Risk Management Strategy among Palm Oil Smallholders in Sabah
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Abstract
Smallholders are vital for the rapid development of palm oil in Malaysia and have contributed more than 37% of GDP in 2019. However, smallholders are vulnerable to various risks such as climate change, flood, diseases, government policy and loss of income. In fact, risks are unpredictable and failure to manage it properly could directly affect their safety, income, survival, and perhaps their retirement fund. Therefore, this study aims to analyse risk management strategy and its determinants among smallholders in Malaysia. Furthermore, the driving factors of smallholders’ risk management strategy are also examined. This study contributions are twofold. First, to the best of our knowledge, this study is the first to examine risk management strategy among smallholders in the emerging economies. Previous studies mostly focusing on risk management practices in firm level (e.g., Jafari et al., 2017; Safriyana et al., 2018), health and safety issues (e.g., Myzabella et at., 2019; Mohd Nawi et al., 2016), or crops and animals in Asia, Africa and Europe countries ((Sulewski et al., 2014; Bastakoti et al., 2013; Harvey et al., 2014; Visschers et al., 2015). Second, this study identifies the key driving factors for risk management strategy that would promote sustainable smallholders, and subsequently support sustainability certification and Sustainable Development Goals (SDGS). Data collected among smallholders in Johor. Johor is chosen as it has the largest oil palm cultivation area and number of smallholders in Malaysia. This study will employ descriptive statistics, factor analysis and multiple regression for data analysis. We expect that risk management strategy among smallholders could be group into several categories. Furthermore, MSPO certification could be the main driving factor for risk management strategies.
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