Project Outline


FARM PROFITABILITY AND RESOURCE USE IN RUBBER AND OIL PALM SMALLHOLDERS OF BATANGHARI, JAMBI, INDONESIA

Currently land use changes phenomena are getting attention because they are always associated with deforestation. In Jambi, rubber and oil palm smallholders are one of the stakeholders which are involved in land use changes. Land scarcity causes the competition of land use between rubber and oil palm smallholders. Hence, it can influence the land use direction. Land direction can be predicted through economic incentive (profit). Land scarcity also leads smallholders to improve both rubber and oil palm without use more land. Thus, it is important to analyze the determinant factors of profit in these commodities. In general, the objectives of this study are (1) to characterize rubber and oil palm smallholder farming, (2) to compute and compare the profit generated from rubber and oil palm farms, and (3) to analyze determinants of rubber and oil palm profitability. This study was conducted by descriptive analysis, equivalent annual annuity and OLS method. The study results stated that the highest cost of rubber farms is labor cost, while the highest cost of oil palm farms is fertilizer. In general, oil palm farms are more profitable than rubber farms. Statistically, commodity selection (rubber or oil palm) significantly influences smallholder profit in which oil palm farms are more profitable than rubber farms. On rubber farms, plot size, tree age, number of productivity tree, herbicide applied, farmer age, number of family member involved in agriculture, land certificate/sporadic ownership and cooperative involvement significantly influence its profit. On the other hand, on oil palm farms, number of productivity tree, NPK applied, herbicide applied, farmer education, number of family member involved in agriculture and ethnicity significantly influence its profit.