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Global population growth has continued to increase the demand for oil Palm products (Sayer et al 2012, Khatun et al 2017). According to previous findings, the demand for palm oil in 2050 will double, reaching 240 metric tons (Corley 2009), leading to an increasing trend in production (Alatas 2015) and expansion (Corley 2009). However, palm plantations that are not cultivated based on good agricultural practices often pose social, economic, and ecological risks on the surroundings.
Indonesia is the largest producer and exporter of palm oil (Mielke, 2018). The export volume trend has continued to grow and it is faster than other countries (Alatas 2015). Between 2009-2013, the country was recognized for its palm oil exportation, contributing 47.16% of the total global export (Ministry of Agriculture of Indonesia 2016). National and global bodies concerned with palm oil pricing, consumption, and production specifically influence the exportation activities (Mariati 2009).
The total area of oil palm plantations in 2016 was 11.91 million hectares with an increased production rate of 33.23 million tons (Directorate General of Estate Crops of Indonesia 2016), owned by smallholders, state, and private companies. Presently, private companies cover an area of 6.51 million hectares, followed by smallholder and the state covering 4.65 million and 0.75 million hectares, respectively (Directorate General of Estate Crops of Indonesia 2016). Some palms are grown in legal locations, while some are encroached into forest areas (Amalia et al 2019) and national parks (Hidayah 2016), which by regulation are prohibited.
The effect of oil palm plantation expansion in forest areas has led to the emergence of serious environmental issues, especially changes in land (Amalia et al 2019). Consequently, it caused ecological landscape changes (Bennett et al 2018), declined ecosystem (Obaideen et al 2019), habitat fragmentation, and biodiversity loss (Fitzherbert et al 2008). Furthermore, it has affected the economic and social aspects of life such as marginalization of local people through the loss of livelihood (Yulian et al 2017), vulnerability (Amalia 2016), transformation (Mardianingsih et al., 2018), and the emergence of conflicts (Koczberski and Curry 2005, Amalia et al 2019). There was a 56% oil palm expansion in forest areas (primary, secondary and production forests) (Koh and Wilcove 2008) in 1990-2005. Plantation in the forest notably covered a landmass of 3.4 million hectares in 2018 (Kehati 2019), and in illegal areas it has given rise to serious negative effects in the environment, and to economic and social aspects. Therefore, a better oil palm plantation management involving owners, financial institutions, product manufacturers, and the government is required to achieve a sustainable development (Tan et al 2009).
Private companies or smallholders often cultivate oil palms in illegal areas. Smallholders' actions in expanding their plantations generally result in a shift in the community's life patterns, from a subsistent to a market-oriented cycle (Zunariyah 2012). Therefore, their expansion is predicted to act more rationally. This production rationalization involves an economic action scope which is profit-oriented (Scott 2012).