Extended Urbanization through Capital Centralization: Contract Farming in Palm Oil-Based Agroindustrialization

Abstract

The discussion on extended urbanization considers accumulation by dispossession as a key apparatus for instilling urban logic into predominantly rural areas. This paper contends that extended urbanization can also be produced without physical dispossession of community land. This is illustrated by the case study of Sei Mangkei, an emerging palm oil agroindustrial district in North Sumatra, Indonesia. Capitalist industries prefer monetization through contract farming rather than privatization as an instrument to capture the productivity of palm oil smallholder land. The people who serve as smallholders in the palm oil industry are not victims of land appropriation. Moreover, this situation was also triggered by an opportunity for maximizing the socio-economic welfare of smallholders. However, the limited options to access other economic activities when the commodity crisis occurred was a consequence that smallholders were not aware of in the past. Thus, we assert that extended urbanization was (re)produced through the articulation of socio-economic and cultural practices of smallholders on a local-scale with regard to the dynamics of the broader process of global industrialization.