Why did the director of one of the state’s largest sugar companies decide to promote Jatropha?

By Deasy Simandjuntak

Quote: “A key figure was the director of a historically prominent state-owned agricultural enterprise that had dominated the production of commercial crops such as sugar….”

The discussion on biofuel development, especially jatropha, in Indonesia has mainly focused on a chronological description of the process: its promotion, cultivation and the failure of the crops’ harvest. Furthermore, official reports have so far identified various technical problems (such as the failure to find good seeds for planting and the absence of a market for harvested seeds) as the reasons for the overall collapse of the jatropha program, which had been planned to assist the government’s program of poverty alleviation. This line of reasoning tends to focus on the lack of knowledge of the farmers and the lack of commitment of the plantation companies as the main contributors to the failure of the program. In reality, the development of jatropha, as with other biofuel resources such as oil palm, began with policymaking. As is the case with many developing countries, policies concerning the allocation of authority and resources within society are determined primarily by the preferences and resources of elite actors, such as civil servants, political representatives and high-level bureaucrats (1). In the discussion of Indonesian jatropha, however, the aspect of policymaking, in which the influence and bargaining of eminent actors came into play, has been little examined. By attempting to indicate the interests of such elite actors, this text aims at answering the question of why these actors, especially those connected to state-owned companies, decided to support or promote jatropha.

Observers of Indonesian biofuel developments have indicated that the promotion of jatropha was largely triggered by the overly optimistic narratives surrounding the plant, mostly revolving around its ability to provide significant yields in marginal and degraded lands. These narratives had initially begun as a result of the extrapolation of laboratory results by companies interested in the pioneering research of ITB Bandung scientists since 1994.

The trajectory of Indonesian policies on biofuel – including jatropha – cannot be separated from the role of Indonesia’s state-owned companies, such as Rajawali Nusantara Indonesia (RNI). One of RNI’s former directors, who was closely associated to some alumni of the aforementioned ITB, later became influential in the development of Indonesian jatropha. As one of the pioneering companies in the jatropha campaign, RNI and its director became the first actors to be stimulated by – and thus, later, to contribute to the further dissemination of – the aforementioned positive narrative from 2005 to 2007 (2). A leading sugar company, RNI essentially focuses on agricultural and pharmaceutical businesses. In 2005, triggered by the company’s own need to reduce sugar production costs, RNI’s director initiated several experiments to find cheaper fuel to replace kerosene (diesel fuel). Jatropha oil was deemed the best solution, for two reasons. First, it could reduce the usage of diesel fuel more effectively than alternatives such as bagasse (sugar-cane waste), wood or sawdust (3). Second, jatropha could also generate other products such as soap, biomass briquettes, organic fertilizer and biogas (4). As a result, jatropha was then planted in areas around sugar factories in Java. Nevertheless, as the narrative was further disseminated among the scientists and policymakers, RNI’s director realized that the commodity brought the company and himself to the attention of the Indonesian president. What began as the company’s internal policy to solve the problem of fuel costs eventually became part of national policy. RNI later became an important actor in the creation of biofuel policy and the biofuel national committee in 2006. Not long after that, the project also gave rise to an elaborate plan to create energy-independent villages, officially enacted by the president in 2007. At the start of the program, RNI, together with Pertamina (the state oil company) and PT Gas Negara (the state gas company), were to be ‘stand-by buyers’, pledging to purchase all the seeds harvested by jatropha farmers in the villages involved in the plan (see Chart). Due to the president’s increased attention to RNI’s jatropha program, there were talks among top-level officials that the RNI director would eventually secure a position as a state minister. Nevertheless, the dynamics of competition between the actors at the national level, in addition to internal company disagreement regarding an alleged imported-sugar corruption case, eventually forced the aforementioned director to step down from his position in RNI, which subsequently ended RNI’s further involvement with jatropha in 2008.

In order to describe the relations between elite actors and government (developmental) projects, thistext uses an actor-oriented approach, which highlights the importance of observing the influence and interests of the actors in the creation and implementation of state policies. By using an actor-oriented approach, Norman Long shows the growing discrepancy between the ideal of the developmental goals written in policy statements and papers, and the goals of the operational practice, as well as the personal goals pursued by individual actors and bureaucrats in the course of implementing the projects (5). In this way, we see the discrepancy between the normative image of the project and the interests of the actors.

The above case shows one of the instances in which a national program or policy became closely interlinked with one or more individual actors. Despite their many regulations, “soft” states like Indonesia lack control mechanisms over public and private sector policies (6), making the role of individual actors crucial in determining national policy. Various actors in the national and local governments vie to initiate or be involved in specific policies which they hope will help to advance their interests, influence and name (7). The relation between the actors and “their” promoted policies is crucial, as these policies become “markers” for the actors’ leadership. Joshua Barker illustrated such situations in which “every new development… would involve elaborate groundbreaking and inauguration ceremonies in which officials overseeing the project would be given center stage” and that “[the regime would]…identify development projects with its own political leadership” (8). In the case of jatropha, the aforementioned former RNI director was given center stage. Jatropha became part of his identity and the “marker” of his leadership in RNI. If a marker is managed well, it can provide an opportunity for an actor to gain political power, for example, promotion to a position as a state minister. This, however, was not the case with the RNI director, as he had to leave his position in the company. As to RNI’s involvement with jatropha, the fact that this project died down in the absence of the director suggests that instead of being a source of biofuel, jatropha had mainly been used as a tool to further an actor’s political interests.

This brief study on the relations between RNI and Indonesian jatropha highlights the role of actors in Indonesian biofuel policy. The above case shows that jatropha was used – whether this was initially intended, or a result of the attention paid to it by the president – to further an actor’s interests. In this case, there was a discrepancy between the ideal developmental goal of the jatropha program, which was to alleviate poverty, and the goal of operational practice, which was to gain a position in the government.

 

References

  1. Merilee S. Grindle, John W. Thomas, Public Choices and Policy Change: The Political Economy of Reform in Developing Countries (Johns Hopkins Press, London, 1991).
  2. Deasy Simandjuntak, Riding the hype: The role of actors in the introduction of jatropha as biofuel crop in Indonesia – The case of Rajawali Nusantara Indonesia 2005-2007. Sustainability 6(6), 3780-3801, Special Issue “The global jatropha hype – Drivers and consequences of the boom and bust of a wonder crop” (2014).
  3. “RNI menuju era energi hijau” (RNI moves toward a green-energy era) (“Jarak Pagar” team, Rajawali Nusantara Indonesia, 2005).
  4. Rama Prihandana, Erliza Hambali, Siti Mujdalipah, Roy Hendroko, Meraup Untung dari Jarak Pagar (Agro Media Pustaka, Jakarta, 2007).
  5. Norman Long, Paradigm lost or paradigm regained? The case for actor-oriented sociology of development, in Long and Long (eds.), Battlefield of Knowledge: The Interlocking of Theory and Practice in Social Research and Development , pp. 16-43 (Routledge, London, 1992).
  6. Deasy Simandjuntak, “Who Shall Be Raja? Patronage Democracy in North Sumatra, Indonesia,” Ph.D. thesis, University of Amsterdam (2010).
  7. Deasy Simandjuntak, Gifts and promises: Patronage democracy in a decentralised Indonesia. European Journal of East Asian Studies 11(1), 99-126 (2012).
  8. Joshua Barker, Engineers and political dreams: Indonesia in the Satellite Age. Current Anthropology 46(5), 703-727 (2005).
  9. “Business industries in Indonesia: Some critical issues,” Business Watch Indonesia (August 28, 2007). Available at http://www.fair-biz.org/admin-bwi/file/publikasi/20070828100425.pdf (accessed November 20, 2013)

Chart

Projection of state-owned companies’ alliances in the Energy-Independent Villages (DMEs) (9)

                        chart

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Why did the director of one of the state’s largest sugar companies decide to promote Jatropha? by JARAK the short history of Jatropha projects in Indonesia, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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