Developing An Economic Model for Independent Smallholder Oil Palm Farmers’ Willingness to Adopt Sustainable Practices

2024

Abstract

The palm oil sector continues to be a pillar of strongest industries in Malaysia. Goal no. 2 of the Sustainable Development Goals (SDGs) for 2030 aims to end hunger, achieve food security, improve nutrition, and promote sustainable agriculture. Palm oil plantations have the potential to support these goals of sustainability and food security. Not only being a popular cooking oil, but it is also an ingredient in numerous supermarket products, including soap, chocolate, and instant noodles. Hence, realizing the full potential of palm oil while mitigating its environmental impact, oil palm farmers in Malaysia need to embrace sustainable practices. By practicing sustainability, farmers can ensure the long-term viability of their livelihoods and contribute positively to global environmental goals. Implementing sustainable methods among smallholders in Malaysia faces several challenges. Key obstacles include economic constraints, such as the high initial costs of new technologies, certification fees, and training, which are prohibitive for smallholders. Additionally, market access is limited, and the economic benefits of certified sustainable palm oil may not always offset these costs. There is also a lack of awareness and education, with many independent smallholder oil palm farmers unaware of sustainable practices or their long-term benefits. Traditional farming practices are deeply ingrained, leading to resistance to change due to uncertainty about new methods. This research aims to assess the economic trade-offs farmers are willing to adopt sustainable practices that reduce environmental impacts, such as reducing chemical fertilizer use using Terengganu, Kelantan, and Pahang estates as a case study. An economic valuation of Choice Experiment (CE) method will be employed to measure the attributes which will be the predictor variables in the developed model (i.e., reduction in chemical fertilizer use, financial compensation, training and support programs, and certification). This approach quantifies the economic trade-offs that farmers are willing to adapt, ultimately demonstrating how these attributes can effectively enhance their sustainable practices and contribute to the overall sustainability and profitability of the oil palm sector. Aspired by the National Policy on Biological Diversity (2016-2025), this study hopes to balance economic growth with environmental protection.

Project Leader

Suziana Hasan (Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), )

Mahirah Kamaludin (Universiti Malaysia Terengganu (UMT), mahirah.k@umt.edu.my)