Intensification model of smallholder oil palm plantation to achieving sustainability and prosperity, Riau Province, Indonesia

Abstract

Abstract Intensification of smallholder oil palm plantations is still a challenge that needs to be achieved in line with ISPO’s target for smallholders in 2025. The current problem is that not all smallholders have implemented Best Management Practices (BMP), resulting in low productivity and poor performance toward sustainability targets. During the previous several years, Indonesia could achieve self-sufficiency in rice through a rice intensification program from the 1960s to the 1980s. This success is expected to be an example for Indonesia to achieve ISPO in all Indonesian oil palm plantations, especially for smallholders. This paper aims to analyze the effect of fertilization, oil palm age, harvest period, and institutions on the productivity of smallholder oil palm plantations to achieve sustainability targets. The analysis was carried out agronomically using multivariate regression, socially using t-test, and economically using NPV and IRR. According to the study, the harvest period has a stronger influence than fertilization, and institutions do not significantly affect productivity. The results of the NPV and IRR analysis, smallholder oil palm plantations are classified as profitable, with an NPV of USD 161,724 and with an IRR value of 12%.