Oil Palm Plantation Expansion and Governance

Production rate of oil palm has been increased in Indonesia to meet the high demand of products. In response, companies and smallholders have improved their production through expansions. In 2018, plantation occupied a land mass of 3.4 million hectares, leading to environmental, social, and economic problems. The aims of study were to analyze the rationality responsible for the encroachment chaos in forest areas, to analyze the correlation between readiness to implement ISPO and the logic responsible for smallholders’ classification, and to analyze related issues in ISPO implementation. Survey method with questionnaires was used on plasma smallholders managing independent plantations in two villages at East Kalimantan. The results showed rules guiding forest encroachment cover the activities of Smallholders with effective and substantive rationality. However, many of them are not ready to implement ISPO certification because their marketing activities are controlled by middlemen. Therefore, forest area encroachment will remain and ISPO certification will be difficult to implement.