Main findings and discussion

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Rapid land-use change due to an increasing global demand for agricultural goods has had ecological, economic and social implications. Indonesia is an excellent case study to analyze these far-reaching consequences, since the emerging country has underwent large land-use transformations with the expansion of cash crops, especially oil palm, over the past two decades. While the ecological effects have received a lot of attention in previous studies, this dissertation analyzes the social and economic dimensions of recent land-use changes in rural Indonesia.

5.1 Main findings and discussion

This dissertation contains three essays analyzing two broader research objectives related to social and economic dynamics of the recent land-use changes in Indonesia. The first objective is to understand, how changes in the farm production system affect dietary quality over time. While the second research objective is to examine, how the oil palm expansion is associated with household economic welfare and intra-household gender roles in smallholder farming systems.

Essay one contributes to the first research objective by examining changes in households‘ food choices over time in response to the changes in production systems. It hypothesizes that reductions in production diversity as a result of agricultural specialization are associated with reductions in household dietary diversity due to the reduced consumption of crops that are no longer produced by the household. It further hypothesizes that greater market access resulting from improvements in infrastructure is associated with increases in household dietary diversity through market purchases of diverse foods. Results show positive relationships between production diversity and household dietary diversity as well as between market access and household dietary diversity. However, the overall decline in dietary diversity over time is linked to the same households that have reduced the diversity of food crops produced. Results show that the decline in dietary diversity was mostly driven by the decreased consumption of nutritious food groups (fruits, vegetables, legumes, and fish).

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Although the magnitude of the association between dietary diversity and production diversity was relatively small, the association between household production and consumption of some important food groups was quite substantial. Thus it can be concluded that the overall impact of increased specialization in Indonesia during the period 2000–2015 on dietary quality appears to have been negative. Furthermore, this indicates that a nutritional transition is well underway and could lead a double or triple-burden of malnutrition, since the Indonesia has still to fight undernourishment, while at the same time, overweight, obesity and micronutrient deficiencies are emerging. Thus more nuanced policies that tackle nutritional quality, are necessary to shift this trend towards the right direction. Food security should not be understood as access to enough calories but rather access to the right calories that are needed for a healthy and nutritious diet. The process of modernization comes with certain nutritional challenges: as people grow fewer fruits, vegetables, and legumes, they are also consuming less of these nutrition-dense foods, while increase in income has been positively associated with the purchase of dairy, eggs and meat. The challenge here is to maintain the improvements, while acting towards minimizing the losses. In contrast to these findings other studies from Sumatra show that the adoption of oil palm improved the quality of household diets over time (Chrisendo et al. 2020; Sibhatu 2019). This could be because farm households were already market oriented and thus the increased income due to the high-value cash crop oil palm improved household dietary quality (Nurhasan et al. 2020).

Findings from the second research objective of this dissertation underline the positive socio-economic welfare effects of oil palm adoption. Prior studies show that smallholder farmers benefit economically from cultivating oil palm. In addition, the second essay examines whether farm households also benefit in the long term and considers potential exposures that affect economic risk. The results show that oil palm cultivation increases household living standards, measured by annual consumption expenditure during the period 2012-2018. Moreover, the findings demonstrate that oil palm cultivation can reduce households‘ economic risk, measured in terms of potential decreases in living standard. The risk-reduction effect is evident despite fluctuating international palm oil prices as oil palm requires less labour than alternative crops such as rubber. This freed family labour is then reallocated to other economic activities such as off-farm work, which helps to smooth income and consumption.

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The social implications of oil palm specialization present mixed results. The last essay focuses on oil palm cultivating households and explores the impacts of oil palm expansion in Indonesia from a gendered perspective. The essay hypothesizes that male and female household members are affected differently by the increasing expansion oil palm. Three tests are presented. First, this study explores how on-farm labour dynamics differ between males and females in oil palm cultivating households. Second, it examines the association between oil palm cultivation and individual level time allocation of females and males within the household. The last test determines whether female involvement in oil palm cultivation could also influence female economic decision making power in oil palm versus rubber cultivating households. Results show that oil palm cultivation decreases on-farm family labour input, especially female labour. Results also suggest that as the share of farm under oil palm cultivation increases, females spend less time on farms, more time on work inside the house and enjoy more leisure time. For males, time allocation does not differ significantly with land-use type, except for more leisure time among male members as the intensity of oil palm cultivation increases. Findings reveal that females are more likely to lose intra-household decision-making power in terms of decisions regarding farm management and income allocation from the farm.

One important policy implication from these findings is that supporting the rural non-farm sector is crucial to ensure the economic sustainability of oil palm cultivators‘ livelihoods.

Investments in the rural non-farm sector could help farmers to diversify their income and reduce their exposure to potential risks that come with a perennial cash crop such as oil palm.

This could for instance happen by investments in rural infrastructure to support economic activities and build stronger markets or credit institutions. Investments in public goods, such as schools or kindergartens, could also help to mitigate potential implications for gender roles.

As essay three shows, women are released from on-farm work and reallocate this time towards care and domestic work. Having kindergartens for instance could reduce the care work burden on women and allow them to pursue other economic activities. This will help to insure female economic autonomy. The importance of the rural non-farm sector can also address concerns of gender equity by providing greater work opportunities for women. It is vital to recognize that heterogeneous implications of oil palm expansion. Although there is an overall positive effect on welfare at the household-level, the implications for the females can be mixed.

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In conclusion, Indonesia‘s agricultural sector can serve as an engine for its further development and oil palm could play an important role in this process. However, to achieve sustainable development, the ecological, economic and social implications of agricultural development strategies need to be accounted for. The findings from this dissertation show how complex the interplay between the different dimensions of human well-being is. Economic improvements might not accompany social ones: policies aiming to increase incomes might not improve household health or nutrition. Gains might be realized at household-level but not trickle down to all its members equally due to power structures such as gender. Therefore it is crucial to go beyond income gains in the evaluation of process of interventions and to look into the different spheres of human well-being. Adding the ecological sustainability adds to this complexity, and yet, needs to be included in the equation to ensure the long-term well-being of humans and the planet. The challenge, however, remains how to harmonize these different aspects.