Land-use change, socioeconomic welfare, and gender roles in rural Indonesia

Global population and income growth has driven the demand for agricultural land. This rapid conversion of land use to agriculture has affected the social and economic welfare of local communities within the landscape. Indonesia is a country that has recently undergone rapid land-use change due to increasing demand in global crop commodities. Oil palm, the largest export commodity in Indonesia, has been identified as a key driver of deforestation and biodiversity loss in this region. Oil palm has also replaced agricultural lands that were previously used to grow food crops for local subsistence, as well as other cash crops such as rubber. The agricultural sector is a main contributor to the national economy and is a major element in Indonesia’s economic growth and development strategy. Despite experiencing rapid economic and social changes over the past two decades, rural poverty, malnutrition, and food insecurity continue to persist at high rates. Understanding the social and economic consequences of land-use change is therefore imperative to address how to support the welfare and development of local communities affected within the landscape. This dissertation explores the human dimension of the recent land-use changes and particularly focuses on the impact of agricultural specialization and oil palm expansion in Indonesia. This dissertation has two research objectives. The first research objective is to analyze how agricultural specialization has affected diets in rural Indonesian households over a time. The second research objective is to examine how the oil palm expansion has affected smallholder farmers in terms of household economic welfare and intra-household gender roles. Despite great strides in reducing hunger over the last two decades, malnutrition remains a major challenge in Indonesia. High rates of child stunting coexist with high and increasing rates of overweight and obesity despite rapid economic growth and reductions in poverty over the last two decades. Part of this economic growth has been driven by a change in agricultural production systems from traditional farming techniques that typically grow multiple crops to more intensified, specialized and commercialized farms. The objective of the first essay is to analyze how changes in the structure of agricultural production have affected diets in rural Indonesian households over time. We use three waves of a panel data from the Indonesian Family Life Survey with a balanced sample of 2785 rural households between 2000 and 2015 to observe transitions in households’ food choices over time in response to the changes in production systems. We find positive relationships between production diversity and household dietary diversity as well as between market access and household dietary diversity. However, we see that there has been an overall decline in dietary diversity in households where production diversity has also reduced. This decline in dietary diversity was mostly driven by the decreased consumption of nutritious food groups (fruits, vegetables, legumes, and fish). Although the magnitude of the association between dietary diversity and production diversity was relatively small, the association between household production and consumption of some of these important food groups was quite substantial. The overall impact of increased specialization in Indonesia during the period 2000–2015 on dietary quality appears to have been negative. After looking at national household dietary quality implications, we zoom in on oil palm producing households. The rapid expansion of oil palm in tropical regions has substantial implications for socioeconomic development. Several studies show that smallholder farmers benefit economically from cultivating oil palm. However, most existing studies examine short-term impacts with cross-sectional data, which has two disadvantages. First, issues of endogeneity are difficult to address with cross-sectional data. Second, dynamic and risk effects cannot be analyzed. In this second essay, we address both issues by using three waves of panel data from smallholder farmers in Indonesia and pseudo fixed effects panel estimators. We show that oil palm cultivation increases household living standards, measured by annual consumption expenditure, by 13% on average. Moreover, we demonstrate that oil palm cultivation reduced households’ economic risk, measured in terms of potential decreases in living standard due to income variability. The risk-reduction effect is evident despite fluctuating international palm oil prices and consequences for oil palm revenues and profits. Oil palm requires less labour than alternative crops, thus freeing family labour for other economic activities. We find that oil palm farmers are more involved in off-farm activities, which helps to smooth income and consumption. Policy support may be required to address oil palm adoption constraints that some smallholders face. In addition, fostering the non-farm economy and improving household access to lucrative off-farm jobs are important for equitable rural development. To our knowledge, there are only few studies that address the intra-household implications of oil palm expansion in Indonesia. Male and female household members might be affected differently by the increasing adoption expanding oil palm cultivation. The last essay explores the gender-disaggregated implications of oil palm cultivation among smallholder households in Indonesia. By using panel and cross-sectional data of 700 smallholder households, we examine the disaggregated farm labor input over time, 24-hour time allocation and females’ economic decision-making power. Results show that oil palm cultivation decreases on-farm family labor input, especially female labor. When looking at the male and female time allocation, results suggest that females spend less time on farms, more time on work inside the house and enjoy more leisure time as the share of farm under oil palm cultivation increases. For the male counterparts, differences in time allocation were not statistically significant, 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 relation to farm management and farm income allocation. These findings make important contributions to addressing rural development policies aiming to expand cash crop production while also improve women’s welfare. This dissertation concludes by providing a synopsis of all three essays, discussing the limitations, possible future research areas, and broader policy conclusions from the findings presented above. For the first research objective, results point to more nuanced policies, targeting nutrition as such. For the second research objective, findings from essay two and three suggest that positive gains from commercial oil palm cultivation occurred in terms of household welfare but the gender implications are rather mixed. In this context rural non-farm sector is important to support income diversification, especially regarding the economic involvement of females that are no longer working on-farm in oil palm cultivation.

2021-06-21