Analysis of Land Availability for Establishment of Palm Oil Plantation

36 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap plantation companies will obtain the ISPO certificates by 2014. With this regulation, all palm oil plantation companies will be obliged to conserve High Conservation Values HCV areas in their concession and to apply good practices in reducing GHG emissions and also obliged to develop plasma farmer with minimum area of 20 of the total area of the plantation. Obligation for establishing plasma farmer may face dilemma, especially for the existing established plantation as all their plantation area already planted. To meet this obligation the alternative ways is to find additional lands to be used for plasma.

B. Analysis of Land Availability for Establishment of Palm Oil Plantation

Analysis of land availability is divided into two parts. The first part is the assessment of lands which have been licensed for forest concessions and palm oil plantation. This analysis was aimed to determine fraction of the licensed lands that have not been planted and not covered by forest. The second part is the assessment of suitability of unlicensed lands for palm oil plantation in both forest and non-forest areas. In Indonesia, lands in forest area are under the authority of Ministry of Forestry, while lands in non-forest area are under the authority of local government. The forest area can be divided into four categories based on its function namely Production Forest HP, Convertible Production Forest HPK, Protection Forest HL and Conservation Forest HK. Based on regulation, only HPK that can be released to local governments to become non-forest area and be utilized for non-forest based activities infrastructure, settlements, agriculture development etc. or called as APL. In this context, lands in forest area are not necessary always covered by forest, while lands in non-forest area may also be covered by forest. The flow of analysis for assessing lands allocated and suitable for palm oil plantation follows Figure 3.1. The assessment of suitable land for palm oil was done only for mineral soils using various layer considerations and indicators Table 3.1. Layer considerations include land cover, peatland, land suitability, concessions and forest function. Land cover refers to observed biophysical cover of the earth surface including a class of vegetation and a type of manmade features as well as bare soil and water body surfaces. The land cover was derived from Landsat images of year 2010 downloaded from USGS Global Visualization http:glovis.usgs.gov using land classification system developed by Ministry of Forestry and also used land cover maps Peta Penutupan Lahan 2006 and 2009 from Ministry of Forestry. The land cover maps consist of 22 land usecover categories, i.e. primary drayland forest, secondary drayland forest, primary mangrove forest, secondary mangrove forest, primary peat forest, 37 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Figure 3.1. Approach for selecting area suitable for palm oil development. Note: Dashed and solid lines indicate the flow of the 1 st and 2 nd parts of analysis respectively Forest area 836,890 ha Non-forest Area 65,035 ha Non-forest area 834,481 ha HPK 107,178 ha HP 201,846 ha HLHK 509,939 ha HPK 395,193 ha HP 240,949 ha HLHK 187,298 ha Unproductive land 395,997 ha Productive lands 446,226 ha Conserved area Recommended for Sink Enhancement Recommended for Oil Palm 1,204,352 ha Suitable for Palm Oil 7,369,205 ha Not suitable for Palm Oil Mineral Soil 12,388,525 ha Peat Soil Land cover map 15,406,094 ha Land suitability map Soil map Concession map Non-licenses 2,674,866 ha Licenses Forest function map Forested land 901,925 ha Non-forested land 1,765,997 ha Forest area 931,918 ha Concession map Forest function map 38 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Table 3.1. Layer Consideration, Indicator, and Data Source Layer Considerations Indicator Data Source Land cover Land cover categories forested area, non-forested area Landsat TMETM+ Data 2010 a Ministry of Forestry 2006, 2009; 1:250,000 scale b Peatland map Soil type organic soil, mineral soil BBSDLP, Ministry of Agriculture 2011, 1:250.000 scale c Wetland International 2004, 1:250,000 scale d Land Suitability for palm oil Topography elevation, slope Shuttle Radar Topography Mission 2008, resolution 90 m e Climate rainfall WorldClim Global Climate data 1989-2009, 30 second resolution f Soil depth, type, drainage, acidity RePPProT 1990, 1:250,000 scale Soil type classifications from FAO Soil Map guidelines g Concession Concession type HGU, HTI, HPH Ministry of Forestry 2010; 1:250,000 scale h Forest function Forest area HPK, HP, HPTHLHSAW and non-forest area APL Ministry of Forestry 2011; 1:250,000 scale i a Landsat TMETM+ data area available in USGS Global Visualization Viewer at http:glovis.usgs.gov b Ministry of Forestry data available as of February 2012 at http:appgis.dephut.go.idappgis : Penutupan Lahan 2006 and 2009 Land cover 2006 and 2009 c Ministry of Agriculture data available as of December 2011 at http:bbsdlp.litbang.deptan.go.id : Peta Gambut Indonesia Skala 1:250,000 Indonesia’s Peatland map 1:250,000 scale d Data available in S. Minnemeyer, L. Boisrobert, F. Stolle, Y.I. Ketut Deddy Muliastra, M. Hansen, B. Arunarwati, G. Prawijiwuri, J. Purwanto, and R. Awaliyan. 2009. Interactive Atlas of Indonesia’s Forest CD-ROM. Washington, DC. World Resources Institute. e Available at http:www2.jpl.nasa.govsrtmcbanddataproducts.html f Available at http:www.worldclim.org g The FAO Digital Soil Map of the World and associated information can be downloaded at http:www.fao.orggeonetworksrvmetadata.show?id=14116 h Oil palm plantations. MoFor 2010 Agriculture Plantations, Direktorat Jenderal Planologi Kehutanan, Kementerian Kehutanan Republik Indonesia, downloaded as Google Earth files kml from http:appgis.dephut.go.idappgiskml.aspx accessed 29 July 2010, supplemented with data gathered from provincial planning agencies BPN MoFor 2010. HTI concession maps, provided by the Planning Department of the Ministry of Forestry, Indonesia Direktorat Jenderal Planologi Kehutanan Kementerian Kehutanan Republik Indonesia http:appgis.dephut.go.idappgiskml.aspx downloaded September 2010. Updated using 1 MoFor 2010 Pemanfaatan Hutan, Data dan Informasi, Tahun 2010, Ministry of Forestry Indonesia, November 2010 www.dephut.go.idfilesBuku_pemanfaatan_2010.pdf and 2 MoF 2011, online WebGis Kehutanan, online interactive map http:webgis.dephut.go.idditplanjsindex.html accessed May 12 2011 Logging Concessions HPH: MoFor 2010 Direktorat Jenderal Planologi Kehutanan, Kementerian Kehutanan Republik Indonesia, Google Earth Format http:appgis.dephut.go.idappgiskml.aspx downloaded July 30 2010 i Forest function of the MoF under Minister Forestry Decree Number S.292 Menhut-II2011 available at http:www.gistutorial.nettmpkalteng2921613.jpg 39 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap secondary peat forest, forest plantation, agriculture plantation, palm oil plantation, agriculture land annual crop, mixed agriculture, rice field, transmigration area, grassland, swamp shrub, settlement, swamp, pond, bare land, mining, water, airport, and cloud. The whole area with 22 land coveruse categories re-grouped into mineral and peat lands following peatland map from Balai Besar Sumberdaya Lahan Pertanian 2011 and Wetland International 2004. The area in mineral soil was further evaluated based on land characteristics for determining the land suitability for palm oil. The suitability of the land was assessed based on biophysical indicators in a specific type of land in term of suitability for a specific use, in this case, oil palm cultivation. In this study, we adopted indicators proposed by WRI and Sekala, with modification Table 3.2. Based on assessment of land cover and distinguishing the land cover into suitable mineral soils for oil palm, the classified land was determined its legal basis in the area according to the concession areas and the forest function of MoF which has been agreed by the Minister of Forestry through a decree Number SK.292Menhut-II2011, signed at 31st May 2011. Concession refers to rights to use a land for a particular purpose i.e. for oil palm called HGU, timber industries called IPHHK or HPH and HTI. In this step, information regarding concessions on potentially suitable sites is collected from the most recent publicly available Ministry of Forestry concessions data 2010. The potential sites for future oil palm development are area outside of the current concessions un-license areas. Meanwhile, the forest function refers to the legal classification of the land described in the Forestry Law of 1999, which classifies land as either within the Forest Area Kawasan Hutan or outside the Forest Area Non-Forest area, Areal Penggunaan Lain - APL 22 . Land within the forest area is further classified according to the following functions: Permanent Production Forest Hutan Produski Tetap – HP, Limited Production Forest Hutan produski Terbatas – HPT, Convertible Production Forest Hutan Produski Konversi– HPK, Protected Forest Hutan Lindung – HL, Conservation Forest Hutan Konservasi – HK. By regulation oil palm plantations can be developed in APL areas or in HPK areas when extra procedures are followed to release the HPK area from the Forest Area. Licensed Lands In 2010, area of licensed lands in Central Kalimantan already reached 8,367,850 ha which consists of 38.4 as HGU, 54.2 as HPH and 7.5 as HTI Table 3.3. Based on Ministry of Forestry concessions data 2010, there are 272 palm oil companies will operate in Central Kalimantan covering area of about 3.21 million hectares. Size of land allocated to the palm oil companies varies from less than 1,000 ha to more 22 Undang-undang No. 41 tahun 1999 tentang kehutanan Law No. 41 of 1999 regarding forestry 40 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap than 35,000 ha. Most of companies have lands with size of between 1,000 and 25,000 ha Figure 3.2. Nevertheless, areas that have been granted with HGU were only 39, while the remaining is still in process of getting HGU 23 . Of 3.21 million hectares, only about 25 that have been planted with palm oil, while the remaining is covered by forest 28 mostly secondary forest, shrubsgrassland 29, agriculture 9 and others mining, rice field, ponds, transmigration area etc. About 11 of the areas are located in peatland. Table 3.2. Suitability Indicators and Suitability Classifications Indicators Suitability Classification Suitable 1 Not Suitable 0 Topography Elevation ≤ 500 m 500 m Slope ≤ 30 30 Climate Rainfall 1250 – 6000 mmyr 1250 mmyr 6000 mmyr Soil Depth 50 cm 50 cm Type Silt loam, sandy clay loam, silty clay loam, clay loam dry or wet inceptisol; oxisol; clay, loamy sand, sandy loam, loam ultisol, clay; loamy sand; sandy loam; loam ultisol; sandy clay; silt spodosol; entisol Heavy clay; sand histosol Drainage Good; moderately good, Excessive; poor Very excessive; very poor; stagnant Acidity pH 3 – 7 pH 3,5 and 7 previous elevation within WRI and Sekala’s proposed indicators was 1000m for not suitable Table 3.3. Area of Licensed lands in Central Kalimantan in 2010 Land cover HGU HPH HTI Primary Forest 11,198 447,643 54 Secondary Forest 861,608 3,277,601 298,587 Forest Plantation 23,717 21,014 55,303 Agriculture Plantation 802,149 56,347 76,325 Cropland 362,262 204,149 53,175 Grassland 871,190 504,096 104,932 Wetland 173,238 67 18,822 Settlement 33,055 7,126 4,046 Others 72,142 14,626 13,376 Total 3,210,560 4,532,670 624,620 Source: Calculated based on Ministry of Forestry concessions data 2010 23 About 21 in the form of izin lokasi location permit and 40 are still in the early stage of process or no information 41 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Figure 3.2. Number of palm oil companies in Central Kalimatan according to the size of the land given to the companies analyzed based on Ministry of Forestry concessions data 2010 Further analysis indicated that almost one third of the lands allocated for palm oil plantation are considered not suitable for palm oil Table 3.4. The non-suitable lands for the palm oil still covered by forest reached 320 thousand hectare and most of them are secondary forests. The distribution of suitable and non-suitable lands allocated for palm oil plantations is presented in Figures 3.3a and b. Table 3.4. Area of allocated lands for palm oil based on their suitability Land cover Suitable Not Suitable Primary Forest 1,661 9,537 Secondary Forest 548,231 313,377 Forest Plantation 21,845 1,872 Agriculture Plantation 671,296 130,852 Cropland 270,431 91,831 Grassland 584,974 286,216 Wetland 95,517 77,721 Settlement 29,581 3,475 Others 47,245 24,897 Total 2,270,782 939,778 10 20 30 40 50 60 70 F re q u e n cy Area ha 42 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Figure 3.3a. Location of licensed lands suitable for palm oil in Central Kalimantan Province based on land suitability analysis and forest function of the MoF under Minister Forestry Decree Number S.292 Menhut-II2011. Suitable lands recommended for palm oil plantation are areas highlighted with yellow in APL horizontal lines, and yellow and light blue in HPK vertical lines and HP oblique lines. 43 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Figure 3.3b. Location of licensed lands not suitable for palm oil in Central Kalimantan Province based on forest function of the MoF under Minister Forestry Decree Number S.292 Menhut-II2011. Non-suitable lands for palm oil plantation are areas highlighted with yellow in APL horizontal lines, and yellow and light blue in HPK vertical lines and HP oblique lines. 44 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Non Licensed Lands Potentially suitable sites for oil palm plantation for the entire Province of Central Kalimantan which have not been licensed reached 3,663,012 ha Table 3.5. As by regulation only lands in HPK that can be released for non-forest based activities, thus the prioritized lands for palm oil development are areas with no-forest cover non-forested land located in APL and HPK. In this study, we considered these lands as degraded lands. Total area of the degraded land in mineral soil suitable for palm oil was about 0.791 million hectare and that in peat lands was about 0.305 million hectare total 1.096 million hectare. By including forested land, the total area available for palm oil establishment in mineral soils increased to 0.955 million hectare and in peatland increase to 0.456 million ha total 1.411 million ha. Distribution of non-licensed lands suitable for palm oil plantation is presented in Figure 3.4. Table 3.5. Land suitable for the establishment of palm oil plantation in Central Kalimantan Land Classificati on Non-forested land Forested Land Mineral soil 1 Organic soil 2 Mineral soil 1 Organic soil 2 APL 395,997 166,048 56,337 41,056 HPK 395,193 138,542 107,178 110,213 HP 240,949 179,688 201,846 209,426 HLHK 180,083 191,203 506,712 368,458 Total 1,212,222 849,564 872,073 729,153 Note: 1 The land suitability analysis was conducted only for mineral soils. The suitable lands in APL are only the unutilized lands grassland, shrubs, swamp or open lands while in HPK they also include agriculture lands and 50 of transmigration area. 2 Only include organic soil with depth of less than 3 m as this land by regulation it is still possible to be utilized for non-forest based activities, however, this study excludes the peat land. Available Lands for Palm Oil Plantation Based on Tables 3.4 and 3.5, lands available for establishment of new palm oil plantation are all licensed lands covered by grassland plus 50 of croplands and all non-licensed lands located in APL and HPK plus non-forested land in Production Forest Table 3.6. Using this assumption, total suitable land available for establishment of new palm oil plantation is 2,496,278 ha. If non- suitable in the licensed lands are included total land available increase to 3,153,197 ha. Based on discussion with Head of Economic Division of Central Kalimantan Province, as more than 3 million hectare of lands already allocated for big plantation, the release of HPK for APL will not be intended for big companies anymore, but it would be allocated for small holder farmers. Referring to Figure 3.4, many of areas of the non-licensed lands are relatively small. Total area of the non-licensed suitable lands will size of more than 1,000 ha is only 281,192 ha Table 3.7. Thus most of the non-licensed suitable lands have size of less than 1,000 ha. Of the 281,192 ha, only about 40 of the lands with size of more than 5,000 ha and about 30 is still covered by forest. 45 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Figure 3.4. Location of non-licensed lands suitable for palm oil in Central Kalimantan Province 46 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Table 3.6. Available lands for establishment of palm oil plantation Lands for palm oil plantation Palm Oil Forested Lands Non-Forested Lands Un planted Licensed lands Suitable 671,296 571,737 720,189 Not-Suitable 130,852 324,787 332,132 Non-licensed lands APL n.a 65,035 395,997 HPK n.a 107,178 395,193 HP n.a n.a 240,949 Total suitable lands 802,149 1 743,950 1,752,328 Total suitable lands non-suitable 802,149 1 1,068,737 2,084,460 Note: 1 Based on statistical data, total licensed area that have been planted with palm oil up to 2010 was 1,054,168 ha Disbun, 2011; see Table 1.1. There are about 200 thousand hectares differences between statistic data and that satellite interpretation. This difference may be due to difficulties in recognizing newly established palm oil plantation from satellite image and the statistic data include palm oil in peat land, while this analysis only include mineral soils . Table 3.7. Categorization of area of the non-licensed lands suitable for palm oil according to size Size of area Forested Land in APL Forested Land in HPK Non Forested Land in HP Grand Total 5000 5,079 26,173 79,383 110,635 1000-5000 26,675 55,879 88,003 170,557 Grand Total 31,754 82,052 167,386 281,192 Scenario of Land Use for the Establishment of Palm Oil Plantation Considering the availability and suitability of the lands for the establishment of palm oil plantation as discussed in previous sections, the land use scenarios developed for this study is divided into four namely: 1. Baseline scenario: All lands allocated for palm oil and also suitable lands in APL and HPK of mineral soils irrespective of land cover forested and non-forested will be used in the future for palm oil establishment. As some of the land at APL and HPK may also be needed for other commodity, we assumed only 70 of the available land will be used for palm oil establishment. This proportion is based on the current proportion between palm oil plantation and total area of agriculture plantations. . 2. Land-swap scenario: To avoid the conversion of forests, all forested lands in APL and HPK will be conserved. To compensate the loss, non-forested land in HP will be swap with the forested lands in APL and HPK. 3. Improved Yield: To reduce the demand for land, the level of productivity of palm oil of the independent small holders and plasma farmer is increased. In this study as indicated in Table 47 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap 2.1, we assumed the productivity of independent farmers can be increased from 8.06 tha to 10.07 tha, and for plasma farmer from 12.59 tha to 15.74 tha. For company, there is no increase in productivity. Following the policy of the local government, the available land under APL and HPK will be allocated all for small holders. 4. All remaining forested lands in APL and HPK are saved: This scenario is proposed if the non-forested lands in production forest cannot replace the forested lands in HPK and APL for the establishment of palm oil plantation. With this scenario, land allocated for the palm oil plantation will decrease as many as forested lands that will be saved. In this scenario, yield of plasma and independent farmers are also improved. Following the above assumptions, the total land available for the establishment of palm oil plantation under the baseline scenario reached 2.6 million ha and about 40 of the lands are still covered by forest Table 3.8. With the implementation of the proposal, the land swap and improved yield scenarios, the forested land that can be saved will be about 0.241 and 0.473 million hectares respectively without reducing the palm oil production. Table 3.7 shows that the two proposals cannot avoid the conversion of forested land for the establishment of palm oil plantations. There is still about 0.544 million hectares of forested land be converted to palm oil. Therefore, we proposed the 4 th land use scenario to save the forested land. In this scenario, total land available for the establishment of new palm oil plantation will be only 1,847,103 ha. Table 3.8. Land allocation scenarios for the establishment of palm oil plantation in Central Kalimantan Land Allocation Category Baseline Land-Swap Improved Yield Forested land Non- Forested Lands Forested land Non- Forested Lands Forested land Non- Forested Lands Un planted Licensed lands Suitable 571,737 720,189 571,737 720,189 544,049 720,189 Not-Suitable 324,787 332,132 204,387 332,132 332,132 Non-licensed lands APL 45,525 277,198 277,198 277,198 HPK 75,025 276,635 276,635 276,635 HP 240,949 240,949 Sub-Total 1,017,073 1,606,154 776,124 1,847,103 544,049 1,847,103 Total 2,623,227 2,623,227 2,391,152 N ote: Only 70 of the total suitable land defined in Table 3.6 or Figure 3.1 is allocated for palm oil 48 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap Expected Palm Oil Production under the Four Land Use Scenarios Estimation of palm oil production from new plantations will require data on land allocation for companies, plasma farmers and independent farmers. In this analysis following the regulation, 20 of all licensed lands will be allocated for plasma, and for the non-licensed lands following provincial government policy, 60 will be allocated for plasma and 40 for independent farmers see Table 3.7. This assumption is applied for the land use scenarios 1-3. While for the scenario 4 saved all forested lands, we assumed that the government will still allocate some of the unlicensed non-forested suitable land for companies, especially the lands with size of more than 5,000 ha see Table 3.7, and the remaining for the plasma and independent farmers. Using these assumptions, the allocated lands for companies, plasma and independent farmers can be seen in Table 3.9. By combining with existing plantation, the total land under palm oil plantation in the future will meet the target see Table 1.1, target is 3,595,173 ha, except for the all forested land saved scenario Table 3.9. Table 3.9. Allocated lands for companies, plasma and independent farmers under the four land use scenarios and total land under palm oil plantation Palm oil Plantations Baseline Land swap Improved Yield All forested land saved Companies 1,462,756 1,462,756 998,090 Plasma farmers 842,558 673,940 594,557 Independent Farmers 317,913 254,457 254.457 Total planned 2,623,227 2,391,152 1,847,103 Total land under plantation Existing + planned 3,677,395 3,445,320 2,901,271 The estimation of CPO production from the existing and new palm oil plantations should consider the age distribution. In the existing plantation, more than half of the plantation was planted after 2005, thus the level of production from the existing plantation will increase significantly in the next ten years as the more plantations will reach optimum age age of between 9 and 15 years. Using assumption of yield of about 8.06 ton FFBha and 19.67 ton FFBha for small holder and big plantations respectively, by 2020 the production of CPO from the existing plantations will reach about 5.02 million ton Figure 3.5. This is more than double 49 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap of the 2010’s level of production which is about 2.21 million ton. Thus without increasing the area of plantation, Central Kalimantan will be able to double its production. Nevertheless, as Sumatra may not be able to expand the palm plantation area anymore due to land availability, expansion of plantation in Kalimantan is still needed so that the national production target can be achieved. Figure 3.5. Estimated CPO production from existing plantation Referring to Table 3.9, in the land swap and improved yield scenarios, establishment of new palm oil plantation will continue in the licensed lands as well as in part of the non-licensed lands. In the saved all forested land scenario, establishment of new palm oil plantation will not be conducted in the forested licensed and non-licensed lands. In this study, all the available lands for the establishment of new palm oil plantation will all be planted within 20 years the for land swap and improved yield scenarios, and within 15 years for the saved all forested land scenario. Thus the rate of planting will be 131,161 hayr for the land swap scenarios, 119,558 hayr for the improved yield scenario and 123,140 hayr for the save all forested land scenario 26 . Using this assumption, estimated production in 2020 from the existing and the new plantations would reach 26 From historical data in last 13 years 1998-2010, mean rate of establishment of palm oil plantation in Central Kalimantan was about 100 thousand hectares per year. - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 C P O t on Small Farmers Big Plantations 50 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap about 7.8 million ton CPO Figure 3.6 which is almost four time of the 2010’s level of production. Thus Kalimantan alone in 2020 can contribute almost one fourth of the national production target. The future production pattern of the CPO of the land swap and improved yield scenarios will be the same as that of the baseline scenarios. The production of the CPO will continue to increase until 2033 with peak production of about 12.5 million tons and start declining slowly. However for the save all forested land scenario, the CPO production will continue to increase up to 2030 with peak of production 11.2 million tons and the decline quite rapidly Figure 3.6 since more plantations have completed their life cycle. If the existing plantations of the plasma and independent farmers that will be replanted later are also targeted for the yield improvement program, the implementation of the saved all forested land scenario might not result in production which is significantly different from the other baseline scenario. Figure 3.6. Estimated production of palm oil from existing and new plantations in Central Kalimantan under baseline, land swap and improved yield scenarios left, and saved all forested land scenario right The result of this analysis suggests that adoption of the all forested land saved scenario is very possible. This scenario will save forested land up to one million hectare and it will not result in significantly different production target of 2020 from that of the baseline scenario. If this recommendation is going to be considered, the MoF need to revise the forest function by changing the status of non-forested production forest becoming HPK and that of forested - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 C P O T o n Big Plantation New Small Holder New Big Plantation Existing Small Holder Existing - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 C P O T o n Big Plantation New Small Holder New Big Plantation Existing Small Holder Existing 51 | P a g e Reducing agricultural expansion into forest: analysis of implementation financing gap convertible production forest becoming production forest. Local governments also need to revisit the land licensing process. Lands that have been allocated for palm oil plantations but still covered by forest and no HGUs are issued, may need to be suspended and cancelled.

C. Delivery Mechanism