "plasma". In 2007, it became a legal requirement for companies to give a fifth of any new plantation to communities. But there were steady claims that companies had reneged on promises - and those legal obligations - to provide plasma.
An investigation found companies have failed to provide more than 100,000 hectares - around the size of Los Angeles - of legally-required plasma in Borneo's Central Kalimantan province alone. Using conservative figures for the profits available from palm oil, we estimated this has deprived communities of an estimated $90m each year. The province accounts for just a fifth of Indonesia's corporate-run oil palm plantations.
Analysis of Ministry of Agriculture data suggests the picture is similar across other major palm oil-producing provinces, and the losses suffered across Indonesia by communities owed plasma could stretch into the hundreds of millions of dollars each year.
When communities complain of a failure to meet promises, the government relies largely on mediation, but an academic study found that just 14% of mediation negotiations lead to an agreement that is implemented. The investigation identified 13 major firms including Colgate-Palmolive that have sourced palm oil from producers alleged to have withheld plasma, or profits from plasma, from communities over the past six years.