Since 2015, the Indonesian Oil Palm Estate Fund (BPDPKS), which is tasked with strengthening and promoting sustainable practices in the industry, has been imposing a $50 per ton export levy on crude palm oil and $30 per ton levy on crude palm oil derivative products when prices drop below $750. (Antara Photo/M. Rusman)

Report Unveils Labor Exploitation in Indonesia’s Palm Oil Industry


JUNE 11, 2016

Jakarta. Palm oil plantation workers in North Sumatra work under alarming rates of exploitation, a report by environmental NGO Rainforest Action Network report released on Wednesday (08/06) found.

Last year, a team of researchers from RAN investigated the living and working conditions of two palm oil plantations in Sumatra, owned by local food company giant Indofood, a joint venture partner of international food distributor PepsiCo.

PepsiCo is the world’s largest globally snack distributor, using 470,045 metric tons of palm oil annually for the products. Its partner Indofood owns IndoAgri, the third largest private palm oil company in the country with 246,000 hectares of plantation area in Sumatra and Kalimantan.

The two food distributors have been accused for abusing workers due to unethical treatment and for allegedly allowing children work in their fields.

According to the report, PepsiCo adopted a revised palm oil policy which outline responsible palm oil production practices in September 2015, but the policy did not require their partners, including Indofood, to follow PepsiCo’s footsteps.

It was also revealed that Indofood does not adopt any responsible palm oil practices.

Through the research, it was found that many of Indofood’s workers were exposed to high-risk environments with little or no proper healthcare coverage, paid unethically low wages, while some were below the legal working age.

RAN interviewed 41 Indofood workers between September and October last year and found many workers not legally bound to the company, as most were precarious workers — including temporary, casual, contract, outsourced and day laborers, known as kernet.

“Kernet workers are essentially invisible workers as they are not recognized as part of the official plantation workforce, have no legal protections and are not eligible for health care, work-related injury compensation, or other social protections,” RAN said in the report.

Seven kernet workers regularly assisted harvesters with various hard labor work, such as collecting loose palm kernels, chopping fruit bunches and organising palm branches, and had no proper regulations or monitoring in their work conditions.

Four of them were teenagers aged 13, 16 and 19 years old, one of which began working at the age of 12.

It was found that kernet workers were "hired" by harvesters, assigned to high daily quotas and were threatened a pay cut if they did not fulfil them.

Permanent employees make up 51 percent of the workforce in the palm oil plantations, but was found to only receive pay slips of Rp 1.7 million ($130), which is below the district’s monthly minimum wage of Rp 2 million.

Casual workers did not receive documented pay slips and were given a basic daily wage of Rp 78,600, under the district’s minimum of Rp 80,480.

Kernet workers however receive a maximum monthly wage between Rp 500,000 to Rp 875,000, depending on the discussed rate with their harvester, while some did not receive any pay as they were just helping family members.

Although children are not directly hired by Indofood, RAN found that children were hired as kernet workers because of the quotas assigned to harvesters, as well as the fact that they were generally cheaper labor.

The unreasonably high quotas set by Indofood was slammed by the organization, as harvesters were assigned to two tons of fresh fruit bunches daily and they had to walk far distances to collect 140 to 160 fruit bunches.

Due to the high quotas and low wages forced workers to recruit family members into the scene, resulting in children leaving their education behind.

Workers were also found to be exposed to the highly hazardous pesticide Paraquat which is banned in various Western countries.

The environment they were working in consisted of many occupational hazards due to the tools — or lack of — they were using on the plantations.

Despite the long hours, possible injuries from carrying heavy loads and insect bites, all casual and kernet workers were reported to have no health insurance or have limited access to the company’s on site clinic.

RAN criticized the two food giants for keeping a closed eye to their employees and warned PepsiCo of running into a risk in their global reputation for failing to fully comply to their recently signed palm oil policy.

“PepsiCo must adopt an ambitious deadline for achieving third-party verified compliance with its policy for all palm oil used in all its products and brands, including those produced by Indofood and other joint venture partners,” said RAN.

The organization listed suggestions for the Indonesian government to extend social welfare benefits such as housing, eduction, health, safety, disability provisions for all workers, including casual and status-less workers.