Smallholder oil palm: space for diversification?: WaNuLCAS model-based exploration of the environmental and economic impact of intercropping scenarios for Indonesian smallholders

Abstract
This research aimed at challenging the assumption that oil palm is best suited to monoculture cultivation for smallholders in Indonesia, through a model-based exploration of the short- and long-term feasibility of a range of plot-level diversifications. The global palm oil production has increased over fourfold in the last two decades, by converting forests and agroforests into monocultures, under the assumption that monoculture oil palm cultivation is most productive. This deforestation caused biodiversity losses and environmental degradation and raised social, political and economic concerns. This study hypothesized that intercropping could serve as an integrative answer to several of these concerns. As intercropping can deliver agronomic, economic and environmental system improvements. Intercropping was explored through simulation of five scenarios in the Water, Nutrient and Light Capture model for Agroforestry Systems (WaNuLCAS) model. The 5 crops included were: cacao, rubber, cassava, groundnut and mucuna as a cover crop. The scenarios were simulated for a 25-year period, for four typical Indonesian oil palm weather and soil conditions. The prices of the farm inputs (e.g. seedlings, labour, fertilizers) and produce were based on those recorded for the Indonesian context. The intercropping scenarios were compared to the monoculture oil palm simulation based on 4 productivity and 6 environmental performance indicators. The model output was generated at plot-level and therewith ignores interactions intercropping could have at farm- or landscape level. The results showed that considerable economic and environmental system improvements can be achieved through intercropping. With the exception of returns to labour, all indicators showed that performance improvement was obtained. Compared to the monoculture, larger productivity per unit of land, and environmental performance improvements were predicted for all intercropping scenarios. Intercropping with cacao showed to obtain the largest net return to land, a 25% increase compared to the monoculture, and can serve as a risk coping strategy. Including annuals in the first years of oil palm cultivation resulted in the quickest investment recovery. Intercropping rubber performed poorly for the economic indicators, but achieved the largest environmental system improvement. It is therefore argued that diversification has a large potential to improve overall system performance at both plot- and landscape-level. To utilize this potential more insight in smallholders’ interest in diversification and suitable incentives to support diversification adoption by smallholder is required.