From Digging to Planting: A Sustainable Economic Transition for Berau, East Kalimantan

This executive summary by the Climate Policy Initiative analyzes the economic transition of the Berau District in East Kalimantan, Indonesia, from a coal-dependent economy to one based on palm oil. The study finds that shifting from coal to a palm oil mono-crop is unsustainable and risks food security. It recommends a transition plan focusing on RSPO certification, increasing production efficiency, diversifying into other high-value crops like pepper and cocoa, and developing downstream processing refineries to capture added value and increase government revenue.

• Berau's economy is currently unsustainable due to a lackC lack of diversity, as palm oil has displaced other estate and food crops. Between 2011 and 2016, Fresh Fruit Bunches (FFB) and Crude Palm Oil (CPO) production increased by 340%, resulting in palm oil occupying approximately 90% of the planted area and 31% of plantation land in the district.
• The shift toward palm oil mono-cropping has compromised regional food security, as the production of staple foods like rice and other crops such as coconut, rubber, and cocoa has declined, making Berau increasingly dependent on food imports from other regions.
• Berau's palm oil production is inefficient compared to national standards. The district's FFB yield is under 17 tons/ha, while the national best practice is 22 tons/ha. CPO yields in Berau are estimated at 2.0–2.8 tons/ha, compared to a national average of 3.5 tons/ha.
• There is significant untapped economic potential in downstream processing and crop diversification. Berau lacks a single refinery, sending raw CPO to eight refineries in Indonesia and Malaysia. Additionally, crops like pepper and cocoa show higher profitability; pepper production value per hectare is more than three times that of palm oil FFB smallholders.
• Palm oil growth has not significantly improved Berau's government revenue. In 2016, the sector contributed IDR 559 billion to central government revenue, but only IDR 9.77 billion (2% of the tax contribution) returned to Berau via the Dana Bagi Hasil (DBH). Most of the district's own-source revenue (80%) comes from service-related industries rather than agriculture or mining.
• The district could increase national tax revenue by approximately IDR 405 billion (USD 31 million) if all CPO were refined within Berau. Furthermore, the government aims to expand Village Enterprises (BUMK) from 99 in 2017 to 584 by 2021 to support community businesses.
• To support sustainability, the report suggests innovative fiscal transfer mechanisms. These include the Special Allocation Fund (DAK) and Regional Incentives Fund (DID), as well as emerging ecology-based transfers: the Provincial Budget Transfer (TAPE) and the District Budget Transfer (TAKE), which reward the protection of forests.

APA

Climate Policy Initiative (2019). From Digging to Planting: A Sustainable Economic Transition for Berau, East Kalimantan. https://www.climatepolicyinitiative.org/publication/from-digging-to-planting-a-sustainable-economic-transition-for-berau-east-kalimantan/

Chicago

Climate Policy Initiative. From Digging to Planting: A Sustainable Economic Transition for Berau, East Kalimantan. 2019. https://www.climatepolicyinitiative.org/publication/from-digging-to-planting-a-sustainable-economic-transition-for-berau-east-kalimantan/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=From Digging to Planting: A Sustainable Economic Transition for Berau, East Kalimantan |date=27 August 2019 |url=https://www.climatepolicyinitiative.org/publication/from-digging-to-planting-a-sustainable-economic-transition-for-berau-east-kalimantan/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2019from, author = {{Climate Policy Initiative}}, title = {{From Digging to Planting: A Sustainable Economic Transition for Berau, East Kalimantan}}, institution = {Climate Policy Initiative}, year = {2019}, month = aug, url = {https://www.climatepolicyinitiative.org/publication/from-digging-to-planting-a-sustainable-economic-transition-for-berau-east-kalimantan/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }