The History and Development of Palm Oil Industry in Indonesia

Sources : https://voi.id/en/memori/149029

By: Atep Afia Hidayat

The history of the palm oil industry in Indonesia traces back to the introduction and commercial cultivation of palm oil seedlings that traveled thousands of kilometers to reach Indonesian shores. This article explores the key figures behind its introduction, initial commercial development, and the integration of palm oil cultivation into Indonesia’s agricultural landscape.

According to various sources, the first palm oil seeds arrived in Indonesia (then the Dutch East Indies) around 1848, brought by the Dutch colonial government from Nigeria. Similarly, Malaysia received its first palm oil seeds in 1875, introduced by the British colonial government through Singapore (MPOC, 2012). Despite Singapore no longer having palm oil plantations today, it stands as the first region to receive African-origin palm oil seeds.

There are differing accounts regarding the history of palm oil in Indonesia. Some suggest that the existence of oil palm in Indonesia is closely tied to the establishment of the Bogor Botanical Gardens in West Java Province. Founded in 1817 by Governor General G.A.G.P. van der Capellen upon the recommendation of German scientist Prof. Caspar George Carl Reinwardt, the initial area covered 47 hectares near the Bogor Palace (PKT-KR, 2016).

According to KPPU (2006), oil palm was first introduced to Indonesia by the Bogor Botanical Gardens in 1884 from Mauritius, during the tenure of Director Johannes Elyas Teysmann. Notably, Mauritius, an island nation in the Indian Ocean approximately 900 km east of Madagascar, played a pivotal role in introducing oil palm to the botanical gardens. The original palm tree, crucial to the history of oil palm cultivation in Indonesia and Southeast Asia, survived until 1989 (about 105 years), and the current botanical collections in Bogor are descendants of this original tree.

Another perspective suggests that oil palm germplasm was brought to the Dutch East Indies by the Dutch colonial government in 1848. Some seeds were planted in the Bogor Botanical Gardens, while others were cultivated as ornamental plants in Deli, North Sumatra, around the 1870s. Concurrently, the Industrial Revolution began in England and spread to various countries and continents, inspiring the initial development of palm oil plantations. The selection and breeding of superior planting materials in Bogor and Deli led to the development of the Deli Dura variety.

The first palm oil plantation in the Dutch East Indies was established in Tanah Itam Hulu (now administratively part of Limapuluh District, Batubara Regency, North Sumatra Province) in 1911 by Belgian national Adrien Hallet, followed by German national K. Schadt. The plantation covered an area of ​​5,123 hectares. The first palm oil exports were conducted in 1919, primarily by established foreign companies. This period marked the integration of agriculture, processing by palm oil mills (PKS), and marketing, forming the basis of agribusiness concepts that had been in practice since the 1900s. The first plant breeding center was established in Marihat (administratively part of Simalungun Regency, North Sumatra Province, and managed by PT Perkebunan Nusantara IV North Sumatra) and Rantau Panjang, Kuala Selangor (Selangor State, Malaysia) in 1911 and 1912 (KPPU, 2006 and Wikipedia, 2016d).

Wikipedia (2016d) notes that until the Japanese occupation, the Dutch East Indies remained a major supplier of palm oil for global demand. However, production drastically declined to only 20% of the 1940 levels following the Japanese invasion. During President Soekarno's administration, efforts were made to revive palm oil production through programs like the Military Labor Program (Bumil), which ultimately faced challenges, resulting in Malaysia (then Malaya) taking over as the world's leading palm oil supplier.

KPPU (2006) records that the monopoly of large-scale foreign companies in the palm oil industry in Indonesia persisted until 1958. Dutch companies were nationalized and taken over by the State Plantation Company. According to Hartono (2013), on December 9, 1957, Prime Minister Juanda announced that all Dutch agricultural companies, including Dutch-Indonesian joint ventures, along with their fixed assets and plantation lands, would be under Indonesian government supervision. The New Order era saw continued expansion of palm oil plantations, often in conjunction with the Smallholder Plantation (PIR) system.

The planted area of palm oil experienced phenomenal growth. Data from Dirjenbun (2014) indicates that in 1968, there were only 119,660 hectares of palm oil plantations, comprising 79,209 hectares of state-owned plantations and 40,451 hectares of private plantations. By 2013, this had expanded to 10,465,020 hectares, an 87.5-fold increase over 45 years. Smallholder plantations began in 1979 with 3,125 hectares, ballooning to 4,356,087 hectares by 2013, a 1,394-fold increase over 34 years. Production from smallholder palm oil plantations increased from 760 tons in 1979 to 10,010,728 tons in 2013, a growth of 13,172 times over 34 years.

Today, Indonesia's palm oil industry dominates the global market. By 2014, the planted area had reached 10,465,020 hectares (BPS, 2015), equivalent to 104,650.20 km2 (approximately 0.9 times the size of Java Island or 171 times the size of Jakarta Province). The palm oil industry has become a cornerstone of Indonesia's economy, with exports reaching USD 18.6 billion (approximately IDR 250 trillion) in 2015, contributing 12.38% to total export value and 14.12% to non-oil and gas exports. Expectations suggest that Indonesia's palm oil production from 2014 onwards will surpass that of its competitors such as Malaysia, Thailand, Colombia, and Nigeria.

References

1. MPOC. (2012). History of Malaysian Palm Oil.
2. PKT-KR. (2016). Bogor Botanical Gardens History.
3. KPPU. (2006). History of Oil Palm in Indonesia.
4. Wikipedia. (2016d). Economic History of Indonesia.
5. Dirjenbun. (2014). Palm Oil Plantation Statistics.

         6. BPS. (2015). Indonesian Palm Oil Industry Report. 

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 Re-write from :

Hidayat, Atep Afia dan M. Kholil. 2020. Industri Sawit Serta Dampak, Ekonomi, Sosial dan Lingkungannya. Penerbit WR. Yogyakarta. (Bagian Satu : Revolusi Industri dan Sejarah Industri Sawit: 2. Sejarah Industri Sawit)