Fostering Economic Resilience in Berau through Smallholder Crop Diversification

The report analyzes the economic risks of palm oil monocropping for independent smallholders in Berau, Indonesia, finding that palm oil returns are often below minimum living costs. It argues that diversifying into crops like maize and cocoa can significantly increase revenue—potentially by up to 825% for maize—while enhancing regional food security and economic stability. The study recommends that the Berau government strengthen priority economic programs, facilitate access to agricultural financing and insurance, and implement environmental safeguards for alternative crops.

• Palm oil is a dominant economic driver in Berau, contributing to a sector that makes up 84.7% of the regency's total GDP, but it is insufficient to meet the minimum living costs of independent smallholders. Financial modeling of a two-hectare plot shows that net returns are 439% lower than the region's minimum wage and GDP per capita over 25 years.
• The shift toward palm oil monocropping has displaced food crops, transforming Berau from a food-secure region capable of self-subsistence in staples like rice into one increasingly reliant on food imports from other regions.
• Diversifying palm oil plantations with maize or cocoa offers significantly higher revenue potential than monocropping. Maize is the most recommended diversification crop, with the potential to generate up to 825% more income, followed by cocoa, which can generate up to 495% more.
• Diversification is identified as the most efficient strategy for improving smallholder income because it requires less capital and capacity building than intensification through replanting and avoids the deforestation associated with expansion.
• The optimal timing for starting crop diversification on vacant land is when existing palm oil plantations reach peak productivity (around year 10), as this period provides the high cash revenues necessary to access financing.

APA

Climate Policy Initiative (2020). Fostering Economic Resilience in Berau through Smallholder Crop Diversification. https://www.climatepolicyinitiative.org/publication/fostering-economic-resilience-in-berau-through-smallholder-crop-diversification/

Chicago

Climate Policy Initiative. Fostering Economic Resilience in Berau through Smallholder Crop Diversification. 2020. https://www.climatepolicyinitiative.org/publication/fostering-economic-resilience-in-berau-through-smallholder-crop-diversification/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Fostering Economic Resilience in Berau through Smallholder Crop Diversification |date=26 November 2020 |url=https://www.climatepolicyinitiative.org/publication/fostering-economic-resilience-in-berau-through-smallholder-crop-diversification/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2020fostering, author = {{Climate Policy Initiative}}, title = {{Fostering Economic Resilience in Berau through Smallholder Crop Diversification}}, institution = {Climate Policy Initiative}, year = {2020}, month = nov, url = {https://www.climatepolicyinitiative.org/publication/fostering-economic-resilience-in-berau-through-smallholder-crop-diversification/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }