Yield Gaps and Factors Affecting Production Inefficiency in Smallholder Oil Palm Plantations in Muaro Jambi District Jambi Province

Abstract

Oil palm plantations in Indonesia, including in Jambi Province, are categorized into large private plantation, state-owned plantation, and smallholder plantation. The productivity of smallholders is the lowest compared to the other 2 categories. At the district and sub-district level, the yield of smallholder oil palm is also vary, spreading from 1,675 to 6,680 kg CPO per ha per year. The large yield variation is inseparable from the plantation management among farmers. The objectives of this research are to study the yield gap and technical efficiency of production among smallholders, and to analyze the factors that affect the technical production inefficiency in smallholder oil palm plantation. The research was conducted in Muaro Jambi District as a main palm oil producing district in Jambi Province. Data was collected from a sampel of 120 independent smallholders. One way anova test was used to study the yield gap and double natural log (ln) of Cobb–Douglas stochastic frontier production function was used to analyze the technical efficiency and some factors affects its inefficiency. The results revealed that there were significant differences in yield among smallholders based on area size, level of education, and activeness in the farmer organizations. However, on average, the management of oil palm by independent smallholders is quite technically efficient. The factor that significantly affects the level of technical inefficiency are the size of the area and farmers’ level of education.