The palm oil sector plays a crucial role in the economy and sustenance of numerous small-scale farmers and communities. However, it also brings about a mix of advantages and difficulties that create uncertainty and require the government to take more action. Potential benefits in the industry include increased income and improved living standards for smallholders during favorable market conditions. Additionally, there is the potential for enhanced productivity through the adoption of sustainable practices and technical improvements, which could lead to economic growth, job creation, and improved infrastructure in rural areas. Nevertheless, the industry faces significant challenges, such as fluctuating palm oil prices, environmental concerns, and unclear policies. For example, the reduction of diesel subsidies and the process to apply for them are issues that many farmers are not aware of. The volatility of market prices can influence the financial challenge of small-scale farmers, these problems pose a risky condition that weakens the stability and growth prospects of the palm oil industry. Therefore, it is essential for the government to implement policies that help smallholders and communities adapt to these challenges. This includes promoting sustainable practices, providing financial and technical support, and ensuring fair market access. However, government action alone is insufficient. Industry players, NGOs, and the smallholders themselves must also be actively involved. Industry players can invest in sustainable practices and provide training and resources to smallholders. NGOs can advocate for fair trade practices and environmental protection, while smallholders can adopt new techniques and participate in cooperative efforts to improve their bargaining power and resilience. This study employs a quantitative approach, beginning with a comprehensive survey of smallholders to gather data on their responses to various scenarios in the palm oil industry. The Best-Worst Scenario method will be utilized to identify critical factors and potential impacts. By simulating best-case and worst-case scenarios, the research will gather insights into how smallholders and communities can effectively manage and adapt to these situations. The findings will inform the design of practical strategies and evaluate the effectiveness of existing policies and interventions. The expected outcomes of this research can be a detailed understanding of the key factors influencing smallholders’ and communities’ responses to industry fluctuations, Practical strategies for smallholders and communities to manage and adapt to both favourable and adverse conditions, evaluation of the impact of current policies and interventions, providing evidence-based recommendations for policy improvements, such as in Program Tanam Semula Sawit Pekebun Kecil Sawit Persendirian (TSPKS 2.0), Budi Agro-Komuditi, and BUDI MySubsidi Diesel. This research aligns with several Sustainable Development Goals, particularly Goal 1 (No Poverty), Goal 2 (Zero Hunger), Goal 8 (Decent Work and Economic Growth), and Goal 13 (Climate Action). By identifying critical factors and designing adaptive strategies, the study aims to enhance the resilience of smallholders and communities, ensuring sustainable livelihoods and economic stability. The research will contribute to informed policy-making, fostering an environment where emerging issues can be effectively translated into actionable policies that support sustainable development in the palm oil industry. This project will promote sustainable practices, drive effective policy interventions, and secure a stable future for smallholders and their communities.