all_report_indonesia_tuti heiriyani_oil palm plantation in swampland area

8/6/2019 All_Report_Indonesia_Tuti Heiriyani_Oil Palm Plantation in Swampland Area

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Poverty AlleviationThrough Oil Palm

Development in

Swampland Area

Faculty of Agriculture, Lambung Mangkurat University

Ir. Hj. Tuti Heiriyani, MP

Prof. Ir. H. Luthfi Fatah, MS, PhD

Individual Research Project Grant

Funded by East Asian Development Network (EADN)

As part of Global Development Network(GDN)Contract Number: EADN/09/025


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Description of

Research Project

Title of Research Project Poverty alleviation through oil palm

development in swampland area

Principle Researcher Ir. Hj. TUTI HEIRIYANI, MP

Senior Lecturer

Faculty of Agriculture

Lambung Mangkurat University

INDONESIAPh. +62 511 4778 015

Mobile +62 8575 11 6070

Email:[email protected]

Researcher-1 Prof. Ir. H. Luthfi Fatah, MS, PhD

Senior Lecturer

Department of Agricultural Socio- economics

Faculty of Agriculture

Lambung Mangkurat University

INDONESIA

Ph. +62 511 772 254

Email:[email protected]

Researcher-2 Farida Herliyanti, SP

Agribusiness and swampland development

adviser at Mambangun Banua, a parivate firm

operating oil palm cultivation in Swampland

areas of South Kalimantan Province

INDONESIA

Mobile + 62 815 2880 1794Email:[email protected]

Date of submission June 2nd, 2010
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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ABSTRACT

In Indonesia, almost a quarter of its area is swampland therefore swampland

development is important. One commodity that financially profitable to grow in

swampland area is oil palm. This commodity has been cultivated quite largely in someparts of Sumatera and Sulawesi, and it has a clear tendency to expand in the near future.

Although financial analyses suggest that the farming is profitable, it is still unclear whatthe effect of the farming on income distribution. It is also lack of knowledge about

whether or not farmer welfare is improving by cultivating oil palm in swampland area.

This research is purposed to understand whether or not the cultivation of oil palm in

swampland area contribute to the improvement of farmer welfare, and to understand the

effect of oil palm cultivation in swampland area on income distribution and poverty

alleviation in the area. This research will combine two approaches: macro and micro

levels. At macro level a Social Accounting Matrix (SAM) will be utilized to investigate

the impacts of oil palm cultivation on income distribution. At micro level, analyses will

focus on farmers, firm owners, and traders (brokers) of oil palm plantation. The researchresults reveal that the cultivation of oil palm in swampland area will benefit more the

agriculture entrepreneur households and high level households both urban and rural. The

companies are also benefit. However, research results also show that oil palm

commodity is important for labor income improvement and will benefit poor farmer

households compared to other sectors or commodities in the economy. Multiplieranalyses indicate that shocks are better when directed to production side than to

commodities side. If the production is supported through the shock, labor will bebenefited more compared to capital. If the shock is directed to commodity, oil palm is

less important both in labor and capital income generation. Policy implications are thatsupport should be given to production side not to commodity side including land

preparation, seeds provision, activities of cultivation, and harvesting. The provision ofinput at reasonable and affordable price, extension, guidance, and research to support oil

palm cultivation are some example of appropriate policy for development of oil palm.

The government needs to support farmer to be an entrepreneur, not labor. The multiplier

effect of shock to oil palm on production aspect will mostly benefit agriculture

entrepreneur. This can be triggered through training and farmer capacity building,

following by adequate support of rural micro finance that suitable and has strong

commitment to support farmer initiating and running their business in oil palm industry.


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TABLE OF CONTENTS

ABSTRACT ..................................................................................................................... iii

TABLE OF CONTENTS .................................................................................................... iv

1 BACKGROUND ....................................................................................................... 1

1.1. Research Questions and Objectives ..........................................................................2

1.1. Significance of the Research .....................................................................................2

2. LITERATURE REVIEW ............................................................................................. 3

3. METHODOLOGY .................................................................................................... 6

4. RESULTS AND DISCUSSIONS .................................................................................. 8

4.1. General Description of Indonesian Economy based on the

Constructed Indonesian SAM 2008 ...........................................................................8

4.2. Income Effects of Oil Palm Plantation in Swampland Area .......................................9

4.3. Flow of Oil Palm Income to Different Households .................................................. 12

4.4. Contribution of Oil Palm to Farmer Welfare ........................................................... 14

4. CONCLUSION AND POLICY IMPLICATION ............................................................ 17

4.1. Conclusion .............................................................................................................. 17

4.2. Policy Implication ................................................................................................... 19

REFERENCES ................................................................................................................. 20

APPENDICES ................................................................................................................. 21


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1. BACKGROUND

Sumatera Island, especially North Sumatra, Lampung and Aceh, has been the first centre ofoil palm plantation in Indonesia. Later on the centre has been expanded to West Java, West

and East Kalimantan, Riau, Jambi and Irian Jaya. In 1995, oil palm plantation was 2.025million hectares (Syukur, 2003). Oil palm cultivations mostly are private plantations run by

large firms (50.7%). Oil palm cultivation being run by the communities is only 32.7%, andmajorities are in small-scale. The rest 16.6% is operated by government (AARD, 2001).

Oil palm has an increasing contribution for Indonesia. Global market demand to CPO is

increasing while supply of the commodity is still limited. Development of oil palm plantation

is one of government policy in order to enhance the base of Indonesian economy through

managing resource endowment efficiently. Oil palm becoming more important as it serves as

the new source of energy in the middle increasing scarcity of fossil fuel. The change in

global climate and the increase in temperature force people to move to alternative source ofenergy that is pro environment and one of the energy source is the oil produced from oil

palm. Oil palm has become a strategic agricultural commodity. Besides bio-fuel, oil palm

has thousands of use. It utilization ranges from food, cosmetics, and up to be use as medicine

as well.

Considering the fact that tropical forest in Indonesia is wide, and that the value of oil

produced from oil palm is high, oil palm plantation seems to be a profitable choice

economically. However, it has to be noticed as well that in oil palm development there willbe many other aspects or parties will lost.

To support the development of oil palm, the Government of Indonesia in 2007 has released adecree named Undang-Undang no 25/2007 regarding foreign direct investment. Foreigncompanies have better chances to invest and run their businesses in Indonesia. The

availability of capital through these investments has provided new employment opportunities,

which in turn is expected to improve the welfare of community.

The expanding potentials of oil palm plantation and the fact that many farmers involved in

the plantation, either as labors or as owners, raise concerns about its impacts on income

distribution and on improving farmers welfare. As mostly oil palm farmers are poor, the

development of oil palm plantations will help to reduce poverty if oil palm farmers are

benefited largely from the cultivation. The policy relevance of this study lies in its objectives

to investigate the influence of oil palm plantation on income distribution and its effects onfarmer welfare. This knowledge will help decision makers in anticipating the growing

tendency of oil palm expansion and deciding whether or not to develop oil palm plantation in

order to alleviate poverty.


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1.1. Research Questions and Objectives

This research is purposed to clarify those concerns by addressing these research questions:

1. What are the effects of oil palm plantation in swampland area on income distribution?2. Among farmers, firms (industries) or traders (brokers), who do receive the highest

additional income from oil palm development in swampland area?

3. How does oil palm farming in swampland area contribute to improving farmer incomeand by how much?

Therefore, the research objectives are:

1. To understand the effect of oil palm cultivation in swampland area on income distributionand poverty alleviation in the area.

2. To understand who does acquire the most benefit of oil palm cultivation in swamplandarea.

3. To understand whether or not the cultivation of oil palm in swampland area contribute tothe improvement of farmer welfare.

1.1. Significance of the Research

In Indonesia swampland consists of 33 million hectares or about 18% of total area. This landis distributed in rural areas of Sumatera, Kalimantan, Irian and Sulawesi islands. Only about

4.5 million hectares of swamp land that has been utilized for various agricultural activitiesand many of these activities are subsistence, small-scale or inefficient. As the result, majority

farmers of swamp area are still in poverty. Meanwhile, farming is the main source of incomefor most of the people living nearby the swamp area. Therefore, to reduce poverty for these

people, agriculture needs to be improved. However, it is not easy to find agriculturalcommodity or agribusiness type to be developed, since swamp area is one of marginal lands,

which needs special treatment in order to grow plant profitably.

One commodity that financially profitable to grow in swamp area is oil palm (Elaeisguineensis Jacq). This commodity has been cultivated quite largely in some parts of

Sumatera and Sulawesi, and it has a clear tendency to expand in the near future. Although

financial analysis shows that this commodity is profitable, the contribution of cultivating this

commodity toward improving farmer welfare is unclear. Who gets benefit the most is still

need to be investigated. The other concern is to understand which party among farmers,

firms (industries) or traders (brokers) receiving the highest benefit.


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2. LITERATURE REVIEW

Swampland ecosystems are important and have dominant roles on earth. Besides their

functions as to provide numerous products for human use and consumption, including fossil

fuels and food, they also function invaluably as the kidneys of the landscape for their

ability to purify polluted rivers, prevent and minimize flooding, protect shorelines, and

replenish groundwater sources. Furthermore, swamplands also provide valuable habitat tonumerous species of waterfowl and wildlife (McCreedy and Miller 1997)

Swamplands are some areas including swamp, marsh, bog, prairie pothole, or similar area,

having a predominance of hydric soils that are inundated or saturated by surface or

groundwater at a frequency and duration sufficient to support, and that under normal

circumstances do support, the growth and regeneration of hydrophytic vegetation. Simply

stated, Swamplands contain (1) water or saturated soils for at least part of the year, (2) plants

that have adapted to life in wet environments (hydrophytic vegetation), and (3) special soils

that develop under depleted oxygen conditions (hydric soils) (Anderson, 1995).

In Indonesia, almost a quarter of its area is swampland. The swampland is found in rural

areas of all major islands of Indonesia, including Sumatera, Kalimantan, Sulawesi and Irian.

The size of swampland area in Indonesia reaches 33.4 millions hectares, including 20.11

million hectares of swamp-tidal and 13,280 million hectares of swamp (Balittra, 2004). Thedistribution of swampland in Indonesia can be seen at Figure 1 as follows.

Figure 1. The Distribution of Swampland in Indonesia

The swampland in Indonesia has the potentials to substitute the farmlands that have been

converted into housings and industries. The development of swampland is important for

Indonesia and could significantly contribute to the provision of food for its growing

population, with the growth rate stands at three millions people a year. The failure in

handling and utilizing swampland could result in a serious food security problem for


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Indonesia in the near future (Saragih, 2003). Swampland cultivation with appropriate

commodities can accelerate economic growth in the region through its backward and forward

linkages. It also contributes to agribusiness development and in turn employment (Luthfi et

al., 2003).

The government of Indonesia has been utilizing swampland as one of the national foodsources since PELITA I through the project of Farming Development in Swamp-tidal Area,

which was carried out in Sumatera and Kalimantan. In these two islands about 3.6 million

hectares of swamplands have been cultivated by rural community with the help ofDepartment of Public Facility in the land preparation process. Besides that, the government

has also facilitated the generation and distribution of swampland management technology,

including water management and land management. For water management, utilization of

swampland needs to manage water systems both macro and micro. For land management, the

type, mineral and structure of swampland has to be given adequate attention and appropriate

handling. Swampland management needs to carefully consider characteristic of the area

(AARD, 2001).

Various agricultural crops can be cultivated in swampland areas. In Indonesia mostly food

crops are cultivated. Generally, food crops productivity and crop intensity are still very low,

and land utilization intensity is also very limited. For instance, from 9.53 million hectares

swamplands that are potentials for agriculture, 4.19 has been reclaimed and prepared by the

government. However, only about 1.5 million hectares have been planted with food crops

(Balittra, 2004).

In some parts of Indonesia, swamplands have also been utilized for the cultivation ofperennial commodities. Oil palm is one of the perennial crops that has been cultivating

largely, mainly in swampland areas of Sumatera and some parts of Kalimantan. Financialanalyses suggest that oil palm cultivation is feasible (Luthfi et al. 2003, Syukur 2003,

Prasetyo 2002). However, mainly the oil palm farming in swampland area is operated bylarge firms, and farmers are only workers for the firms. Although the oil palm cultivation

financial analyses suggest that the farming is profitable, it is still unclear what the effect of

the farming on income distribution in the area is. It is also lack of knowledge whether or not

farmer welfare is improving through the promotion of oil palm cultivation in swampland

area.

The main contribution of this research is to provide good knowledge about the potentials of

developing oil palm farming in swampland area for reducing poverty and improving income

distribution in the area, and also to provide some empirical data about income generation andincome distribution of cultivating oil palm in swampland areas among farmers, plantation

owners and traders (brokers).

Two provinces are chosen to be investigated more in details in this project. One province is

South Sumatera as to represent the well establish oil palm plantation. The other province isSouth Kalimantan where the utilization of swampland, has just been started. By using these

two different characteristics of oil palm plantation areas, the information that will beinvestigated will be more representative for the activity of Indonesian oil palm plantation in

general.


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Below is presented some descriptive data of these two areas where the research project will

take place.

Table 1. Characteristics of Research Areas

Characteristics South Sumatera South KalimantanProvincial Capital Palembang Banjarmasin

Provincial Area (sqkm) 103,688 37,66

Percentage to total area of Indonesia 5.40 1.96

Male (in thousands) 3,444.12 1,491.9

Female (in thousands) 3,413.26 1,483.8

Total Male+Female (in thousands) 6,857.38 2,975.7

Population Density per sqkm 78 70

Sex Ratio 101.0 100.5

Growth Rate of Population (1990-2000) 2.39 1.45Labor Force Participation Rate 57.46 65.46

Open Unemployment Rate 4.11 2.89

Gross Regional Domestic Product atcurrent market prices (million rupiahs)

19,944,999 8,040,646

GRDP at constant 1993 market prices

(million rupiahs)

14,072,706 6,293,905

Source : Statistic of Indonesia 2004.

The variables that will be investigated from the areas through this research are variables for

micro data, including oil palm income of farmers, firms (industries) and traders (brokers).This data will be combined with macro data at national level which will be organized in a

Social Acconting Matrix (SAM) framework.


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3. METHODOLOGY

This research combines two approaches: macro and micro levels. At macro level a Social

Accounting Matrix (SAM) is utilized. The SAM is used mainly to analyze the distributive

effects of oil palm development in swampland area on income using SAM based analyses.To complement the macro analyses (SAM based analyses), the research will apply micro

analysis as well. This will focus on farmers, firm owners, and traders (brokers) of oil palmplantation. This approach is used to gather information on how income generated from oil

palm plantation is distributed among household types. This also investigates how oil palm

cultivation in swampland area contribute to improving farmer income, including the process

of product transactions, price determination, farmer bargaining position and transaction cost,

which all influence the proportion of the income generated from oil palm plantation received

by farmers.

For the macro approach, data requirement includes the most recent SAM Indonesia,

Indonesian Economic Indicators 2008 as the current data on Indonesian economy and recentdata about oil palm production including its input and output structures. The recent SAM of

Indonesia is the 2005 Indonesias SAM. This is used as the base matrix of SAM, which is

then modified and combined with the Indonesian Economic Indicators April 2009 to develop

an up to date SAM for the economy of Indonesia. The best up to date SAM that can be

developed given the most recent data available is the SAM Indonesia 2008. To utilize theSAM Indonesia 2008 for analyses in this study, its agricultural sector were disaggregated to

represent the oil palm activities in the model. For this purpose the recent data on oil palmproduction will be utilized. The data include Agricultural Indicator 2006, Directory of

Plantation Firms 2006, South Sumatera in Number 2008, and South Kalimantan in Number2008. SAM Indonesia 2005 and Indonesian Economic Indicators are collected fromBiro

Pusat Statistik (Bureau of Statistical Centre). The recent data on oil palm were collectedfrom several sources including: Department of Agriculture Directorate General of Plantation,

some previous research reports, Bureau of Statistical Centre and from National Development

Planning Agency.

The SAM based analyses are multiplier analysis and snapshot analysis. Multiplier analysis

utilizes multiplier matrix derived from the SAM matrix. This analysis helps to understand

the effect of oil palm activities on income generation of various household levels in the

economy. In turn the analysis can indicate distributive effect of oil palm plantation on

income distribution. Snapshot analysis is the analysis of existing economic interdependency

using a particular part of the SAM matrix. For this research, the snapshot analysis especially

utilized to help understanding on contribution mechanism of oil palm farming in swamplandarea toward the improvement of farmer income.

For the micro approach, some primary data will be collected from farmers, oil palm

plantation owners, traders (brokers) of oil palm product and other primary sources that are

relevant. In this research two provinces are chosen as the project areas. One province is

South Sumatera. This province is chosen to represent the well establish oil palm plantation,

because the plantation in Sumatera relatively older and has been quite long time in operation

compared to oil palm plantation in any other part of Indonesia. Oil palm estate has been


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started since 1911 in North Sumatera. Besides that, oil palm estate in swampland area of

South Sumatera has been popular. The system and mechanism of oil palm development in

this area become a destination place for any other region to do study comparative. The other

province is South Kalimantan. In this area the oil palm development, particularly for the

utilization of swampland, has just been started. By using these two different characteristics

of oil palm plantation areas, the information that will be investigated will be morerepresentative for the activity of Indonesian oil palm plantation in general.

The farmer population is the farmer that cultivates oil palm which is included in farmergroup. The sampling method is proportionate random sampling, based on the number of

farmer in a group with the sample of farmers are 60 for each province. Therefore the total

sample will be 120 farmers. For oil palm estate representative, number of plantations will be

decided proportionally between the two provinces, based on the number of plantations

operate in the provinces. The total of plantation samples is 10 units. For the traders (brokers)

number of total traders as representatives are 10 units, with the same procedure of sampling

as the oil palm plantations.

Basically, this is descriptive statistical analysis that is using mean, median and modus and

other relevant statistical measures to describe trends in population of respective data.


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4. RESULTS AND DISCUSSIONS

4.1. General Description of Indonesian Economy based on the

Constructed Indonesian SAM 2008

The Indonesian SAM 2008 is developed based on Indonesian SAM 2005 released by Bureau

of Statistical Centre. This base year of 2005 is then upgraded to 2008 using 2009 Indonesian

Economic Indicators. Based on the 2005 SAM, GDP of Indonesia is IDR 2,896,945.16

million. In 2008, the recent data shows that GDP increase to IDR 4,954,028.90 million. The

2008 Indonesian SAM has been consistent with this figure. The complete 2008 IndonesianSAM is presented in Appendix 1. The calculation of GDP based on the 2008 SAM also

shows the same numbers. Based on the 2008 SAM, general description of Indonesianeconomy is as the following Table 2.

Table 2. General Description of Indonesian EconomyAccount Value (IDR millions) Percentage

Labor 2,575,262.39 6.78

Capital 2,273,921.84 5.99

Household 3,751,725.54 9.88

Company 1,722,508.64 4.54

Government 1,117,304.73 2.94

Production Sectors 9,624,191.27 25.34

Trade and Transportation 1,061,663.76 2.80

Domestic Commodity 10,603,939.14 27.92

Imported Commodity 1,665,485.78 4.39Capital Account 1,329,618.70 3.50

Indirect Tax 295,151.34 0.78

Subsidy 184,872.82 0.49

Overseas 1,768,498.92 4.66

TOTAL 37,974,144.87 100.00

Table 2 shows revenue value (in IDR million) of all accounts in the 2008 SAM. If outputs or

inputs of all account in Indonesian economy are added together, their total value is almost

IDR 38 trillion. Return to factors (labor and capital) produce income about 12% of the total

output of the economy. Labor contribution is a little bit higher than the contribution of

capital. Total income value produced by factors is IDR 4,849,184.23 million.


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Different categories of households receive some of the income produced by factors. The

households also receive transfers from various sources including other household categories

and transfer from overseas. If these amounts are summed, the value stands at IDR

3,751,725.54 million. This comprises about 10% of total output of Indonesian economy.

If we look at the total output value of commodity, the number stands at IDR12,269,424.92million or about 32% ot Indonesian Output in total. From this amount IDR 10,603,939.14million is output of domestic commodities, and IDR 1,665,485.78 million. This structure

indicates that domestic commodity is more strategic for Indonesia compared to importedcommodity. If we use total Indonesian output as denominator, we can see that domestic

commodity contribute about 28% while the imported commodity only shares about 4%.

If we look at the importance of overseas account in Indonesian economy based on the 2008SAM, we can see from the Table 2 above that contribution of overseas account in Indonesias

total output is less than 5% or IDR 1,768,498.92 million. This account structure implies that

Indonesian economy has only little dependency on overseas. From IDR 37,974,144.87

million output of all accounts in Indonesian economy, overseas account only share lest than5%. If the management of production and other economic transactions is appropriate,

Indonesia can promote the improvement of its economy without strong needs to overseas

intervention.

4.2. Income Effects of Oil Palm Plantation in Swampland Area

In the constructed 2008 SAM, production sectors and their commodities are grouped into six

big categories as the followings:

1.

Food Crop, Livestock, Fishery, and Food Processor2. Other Agriculture, Forestry, and Hunting3. Oil Palm4. Mining, Processor non food, Electricity, Gas, and Drinking Water5. Trade, Restaurant and Hotel, Transportation and Communication, Individual Service6. Finance, Real Estate, Government, Social and Cultural Service, and EntertainmentIn the SAM income is generated by factors of production which are labor and capital. These

labor and capital income will then flow to households of different categories. The source of

income is the value of commodity produced production sectors.

To analyze the effects of oil palm plantation in swampland area a mixed multiplier matrixcalculated and constructed based on the 2008 SAM. The complete mixed multiplier is

provided in Appendix 2. Based on the mixed multiplier income effects of production sectors

are as in Table 3 below. The Table captures the effects of shocks given to particular account

in production sectors categories. Shock to production sectors means that intervention to the

category is given in its production process.

As can be seen from Table 3 shock to production sectors has different effects, depend on

which category the shock is given. If we observe the effect on labor income, among the


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categories oil palm and other agriculture, forestry, and hunting have the highest multiplier

effects on labor. These two categories have the multiplier 0.7529. This means that if these

categories are given additional one unit of shock, they will produce additional 0.7529 unit of

income for labor. Based on this fact we can understand that if government focus on

increasing labor income, then the government could direct the shock to oil palm or to other

agriculture, forestry, and hunting. The description above infers that oil palm commodity isimportant for labor income improvement.

Table 3. Income Effects ofShocks on Production Sectors on Labor and Capital IncomeAccount Labor Capital

Production Sectors

Food Crop, Livestock, Fishery, and Food Processor 0.4710 0.2810

Other Agriculture, Forestry, and Hunting 0.7529 0.4143

Oil Palm 0.7529 0.4143

Mining, Processor non food, Electricity, Gas, and Drinking

Water 0.4003 0.5395

Trade, Restaurant and Hotel, Transportation and

Communication, Individual Service 0.6592 0.4142

Finance, Real Estate, Government, Social and Cultural

Service, and Entertainment 0.6222 0.5382

The effects of production shock on capital is dominated by Mining, Processor non food,

Electricity, Gas, and Drinking Water category. Based on mixed multiplier analysis this

category has the highest capital multiplier. It stands at 0.5395. Finance, Real Estate,

Government, Social and Cultural Service, and Entertainment category stands at the second

place with multiplier of 0.5382. Oil palm, Other agriculture, forestry, and hunting, and

Trade, Restaurant and Hotel, Transportation and Communication, Individual Servicefollow. The first two have the same multiplier (0.4143), followed by the third one with

0.4142 of multiplier value. Although oil palm only stands at the third place for capital incomeeffect of the shock, considering the multiplier value, we can understand that its effect is quite

significant. It is much higher if we compare it with Food Crop, Livestock, Fishery, and FoodProcessor category.

Multiplier analysis of shock on production sectors of the six categories reveals that oil palm

is dominant for labor income generation, but less dominant for capital income generation.

This may be related to the facts that in oil palm plantation, labor shares significantcontribution to the farm daily operation compared to other resources, both in terms of cost

required and also in terms of quantity of activities. Therefore if the production is supportedthrough the shock, the labor will be benefited more compared to the capital.


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Income effects will be slightly different if the shock is directed to the commodity. The shock

to commodity means that intervention to the category is given in order to add value to the

commodity. Table 4 illustrates that if the shock is given to domestic commodities categorythat generates the highest labor income is Trade, Restaurant and Hotel, Transportation and

Communication, Individual Service. This is then followed by Finance, Real Estate,

Government, Social and Cultural Service, and Entertainment. At the third high multiplierMining, Processor non food, Electricity, Gas, and Drinking Water takes the place. Oil palm

has the smallest labor income multiplier. There is an interesting figure here. Food Crop,

Livestock, Fishery, and Food Processor situates at the fourth place better than oil palm and

other agriculture. These figures could be caused by the facts that the category is labor

intensive. Many of the activities in this category are small-scale but they are numerous, so

that as a sum their number is quite significant.

Table 4. Income Effects of Shocks on Domestic Commodities on Labor and Capital

Income

Account Labor Capital

Domestic CommoditiesFood Crop, Livestock, Fishery, and Food Processor 0.1211 0.0761

Other Agriculture, Forestry, and Hunting 0.0689 0.0433

Oil Palm 0.0619 0.0389

Mining, Processor non food, Electricity, Gas, and Drinking

Water 0.4196 0.5181

Trade, Restaurant and Hotel, Transportation and

Communication, Individual Service 0.6475 0.4068

Finance, Real Estate, Government, Social and Cultural

Service, and Entertainment 0.6161 0.5329

Meanwhile, if we look at the effect of commodity shock on capital income generation, thebest multiplier effect is provided by Finance, Real Estate, Government, Social and Cultural

Service, and Entertainment, followed respectively by Mining, Processor non food,Electricity, Gas, and Drinking Water and Trade, Restaurant and Hotel, Transportation and

Communication, Individual Service. Oil palm has the smallest multiplier. It seems clear forthis situation that the more capital investment the higher multiplier effect for capital income

generation.

Table 4 reveals that based on multiplier analyses of domestic commodity shocks, oil palm is

less important both in labor and capital income generation. Multiplier effects of oil palm for

commodity shocks are relatively smaller than other categories. Even more, if capital incomegeneration becomes our concern, among other categories oil palm has the smallest capital

income multiplier. These facts indicate that shocks for oil palm are better when directed to

production than directed to commodities.


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Table 5. The Distribution of Labor Income

Labor Production Commodity

AgriculturePaid 0.1830 0.0000

Un paid 0.2942 0.0000

Production, Operator of transportation,and Low income labor

Paid 0.0648 0.0097

Un paid 0.0261 0.0054

Administration, Selling, and ServicePaid 0.0829 0.0209

Un paid 0.0497 0.0190

Leadership, Army, Professional, and

Technician

Paid 0.0437 0.0058

Un paid 0.0084 0.0010

Income in the concerned economy is produced by production factors which are labor and

capital. Capital income will mostly flow to company while labor income will flow to

different category of households depending on the category of labor. Table 5 above describeshow labor income generated from oil palm is being distributed to different type of labor. It

will have different multiplier effects depending on where was the shock directed to,production sectors or domestic commodity.

It can be seen on Table 5 that if the shock was given to production sectors then the most of

labor income generated by multiplier effect will be received by Unpaid Agricultural Labor.

On the other hand, if the shock was directed to domestic commodity, then the Paid

Administration, Selling, and Service will benefit most from the labor income flow. This will

receive the highest income. Agricultural labor both paid and unpaid will receive no income.

It is apparent from Table 5 that if the shock is on production the agricultural labor will

benefit, while if the shock is on commodity seller and service will benefit more. Inclusive inthis category is trader, agent, broker and dealer of various levels.

4.3. Flow of Oil Palm Income to Different Households

To understand who does acquire the most benefit of oil palm cultivation in swampland area

this income flows to households as multiplier effects of shock on production or commodity

can describe the situation. If in particular we want to investigate the highest recipient of

additional income from oil palm development in swampland area among farmers, firms

(industries) or traders (brokers), we need first to understand in which category of households

these parties belong to.

Majorities of farmers are in low labor agriculture and some of them are in rural low level

households. Traders and brokers are mainly in the category of agriculture entrepreneur andrural high level households. Capital owners investing in oil palm will fall in the category of

high level households both in urban area and rural areas. Firms or industries in this model areincluded in the category of company. Income generated from oil palm will flow to different

households. Multiplier analysis produces results as presented in Table 6.


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Table 6. Income Flow of Shock on Production and Commodity on Different Households

Households Production Commodity

Agriculture Low labor 0.0928 0.0025

Entrepreneur 0.2878 0.0096

Rural Low level 0.1590 0.0081High level 0.1248 0.0132

Urban Low level 0.1244 0.0005

High level 0.1234 0.0228

Company 0.3001 0.0277

If the shock is directed to oil palms production process, the most benefit household is

Agriculture Entrepreneur. It has 0.2878 of multiplier effect. At the second place is Rural

Low Level and then followed by Rural High Level. Agriculture Low Labor has the

lowest multiplier effect. The multiplier in Table 6 implies that with production shock rural

community will benefit more. In particular households of agricultural entrepreneur willbenefit the most. This household category includes traders, brokers, and households that

managing the cultivation oil palm and other plantation although with the small-scale farming.Low labor is less benefited compared to the other. Although the shock is directed to

production process, the low labor agriculture households are lacking of ability to capture the

benefit. They only receive wage in doing agriculture activities of oil palm. The owner of oil

palm will receive benefit from the shock.

Meanwhile companys share of income multiplier produced by the shock on production

process is in fact higher than agriculture entrepreneur. The multiplier effect stands at 0.3001.

This is caused by the fact that shock on production will make productivity is better and in

turn will generate more return to capitals. This return is then flow to company. This makescompany multiplier effect is higher than agriculture entrepreneur multiplier effect.

On the other hand, if the shock is given to commodity, the most benefit household is in the

category of Urban High Level. This is followed by UrbanLow Level at the second place

and Rural High Level at the third place. This indicates with commodity shock the urbancommunity and high level household will benefit more. Agricultural labor has less benefit if

the shock is on commodity. Income flow of multiplier effect is not captured by low levelhousehold and agricultural labor.

If we take the figure for company, the multiplier effect is slightly lower than the urban high

level household, but still exceeding the multiplier of other household category. This iscaused by the fact that for commodity the roles of agricultural company are reduced. Traders

and brokers, and other commodity transaction or processing will have higher multiplier effect

values if the shock is given to commodity.

From the description above we can infer that the cultivation of oil palm in swampland area

based on this multiplier analysis will benefit more the agriculture entrepreneur households

and the firms or companies if the shock is given to production process. On the other hand, if


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the shock is directed to commodity then the most benefit is high level households both urban

and rural. The companies are also benefit with this shock.

4.4. Contribution of Oil Palm to Farmer Welfare

Multiplier analysis reveals that oil palm development is a suitable choice of policy for

poverty alleviation. Compared to other category of economic activities as represented in the

SAM accounts, shock to oil palm production will produce the highest multiplier effects. The

details of multiplier effects of shock on production of various categories in the economy of

Indonesia are presented on Table 7 below.

Table 7. Multiplier effects ofProduction of Various Categories on Households

Households 1 2 3 4 5 6

Agriculture Low labor 0.0415 0.0928 0.0928 0.0200 0.0266 0.0278

Entrepreneur 0.1747 0.2878 0.2878 0.0879 0.1026 0.1223

Rural Low level 0.1019 0.1590 0.1590 0.1095 0.1402 0.1079High level 0.0807 0.1248 0.1248 0.0677 0.0863 0.1016

Urban Low level 0.0978 0.1244 0.1244 0.1817 0.2185 0.1943

High level 0.0821 0.1234 0.1234 0.1371 0.2428 0.2710

Note:

1 Food Crop, Livestock, Fishery, and Food Processor

2 Other Agriculture, Forestry, and Hunting

3 Oil Palm

4 Mining, Processor non food, Electricity, Gas, and Drinking Water

5 Trade, Restaurant and Hotel, Transportation and Communication,Individual Service

6Finance, Real Estate, Government, Social and Cultural Service, and

Entertainment

From Table 7 we can see that multiplier effects of shock on production of oil palm willproduce multiplier effect 0.0928 to Low Labor Agriculture householdand 0.1590 to Low

Level Rural household. These two values of multiplier effects are the highest if we

compared with other categories for the same household levels in the economy. Other

Agriculture, Forestry, and Hunting has the same multiplier effect value with oil palm. The

cause of this is that in the production structure oil palm and other agriculture, forestry,hunting are the same. In the SAM account agriculture basically is divided only into two big

categories: (1) Food Crop, Livestock, Fishery, and Food Processor and (2) Food Crop,

Livestock, Fishery, and Food Processor. Oil palm was excluded from Other Agriculture,

Forestry, and Hunting for the purposes of analyses, therefore their values in production

structure has very little difference which are not reflected in the multiplier effect for shock on

production aspect.

Poor farmer households mainly fall in the category of Low Labor Agriculture and Low

Level Rural households. To help improving these poor farmers welfare the target of income


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multiplier effects should be directed toward these two households. Table 7 shows that shock

directed to oil palm production is suitable for the purpose. This shock will produce multiplier

effects that will benefit these two categories of household, and the multiplier of this shock

produce higher values than the value produced by shocks on other categories.

Shock to food crop produces less multiplier effect for Low Labor Agriculture householdthan shock on oil palm. Its multiplier only stands at 0.4105. Actually many poor farmerhouseholds grow food crop. This is basically based on the concern of food security for the

family and also based on the facts that this food crop has been cultivated years since theirparents and parents of parents. They get used to this crop cultivation, and movement to other

crop will require significant efforts, not only internally by them-selves but also for some

degree requires external help.

Although the analysis shows that oil palm is better in terms of multiplier effect produced, it is

a challenge to introduce this crop replacing food crop. Food security and skill concern will

be significant constraints for majority of farmers. Some possible easy to adopt option for

farmer is if oil palm can be introduced in-line with the cultivation of food crop categorywhich in this SAM model includes food crop, livestock, fishery, and food processor.

As previously explained, in the model shocks could be directed to production side or to

commodity side, and based on the analysis these two directions will have quite significant

differences. In shock policy it is very important to maintain that the shock on oil palm is

directed to production side, not to commodity side, because if the shock is directed tocommodity side the shock on oil palm is no longer pro poor farmer households. For detail

please see Table 8 below.

Table 8. Multiplier effects ofCommodity of Various Categories on Households

Households 1 2 3 4 5 6

Agriculture Low labor 0.0049 0.0028 0.0025 0.0203 0.0261 0.0275

Entrepreneur 0.0189 0.0107 0.0096 0.0880 0.1008 0.1211

Rural Low level 0.0258 0.0147 0.0132 0.1108 0.1377 0.1069

High level 0.0159 0.0090 0.0081 0.0684 0.0847 0.1006

Urban Low level 0.0401 0.0229 0.0205 0.1824 0.2146 0.1924

High level 0.0446 0.0254 0.0228 0.1454 0.2385 0.2684

Note:

1 Food Crop, Livestock, Fishery, and Food Processor

2 Other Agriculture, Forestry, and Hunting3 Oil Palm

4 Mining, Processor non food, Electricity, Gas, and Drinking Water

5Trade, Restaurant and Hotel, Transportation and Communication,

Individual Service

6Finance, Real Estate, Government, Social and Cultural Service, and

Entertainment


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Table 8 shows that if the shock is given to oil palm on commodity side the multiplier effectfor Low Labor Agriculture household is only 0.0025. This is actually the smallest if

compared to other categories multiplier effects. The highest multiplier effect will be produced by Finance, Real Estate, Government, Social and Cultural Service, and

Entertainment category of commodity. Shock on oil palm on commodity side will mostly

benefit High Level Urban household. The multiplier effect for this category is the highestthat is 0.0228 compared to the multiplier effects received by other household categories. Inthis shock capital owners gain more. Urban high level household are mainly capital owner

who invest their capital in oil palm.

If we observe Rural Low Level households, multiplier effect of oil palm from the shock on

commodity is also the smallest, it stands only at 0.0132. The highest multiplier for this

household category is from Food Crop, Livestock, Fishery, and Food Processor. Its

multiplier effect received by Rural Low Level household is 0.0258. Rural low level

households consist of farmers who have small land and small farming. Small-scale oil palm

farmers are also included in this category although their numbers are very limited. Majority

of these farmers are growing food crops, livestock and fishery. Therefore, shock on oil palmcommodity does not benefit this category very much. The multiplier effect will be more

benefited for them if the shock is directed to Food Crop, Livestock, Fishery, and Food

Processor.

It is apparent from the Table above that shock on commodity of oil palm does not benefit the

poor farmers. Instead it will benefit the capital owners.


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4. CONCLUSION AND POLICY IMPLICATION

4.1. Conclusion

Swamp land in Indonesia is large. It consists of 33 million hectares or about 18% of totalarea. This land is distributed widely in rural areas of all most all of big islands of Indonesia,

except Java. However, many of these swamp land are still idle, and only about 4.5 millionhectares of swamp land that has been utilized for various agricultural activities and many of

these activities are subsistence, small-scale or inefficient. As the result, majority farmers of

swamp area are still in poverty. Considering the fact that tropical forest in Indonesia is wide,

and that oil palm product values are promising, oil palm plantation seems to be a profitable

choice. However, it needs a careful assessment to see who will be benefit from the oil palm

activities and how much the benefit is.

The trend shows that oil palm plantation is expanding and this attracts many farmers into theplantation, either as labors or as owners. This fact raises concerns about its impacts on

income distribution and on improving farmers welfare. As mostly oil palm farmers are poor,

the development of oil palm plantations will help to reduce poverty if oil palm farmers are

benefited largely from the cultivation.

The research objectives are: (1) To understand the effect of oil palm cultivation in swamplandarea on income distribution and poverty alleviation in the area. (2) To understand who does

acquire the most benefit of oil palm cultivation in swampland area. (3) To understandwhether or not the cultivation of oil palm in swampland area contribute to the improvement

of farmer welfare.

The policy relevance of this study lies in its objectives to investigate the influence of oil palmplantation on income distribution and its effects on farmer welfare. This knowledge will help

decision makers in anticipating the growing tendency of oil palm expansion and deciding

whether or not to develop oil palm plantation in order to alleviate poverty.

This research combines two approaches: macro and micro levels. At macro level a Social

Accounting Matrix (SAM) is utilized. The SAM is used mainly to analyze the distributive

effects of oil palm development in swampland area on income using SAM based analyses.

To complement the macro analyses (SAM based analyses), the research will apply micro

analysis as well. This will focus on farmers, firm owners, and traders (brokers) of oil palm

plantation. This approach is used to gather information on how income generated from oil

palm plantation is distributed among household types. This also investigates how oil palm

cultivation in swampland area contribute to improving farmer income, including the process

of product transactions, price determination, farmer bargaining position and transaction cost,

which all influence the proportion of the income generated from oil palm plantation receivedby farmers.

Research results show that oil palm commodity is important for labor income improvement.Multiplier analyses reveal that for oil palm, shocks are better when directed to production

than directed to commodities. If a shock is directed on production of oil palm, agricultural


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labor will benefit, while if the shock is on commodity seller and service will benefit more. If

government focuses on increasing labor income, then the government should direct the shock

to oil palm or to other agriculture, forestry, and hunting.

Multiplier analysis of shock on production sectors of the six categories reveals that oil palm

is dominant for labor income generation, but less dominant for capital income generation.This may be related to the facts that in oil palm plantation, labor shares significantcontribution to the farm daily operation compared to other resources, both in terms of cost

required and also in terms of quantity of activities. Therefore if the production is supportedthrough the shock, the labor will be benefited more compared to the capital.

On the other hand, if we observe the shock that is directed to commodity, multiplier analyses

reveal that oil palm is less important both in labor and capital income generation. Multiplier

effects of oil palm for commodity shocks are relatively smaller than other categories. Even

more, if capital income generation becomes our concern, among other categories oil palm has

the smallest capital income multiplier.

Furthermore, the research results also reveal that the cultivation of oil palm in swampland

area based on this multiplier analysis will benefit more the agriculture entrepreneur

households and firms or companies if the shock is given to production process. On the other

hand, if the shock is directed to commodity then the most benefit is high level households

both urban and rural. The companies are also benefit with this shock.

For improvement of poor farmers welfare, the target of income multiplier effects should be

directed toward improving income of two households: Agriculture Low Labor and Rural

Low Level households. The research results show that shock directed to oil palm production

is suitable for the purpose. This shock will produce multiplier effects that will benefit the twocategories of poor farmer households, and the multiplier of this shock produce higher values

than the value produced by shocks on other categories. It is also apparent however that shockon commodity of oil palm does not benefit the poor farmers. Instead it will benefit the capital

owners.


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4.2. Policy Implication

Based on multiplier analyses it is obvious that oil palm development is more suitable to help

improving poor farmer welfare compared to other production sectors and commodities,however it will bring more benefit for Agriculture Entrepreneur and Rural Low Level

households. Therefore, a policy of oil palm development for poverty alleviation needs a

careful attention.

Some policy implications based on the research results are that in promoting oil palm

development, it is very important that support should be given to production side not to

commodity side. Production side is part of the oil palm industry which operates in

production process. This includes land preparation, seeds provision, activities of cultivation,

and harvesting. Commodity side is all efforts to add value to oil palm products. This

includes post harvest handling, transporting, processing, and other downstream process to

generate value added to the products. Support to production side will benefit labor and to

commodity side will benefit capital owner more.

The provision of input at reasonable and affordable price, extension, guidance, and research

to support oil palm cultivation are some example of appropriate policy for development of oil

palm. Price supports, infrastructure for transportation, processing factories and the likes will

be not appropriate. These activity will not benefit poor farmers, instead it will benefit capital

owner from the households of high level urban and rural.

Another important policy implication is that the government needs to facilitate and to

encourage farmer to be an entrepreneur, not labor. The multiplier effect of shock to oil palmon production aspect will mostly benefit agriculture entrepreneur. This can be triggered

through training and farmer capacity building, following by adequate support of rural microfinance that suitable and has strong commitment to support farmer initiating and running their

business in oil palm industry.


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REFERENCES

AARD, 2001, The potentials of swamplands for agriculture,Bulletin of Agricultural

Research and Development, Vol. 23 No. 6, p 3-7.

Anderson, Julie, 1995, Wetland incentives programs for landowner, Austin-Texas: Texas

Parks and Wildlife Department.

Balittra, 2004, Characteristics and prospect of swampland development, Banjarbaru:

Swampland Research Centre.

Luthfi et al., 2003, Regional development through land utilization to improve welfare and

the performance of regional economy, Research report, Banjarbaru: Collaboration between

Faculty of Agriculture Lambung Mangkurat University and Regional Development Planning

Agency of Hulu Sungai Selatan Distric.

McCreedy, Clark D. and Brian K. Miller, 1997, Farm income through conservation: thewetlands reserve programHoosier Farmland Wildlife Notes Fostering Wildlife in

Agriculture Vol. 3 No. 2 p.130.

Prasetyo, Sigit, 2002, The evaluation of oil palm plantation with partnerships system in

Kalumpang District of South Kalimantan Province, Thesis for Graduate Degree, Banjarbaru:

Faculty of Agriculture Lambung Mangkurat University.

Saragih, Bungaran, 2003, Swampland (33 million hectares) replaces farming in Java.

National expose of Swampland farming, Karang Buah South Kalimantan Wednesday, July

30th

.

Syukur, Suheimi, 2003, Oil palm in brief, Pematang Siantar: Marihat Research Centre.


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APPENDICES

AppendiceS


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Appendix 1. Indonesia Social Accounting Matrix 2008

(Million Rupiah)

Description Code 1 2 3 4 5

Paid 1 0.00 0.00 0.00 0.00 0.00

Un paid 2 0.00 0.00 0.00 0.00 0.00

Paid 3 0.00 0.00 0.00 0.00 0.00

Un paid 4 0.00 0.00 0.00 0.00 0.00

Paid 5 0.00 0.00 0.00 0.00 0.00

Un paid 6 0.00 0.00 0.00 0.00 0.00Paid 7 0.00 0.00 0.00 0.00 0.00

Un paid 8 0.00 0.00 0.00 0.00 0.00

9 0.00 0.00 0.00 0.00 0.00

Low labour 10 49,279.14 18,941.50 29,206.18 1,948.27 30,435.03

Enterpreneur 11 46,530.61 209,371.78 72,166.37 39,357.94 77,514.04

Low level 12 29,005.40 62,699.94 147,114.97 55,373.72 37,416.77

High level 13 11,375.11 74,849.96 12,146.01 47,402.22 41,525.92

Low level 14 2,276.34 4,523.62 285,302.24 70,452.05 179,278.20

High level 15 3,772.09 3,418.42 22,494.34 34,691.56 174,900.53

Company 16 0.00 0.00 0.00 0.00 0.00

Government 17 0.00 0.00 0.00 0.00 0.00

Food Crop, Livestock, Fishery, and Food Process 18 0.00 0.00 0.00 0.00 0.00

Other Agriculture, Forestry, and Hunting 19 0.00 0.00 0.00 0.00 0.00

Oil Palm 20 0.00 0.00 0.00 0.00 0.00

Mining, Processor non food, Electrici ty, Gas, and 21 0.00 0.00 0.00 0.00 0.00

Trade, Restoran and Hotel, Tranportation and Co 22 0.00 0.00 0.00 0.00 0.00Finance, Reas Estate, Government, Social and C 23 0.00 0.00 0.00 0.00 0.00

Trade and Transportation Margin 24 0.00 0.00 0.00 0.00 0.00



Oil Palm 27 0.00 0.00 0.00 0.00 0.00


Trade, Restoran and Hotel, Tranportation and Co 29 0.00 0.00 0.00 0.00 0.00

Finance, Reas Estate, Government, Social and C 30 0.00 0.00 0.00 0.00 0.00




Trade, Restoran and Hotel, Tranportation and Co 34 0.00 0.00 0.00 0.00 0.00

Finance, Reas Estate, Government, Social and C 35 0.00 0.00 0.00 0.00 0.00

Capital Account 36 0.00 0.00 0.00 0.00 0.00

Indirect Tax 37 0.00 0.00 0.00 0.00 0.00

Subsidy 38 0.00 0.00 0.00 0.00 0.00

Overseas 39 0.00 0.00 1,333.70 0.00 1,743.06

142,238.69 373,805.23 569,763.80 249,225.76 542,813.54

ProductionFactor

Labour

Agriculture

Production, Operator of

transportation, and Low

Administration, Selling,

and ServiceLeadership, Army,

Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

nesian SAM IDR Million 22


27/38


(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17

Food Crop, Livestock, Fishery, and Food Process 18

Other Agriculture, Forestry, and Hunting 19

Oil Palm 20

Mining, Processor non food, Electrici ty, Gas, and 21

Trade, Restoran and Hotel, Tranportation and Co 22Finance, Reas Estate, Government, Social and C 23

Trade and Transportation Margin 24



Oil Palm 27


Trade, Restoran and Hotel, Tranportation and Co 29

Finance, Reas Estate, Government, Social and C 30






Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

6 7 8 9 10 11

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

6,384.60 6,337.91 206.14 13,104.36 244.56 924.36

20,942.91 45,195.31 3,028.16 130,153.72 247.14 825.27

91,533.06 17,594.81 7,805.23 131,233.73 245.20 698.47

35,168.46 44,931.67 3,158.58 134,960.22 52.31 137.44

69,240.02 20,939.24 8,813.35 172,038.92 279.83 923.94

161,408.24 131,265.54 20,804.79 176,099.86 29.51 82.11

0.00 0.00 0.00 1,359,982.21 5,680.70 19,257.03

0.00 0.00 0.00 0.00 6,148.80 18,382.74

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 106,613.84 247,382.36

0.00 0.00 0.00 0.00 1,528.28 4,093.73

0.00 0.00 0.00 0.00 454.34 1,217.03

0.00 0.00 0.00 0.00 29,197.32 102,016.75

0.00 0.00 0.00 0.00 22,334.73 113,004.89

0.00 0.00 0.00 0.00 36,049.10 90,676.83

0.00 0.00 0.00 0.00 3,924.43 18,285.22

0.00 0.00 0.00 0.00 13.81 70.93

0.00 0.00 0.00 0.00 6,218.62 47,342.50

0.00 0.00 0.00 0.00 566.73 9,984.32

0.00 0.00 0.00 0.00 369.96 2,297.47

0.00 0.00 0.00 0.00 12,684.84 63,553.65

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 2,657.35 0.00 156,348.82 911.11 4,369.92

384,677.29 268,921.82 43,816.26 2,273,921.84 233,795.16 745,527.00

2008 Indonesian SAM IDR Million 23


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(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17



Oil Palm 20






Oil Palm 27









Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

12 13 14 15 16

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

651.73 733.55 1,011.16 1,104.25 5,100.18

540.69 660.43 865.14 796.60 21,055.77

571.92 634.94 885.18 883.86 17,331.15

103.24 182.18 148.09 88.37 7,768.40

522.28 664.38 589.38 1,019.13 24,230.85

77.38 71.48 97.71 111.35 26,389.50

12,154.22 12,644.22 15,963.83 13,438.83 182,069.75

16,050.77 16,424.03 29,538.40 28,341.66 535,307.40

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

206,293.14 94,433.28 242,554.25 150,921.50 0.00

4,103.31 1,812.98 3,832.19 2,766.39 0.00

1,219.88 538.98 1,139.28 822.42 0.00

130,347.47 73,251.55 174,699.57 135,375.69 0.00

116,198.53 72,982.91 172,020.80 135,108.08 0.00

101,641.93 45,645.71 126,649.08 93,656.51 0.00

16,636.18 13,007.61 19,191.33 21,709.09 0.00

46.83 49.82 57.99 95.41 0.00

21,890.69 27,831.10 29,330.50 48,559.76 0.00

8,029.55 8,955.86 12,868.63 21,515.59 0.00

2,974.92 3,631.55 4,861.51 8,718.07 0.00

37,246.73 52,032.13 56,542.60 96,310.75 825,217.79

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

3,603.02 1,970.15 5,003.82 4,146.36 78,037.85

680,904.40 428,158.84 897,850.45 765,489.69 1,722,508.64



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(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17



Oil Palm 20






Oil Palm 27









Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

17 18 19 20 21

0.00 92,048.07 38,719.66 11,470.96 0.00

0.00 293,112.80 62,250.35 18,442.08 0.00

0.00 62,363.46 3,238.46 959.41 385,280.65

0.00 30,937.19 816.76 241.97 141,274.30

0.00 19,552.29 2,733.55 809.83 96,976.57

0.00 3,255.16 343.09 101.64 6,510.790.00 6,583.22 602.66 178.54 46,462.28

0.00 1,617.59 634.12 187.86 16,511.58

0.00 243,323.47 41,414.16 12,269.22 1,277,233.91

59,494.15 0.00 0.00 0.00 0.00

63,452.46 0.00 0.00 0.00 0.00

56,285.68 0.00 0.00 0.00 0.00

11,179.46 0.00 0.00 0.00 0.00

39,373.26 0.00 0.00 0.00 0.00

7,176.51 0.00 0.00 0.00 0.00

74,361.17 0.00 0.00 0.00 0.00

169,761.88 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 505,777.66 1,859.11 550.77 12,968.37

24.72 86,684.18 14,087.70 4,173.57 86,263.89

7.35 25,770.42 4,188.14 1,240.77 25,645.47

35,895.54 55,630.98 25,346.59 7,509.09 1,446,403.17

45,290.59 17,241.87 4,982.71 1,476.16 102,888.73

140,529.45 25,190.74 6,985.15 2,069.40 122,295.80

0.00 35,484.41 0.00 0.00 776.40

0.00 638.07 99.38 29.44 13,415.11

8,448.10 16,476.48 3,052.62 904.36 682,021.63

2,974.56 2,872.30 112.63 33.37 22,017.07

7,947.59 2,614.35 95.74 28.36 41,783.96

186,030.20 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

184,872.82 0.00 0.00 0.00 0.00

24,199.26 0.00 0.00 0.00 0.00

1,117,304.72 1,527,174.70 211,562.58 62,676.81 4,526,729.69



30/38


(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17



Oil Palm 20






Oil Palm 27









Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

22 23 24 25 26

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

102,833.84 14,623.60 0.00 0.00 0.00

69,626.08 6,329.45 0.00 0.00 0.00

257,677.38 164,254.67 0.00 0.00 0.00

352,397.60 22,069.00 0.00 0.00 0.0032,407.15 181,911.76 0.00 0.00 0.00

9,608.07 15,257.04 0.00 0.00 0.00

356,555.58 339,741.50 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 1,526,922.11 0.00

0.00 0.00 0.00 0.00 211,562.58

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 365,311.08 25,636.85

187,124.07 48,742.03 0.00 0.00 0.00

3,257.53 432.47 0.00 0.00 0.00

968.44 128.57 0.00 0.00 0.00

307,253.99 109,257.39 0.00 0.00 0.00

194,607.58 39,870.61 1,061,663.76 0.00 0.00

146,900.28 115,254.30 0.00 0.00 0.00

2,724.97 326.64 0.00 0.00 0.00

69.26 1.62 0.00 0.00 0.00

92,554.50 18,206.05 0.00 0.00 0.00

24,232.08 5,102.21 0.00 0.00 0.00

43,595.49 30,144.69 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 60,551.62 3,596.38

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

2,184,393.89 1,111,653.61 1,061,663.76 1,952,784.81 240,795.81



31/38


(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17



Oil Palm 20






Oil Palm 27









Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

27 28 29 30 31

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

62,676.81 0.00 0.00 0.00 0.00

0.00 4,416,148.67 0.00 0.00 0.00

0.00 0.00 2,181,980.13 0.00 0.000.00 0.00 0.00 1,111,286.86 0.00

6,721.59 506,747.86 240.19 0.00 20,193.26

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

942.92 73,189.45 39,407.40 11,016.65 12,366.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 101,480.61

70,341.31 4,996,085.98 2,221,627.71 1,122,303.51 134,039.87



32/38


(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17



Oil Palm 20






Oil Palm 27









Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

32 33 34 35 36

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00

468.06 136,343.82 1.04 0.00 0.00

0.00 0.00 0.00 0.00 -22,578.95

0.00 0.00 0.00 0.00 1,953.72

0.00 0.00 0.00 0.00 576.49

0.00 0.00 0.00 0.00 1,074,470.43

0.00 0.00 0.00 0.00 12,992.77

0.00 0.00 0.00 0.00 3,654.77

0.00 0.00 0.00 0.00 1,973.60

0.00 0.00 0.00 0.00 151.85

0.00 0.00 0.00 0.00 169,867.11

0.00 0.00 0.00 0.00 453.58

0.00 0.00 0.00 0.00 3,961.52

0.00 0.00 0.00 0.00 0.00

2,333.00 91,747.91 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

11,938.47 1,015,870.98 119,717.44 153,025 .19 82,141 .82

14,739.53 1,243,962.72 119,718.48 153,025.19 1,329,618.70



33/38


(Million Rupiah)

Description Code

Paid 1

Un paid 2

Paid 3

Un paid 4

Paid 5

Un paid 6Paid 7

Un paid 8

9

Low labour 10

Enterpreneur 11

Low level 12

High level 13

Low level 14

High level 15

Company 16

Government 17



Oil Palm 20






Oil Palm 27









Capital Account 36

Indirect Tax 37

Subsidy 38

Overseas 39

ProductionFactor

Labour

Agriculture





Professional, and

Capital

DomesticCommo

ImportedCom

TOTAL

Institution

Household

Agriculture

Rural

Urban

Prod

uctionSecto

37 38 39 TOTAL

0.00 0.00 0.00 142,238.69

0.00 0.00 0.00 373,805.23

0.00 0.00 464.39 569,763.80

0.00 0.00 0.00 249,225.76

0.00 0.00 809.25 542,813.54

0.00 0.00 0.00 384,677.290.00 0.00 776.21 268,921.82

0.00 0.00 0.00 43,816.26

0.00 0.00 3,384.00 2,273,921.84

0.00 0.00 8,688.08 233,795.16

0.00 0.00 12,822.64 745,527.00

0.00 0.00 23,590.37 680,904.40

0.00 0.00 2,981.21 428,158.84

0.00 0.00 17,383.42 897,850.45

0.00 0.00 2,598.78 765,489.69

0.00 0.00 26,956.67 1,722,508.64

295,151.34 0.00 2,197.71 1,117,304.73

0.00 252.60 0.00 1,527,174.70

0.00 0.00 0.00 211,562.58

0.00 0.00 0.00 62,676.81

0.00 110,581.01 0.00 4,526,729.68

0.00 2,413.76 0.00 2,184,393.880.00 366.76 0.00 1,111,653.62

0.00 0.00 0.00 1,061,663.76

0.00 0.00 170,143.38 1,952,784.82

0.00 0.00 25,781.14 240,795.81

0.00 0.00 6,423.73 70,341.31

0.00 0.00 1,289,430.45 4,996,085.98

0.00 0.00 108,963.00 2,221,627.71

0.00 0.00 65,104.47 1,122,303.51

0.00 0.00 0.00 134,039.87

0.00 0.00 0.00 14,739.53

0.00 71,258.70 0.00 1,243,962.71

0.00 0.00 0.00 119,718.48

0.00 0.00 0.00 153,025.19

0.00 0.00 0.00 1,329,618.70

0.00 0.00 0.00 295,151.34

0.00 0.00 0.00 184,872.82

0.00 0.00 0.00 1,768,498.92

295,151.34 184,872.82 1,768,498.91 37,974,144.87



34/38

Appendix 2. Mixed Multiplier Matrix

Code 1 2 3 4 5 6 7 8

1 1.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

2 0.0000 1.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

3 0.0449 0.0468 1.0533 0.0523 0.0516 0.0528 0.0501 0.0528

4 0.0209 0.0219 0.0248 1.0244 0.0241 0.0246 0.0234 0.0247

5 0.0753 0.0769 0.0859 0.0837 1.0830 0.0843 0.0802 0.0843

6 0.0517 0.0554 0.0616 0.0609 0.0602 1.0613 0.0589 0.06157 0.0455 0.0443 0.0495 0.0475 0.0472 0.0478 1.0451 0.0476

8 0.0057 0.0057 0.0064 0.0062 0.0061 0.0062 0.0059 1.0062

9 0.2116 0.2153 0.2437 0.2373 0.2347 0.2393 0.2267 0.2391

10 0.3584 0.0630 0.0648 0.0212 0.0693 0.0301 0.0366 0.0182

11 0.3734 0.6073 0.1794 0.2095 0.1938 0.1063 0.2174 0.1209

12 0.2570 0.2227 0.3198 0.2826 0.1287 0.2989 0.1235 0.2391

13 0.1170 0.2380 0.0637 0.2315 0.1174 0.1330 0.2066 0.1137

14 0.1033 0.1021 0.6014 0.3814 0.4279 0.2795 0.1727 0.3007

15 0.1213 0.1059 0.1477 0.2448 0.4268 0.5259 0.5893 0.5811

16 0.1754 0.1797 0.1932 0.1910 0.1878 0.1902 0.1832 0.1898

21 0.3325 0.3432 0.3955 0.3869 0.3814 0.3914 0.3695 0.3911

22 0.2889 0.3130 0.3478 0.3448 0.3412 0.3474 0.3341 0.349023 0.2310 0.2206 0.2464 0.2350 0.2337 0.2362 0.2223 0.2349

24 0.0568 0.0601 0.0652 0.0654 0.0647 0.0664 0.0642 0.0666

28 0.3762 0.3883 0.4474 0.4378 0.4315 0.4428 0.4181 0.4425

29 0.2942 0.3187 0.3541 0.3511 0.3474 0.3537 0.3402 0.3554

30 0.2333 0.2228 0.2489 0.2374 0.2361 0.2386 0.2245 0.2372

31 0.0311 0.0343 0.0329 0.0351 0.0344 0.0359 0.0362 0.0360

32 0.0011 0.0012 0.0013 0.0013 0.0013 0.0013 0.0012 0.0013

33 0.1263 0.1415 0.1349 0.1427 0.1427 0.1459 0.1487 0.1475

all_report_indonesia_tuti heiriyani_oil palm plantation in swampland area

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