Since the end of 2007, Merauke district planned to establish a project for food and energy production called Merauke Integrated Food and Energy Estate (MIFEE). It is a mega agro-development project for food and energy production which spans three districts in Papua (Merauke, Mappi and Boven-digul) and it became part of the central government’s plan to develop agricultural estates in remote areas. The target is Indonesia can become a self-sufficient country in food and energy production and eventually become exporters as the President said “Feed Indonesia, then feed the world”[1]. This project will cover around 1.28 million ha, and 90% among them (1.13 million ha) are primary/natural forests –that have not been logged before. The MIFEE became part of the 100 days agenda of of the national cabinet and became the dominion of ministry of agriculture coordinate with local government (district level of Merauke). This project also expected would start at 2010, initially for 500,000 hectares with the first harvest expected in 2012. The project would also be channeled for the construction of 700 kilometers of roads in the district, 1,500 kilometers of connecting road to West Papua province, three ports and irrigation systems involving government investment for infrastructure around US$ 3 million and predicted will invite private (local and foreign investment) up to US$ 60 millions[2].
It was Texmaco – a conglomerate company-, the first who explored the potential of Merauke by managing big plantation (more 3,000 ha) since the eighties and developed oil palm, sugar cane and other natural fiber plantations for a pulp development by the US-based company Scott Paper[3].After the collapsed of Texmaco at the beginning of 2000, Medco group continued Texmaco work and research including the potential of Merauke for paddy and sugarcane production.
Medco Group, an Indonesian oil and gas company, at 2007 firstly using its subsidiary company (Medco Papua Lestari) began construction of a wood-chip mill in Merauke and plans to start producing at mid 2008 reach its peak production, a 500,000-metric-ton-a-year pulp-and-paper, in 2012[4]. The plant would be Indonesia's first large new mill since the 1997-98 (Asian financial crisis) and the first in Papua. Medco appears to have the biggest plans for Merauke. The company has persuaded the local government and Ministry of Forestry to grant it a 600,000-hectare concession area near the Bian River.
While at the same time, PT Medco Papua (another Medco group subsidiary company), piloted 200 ha project on agriculture business at Merauke; corn cassava, soybean, sugar cane and pady SRI system (which also introduced by Medco Foundation on West Java, Aceh, Bali, Central Kalimantan and Nusa Tenggara). Along with its successfulness especially in piloting 20 ha project with paddy SRI system at tanah miring, Merauke (and other parts in Indonesia), Medco group had big support from Merauke Bupati (Johanes Gluba Gebze) to expand the paddy SRI business in industrial scale as the Bupati saw the SRI system has high productivity and suitable with the Merauke area characteristic, topography and climate[5]. A concept for integrated rice industry covered 1.9 million ha at Merauke was proposed to the government (Ministy of Agriculture)- as it was a mega project, massive external investment and governmental support for infrastructure also needed-, called by Merauke Integrated Rice Estate (MIRE)[6]. The MIRE will encourage partnership with local farmers and banking using integrated farming; organic system, waste management and organic fertilizer production.
The Ministry of Agriculture found the MIRE concept can become a solution for Indonesia (and the world) food crises –strong lobby from Medco also other factor as Medco’s owner also a senior political actor- On August 2008, the ministry invited some investors from Saudi (BinLaden Group) known as the Middle East Foodstuff Consortium to discuss the possibility the involvement of the Consortium in developing rice industry in Indonesia especially in Merauke (and South East Sulawesi also proposed). The BinLaden Group signed an agreement to invest at least US$4.3bn, on behalf of a consortium of 15 Saudi investors, to develop 500,000 ha of riceland in Merauke[7]. The aim is to produce basmati rice (premium rice which is consumed by majority of Middle East population) for export to Saudi Arabia[8]. The Consortioum also would consider reserving some of the rice for the local market[9].
There were also several local firms interested in joining the MIRE program, beside Medco E&P Indonesia as a pioneer, other firms were PT Bangun Cipta Sarana (construction), PT Wolo Agro Lestari (plantation), PT Comexindo (plantation and trading for corn, palm, rubber and tea) and Sumber Alam Sutera (hybrid rice seeds)[10]. Most of companies has closed link to the political party and also has strong power to influencing government policy. As it was explained, Medco Group is owned by Arifin Panigoro, a senior political actor, while Comexindo Group is owned by Hashim Djoyohadikoesoemo, the brother of Prabowo Subianto (Suharto’s ex-son in law, ex head of Kopassus and Kostrad Special Forces units, and failed Presidential Candidate). Bangun Tjipta Sarana is commisionered by Siswono Yudo Husodo, having been Director from 1969 – 1988. During this time Husodo was Minister of Home Affairs (1988 – 1993), Minister for Transmigration (1993 – 1998), and a deputy presidential candidate (2004). Sumber Alam Sutra / Artha Graha Group is controlled by Tommy Winata (Oe Suat Hong). Winata's close links to the military were forged when he won lucrative contracts to construct military facilities in Papua and West Papua, Ambon, and Makassar, and when he reportedly ran Yayasan Kartika Eka Paksi, a retirement welfare fund for the military. Winata has been involved in the timber trade since setting up Artha Graha Group[11]
The central government on November 27, 2008 managed cabinet meeting and discussed on how to support the food estated for Indonesian’s food resilience by providing regulation as legal basis[12]. Some key regulations had already being drafted and coordinated by the Ministry of economic affair as the food estate also will involve many ministries in Indonesia. As the regulation draft being negotiated with the parliament, disappointing news emerged during the 5th World Islamic Economic Forum on March 2009. The minister of agriculture announcing that the Saudi Binladin Empire had frozen its plan to invest $4.3 billion in developing rice crops in Merauke. The investors decided to stall its plan due to the global financial crisis (falling food prices and the Middle East’s diminishing oil revenues)[13]. This situation forced Indonesian Government to focus on domestic partners potential for developing the food estate and encouraging the local investor to invite the foreign investor using their own resources.
On the other hand, Medco group has scaled back plans for a large pulp and paper mill at Merauke due to growing global concern over the impact of deforestation on climate change. Medco has dropped plans for its pulp and paper mill and instead is focusing on a smaller-scale $70 million facility to produce wood pellets, a potential "green" fuel. There were potential markets as an increasing demand for wood pellets from companies in Europe and Asia that are under pressure to reduce their carbon emissions.[14] Wood pellets are rising in popularity as a source of fuel to replace carbon dioxide-emitting coal in power stations and for heating. Medco has teamed up with LG Corp. of South Korea[15], which has taken a 32% stake in Medco's Papua unit and will market the wood pellets overseas. It plans to produce 100,000 metric tons of wood pellets in 2010 and 300,000 tons within two years. As the company also found a prospective future for sugarcane to be developed for food (sugar) and fuel (ethanol), they planned to expand their area from piloting into more industrial level and tried to involve their strategic partner from Japan with total investment around US$ 25-30 millions to produce 60 tons bioethanol perday[16]. Medco found these two initiatives for alternative fuel also can be strategic to promote the industrial food estate which was already planned at Merauke. Thus the local government supported the idea, the concept of energy was integrated into food estate. It was suspected as the reason why the term of MIRE was changed into MIFEE (Merauke Food and Energy Estate).
While there were serious effort in recruiting investors for MIFEE project, government issued out some regulation that will provided widened road for the project implementation.First regulation on October 14,2009 was, Law 41/2009 on The Protection of Areas for Sustainable Food Agriculture. This law was intended to support the successful of Indonesia in food sovereighnity by protecting the existing land farming and creating parrenial land farming for food supply. This law also allows the form of corporate farming which has investment sharing between local government (51%) and foreign investor (49%). Then, 29 November 2009 Government Regulation No.39/2009 on Special economic zone (SEZ)[17]-mandated under the 2007 investment law-, as Merauke (throught MIFEE) also proposed to become one of Indonesian Special Economic Zone for agricultural purposes (there were 22 proposal for SEZ area). Using this law, the zones will provide companies with fiscal incentives, such as reduced corporate-income and land taxes, and will exempt them from value-added and luxury goods taxes. Companies will also enjoy nonfiscal incentives, such as streamlined immigration procedures and easier access to land and business permits. Unlike in existing free-trade zones — which are restricted to international companies — imports of raw materials and exports of finished products will not be tax-exempt, but goods produced in the clusters will be allowed to be sold on the domestic market. Investors can have their business permits in less than 14 working days, compared to the current 30 to 60 days, and bypass all licensing laws laid down by the local administrations.
On 2010, there were three regulations related with MIFEE project issued by the government. First was new land-use Government Regulation No.10/2010 (January 22,2010) on Procedure on Converting Forest Allocation and Function. It must be noted here that this regulation allows forest areas to be used in the development of non-forestry activities that are categorized in the regulation as “activities inevitably tied to strategic goals.” These activities include mining, renewable energy technology, telecommunications development, generator installations, public roads, toll roads, railroads, forestry-related industries, security and defense, and temporary shelters in response to natural disasters. Then at the same day, the government also issued out Regulation No.11/2010 on Enforcement and Empowerment of Abandoned land (including forestry zone) that allows Land acquisition for public private partnership activities as it is intended for increasing people prosperity[18]. Then on 28 January 2010, government released regulation No. 18/2010 on Plantation Business which is derivied from Law 41/2009. The regulation states that for papua area each investor for food plantation only can manage maximum up to 20,000 ha (while other area only 10,000 ha) then a permit would be needed for farmer who owned land more than 25 ha and or who employ more than 10 persons.
The local government on 2010 also prepared local regulation relating with MIFEE project. There are three regulations what will be launched soon. Up to now the regulation still discussed with stakeholders related in Merauke[19]. The regulations are (i) MIFEE; (ii) community empowerment (iii) indigenous right. The involvement of other stakeholders -including from local NGOs- also being questioned, since the MIFEE concept was initially designed as top-downed. There is concern from NGO activists that their involvement in MIFEE regulation only intended for local government justification that the MIFEE has already involving other stakeholders for its planning[20]. Since the beginning, the idea of MIFEE always defined as the concept of Bupati and Central Government.
Based on Presidential Instruction No. 01/2010 (Febuary 2010) on the Acceleration of the National Development 2010, The MIFEE has been started by completing of Master Plan of Rice and Energy Estate Development. In the Master Plan, there are 8 cluster (3 zones) which every cluster consisted of 30 sub-clusters of production zone has been delineated, where each sub-cluster would cover around 5,000 ha[21]. It is planned that the area will be planted by 50% for foodstock (Paddy, Corn, Soybean and husbandry), 30 % sugar cane and 25 % palm oil to reach the project objective as it is explicitly written at the document. The quantitative objectives of the MIFEE are as follows:
· Increase Indonesia annual main food stock (rice by 1.95 million tons; maize by 2.02 million tons; soybean by 167 thousand tons; 64 thousand cows; sugar by 2.5 million tons and CPO by 937 thousand tons)
· Export the food stock surplus
· Develop the agro-business and agro-industry zone on potential area that cover 1.28 million ha which derived from 154,790 ha of APL (land for other purpose) and 1.128 million ha of HPK (Convertible Production Forest)
· Provide employment opportunity at agriculture sector for 44,900 people –for both native and external people.
· Increase income of local population at least US$ 3,500 per household per year.
· Saving national devisa through decreasing food import as equal as Rp 51.41 billion (around US$ 48 million)
However, it must be noted that the bio-fuel development cannot be driven by the market alone. The improvement of all the pre-requisites in order to enhance the competitiveness of the products must be carried out through significant contribution of the central as well as local governments. In reference to the facts from MIFEE Project, the potential to develop both food products and bio-fuel feedstock in parallel is high. The challenge is how to focus all the efforts, from central as well as local government, private sector, and international investors to bring about the potentials into reality. There were 37 investors (only 1 foreign investor from Korea –investors from China and Singpore will follow soon) already expressed their interested in MIFEE project and six of whom already had licenses. They include Bangun Tjipta, Medco Group, Comexindo, Digul Agro Lestari, Buana Agro Tama and Wolo Agro Makmur. The license provides the company right to use the land for 60 years and can be extended up to 90 years.[22]
A critical opinion saw the potential of the allocation of forest land for the MIFEE project that would involve massive deforestation and billions of dollars of timber revenues for companies who get the concessions. Greenomics (2010) estimated from 1.06 million ha forested areas for the project consisted about 410.9 million cubic meters of timber worth about Rp 120.87 trillion ($13.1 billion) on the domestic market. And it could fetch as much as Rp 375.5 trillion on the black market.[23]
Others saw the negative impact on MIFEE project in marginalizing local people. As the Papuan still dependant on nature for their livelihood, the massive deforestration mean the Papuan will loose they source of livelihood and since they have no skill in agricultural activities they can not compete with other worker from outside papua.[24] The loose of the forest for tribes in Merauke also will create horizontal conflict among them since they must compete in searching food for living. Adat law allows tribe to kill person from other tribe who enter their forest territory event for food[25]. The unbalanced ratio between the project’s area and the available manpower could pose another problem, forcing the companies involved in the project to bring in workers from outside Papua. If a hectare of land needed four workers, the project would need 6.4 million workers while the total population of West Papua is only 4.6 million people, where 2.2 million of this population is indigenous and 70% lives in remote areas. With a population of only 174,710 in Merauke, these plans will acutely threaten the existence of Indigenous Peoples within these areas, turning them into a minority in number, even leading to extinction in the future. AMAN (Indegenous people network around archipelago) claimed that the MIFEE project also part of structural and systematic genocide[26]. The MIFEE also suspected could possibly lead to farmers into slavery due to the high amount of capital and wide corporate ranges. There has been a strong allegation of business monopoly that will control the selling prices.
[3] Interview with Michael Mantiri, head of Coordination Board of Natural Resources and The Environment (BPSDA-LH), province of Papua.
[5] As The Bupati also has his own concept since 7 years ago about agricultural industry in Merauke, He saw in his last term as Bupati of Merauke, the project can be his success story for becoming a governor of a new province of Merauke and offered a chance for him to retain power. See EIA/Telapak report (2009); Up For Grabs –Deforestration and Exploitation in Papua’s Plantation Boom,
[8] BinLaden Group also signed a similar memorandum of understanding with the Sultra provincial government for 80,000 ha of land.
[9] After the MOU signed, the BinLaden group also bought 12% stakes of PT Bakrie & Brother worth around US$ 3 millions on October, 2008 see: http://yakinku.wordpress.com/2008/10/06/bin-ladin-borong-saham-bakrie-brothers/
[16] http://www.korantempo.com/korantempo/koran/2008/05/16/Ekonomi_dan_Bisnis/krn.20080516.130961.id.html
[17] SEZ becomes Indonesian government concern since 2006 in order to increase foreigner investment
[18] http://www.walhi.or.id/in/kampanye/advokasi-kebijakan/54-uu-psda/825-pp-11-tahun-2010-tentang-penertiban-tanah-terlantar
[19] Interview with Marco, Director of WWF Indonesia Region Sahul
[20] Interview with Fr. Dicky oei, director of SKP-KAM, Merauke.
[21] Grand Design Pengembangan Food Estate di Merauke Papua
[25] Interview with Alberth Gebze Moyend, head of LMA Merauke
