The heavy rains of late November 2025 devastated many countries in South East Asia. Indonesia was hit the hardest, with more than 953 lives lost in Aceh, Sumatra Utara, and Sumatra Barat in the floods and landslides. The tragedy kindled public anger, and social media has been flooded after the resurfacing of a 2024 speech by President Prabowo, where the President undermined the risks that result from increasing oil palm production as well as the deforestation that has been happening in Sumatra. Beyond momentary outrage, these events have signaled a deep reflection for Indonesia about palm oil and the international political economy of our everyday lives.
Opportunity & Meeting Global Demands
Ever since 1970, the demand for palm oil has increased fortyfold. In 2024, Indonesia had the largest consumption of palm oil in the world at 20.35 million metric tons. To meet such demands, not to mention the export-led growth targets, Indonesia has rapidly increased its palm oil production, and now is the largest producer in the world. However, alongside this change game a range of social and environmental grievances. Sumatra, the region hit hardest by the recent floods, contains the most extensive palm oil plantation area in Indonesia. This is no coincidence.
Palm oil production in Indonesia is complex interplay between state corporations, private corporations and smallholders. The majority of palm oil production in Indonesia is controlled by private corporations. The state has supported plantation expansion and eased trade barriers since the post Soeharto era of private corporations who can produce faster with their technology, to increase foreign-exchange earnings. Moreover, private corporations rely heavily on monoculture systems. Given that private corporations operate on large-scale areas of land, monoculture significantly reduces biodiversity and weakens soil stability as oil palm trees have shallow roots. Therefore, it increases the risk of flooding and soil erosion.
Environmental Responsibility
The environmental consequences of Indonesia’s massive palm oil production play out alongside a shifting global political economy agenda that is more climate-conscious. On one hand, China, one of Indonesia’s largest importers of palm oil, has begun an ambitious path towards greener supply chains. On the other hand, Indonesia faced a trade dispute with the European Union over environmental concerns of palm oil production. Although Indonesia recently won the dispute, it cannot ignore the mounting global expectations for sustainability. Many countries have also developed more international environmental standardization in trade. For instance, the Roundtable on Sustainable Palm Oil (RSPO), a voluntary internationally recognized certification, has also gained more usage in Indonesia, but its reach remains limited.
To raise environmental standards and international competitiveness, Indonesia currently has the Indonesian Sustainable Palm Oil (ISPO), a certification regulation introduced in 2009. Although the number or certificate holders have increased, as of 2025, only 39.33% have obtained ISPO certification. Additionally, Presidential Decree No. 16 of 2025 has pushed for stronger implementation, however overall compliance remains low and slow. However, critics argue that the ISPO falls short in addressing key issues such as post-plantation land rehabilitation.
The moratorium regulation aimed at halting the expansion of palm oil plantations in Indonesia between 2018-2021 was deemed as a step forward in sustainability efforts. However, the policy was not renewed, and expansion in regions such as Sumatra has continued.
Overlooking the Smallholders & Everyday Lives
Smallholders, defined as those who own less than 25 hectares of land, make up roughly 40% of oil production in Indonesia. Despite this, they are often overlooked and occupy a precarious position. Some smallholders are associated with private corporations, while others are fully independent. The latter has less financial capacity, knowledge and technology, making them vulnerable within the supply chain compared to private corporations. Moreover, they do not have the access to the markets that private corporations do.
A study on palm oil justice movements in Indonesia highlights how the dominating practices of state elites and private corporations have not only weakened smallholders’ political and economic aspirations, but also cause the most environmental damage.
The November floods pose a strong reminder that the government’s negligence to govern palm oil production has ultimately impacted the lives of the grassroots communities such as smallholder farmers. The palm oil sector supports more than 16 million workers, whose livelihoods bear the immediate heaviest burden—losing homes, schools, and roads to the very mud of private corporations misconduct and policies.
As consumers, without realising, palm oil is embedded in our everyday lives whether it be the food we eat or the products in our bathroom cabinets. Hence, we cannot simply stop consuming it, especially since many people depend on the industry for their livelihoods. While we can make more mindful choices, the government must make a more strategic position.
Moving Forward
Several research studies have suggested that the “bottom-up” approach of supporting smallholders may be a practical solution to reconcile higher output with environmental protection. Approaches include investing in capacity building and exposure to international markets. Evidence also shows that the adoption of sustainable practices leads to increased productivity.In light of the hundreds of lives lost, focusing on the narrative of the palm oil industry as a ‘blessing from the almighty’ that should be expanded ignores the failure of the government to empower and protect those who contribute the most. Focusing on corporate expansion while ignoring the power asymmetry of smallholders undermines environmental implications, long-term competitiveness and rural welfare. If the government lacks the political will to empower and protect those at the base of the supply chain, the cost of the next flood will be even higher.
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