Smallholders’ willingness to pay for dura marking oil palm seeds

Abstract

In 2018, around 4 million ha of oil palm smallholdings need to be replanted. Indonesia could utilize this moment to improve smallholdings’ productivity by ensuring the usage of good quality seeds. For the industry, Dura is considered as bad seeds as its thick shells can damage the machine and the oil content is low. Therefore, most mills do not want to buy it, hence the selling price is low. In fact, most smallholdings’ use uncertified seedlings that include many contaminated Dura. Unfortunately, smallholders can only detect this 3 years after the planting and spending a considerable amount of production costs. Actually, to avoid the unnecessary loss a Dura marking technique can be applied to the oil palm seeds. However, most smallholders are unlikely consider Dura usage as an important issue due to the higher weight and higher sales revenue. This study is conducted to analyse smallholders’ willingness to pay (WTP) for seed marking service. Data is collected from 60 independent smallholders in Labuhan Batu Utara, which mostly use the uncertified seedlings. The willingness to pay is measured with Conjectural Variations Approach, revealing 71% of the respondents are willing to pay the Dura seed marking service, although still with a minimum level of WTP. Pearson Chi Square Correlation Test shows that the WTP for Dura Marking Service is only significantly correlated with the smallholders’ knowledge and perception, but not with their land size and experience. Based on the results, a number of policy implication are included.

Ethephon-Induced Abscission of Oil Palm Fruits at Optimal Bunch Ripeness and Retting Period to Improve Commercial Seed Production

“…Recovery of loose fruits in the seed garden may pose a risk of mixing with open-pollinated dura seeds derived from the same mother palms or neighboring nonmother palms, leading to dura contamination. Planting of thick-shelled dura contaminants can immediately lead to a 25% reduction in oil yield compared to the commercial thin-shelled DxP hybrids and the impact remains throughout the 20-25 years of economic life of the commercial palm [28]. To safeguard seed purity, SHELL and SNP-based legitimacy assays are now available to detect and remove the dura contaminants as early as the seed stage [29,30], but preventing the 10% loose fruits through early FFB harvest before 150 DAP is clearly more effective to completely avoid the risk of genetic contamination and seed loss.…”

Urgency to accelerate replanting of Indonesian oil palm: A review of the role of seed institutions

“…There are relatively few farmers who buy seeds from oil palm companies, production input shops, and nurseries (16.7%). This condition shows that the role of smallholders and illegitimate breeders is still relatively significant in providing seeds [16]. The use of illegal seeds by farmers is inseparable from the consideration of the price difference between illegal seeds and certified seeds [17].…”

“…This is because the price is much lower than the certified one, which is IDR 15,000 (USD 1.08) and IDR 40,000 (USD 2.89), respectively. In terms of price, all respondents were willing to pay for certified seeds, but only 29% were willing to pay (WTP) IDR 25,000 (USD1.81) or more for the difference in the average price between certified and uncertified seeds [16]. Illegal seed makers can sell seeds cheaply because the process of making them is very easy.…”

“…Some (29%) farmers are reluctant to pay for Dura marking services, indicating their perception that Dura is not the best type but is still profitable due to its heavier weight. However, 71% farmers are willing to pay for Dura marking services, varying in value from less than IDR 10,000 (USD 0.72) up to IDR 40,000 (USD 2.89) [16]. Associated with the replanting financing scheme in the PSR program, the additional cost of detecting seed purity can be considered as part of the cost assistance component from BPDPKS.…”

“…The area of Indonesian oil palm plantations has experienced higher growth for 30 years, reaching an area of 7.2 million ha in 2009 [2] and continues until the last decade, in 2011 reaching 8.99 million ha, increasing to 14.68 million ha in 2019 with a total fresh fruit bunch (FFB) production in 2011 of 157.33 million tons, increasing to 245.63 million tons in 2019 [3]. The data shows that the productivity of Indonesian oil palm plantations decreased from 17.49 tons of FFB per ha in 2011 to 16.73 tons of FFB per ha in 2019. In the same period, the productivity of Malaysian oil palm plantations reached 17.26 to 20.33 tons of FFB per ha per year, and in 2019 it was still at the level of 18.98 tons per ha [3].…”