Spice crops first attracted Europeans to the East Indies, but the tropical climate and rich volcanic soils offered a fertile laboratory for the introduction of new commercial crops such as sugar, coffee, and rubber. Large private plantations controlled by European and American interests became the backbone of the colonial economy in the late nineteenth century, when the Dutch colonial government began to limit the practice of tax collection by forced crop cultivation on village land. Even at the height of the plantation economy, however, small-scale peasant cultivators were competitive suppliers of a variety of commercial crops. In 1929, just before the world market collapse in the Great Depression, agricultural products were 75 percent of total Netherlands Indies exports, and about one-third of agricultural exports were from small-scale indigenous producers. Although sugar, then the single most important export crop, was entirely a plantation crop, a large share of rubber, next in export value to sugar, was supplied by smallholders; and coconut, then the third largest agricultural export, was produced almost exclusively by smallholders.

Although far less important in the overall economy, the estate crops were a significant share of exports and a vital source of income in the rural economy throughout the 1970s and 1980s. Smallholders continued to cultivate many estate crops grown on a large scale on government and privately owned plantations. Government-owned plantations were largely the legacy of nationalization of foreign estates during the 1950s, and restrictions on ownership still limited foreign participation, although joint ventures were not uncommon.

Rubber was generally the most valuable export crop, followed by coffee and oil palm. Exports of palm oil and coconut were periodically restricted to ensure adequate domestic supplies. A variety of other estate crops, including tobacco, pepper, tea, and cocoa, were also exported. Sugarcane was still cultivated but never regained its prominence after the collapse of the sugar industry during the Great Depression.

During the mid-1980s, the government initiated an ambitious plan to improve the technology and plant stock of small-scale producers. One of the Nucleus Estate Programs was a smallholder scheme that provided small plots of high-yielding tree crops to participating farmers in a determined location who shared the benefits of centralized technological and managerial assistance. A variety of difficulties were encountered with this strategy, and the planting area and productivity targets were rarely achieved. Outside observers criticized the nucleus-estate smallholder approach because only a small number of cultivators participated, leaving the majority of smallholders outside the nucleus estates without access to more productive hybrid tree stocks.

Rubber was cultivated on 3 million hectares of land in 1988, and about 80 percent of that area was owned by smallholders with holdings of two hectares or less. Smallholder cultivation was concentrated in Sumatra, especially in the provinces of Sumatera Utara, Riau, Jambi, and Sumatera Selatan. Some smallholder cultivation was found on Kalimantan, but less than 2 percent was outside Sumatra and Kalimantan. Government and private estates cultivated roughly equal areas, although private estates were subject to a legal maximum size varying by province, and so were smaller and more numerous than government estates. About 12 government-owned and more than 800 private rubber estates were concentrated in Sumatera Utara, Jawa Barat, Jawa Timur, and Kalimantan Tengah provinces.

Oil palm (Elaeis guineensis, Arecaceae) was the newest and fastest growing tree crop in the 1980s. Ten government estates- -primarily in Sumatera Utara Province--were the major producers, although eighteen private estates accounted for about 25 percent of the total 655,000 hectares devoted to oil palm in 1988. Smallholder cultivation of oil palm was insignificant. Exports of palm oil also expanded rapidly in the late 1980s, making Indonesia a major supplier, with 10 percent of the world market in 1988.

Coconuts were cultivated almost exclusively by smallholders. In 1983 about 3 million hectares were devoted to coconut production throughout the archipelago, although a large share was on Java. In the early 1980s, the World Bank estimated that as much as 60 percent of coconut products were not sent to the market but instead consumed by the cultivators, in part because of low producer prices reflecting government administration of the domestic coconut trade. Indonesia was the second largest producer of coconuts in the world after the Philippines, but remained an insignificant exporter because of government restrictions and inadequate processing facilities.

Coffee also was cultivated almost entirely by smallholders but, in contrast, remained an important export crop throughout the 1970s and 1980s. Processing and marketing of coffee was undertaken by the private sector with little government intervention. Most Indonesian coffee trees were of the Robusta variety, which is more hardy but of lower quality than Arabica coffee. Cultivation was concentrated on Sumatra, especially Lampung Province, which accounted for almost 25 percent of the estimated 500,000 hectares of smallholder cultivation in 1978.

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Source: U.S. Library of Congress