Why is there trade in agricultural commodities and wildlife?
Trade in commodities plays an important role in Indonesia’s economy. The country is one of the world’s largest exporters of commodities – including agricultural products and wildlife – and has great potential to further enhance its leading position. Exports account for the largest contribution to Indonesia’s gross domestic product (BPS-Statistics Indonesia 2018), while also generating employment and foreign exchange reserves (TPSA Project 2018). However, it is necessary to strike a balance between achieving economic growth from the trade in agricultural commodities and supporting forest and biodiversity conservation in Indonesia (Pirard et al. 2017).
Indonesia is the world’s largest producer of palm oil, contributing more than 50% of global production (Sharma et al. 2018). Increasing demand for palm oil intended for export is resulting in a massive expansion of oil palm plantations in Indonesia, delivering important economic development while causing environmental degradation and socioeconomic impacts.
Indonesia has been one of the leading coffee producers for centuries (TPSA Project 2018) and its coffee production is dominated by smallholders (Arifin 2010; Ibnu 2017). Coffee farming is also associated with environmental impacts on forests. As a result of climate change, there are increased risks to coffee production in Indonesia (TPSA Project 2018; Bunn et al. 2015; Killeen and Harper 2016) and greater threat over the opening of new coffee plantations in forest landscapes.
Indonesia is one of the main Asian countries serving as a source and transit point for the international wildlife trade (Baker et al. 2013; Traffic International 2008). Indonesia is considered one of the ‘wildlife trade hotspots’ (Nijman 2010; Traffic International 2008), with the export of wildlife and plant species estimated at USD 374 million in 2015 and USD 580 million in 2017 (Ministry of Environment and Forestry 2018). The country has implemented a set of rules and regulations for the wildlife trade, but illegal trading and trafficking continue to occur (Hanif 2015). The value of illegal trade has been estimated at USD 1 billion per year. However, the real figure is unknown and may be higher than the estimated value (Lubis 2017).
The TRADE Hub Indonesia aims to provide business cases, policy changes and stronger financial institutions where the global trade in palm oil and coffee delivers benefits for the country. It also aims to reduce impacts on high-risk forested landscapes and their rural communities. In addition, the project is expected to enhance information on the legal and illegal trade in selected wildlife species and commodities in Indonesia.