Beyond Rational Choice Theory: Multifaceted Determinants of Participation in Palm Oil Sustainable Certification Amongst Smallholders in Malaysia

Abstract

The demand for palm oil is steadily increasing where global consumption in 2020 has reached 77 million metric tons or equivalent to 7 kg of palm per capita usage. However, the industry is under critics for unsustainable production practice and environmental degradation due to unscrupulous deforestation. One of the measures taken to ensure sustainability practices in the industry in Malaysia includes certifications such as the Roundtable on Sustainable Palm Oil (RSPO) and the Malaysian Sustainable Palm Oil (MSPO). These certifications are offered to industry players/plantation giants in which all stakeholders/members need to fulfill stringent requirements in order to obtain the certification. Efforts are now being taken to ensure that every stakeholder in the palm oil industry obtain sustainable certification, and this includes effort to enable smallholders to also follow the guidelines and fulfill the certification requirements. However, as of 2021, only 30% smallholders were certified despite the rigorous efforts made. Several factors may have hindered the participation of these smallholders. Hence, it is crucial that the agencies involved in managing this industry identify the factors influencing the certification of smallholders. The identification of these determinants will help policymakers to strengthen policy in disseminating sustainability practices in the palm oil industry. The objective of the current study is to identify factors influencing smallholders' participation in palm oil certification in Malaysia. This study looks beyond rational choice theory and develops a model based on elements of social structure and interaction. Quantitative approaches through questionnaire survey were used in this study. Purposive sampling was used, and data collections involved 200 oil palm smallholders in Malaysia. Four elements, namely, “Perceived Economic Benefit,” “Social Interaction,” “Shared Identity,” and “Communication Discourse,” were found to have significant influences on smallholders' participation in palm oil sustainable certification. Implication and future recommendation were included in the concluding remark.

Smallholders participation in sustainable certification: The mediating impact of deliberative communication and responsible leadership

“…With the financial incentive and technical support provided to the smallholders in the palm oil industry, it was expected that there would be a huge number of smallholders participating in sustainable certifications. It is in accordance with the perspective of game theory and rational choice theory where an individual shall maximize their own utility when given chance to act so ( Grandori, 2010 ; Wong, 2014 ; Ahmad Rizal et al, 2021 ). Empirical evidence however proves otherwise.…”

“…The current literature on sustainable certification largely emphasizes rational-choice theory (RCT) to explain the lack of participation by smallholders in the schemes ( Hidayat et al, 2016 ; Ni et al, 2016 ; Ahmad Rizal et al, 2021 ), which has its limitation. RCT primarily focuses on human behaviour in optimizing economic values and utility (i.e., personal gain or loss based on self-interest).…”

“…A farmer’s ability to exhibit “good farming” methods to their peers determines how they are valued ( Taylor and Van Grieken, 2015 ). In addition, they share information with other members of the group, including developments in technology and inventions to boost agricultural output and productivity ( Nordin et al, 2015 ; Mannan et al, 2017 ; Ahmad Rizal et al, 2021 ).…”

“…Hence, it is not surprising that other institutions within the industry treat them as an organisation. For instance, in Malaysia, the authorised organisation to develop and advance the oil-palm industry – Malaysia Palm Oil Board (MPOB) created Sustainable Palm Oil Cluster (SPOC) to drive and hasten the adoption of sustainable certification by the smallholders ( Ahmad Rizal et al, 2021 ).…”

Data_Sheet_1.DOCX

“…Sharing the same language, demographic, and culture have been shown to have an effect on the farmers' behavior in the other studies. For instance, in a study conducted among a small group of oil palm farmers in Malaysia, shared identity was a significant variable that influences the farmers' decision to participate in sustainability initiatives (Ahmad Rizal et al, 2021). Thus, in our study, shared identity could also explain how structure is a significant social media affordance in influencing perceived information quality.…”