The impacts of oil palm plantations on local and migrant smallholders’ incomes

In Indonesia, oil palm plantations have long affected income levels positively. Furthermore, Indonesia has developed oil palm smallholdings in 1980 to improve rural incomes. The success of this program has attracted other farmers and migrants to further developed oil palm plantations. Those who collaborated with companies were known as scheme smallholdings, while the others are known as independent smallholdings. In general, the lack of professional assistance has caused independent smallholdings to perform lower than the scheme ones. In addition, on average, the migrants also performed better as they were familiar with the collective actions of group activity management. Using as many as 210 and 219 scheme and independent smallholders from the Provinces of North Sumatra, South Sumatra, Jambi and Riau, such assumption were tested using the ANOVA compare means test of the four groups, namely schemed local and migrant, and independent local and migrant. Comparisons between the smallholders' incomes and the Regional Minimum Wages of each province were analysed. The results showed that oil palm plantations have significantly improved the smallholders' incomes in all provinces, although the impacts were observed to be higher for the scheme-migrant smallholders, not only concerning income, but also for productivity and selling price. However, this was likely due to the difference between scheme and independent rather than locals and migrants. This was partly explained due to the collective actions of all migrant-schemed smallholders in both the input purchases and the output sales and around 50% of the local-schemed, while almost all independents did it individually.

Diana Chalil, Riantri Barus, Zulkifli Alamsyah, Jullimursyida, Mawardati and Isfenti Sadalia